As filed with the Securities and Exchange Commission on June 6, 1997
Registration Statement No. 333-
Registration Statement No. 333- -01
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
PEOPLE'S BANCSHARES, INC. PEOPLE'S BANCSHARES CAPITAL TRUST
(Exact name of Registrant (Exact name of Registrant as
as specified in its charter) specified in its Trust Agreement)
MASSACHUSETTS DELAWARE
(State or other jurisdiction (State or other jurisdiction
of incorporation or organization) of incorporation or organization)
----------- ---------
6712 6719
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
04-1716220 (applied for)
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
545 PLEASANT STREET
NEW BEDFORD, MASSACHUSETTS 02740
(508) 991-2601
(Address, including zip code, and telephone number, including area code of
Registrant's principal executive offices)
RICHARD S. STRACZYNSKI
President and Chief Executive Officer
PEOPLE'S BANCSHARES, INC.
545 Pleasant Street
New Bedford, Massachusetts 02740
(508) 991-2601
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
REGINA M. PISA, P.C. JAMES L. NOUSS, JR., ESQ.
Goodwin, Procter & Hoar LLP Bryan Cave LLP
Exchange Place One Metropolitan Square
Boston, MA 02109 211 North Broadway, Suite 3600
(617) 570-1000 St. Louis Mo. 63102-2750
(314) 259-2000
--------------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If any of the Securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box.|_|
If the Registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this form, check the following box: |X|
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
<TABLE>
<CAPTION>
Title of Each Class of Proposed Maximum
Securities to be Amount to be Proposed Maximum Aggregate Offering Amount of Registration
Registered Registered Offering Price Per Unit Price Fee
---------------------- ------------- ----------------------- ------------------ ----------------------
<S> <C> <C> <C> <C>
Preferred Securities of 1,380,000(1) $10 $13,800,000 $4,181.82(4)
People's Bancshares
Capital Trust
Subordinated (2) _______ _______ _______
Debentures of People's
Bancshares, Inc. (2)
Guarantee of People's (3) _______ _______ _______
Bancshares, Inc. with
respect to the Preferred
Securities (3)
</TABLE>
(1) Includes 180,000 Preferred Securities which may be sold by People's
Bancshares Capital Trust to cover over-allotments.
(2) The Subordinated Debentures will be purchased by People's Bancshares
Capital Trust with the proceeds of the sale of the Preferred Securities.
Such securities may later be distributed for no additional consideration
to the holders of the Preferred Securities of People's Bancshares
Capital Trust upon its dissolution and the distribution of its assets.
(3) This Registration Statement is deemed to cover the Subordinated
Debentures of People's Bancshares, Inc., the rights of holders of
Subordinated Debentures of People's Bancshares, Inc. under the
Indenture, and the rights of holders of the Preferred Securities under
the Trust Agreement, the Guarantee and the Expense Agreement entered
into by People's Bancshares, Inc. No separate consideration will be
received for the Guarantee.
(4) The registration fee is calculated in accordance with Rule 457(n).
Pursuant to Rule 457(n) under the Securities Act, no separate
registration fee is payable for the Guarantee.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant 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 Section 8(a), may
determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of any offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS SUBJECT TO COMPLETION, DATED , 1997
----------------------------------------------
1,200,000 PREFERRED SECURITIES
PEOPLE'S BANCSHARES CAPITAL TRUST
__% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER PREFERRED SECURITY)
GUARANTEED, AS DESCRIBED HEREIN, BY
PEOPLE'S BANCSHARES, INC.
$12,000,000 __% SUBORDINATED DEBENTURES OF
PEOPLE'S BANCSHARES, INC.
The % Cumulative Trust Preferred Securities (the "Preferred Securities")
offered hereby represent preferred undivided beneficial interests in the assets
of People's Bancshares Capital Trust, a statutory business trust created under
the laws of the State of Delaware (the "Trust"). People's Bancshares, Inc., a
Massachusetts corporation (the "Company"), will own all the common securities
(the "Common Securities" and, together with the Preferred Securities, the "Trust
Securities") representing undivided beneficial interests in the assets of the
Trust.
(Continued on next page)
Application has been made to have the Preferred Securities approved for
quotation on The Nasdaq Stock Market's National Market under the Symbol "PBKBP."
------------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN
INVESTMENT IN THE PREFERRED SECURITIES.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY AND INVOLVE INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
================================= =========================== ========================== =======================
Price to Underwriting Proceeds to
Public Commission(1) Trust(2)
- --------------------------------- --------------------------- -------------------------- -----------------------
Per Preferred Security........... $10 (2) $10
- --------------------------------- --------------------------- -------------------------- -----------------------
Total(3)......................... $12,000,000 (2) $12,000,000
================================= =========================== ========================== =======================
</TABLE>
(1) The Company and the Trust have agreed to indemnify the Underwriters
against certain liabilities, including certain liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Subordinated Debentures, the Company,
as issuer of the Subordinated Debentures, has 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." The Company has also agreed to pay the
expenses of the offering estimated to be $ .
(3) The Trust has granted the Underwriters an option exercisable within 30
days from the date of this Prospectus to purchase up to 180,000
additional Preferred Securities on the same terms and conditions set
forth above to cover over-allotments, if any. If all such additional
Preferred Securities are purchased, the total Price to Public and
Proceeds to Trust will be $13,800,000. See "Underwriting."
The Preferred Securities are offered by the Underwriters subject to
receipt and acceptance by them, prior sale and the Underwriters' right to reject
any order in whole or in part. It is expected that delivery of the Preferred
Securities will be made through the facilities of the Depository Trust Company
("DTC") and, in certain circumstances, in certificated form in New York, New
York on or about June __, 1997 against payment therefor in immediately available
funds.
------------------------------------
SANDLER O'NEILL & PARTNERS, L.P. STIFEL, NICOLAUS & COMPANY
INCORPORATED
------------------------------------
June __, 1997
(Continued from the previous page)
State Street Bank and Trust Company is the Property Trustee (as defined
herein) of the Trust. The Trust exists for the purpose of issuing the Preferred
Securities and investing the proceeds thereof in an equivalent amount of ___%
Subordinated Debentures (the "Subordinated Debentures") of the Company. The
Subordinated Debentures will mature on June 30, 2027, which date may be (i)
shortened to a date not earlier than June 30, 2002, or (ii) extended to a date
not later than June 30, 2036, in each case if certain conditions are met
(including, in the case of shortening the Stated Maturity (as defined herein),
the Company having received prior approval of the Board of Governors of the
Federal Reserve System ("Federal Reserve") to do so if then required under
applicable capital guidelines or policies of the Federal Reserve). The Preferred
Securities will have a preference over the Common Securities under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise. See "Description of the Preferred
Securities--Subordination of Common Securities."
Holders of Preferred Securities are entitled to receive preferential
cumulative cash distributions, at the annual rate of ___% of the liquidation
amount of $10 per Preferred Security (the "Liquidation Amount"), accruing from
_______, 1997, the date of original issuance, and payable quarterly in arrears
on the last day of March, June, September and December of each year, commencing
September 30, 1997 (the "Distributions"). The Company has the right, so long as
no Debenture Event of Default (as defined herein) has occurred and is
continuing, to defer payment of interest on the Subordinated Debentures at any
time or from time to time for a period not to exceed 20 consecutive quarters
with respect to each deferral period (each, an "Extension Period"); provided
that no Extension Period may extend beyond the Stated Maturity of the
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Company may elect to begin a new
Extension Period subject to the requirements set forth herein. If interest
payments on the Subordinated Debentures are so deferred, Distributions on the
Preferred Securities will also be deferred, and the Company will not be
permitted, subject to certain exceptions described herein, to declare or pay any
cash distributions with respect to its capital stock or debt securities that
rank pari passu with or junior to the Subordinated Debentures. DURING AN
EXTENSION PERIOD, INTEREST ON THE SUBORDINATED DEBENTURES WILL CONTINUE TO
ACCRUE (AND THE AMOUNT OF DISTRIBUTIONS TO WHICH HOLDERS OF THE PREFERRED
SECURITIES ARE ENTITLED WILL ACCUMULATE) AT THE RATE OF _______% PER ANNUM,
COMPOUNDED QUARTERLY, AND HOLDERS OF THE PREFERRED SECURITIES WILL BE REQUIRED
TO INCLUDE INTEREST INCOME IN THEIR GROSS INCOME FOR UNITED STATES FEDERAL
INCOME TAX PURPOSES IN ADVANCE OF RECEIPT OF THE CASH DISTRIBUTIONS WITH RESPECT
TO SUCH DEFERRED INTEREST PAYMENTS. UPON THE OCCURRENCE OF AN EXTENSION PERIOD,
A HOLDER OF PREFERRED SECURITIES THAT DISPOSES OF ITS PREFERRED SECURITIES
BETWEEN RECORD DATES FOR PAYMENTS OF DISTRIBUTIONS (AND CONSEQUENTLY DOES NOT
RECEIVE A DISTRIBUTION FROM THE TRUST FOR THE PERIOD PRIOR TO SUCH DISPOSITION)
WILL NEVERTHELESS BE REQUIRED TO INCLUDE ACCRUED BUT UNPAID INTEREST ON THE
SUBORDINATED DEBENTURES THROUGH THE DATE OF DISPOSITION IN INCOME AS ORDINARY
INCOME AND TO ADD SUCH AMOUNT TO ITS ADJUSTED TAX BASIS IN ITS PRO RATA SHARE OF
THE UNDERLYING SUBORDINATED DEBENTURES DEEMED DISPOSED OF. See "Description of
the Subordinated Debentures--Option to Extend Interest Payment Period," "Certain
Federal Income Tax Consequences--Potential Extension of Interest Payment Period
and Original Issue Discount" and "--Disposition of Preferred Securities."
The Company and the Trust believe that, taken together, the obligations
of the Company under the Guarantee, the Trust Agreement, the Subordinated
Debentures, the Indenture and the Expense Agreement (each as defined herein)
provide, in the aggregate, a full, irrevocable and unconditional guarantee, on a
subordinated basis, of all of the obligations of the Trust under the Preferred
Securities. See "Relationship Among the Preferred Securities, the Subordinated
Debentures and the Guarantee--Full and Unconditional Guarantee." The Guarantee
of the Company guarantees the payment of Distributions and payments on
liquidation or redemption of the Preferred Securities, but only in each case to
the extent of funds held by the Trust, as described herein. See "Description of
the Guarantee--General." If the Company does not make interest payments on the
Subordinated Debentures held by the Trust, the Trust will have insufficient
funds to pay Distributions on the Preferred Securities. The Guarantee does not
cover payments of Distributions when the Trust does not have sufficient funds to
pay such Distributions. In such event, a holder of Preferred Securities may
institute a legal proceeding directly against the Company pursuant to the terms
of the Indenture to enforce payments of amounts equal to such Distributions to
such holder. See "Description of the Subordinated Debentures--Enforcement of
Certain Rights by Holders of the Preferred Securities." The obligations of the
Company under the Guarantee
2
and the Preferred Securities are subordinate and junior in right of payment to
all Senior Debt, Subordinated Debt and Additional Senior Obligations (each as
defined herein) of the Company. The Subordinated Debentures are unsecured
obligations of the Company and are subordinated to all Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company.
The Preferred Securities are subject to mandatory redemption, in whole
or in part, upon repayment of the Subordinated Debentures at maturity or their
earlier redemption. Subject to Federal Reserve approval, if then required under
applicable capital guidelines or policies of the Federal Reserve, the
Subordinated Debentures are redeemable prior to maturity at the option of the
Company (i) on or after June 30, 2002, in whole at any time or in part from time
to time, or (ii) at any time, in whole (but not in part), within 180 days
following the occurrence of a Tax Event, a Capital Treatment Event or an
Investment Company Event (each as defined herein), in each case at a redemption
price equal to the accrued and unpaid interest on the Subordinated Debentures so
redeemed to the date fixed for redemption, plus 100% of the principal amount
thereof. See "Description of the Preferred Securities--Redemption or Exchange."
The Company has the right at any time to dissolve the Trust, subject to
the Company having received prior approval of the Federal Reserve to do so if
then required under applicable capital guidelines or policies of the Federal
Reserve. In the event of the voluntary or involuntary dissolution of the Trust,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, the holders of Preferred Securities will be entitled to receive
a Liquidation Amount of $10 per Preferred Security, plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
Subordinated Debenture having an aggregate principal amount equal to the
Liquidation Amount of such Preferred Securities (and carrying with it
accumulated interest in an amount equal to the accumulated and unpaid
Distributions then due on such Preferred Securities), subject to certain
exceptions. See "Description of the Preferred Securities--Redemption or
Exchange" and "--Liquidation Distribution Upon Dissolution."
The Company will provide to the holders of the Preferred Securities
quarterly reports containing unaudited financial statements and annual reports
containing financial statements audited by the Company's independent auditors.
The Company will also furnish annual reports on Form 10-K and quarterly reports
on Form 10-Q free of charge to holders of the Preferred Securities who so
request in writing addressed to the Clerk of the Company.
CERTAINPERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTTING THE PREFERRED SECURITIES AND
BIDDING FOR AND PURCHASING SUCH PREFERRED SECURITIES AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING." SUCH STABILIZING TRANSACTIONS, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
3
[MAP]
4
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus. As used herein, (i) the
"Indenture " means the Indenture, to be dated as of June __, 1997, as amended
and supplemented from time to time, between the Company and State Street Bank
and Trust Company, as trustee (the "Debenture Trustee"), relating to the
Subordinated Debentures, (ii) the "Trust Agreement" means the Amended and
Restated Declaration of Trust relating to the Trust among the Company, as
Depositor, State Street Bank and Trust Company, as Property Trustee (the
"Property Trustee"), Wilmington Trust Company, as Delaware Trustee (the
"Delaware Trustee"), and the Administrative Trustees named therein
(collectively, with the Property Trustee and Delaware Trustee, the "Issuer
Trustees") and (iii) the "Guarantee" means the Guarantee Agreement relating to
the Preferred Securities between the Company and State Street Bank and Trust
Company, as Guarantee Trustee (the "Guarantee Trustee").
PEOPLE'S BANCSHARES, INC.
The Company is a one-bank holding company that operates primarily
through People's Savings Bank of Brockton (the "Bank"). The Bank is a community
bank, with 14 branches located in and around the cities of Brockton, New Bedford
and Taunton in Southeastern Massachusetts. The Bank has experienced a
significant turnaround during the last five years, from suffering a loss in 1992
to achieving a return on average equity of 13.03% in 1996 and 16.28% in the
first quarter of 1997. Asset size increased from $163.5 million at December 31,
1992 to $548.8 million at March 31, 1997.
FINANCIAL SUMMARY
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
---------------------- -----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Pre tax income (loss) $ 2,049 $ 1,094 $ 5,444 $ 3,023 $ 1,734 $ 15 $ (2,390)
Net income 1,308 687 3,559 2,194 1,974 1,053 (377)
Earnings (loss) per
share (fully diluted) 0.36 0.25 1.09 0.87 0.84 0.46 (0.16)
Assets 548,774 533,134 496,133 324,440 231,566 190,661 163,483
Deposits 328,331 322,261 336,238 174,583 134,345 137,602 146,814
Stockholders' equity 30,790 27,382 31,064 19,677 16,975 15,971 14,872
Return (loss) on average
total equity 16.28% 12.20% 13.03% 11.65% 11.80% 6.77% (2.62)%
</TABLE>
The Company has sought to consistently increase earnings per share and
to maximize return on equity through a combination of strategies, including:
o Commercial Lending. One of the Company's recently adopted
principal strategies is to increase core earnings by redeploying
funds from investments into commercial business and commercial
mortgage loans to small businesses and middle market companies in
its market area. These companies tend to be privately-held and
owner-operated with annual sales of less than $25 million and
with typical borrowing arrangements of $250,000 to $1.5 million.
Partly as a result of recent acquisitions, total commercial loans
increased from approximately $39 million at December 31, 1995 to
approximately $55 million at December 31, 1996. In carrying out
this strategy, the Bank intends to utilize the significant
experience that several of its senior managers and commercial
lending officers have acquired through prior service with larger
commercial banking institutions.
o Residential Mortgage Brokerage. The Company has sought to
increase non-interest income through the establishment in 1995 of
a residential mortgage loan origination and brokerage subsidiary.
This subsidiary currently maintains five mortgage loan production
offices. The Company's loan originations have increased from $17
million in 1994 to $229 million in 1996. All loans sold to third
parties are sold servicing-released.
o Capital Management. The Company intends to continue to focus on
managing its capital to provide an attractive return on equity.
As part of this strategy, the Company has significantly
5
increased its assets through the use of borrowings to purchase
mortgage-backed securities. These borrowings, consisting of
Federal Home Loan Bank ("FHLB") advances and repurchase
agreements, have increased from none at December 31, 1992 to
$184.4 million at March 31, 1997.
o Acquisitions. The Company intends to continue to consider
opportunities for expansion through selective acquisitions as a
means of realizing improved economies of scale and increased
market penetration and scope, if and when suitable opportunities
arise. In four acquisitions consummated during 1995 and 1996 the
Bank acquired nine branch locations and assets having an
aggregate value of $186.2 million at the time of acquisition. As
part of the integration process of these acquisitions, the
Company has upgraded and conformed its technology and processes
to establish an operational infrastructure conducive to further
growth.
The principal executive office of the Company is located at 545 Pleasant
Street, New Bedford, Massachusetts 02741 and its telephone number is (508)
991-2601.
PEOPLE'S BANCSHARES CAPITAL TRUST
The Trust is a statutory business trust formed under Delaware law upon
the filing of a certificate of trust with the Delaware Secretary of State. The
Trust's business and affairs are conducted by the Issuer Trustees: the Property
Trustee, the Delaware Trustee, and the three individual Administrative Trustees,
who are officers of the Company. The Trust exists for the exclusive purposes of
(i) issuing and selling the Trust Securities, (ii) using the proceeds from the
sale of the Trust Securities to acquire the Subordinated Debentures issued by
the Company and (iii) engaging in only those other activities necessary,
advisable or incidental thereto. The Subordinated Debentures will be the sole
assets of the Trust and, accordingly, payments under the Subordinated Debentures
will be the sole revenue of the Trust. All of the Common Securities will be
owned by the Company.
6
THE OFFERING
Securities Offered.......... 1,200,000 Preferred Securities having a Liquidation
Amount of $10 per Preferred Security. The Preferred
Securities represent preferred undivided beneficial
interests in the assets of the Trust, which will
consist solely of the Subordinated Debentures and
payments thereunder. The Trust has granted the
Underwriters an option, exercisable within 30 days
after the date of this Prospectus, to purchase up
to an additional 180,000 Preferred Securities at
the initial offering price, solely to cover
over-allotments, if any.
Distributions .............. The Distributions payable on each Preferred
Security will be fixed at a rate per annum
of______% of the Liquidation Amount of $10 per
Preferred Security, will be cumulative, will accrue
from _____________, 1997, the date of original
issuance of the Preferred Securities, and will be
payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year,
commencing September 30, 1997. See "Description of
the Preferred Securities--Distributions--Payment of
Distributions."
Option to Extend Interest
Payment Period.............. The Company has the right, at any time, so long as
no Debenture Event of Default has occurred and is
continuing, to defer payments of interest on the
Subordinated Debentures for a period not exceeding
20 consecutive quarters; provided, that no
Extension Period may extend beyond the Stated
Maturity of the Subordinated Debentures. As a
consequence of the extension by the Company of the
interest payment period, quarterly Distributions on
the Preferred Securities will be deferred (though
such Distributions will continue to accrue with
interest thereon compounded quarterly, since
interest will continue to accrue and compound on
the Subordinated Debentures) during any such
Extension Period. During an Extension Period, the
Company will be prohibited, subject to certain
exceptions described herein, from declaring or
paying any cash distributions with respect to its
capital stock or debt securities that rank pari
passu with or junior to the Subordinated
Debentures. Upon the termination of any Extension
Period and the payment of all amounts then due, the
Company may commence a new Extension Period,
subject to the foregoing requirements. See
"Description of the Preferred
Securities--Distributions--Extension Period" and
"Description of the Subordinated Debentures--Option
to Extend Interest Payment Period." Should an
Extension Period occur, holders of Preferred
Securities will be required to include deferred
interest income in their gross income for United
States federal income tax purposes in advance of
receipt of the cash distributions with respect to
such deferred interest payments. See "Certain
Federal Income Tax Consequences--Potential
Extension of Interest Payment Period and Original
Issue Discount."
Optional Redemption......... The Preferred Securities are subject to mandatory
redemption, in whole or in part, upon repayment of
the Subordinated Debentures at maturity or their
earlier redemption. Subject to Federal Reserve
approval, if then required under applicable capital
guidelines or policies of the Federal Reserve, the
Subordinated Debentures are redeemable prior to
maturity at the option of the Company (i) on or
after June 30, 2002, in whole at any time or in
part from time to time, or (ii) at any time, in
whole (but not in part), within 180 days following
the occurrence of a
7
Tax Event, a Capital Treatment Event or an
Investment Company Event, in each case at a
redemption price equal to 100% of the principal
amount of the Subordinated Debentures, together
with any accrued but unpaid interest on the
Subordinated Debentures to the date fixed for
redemption. See "Description of the Subordinated
Debentures--Redemption or Exchange."
Ranking........................ The Preferred Securities will rank pari passu,
and payments thereon will be made pro rata, with
the Common Securities except as described under
"Description of Preferred
Securities--Subordination of Common Securities."
The Subordinated Debentures will rank pari passu
with all other Subordinated Debentures (if any)
issued by the Company (the "Other Debentures"),
which are issued and sold (if at all) to other
trusts established by the Company (if any), in
each case similar to the Trust ("Other Trusts"),
and will constitute unsecured obligations of the
Company and will rank subordinate and junior in
right of payment to all Senior Indebtedness to
the extent and in the manner set forth in the
Indenture. See "Description of Subordinated
Debentures." The Guarantee will rank pari passu
with all other guarantees (if any) issued by the
Company with respect to Preferred Securities (if
any) issued by Other Trusts ("Other Guarantees")
and will constitute an unsecured obligation of
the Company and will rank subordinate and junior
in right of payment to all Senior Indebtedness
to the extent and in the manner set forth in the
Guarantee Agreement. See "Description of
Guarantee." In addition, because the Company is
a holding company, the Subordinated Debentures
and the Guarantee will be effectively
subordinated to all existing and future
liabilities of the Company's subsidiaries,
including the Bank's deposit liabilities. See
"Description of Subordinated
Debentures--Subordination."
Distribution of Subordinated
Debentures..................... The Company has the right at any time to
dissolve the Trust and, after satisfaction of
liabilities to creditors of the Trust as
required by applicable law, cause the
Subordinated Debentures to be distributed to
holders of Preferred Securities in liquidation
of the Trust, subject to the Company having
received prior approval of the Federal Reserve
to do so if then required under applicable
capital guidelines or policies of the Federal
Reserve. See "Description of the Preferred
Securities--Redemption or Exchange" and
"Description of the Preferred
Securities--Liquidation Distribution Upon
Dissolution."
Guarantee...................... The Company has guaranteed the payment of
Distributions and payments on liquidation or
redemption of the Preferred Securities, but only
in each case to the extent of funds held by the
Trust, as described herein. The Company and the
Trust believe that, taken together, the
obligations of the Company under the Guarantee,
the Trust Agreement, the Subordinated
Debentures, the Indenture and the Expense
Agreement provide, in the aggregate, a full,
irrevocable and unconditional guarantee, on a
subordinated basis, of all of the obligations of
the Trust under the Preferred Securities. The
obligations of the Company under the Guarantee
and the Preferred Securities are subordinate and
junior in right of payment to all Senior Debt,
Subordinated Debt and Additional Senior
Obligations of the Company. If the Company does
not make principal or interest payments on the
Subordinated Debentures, the Trust will not have
sufficient funds to make distributions on the
Preferred Securities. In such event, the
Guarantee will not apply to
8
such Distributions until the Trust has
sufficient funds available therefor. See
"Description of the Guarantee."
Voting Rights.................. The holders of the Preferred Securities will
have no voting rights except in limited
circumstances. See "Description of the Preferred
Securities--Voting Rights; Amendment of Trust
Agreement."
Use of Proceeds................ All of the proceeds from the sale of the Trust
Securities will be invested by the Trust in the
Subordinated Debentures. The Company intends to
use the net proceeds from the sale of the
Subordinated Debentures for general corporate
purposes, including the repurchase of
outstanding equity securities of the Company,
contributions to the Bank to fund its operations
and the financing of one or more future
acquisitions by the Company if and when suitable
opportunities arise. Initially, the net proceeds
may be used to make investments in short
average-life securities. See "Use of Proceeds."
Nasdaq National Market
Symbol......................... Application has been made to have the Preferred
Securities approved for quotation on The Nasdaq
Stock Market's National Market under the symbol
"PBKBP."
9
<TABLE>
<CAPTION>
SUMMARY CONSOLIDATED FINANCIAL DATA
AT OR FOR THE
THREE MONTHS ENDED
MARCH 31, AT OR FOR THE YEAR ENDED DECEMBER 31,
--------------------- -------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(dollars in thousands, except per share data)
CONSOLIDATED BALANCE SHEET DATA:
Total assets............... $ 548,774 $ 533,134 $496,133 $324,440 $231,566 $ 190,661 $ 163,483
Investment securities...... 252,346 223,458 192,517 166,709 103,621 64,671 30,818
Loans, net................. 244,962 245,994 246,195 129,778 111,103 107,906 105,150
Deposits................... 328,331 322,261 336,238 174,583 134,345 137,602 146,814
Borrowed funds............. 184,358 153,337 123,920 126,245 77,580 35,000 -
Stockholders' equity....... 30,790 27,382 31,064 19,677 16,975 15,971 14,872
CONSOLIDATED OPERATING DATA:
Interest and dividend income $ 9,729 $ 6,609 $ 33,761 $ 19,729 $ 14,293 $ 12,057 $ 12,997
Interest expense........... 5,315 3,655 18,595 11,149 6,559 4,998 6,671
--------- --------- -------- -------- -------- --------- ---------
Net interest income........ 4,414 2,954 15,166 8,580 7,734 7,059 6,326
Provision for loan losses.. - 75 75 525 807 1,492 1,363
--------- --------- -------- -------- -------- --------- ---------
Net interest income, after
provision for loan losses 4,414 2,879 15,091 8,055 6,927 5,567 4,963
Other income............... 1,282 895 4,031 1,755 1,033 1,368 1,154
Operating expenses......... 3,647 2,680 13.678 6,787 6,226 6,920 8,507
--------- --------- -------- -------- -------- --------- ---------
Income (loss) before income
taxes and extraordinary item 2,049 1,094 5,444 3,023 1,734 15 (2,390)
Provision (benefit) for income
taxes.................... 741 407 1,885 829 (240) (1,038) (983)
--------- --------- -------- -------- -------- --------- ---------
Income (loss) before
extraordinary item....... 1,308 687 3,559 2,194 1,974 1,053 (1,407)
Extraordinary item......... - - - - - - 1,030
--------- --------- -------- -------- -------- --------- ---------
Net income (loss).......... $ 1,308 $ 687 $ 3,55 $ 2,19 $ 1,974 $ 1,053 $ (377)
========= ========= ======== ======== ======== ========= =========
PER SHARE DATA:
Weighted average shares
outstanding- primary
(in thousands)........... 3,646 2,744 3,260 2,414 2,338 2,300 2,300
Weighted average shares
outstanding - fully diluted
(in thousands)........... 3,646 2,744 3,268 2,523 2,338 2,330 2,300
Primary earnings (loss) per
share before extraordinary
item $ 0.36 $ 0.25 $ 1.09 $ 0.91 $ 0.84 $ 0.46 $ (0.61)
Primary earnings (loss) per share 0.36 0.25 1.09 0.91 0.84 0.46 (0.16)
Fully diluted earnings (loss) per
share before extraordinary item 0.36 0.25 1.09 0.87 0.84 0.46 (0.61)
Fully diluted earnings (loss)
per share................ 0.36 0.25 1.09 0.87 0.84 0.46 (0.16)
Cash dividends paid per share 0.09 0.05 0.27 0.04 - - -
Book value per common share 8.57 8.20 8.72 8.47 7.38 6.94 6.47
SELECTED FINANCIAL DATA:
Return (loss) on average assets(1) 0.97% 0.75% 0.74% 0.81% 0.95% 0.62% (0.23)%
Return (loss) on average equity(1)16.28 12.20 13.03 11.65 11.80 6.77 (2.62)
Weighted average interest rate
spread................... 3.07 3.03 2.92 2.94 3.62 4.26 3.91
Dividend payout ratio...... 25.00 20.00 24.77 4.40 - - -
Allowance for loan losses
to total loans(2)........ 1.65 1.93 1.71 2.75 2.79 3.18 3.30
Non-performing loans to
total loans(2)(3)........ 1.36 2.05 1.40 3.44 1.97 3.26 5.33
Allowance for loan losses to
non-performing loans(4).. 121.24 94.08 122.08 79.84 141.70 97.47 61.96
Non-performing assets
to total assets.......... 0.81 1.09 0.88 1.65 2.40 4.43 9.12
Efficiency ratio(5)........ 63.10 69.16 70.94 64.30 60.35 68.11 80.88
CAPITAL RATIOS
Average total stockholders' equity to
average total assets... 5.97 6.11 5.70 6.92 8.09 9.23 8.82
Total risk-based capital ratio 13.95 10.81 13.56 12.17 15.40 14.81 13.30
Leverage Ratio............. 5.89 7.34 6.01 6.04 7.87 8.63 8.94
RATIO OF EARNINGS TO COMBINED
FIXED CHARGES(6)
Including interest on deposits 1.38x 1.29x 1.29x 1.27x 1.26x 1.00x 0.65x
Excluding interest on deposits 1.80x 1.56x 1.64x 1.53x 1.63x 1.03x (15.15)x
- --------------
</TABLE>
(1) Annualized for the three months ended March 31, 1997 and 1996.
(2) Total loans includes loans and loans held for sale.
(3) If prior periods had been restated to reflect the adoption of SFAS 114 the
ratio would have been 4.04%, 5.55% and 8.58%, at December 31, 1994, 1993 and
1992, respectively.
(4) If prior periods had been restated to reflect the adoption of SFAS 114, the
ratio would have been 67.76%, 55.99% and 37.17% at December 31, 1994, 1993 and
1992, respectively.
(5) Equals operating expenses, exclusive of expenses associated with other real
estate owned, divided by the sum of net interest income and other income.
(6) For purposes of calculating the ratio of earnings to combined fixed charges,
earnings consist of income before taxes plus interest and rent expense. Fixed
charges consist of interest and rent expense.
10
RISK FACTORS
Prospective investors should carefully consider, together with the other
information contained and incorporated by reference in this Prospectus, the
following risk factors in evaluating the Company and its business and the Trust
before purchasing the Preferred Securities offered hereby. Prospective investors
should note, in particular, that this Prospectus contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Act of 1934,
as amended (the "Exchange Act"), and that actual results could differ materially
from those contemplated by such statements. The considerations listed below
represent certain important factors the Company believes could cause such
results to differ. These considerations are not intended to represent a complete
list of the general or specific risks that may affect the Company and the Trust.
It should be recognized that other risks may be significant, presently or in the
future, and the risks set forth below may affect the Company and the Trust to a
greater extent than indicated.
RISK FACTORS RELATING TO THE PREFERRED SECURITIES
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED
DEBENTURES
The obligations of the Company under the Guarantee issued for the
benefit of the holders of Preferred Securities and under the Subordinated
Debentures are unsecured and rank subordinate and junior in right of payment to
all Senior Debt, Subordinated Debt and Additional Senior Obligations of the
Company, whether now existing or hereafter incurred. At May 31, 1997, the
Company had no outstanding Senior Debt, Subordinated Debt or Additional Senior
Obligations. Because the Company is a holding company, the right of the Company
to participate in any distribution of assets of the Bank upon the Bank's
liquidation or reorganization or otherwise (and thus the ability of holders of
the Preferred Securities to benefit indirectly from such distribution) is
subject to the prior claims of creditors of the Bank, except to the extent that
the Company may itself be recognized as a creditor of the Bank. The Subordinated
Debentures, therefore, will be effectively subordinated to all existing and
future liabilities of the Bank and holders of Subordinated Debentures and
Preferred Securities should look only to the assets of the Company for payments
on the Subordinated Debentures. Neither the Indenture, the Guarantee nor the
Trust Agreement places any limitation on the amount of secured or unsecured
debt, including Senior Debt, Subordinated Debt and Additional Senior
Obligations, that may be incurred by the Company. See "Description of the
Guarantee--Status of the Guarantee" and "Description of the Subordinated
Debentures--Subordination."
The ability of the Trust to pay amounts due on the Preferred Securities
is solely dependent upon the Company making payments on the Subordinated
Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES; MARKET PRICE
CONSEQUENCES
The Company has the right under the Indenture, so long as no Debenture
Event of Default has occurred and is continuing, to defer the payment of
interest on the Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarters with respect to each Extension
Period; provided that no Extension Period may extend beyond the Stated Maturity
of the Subordinated Debentures. As a consequence of any such deferral, quarterly
Distributions on the Preferred Securities by the Trust will be deferred (and the
amount of Distributions to which holders of the Preferred Securities are
entitled will accumulate additional Distributions thereon at the rate of ____ %
per annum, compounded quarterly from the relevant payment date for such
Distributions) during any such Extension Period. During any such Extension
Period, the Company may not (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of the Company's capital stock, (ii) make any payment of principal, interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu with or junior in interest to the Subordinated
Debentures or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the Subordinated
Debentures (other than payments under the Guarantee), or (iii) redeem, purchase
or acquire less than all of the Subordinated Debentures or any of the Preferred
Securities. Prior to the termination of any such Extension Period, the Company
may further defer the payment of interest; provided, that no Extension Period
may exceed 20 consecutive quarters or extend
11
beyond the Stated Maturity of the Subordinated Debentures. Upon the termination
of any Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the annual rate of ______ % compounded
quarterly, to the extent permitted by applicable law), the Company may elect to
begin a new Extension Period, subject to the above requirements. Subject to the
foregoing, there is no limitation on the number of times that the Company may
elect to begin an Extension Period. See "Description of the Preferred
Securities--Distributions--Extension Period" and "Description of the
Subordinated Debentures--Option to Extend Interest Payment Period."
Should an Extension Period occur, each holder of Preferred Securities
will be required to accrue and recognize income (in the form of original issue
discount ("OID")) in respect of its pro rata share of the interest accruing on
the Subordinated Debentures held by the Trust for United States federal income
tax purposes. A holder of Preferred Securities must, as a result, include such
income in gross income for United States federal income tax purposes in advance
of the receipt of cash, and will not receive the cash related to such income
from the Trust if the holder disposes of the Preferred Securities prior to the
record date for the payment of the related Distributions. See "Certain Federal
Income Tax Consequences--Potential Extension of Interest Payment Period and
Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures. Should the Company elect, however, to exercise such
right in the future, the market price of the Preferred Securities is likely to
be adversely affected. A holder that disposes of its Preferred Securities during
an Extension Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Preferred Securities. As a
result of the existence of the Company's right to defer interest payments, the
market price of the Preferred Securities may be more volatile than the market
prices of other securities on which original issue discount accrues that are not
subject to such optional deferrals.
TAX EVENT, CAPITAL TREATMENT EVENT OR INVESTMENT COMPANY EVENT; REDEMPTION
The Company has the right to redeem the Subordinated Debentures in whole
(but not in part) within 180 days following the occurrence of a Tax Event, a
Capital Treatment Event or an Investment Company Event (whether occurring before
or after June 30, 2002), and, therefore, cause a mandatory redemption of the
Preferred Securities. The exercise of such right is subject to the Company
having received prior approval of the Federal Reserve to do so if then required
under applicable capital guidelines or policies of the Federal Reserve.
"Tax Event" means the receipt by the Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the date
of such opinion, subject to United States federal income tax with respect to
income received or accrued on the Subordinated Debentures, (ii) interest payable
by the Company on the Subordinated Debentures is not, or, within 90 days of such
opinion, will not be, deductible by the Company, in whole or in part, for United
States federal income tax purposes, or (iii) the Trust is, or will be within 90
days of the date of the opinion, subject to more than a de minimis amount of
other taxes, duties or other governmental charges. The Company must request and
receive an opinion with regard to such matters within a reasonable period of
time after it becomes aware of the possible occurrence of any of the events
described in clauses (i) through (iii) above. See "--Risk Factors Relating to
the Preferred Securities--Proposed Tax Legislation" for a discussion of certain
legislative proposals that, if adopted, could give rise to a Tax Event, which
may permit the Company to cause a redemption of the Preferred Securities prior
to June 30, 2002.
"Capital Treatment Event" means the receipt by the Trust of an opinion
of counsel experienced in such matters to the effect that, as a result of any
amendment to or any change (including any announced prospective change) in the
laws (or any regulations thereunder) of the United States or any political
subdivision thereof or
12
therein, or as a result of any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or which proposed change, pronouncement or decision is
announced on or after the date of issuance of the Preferred Securities under the
Trust Agreement, there is more than an insubstantial risk of impairment of the
Company's ability to treat the aggregate Liquidation Amount of the Preferred
Securities (or any substantial portion thereof) as "Tier 1 Capital" (or the then
equivalent thereof) for purposes of the capital adequacy guidelines of the
Federal Reserve, as then applicable to the Company; provided, however, that the
inability of the Company to treat all or any portion of the Liquidation Amount
of the Preferred Securities as Tier 1 Capital shall not constitute the basis for
a Capital Treatment Event if such inability results from the Company having
cumulative preferred capital in excess of the amount which may qualify for
treatment as Tier 1 Capital under applicable capital adequacy guidelines of the
Federal Reserve.
"Investment Company Event" means the receipt by the Trust of an opinion
of counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, the Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which change
becomes effective on or after the date of original issuance of the Preferred
Securities.
SHORTENING OR EXTENSION OF STATED MATURITY OF SUBORDINATED DEBENTURES
The Company has the right, at any time, to shorten the maturity of the
Subordinated Debentures to a date not earlier than June 30, 2002. The exercise
of such right is subject to the Company having received prior approval of the
Federal Reserve if then required under applicable capital guidelines or policies
of the Federal Reserve. The Company also has the right to extend the maturity of
the Subordinated Debentures (whether or not the Trust is dissolved and the
Subordinated Debentures are distributed to holders of the Preferred Securities)
to a date no later than June 30, 2036, the 39th anniversary of the initial
issuance of the Preferred Securities. Such right may only be exercised, however,
if at the time such election is made and at the time of such extension (i) the
Company is not in bankruptcy, otherwise insolvent or in liquidation, (ii) the
Company is not in default in the payment of any interest or principal on the
Subordinated Debentures, (iii) the Trust is not in arrears on payments of
Distributions on the Preferred Securities and no deferred Distributions are
accumulated, and (iv) the Company has a Senior Debt rating of investment grade.
See "Description of the Subordinated Debentures--General."
RIGHTS UNDER THE GUARANTEE
The Guarantee guarantees to the holders of the Preferred Securities, to
the extent not paid by the Trust, (i) any accrued and unpaid Distributions
required to be paid on the Preferred Securities, to the extent that the Trust
has funds available therefor at such time, (ii) the Redemption Price (as defined
herein) with respect to any Preferred Securities called for redemption, to the
extent that the Trust has funds available therefor at such time, and (iii) upon
a voluntary or involuntary dissolution, winding-up or liquidation of the Trust
(other than in connection with the distribution of Subordinated Debentures to
the holders of Preferred Securities or a redemption of all of the Preferred
Securities), the lesser of (a) the amount of the Liquidation Distribution (as
defined herein), to the extent the Trust has funds available therefor at such
time, and (b) the amount of assets of the Trust remaining available for
distribution to holders of the Preferred Securities in liquidation of the Trust.
The holders of not less than 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 the
Guarantee or to direct the exercise of any trust power conferred upon the
Guarantee Trustee under the Guarantee. Any holder of the Preferred Securities
may institute a legal proceeding directly against the Company to enforce its
rights under the Guarantee without first instituting a legal proceeding against
the Trust, the Guarantee Trustee or any other Person (as defined in the
Guarantee). If the Company were to default on its obligation to pay amounts
payable under the Subordinated Debentures, the Trust would lack funds for the
payment of Distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of Preferred Securities
would not be able to rely upon the Guarantee for such amounts. In the event,
however, that a Debenture Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest on or
principal of the Subordinated Debentures on the
13
payment date on which such payment is due and payable, then a holder of
Preferred Securities may institute a legal proceeding directly against the
Company for enforcement of payment to such holder of the principal of or
interest on such Subordinated Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Preferred Securities of such holder (a
"Direct Action"). The exercise by the Company of its right, as described herein,
to defer the payment of interest on the Subordinated Debentures does not
constitute a Debenture Event of Default. In connection with such Direct Action,
the Company will have a right of set-off under the Indenture to the extent of
any payment made by the Company to such holder of Preferred Securities in the
Direct Action. Except as described herein, holders of Preferred Securities will
not be able to exercise directly any other remedy available to the holders of
the Subordinated Debentures or assert directly any other rights in respect of
the Subordinated Debentures. See "Description of the Subordinated
Debentures--Enforcement of Certain Rights by Holders of Preferred Securities,"
"Description of the Subordinated Debentures--Debenture Events of Default" and
"Description of the Guarantee." The Trust Agreement provides that each holder of
Preferred Securities by acceptance thereof agrees to the provisions of the
Guarantee and the Indenture.
NO VOTING RIGHTS EXCEPT IN LIMITED CIRCUMSTANCES
Holders of Preferred Securities will have no voting rights except in
limited circumstances relating only to the modification of the Preferred
Securities and the exercise of the rights of the Trust as holder of the
Subordinated Debentures and the Guarantee. Holders of Preferred Securities will
not be entitled to vote to appoint, remove or replace the Property Trustee or
the Delaware Trustee, as such voting rights are vested exclusively in the holder
of the Common Securities (except upon the occurrence of certain events described
herein). The Property Trustee, the Administrative Trustees and the Company may
amend the Trust Agreement without the consent of holders of Preferred Securities
to ensure that the Trust will be classified for United States federal income tax
purposes as a grantor trust even if such action adversely affects the interests
of such holders. See "Description of the Preferred Securities--Voting Rights;
Amendment of Trust Agreement" and "Description of the Preferred
Securities--Removal of the Trust Trustees."
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed certain tax law changes
that would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "1996 Proposed Legislation") if such debt obligations have a maximum
term in excess of 20 years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. On March 29, 1996, Senate Finance
Committee Chairman William V. Roth, Jr. and House Ways and Means Committee
Chairman Bill Archer issued a joint statement (the "Joint Statement") indicating
their intent that certain legislative proposals initiated by the Clinton
administration, including the 1996 Proposed Legislation, that may be adopted by
either of the tax-writing committees of Congress, would have an effective date
that is no earlier than the date of "appropriate Congressional action." In
addition, subsequent to the publication of the Joint Statement, Senator Daniel
Patrick Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote
letters to Treasury Department officials concurring with the views expressed in
the Joint Statement. Neither the 1996 Proposed Legislation nor similar
legislation was enacted during the 104th Congress. On February 6, 1997,
President Clinton proposed in the administration's fiscal year 1998 budget
certain tax law changes (the "1997 Proposed Legislation") that would, among
other things, generally deny corporate issuers a deduction for interest or OID
in respect of certain debt obligations if such debt obligations have a maximum
term in excess of 15 years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. The 1997 Proposed Legislation also
contains a provision that would deny a deduction to corporate issuers for
interest or OID with respect to debt instruments that have a maximum term of
more than 40 years (including rights to extend, renew or relend), or are payable
in stock of the issuer or a related party. The U.S. Treasury Department's
summary of the 1997 Proposed Legislation states that the above provisions
regarding the deduction of interest would generally be effective for instruments
issued on or after the date of first Congressional committee action with respect
to the 1997 Proposed Legislation. The House Ways and Means Committee began a
full committee hearing on the President's fiscal 1998 budget on February 11,
1997. There can be no assurance that the effective date guidance in the 1997
Proposed Legislation will be adopted if the proposed change to the tax law is
enacted, or that other legislation enacted after the date hereof will not
otherwise adversely affect the ability of the Company to deduct the interest
payable on the
14
Subordinated Debentures. Consequently, there can be no assurance that a Tax
Event will not occur. A Tax Event would permit the Company, upon approval of the
Federal Reserve if then required under applicable capital guidelines or policies
of the Federal Reserve, to cause a redemption of the Preferred Securities
before, as well as after, June 30, 2002. See "Description of the Subordinated
Debentures--Redemption or Exchange" and "Description of the Preferred
Securities--Redemption or Exchange--Tax Event Redemption, Capital Treatment
Event Redemption or Investment Company Event Redemption" and "Certain Federal
Income Tax Consequences--Effect of Proposed Changes in Tax Laws."
REDEMPTION; EXCHANGE OF PREFERRED SECURITIES FOR SUBORDINATED DEBENTURES
The Company has the right at any time to dissolve the Trust and cause
the Subordinated Debentures, after satisfaction of liabilities to creditors of
the Trust, to be distributed to the holders of the Preferred Securities in
exchange therefor in liquidation of the Trust. The exercise of such right is
subject to the Company having received prior approval of the Federal Reserve if
then required under applicable capital guidelines or policies of the Federal
Reserve. The Company will have the right, in certain circumstances, to redeem
the Subordinated Debentures in whole or in part, in lieu of a distribution of
the Subordinated Debentures by the Trust, in which event the Trust will redeem
the Trust Securities on a pro rata basis to the same extent as the Subordinated
Debentures are redeemed by the Company. Any such distribution or redemption
prior to the Stated Maturity will be subject to prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies of the
Federal Reserve. See "Description of the Preferred Securities--Redemption or
Exchange--Tax Event Redemption, Capital Treatment Event Redemption or Investment
Company Event Redemption."
Under current United States federal income tax law, a distribution of
Subordinated Debentures upon the dissolution of the Trust would not be a taxable
event to holders of the Preferred Securities. If, however, the Trust is
characterized as an association taxable as a corporation at the time of the
dissolution of the Trust, the distribution of the Subordinated Debentures may
constitute a taxable event to holders of Preferred Securities. Moreover, upon
occurrence of a Tax Event, a dissolution of the Trust in which holders of the
Preferred Securities receive cash may be a taxable event to such holders. See
"Certain Federal Income Tax Consequences--Receipt of Subordinated Debentures or
Cash Upon Liquidation of the Trust."
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities upon a dissolution or liquidation of the Trust. The
Preferred Securities or the Subordinated Debentures may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Subordinated
Debentures, prospective purchasers of Preferred Securities are also making an
investment decision with regard to the Subordinated Debentures and should
carefully review all the information regarding the Subordinated Debentures
contained herein.
If the Subordinated Debentures are distributed to the holders of
Preferred Securities upon the liquidation of the Trust, the Company will use its
best efforts to list the Subordinated Debentures on The Nasdaq Stock Market's
National Market or such stock exchanges, if any, on which the Preferred
Securities are then listed.
TRADING PRICE; ABSENCE OF PRIOR PUBLIC MARKET FOR THE PREFERRED SECURITIES
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest (or OID if the Subordinated
Debentures are treated as having been issued, or reissued, with OID) with
respect to the underlying Subordinated Debentures. A holder who disposes of his
Preferred Securities will be required to include in ordinary income (i) any
portion of the amount realized that is attributable to such accrued but unpaid
interest to the extent not previously included in income, or (ii) any amount of
OID, in either case, that has accrued on his pro rata share of the underlying
Subordinated Debentures during the taxable year of sale through the date of
disposition. Any such income inclusion will increase the holder's adjusted tax
basis in his Preferred Securities disposed of. To the extent that the amount
realized in the sale is less than the holder's adjusted tax basis, a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences--Disposition of Preferred
Securities."
15
There is no current public market for the Preferred Securities. Although
application has been made to approve the Preferred Securities for quotation on
The Nasdaq Stock Market's National Market, there can be no assurance that an
active public market will develop for the Preferred Securities or that, if such
market develops, the market price will equal or exceed the public offering price
set forth on the cover page of this Prospectus. The public offering price for
the Preferred Securities has been determined through negotiations between the
Company and the Underwriters. Prices for the Preferred Securities will be
determined in the marketplace and may be influenced by many factors, including
prevailing interest rates, the liquidity of the market for the Preferred
Securities, investor perceptions of the Company and general industry and
economic conditions.
PREFERRED SECURITIES ARE NOT INSURED
The Preferred Securities are not insured by the Bank Insurance Fund (the
"BIF") or the Savings Association Insurance Fund (the "SAIF") of the Federal
Deposit Insurance Corporation (the "FDIC") or by any other governmental agency.
RISK FACTORS RELATING TO THE COMPANY
CONTINUED WEAKNESS IN LOCAL ECONOMY
Prevailing economic conditions, as well as government policies and
regulations concerning, among other things, monetary and fiscal affairs,
significantly affect the operations of financial institutions such as the Bank.
The New England region of the United States, including southeastern
Massachusetts (the Bank's primary market area) experienced a significant
economic decline beginning in 1988. This decline adversely affected employment,
the real estate markets and the banking industry in the Bank's market area.
Although economic conditions in New England have since stabilized, the local
economy in the Bank's market area continues to display evidence of weakness. Any
deterioration of economic conditions or real estate markets in the Bank's market
area could adversely affect the financial condition and results of operations of
the Bank in the future.
LENDING RISKS--CREDIT QUALITY
A central focus of the Company's and the Bank's strategy is the
continued development and growth of a diversified loan portfolio, with emphasis
on commercial, consumer and real estate loans made to borrowers within the
Bank's market areas. Certain risks are inherent in the lending function,
including a borrower's inability to pay, insufficient collateral coverage and
changes in interest rates. Repayment risk on commercial loans is most
significantly affected by changing economic conditions in a particular
geographical area, business or industry which could impair future operating
performance. Risks associated with real estate loans and general business loans
include changes in general economic conditions which may affect the borrower's
ability to repay as well as underlying collateral values. Installment and other
consumer loans are subject to repayment risk, which the Company believes is
mitigated by the diverse portfolio of such loans and the relatively low average
balances outstanding on individual extensions of credit.
Multi-family and commercial real estate loans are generally viewed in
the banking community as exposing the lender to greater credit risk than 1-4
family residential loans and typically involve higher loan principal amounts. At
March 31, 1997, the Bank's multi-family and commercial real estate portfolios
totaled $56.1 million, or 21.1% of total loans and loans held for sale. Of this
amount, $11.3 million, or 20.2% consisted of multi-family loans and $44.8
million, or 79.8%, consisted of commercial real estate loans.
The Bank currently originates loans secured by commercial real estate
properties. The Bank attempts to offset the risks associated with commercial
real estate lending by primarily lending to individuals who have proven
management experience and who will be actively involved in the management of the
property, and by making such loans with lower loan-to-value ratios than 1-4
family loans. Economic events and government regulations, which are outside the
control of the borrower or lender, could affect the value of the security for
such loans or the future cash flow of the affected properties.
16
At March 31, 1997, the Bank had $592,000 in non-performing commercial
real estate loans and $1.6 million in non-performing multi-family residential
loans. For the three months ended March 31, 1997, the Bank experienced
charge-offs of $9,000 and $133,000 on commercial real estate mortgages and
multi-family residential mortgages, respectively.
At March 31, 1997, 69% of the Bank's total loans and loans held for sale
were secured by 1-4 family residential mortgages, of which 64% were adjustable
rate mortgages ("ARMs"). Generally, ARMs pose credit risks different from the
risks inherent in fixed-rate loans because when interest rates rise the
borrower's payments rise, thereby increasing the potential for default. However,
long-term fixed-rate mortgages expose the Bank to higher interest-rate risk.
ECONOMIC CONDITIONS AND MONETARY POLICIES
Conditions beyond the Company's control may have a significant impact on
changes in net interest income from one period to another. Examples of such
conditions could include: (i) the strength of credit demands by customers; (ii)
fiscal and debt management policies of the federal government, including changes
in tax laws; (iii) the Federal Reserve's monetary policy, including the
percentage of deposits that must be held in the form of non-earning cash
reserves; (iv) the introduction and growth of new investment instruments and
transaction accounts by non-bank financial competitors; and (v) changes in rules
and regulations governing the payment of interest on deposit accounts.
SENSITIVITY TO FLUCTUATIONS IN INTEREST RATES
The Company's profitability, like that of most similarly situated
financial institutions, is dependent to a large extent upon the Bank's net
interest income, which is the difference between its interest income on
interest-earning assets, such as loans and investments, and its interest expense
on interest-bearing liabilities, such as deposits and borrowings. Accordingly,
the Company's results of operations and financial condition are largely
dependent on movements in market interest rates and its ability to manage its
assets in response to such movements. The difference between the amount of the
total interest-earning assets and interest-bearing liabilities which reprice
within a given time period could have a negative effect on the Bank's net
interest income depending on whether such difference was positive or negative
and the direction of movement of interest rates.
Increases in interest rates may reduce demand for loans and, thus, the
amount of loan and commitment fees. In addition, fluctuations in interest rates
may also result in disintermediation, which is the flow of funds away from
depository institutions into direct investments which pay a higher rate of
return, and may affect the value of the Company's investment securities and
other interest earning assets. Given that the Bank's assets consist of a
substantial number of loans with interest rates which change in accordance with
changes in prevailing market rates, if interest rates rise sharply, many of the
Bank's borrowers would be required to make higher interest payments on their
loans. Thus, increases in interest rates may cause the Bank to experience an
increase in delinquent loans and defaults to the extent that borrowers are
unable to meet their increased debt servicing obligations.
Interest rate changes may also affect the profitability of the Company's
mortgage banking operations by dampening loan demand. However, the Company
mitigates interest rate risk by selling all mortgage loan origination production
"servicing released," thus avoiding writedown of mortgage servicing assets that
may occur as a by-product of changes in the interest rate environment.
Additionally, the Company commits all mortgage loan originations for sale prior
to funding, thus avoiding mark to market writedowns on held for sale loan
portfolios. Finally, the Company manages its asset/liability position at the
Bank to perform better in a rising interest rate environment, which partially
offsets the mortgage subsidiary's tendency to perform better in a declining
interest rate environment.
ALLOWANCE FOR LOAN LOSSES
The Company believes that the Bank has established an adequate allowance
for loan losses in accordance with generally accepted accounting principles.
However, future additions to the allowance in the form of the provision for loan
losses may be necessary due to changes in economic conditions and growth of the
Bank's loan
17
portfolio. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Bank's allowance for loan
losses. An increase in the Bank's provision for loan losses would negatively
affect the Company's earnings.
LEGISLATIVE AND REGULATORY DEVELOPMENTS
The financial institutions industry is subject to significant regulation
which has materially affected the financial institutions industry in the past
and will do so in the future. Such regulations, which affect the Company on a
daily basis, may be changed at any time, and the interpretation of the relevant
law and regulations are also subject to change by the authorities who examine
the Company and the Bank and interpret those laws and regulations. There can be
no assurance that any present or future changes in the laws or regulations or in
their interpretation will not adversely and materially affect the Company.
COMPETITION
The Bank faces significant competition both in generating loans and in
attracting deposits. The southeastern Massachusetts area is a highly competitive
market. The Bank faces direct competition from a significant number of financial
institutions operating in its market area, many with a state-wide or regional
presence and, in some cases, a national presence. Many of these financial
institutions are significantly larger and have greater financial resources than
the Bank. The Bank's competition for loans comes principally from commercial
banks, savings banks, mortgage banking companies, credit unions and insurance
companies. Its most direct competition for deposits has historically come from
credit unions located in the Bank's market area, which have been able to offer
higher deposit rates due to their lack of federal and state taxation. The Bank
also faces competition for deposits from savings and commercial banks. In
addition, the Bank faces increasing competition for deposits from non-bank
institutions such as brokerage firms and insurance companies in such instruments
as short-term money market funds, corporate and government securities funds,
mutual funds and annuities. Competition may also increase as a result of the
lifting of restrictions on the interstate operations of financial institutions.
18
PEOPLE'S BANCSHARES, INC.
People's Bancshares, Inc. (the "Company") is a one-bank holding company
headquarted in New Bedford, Massachusetts providing commercial and consumer
banking services through its subsidiary, People's Savings Bank of Brockton (the
"Bank"). The Bank is engaged principally in the business of attracting deposits
from individuals, business and industry, and investing those funds in
residential and commercial mortgages, consumer, commercial and construction
loans and investments, primarily mortgage-backed securities.
The Company has recently expanded its market presence in Southeastern
Massachusetts through acquisitions of branches of other financial institutions.
In March 1995, the Bank purchased the assets of Minuteman Funding Company, a
mortgage broker located in Andover, Massachusetts, and transferred the acquired
assets to People's Mortgage Company. In May 1995, the Bank merged with the Bank
of Taunton, A Co-operative Bank, with the Bank as the surviving entity. In the
Bank of Taunton acquisition, the Bank acquired total deposits of approximately
$17.0 million at the time of the acquisition and two branch offices of the Bank
of Taunton located in Taunton and East Taunton, Massachusetts. In July 1995, the
Bank assumed approximately $9.7 million in deposits from Haymarket Co-operative
Bank and reallocated the deposits to one of the Bank's existing branches in
Brockton. In September 1995, the Bank acquired certain assets and assumed
approximately $13.0 million of deposits of the Mansfield, Massachusetts branch
of Bank of Boston.
In March 1996, the Bank completed the purchase of certain loans and
other assets and the assumption of certain deposit and other liabilities of one
branch of Fleet Bank of Massachusetts, National Association ("Fleet") and four
branches of Shawmut Bank, National Association ("Shawmut," and collectively with
Fleet, "Fleet/Shawmut"). At the closing of the Fleet/Shawmut acquisitions, the
Bank assumed deposits totaling $144.7 million and acquired certain loans of
Fleet/Shawmut with an aggregate face value of approximately $113.7 million. The
Bank also acquired the real property owned or leased by Fleet and Shawmut in
connection with the operation of the branches and related automated teller
machines, furniture, equipment, and other fixed operating assets, for a total
purchase price of approximately $1.8 million.
The Bank has seven wholly owned subsidiaries. People's Mortgage
Corporation, which was organized in March 1995, acts as the mortgage brokerage
subsidiary of the Bank. PSB Security Corporation I, II, and III, organized in
March 1996, are "security corporations" for Massachusetts tax purposes and enjoy
a more favorable tax rate than the Bank on income derived from securities they
hold. Currently, only PSB Security Corporation I is active. The remaining
subsidiaries of the Bank are primarily engaged in the management and sale of
foreclosed real estate.
The principal executive office of the Company is located at 545 Pleasant
Street, New Bedford, Massachusetts 02740, and its telephone number is (508)
991-2601.
PEOPLE'S BANCSHARES CAPITAL TRUST
The Trust is a statutory business trust formed under Delaware law
pursuant to (i) a trust agreement, dated as of June 6, 1997, executed by the
Company, as depositor, and the trustees of the Trust (together with the Property
Trustee, the "Trustees"), and (ii) a certificate of trust filed with the
Secretary of State of the State of Delaware on June 6, 1997. The initial trust
agreement will be amended and restated in its entirety (as so amended and
restated, the "Trust Agreement") substantially in the form filed as an exhibit
to the Registration Statement of which this Prospectus forms a part. The Trust
Agreement will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). Upon issuance of the Preferred
Securities, the purchasers thereof will own all of the Preferred Securities. The
Company will acquire all of the Common Securities, which will represent an
aggregate liquidation amount equal to at least 3% of the total capital of the
Trust. The Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Preferred Securities, except that upon the occurrence
and during the continuance of an Event of Default (as defined herein) under the
Trust Agreement resulting from a Debenture Event of Default, the rights of the
Company as holder of the Common Securities to payment in respect of
Distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the Preferred Securities. See
"Description of the Preferred Securities--Subordination of Common Securities."
The Trust exists for the exclusive purposes of (i) issuing the Trust Securities
representing undivided beneficial interests in the assets of
19
the Trust, (ii) investing the gross proceeds of the Trust Securities in the
Subordinated Debentures issued by the Company, and (iii) engaging in only those
other activities necessary, advisable, or incidental thereto. The Subordinated
Debentures and payments thereunder will be the only assets of the Trust and
payments under the Subordinated Debentures will be the only revenue of the
Trust. The Trust has a term of 55 years, but may dissolve earlier as provided
in the Trust Agreement. The principal executive office of the Trust is c/o
People's Bancshares, Inc., 545 Pleasant Street, New Bedford, Massachusetts
02740, and its telephone number is (508) 991-2601.
The number of Trustees will, pursuant to the Trust Agreement, initially
be five. Three of the Trustees (the "Administrative Trustees") will be persons
who are employees or officers of, or who are affiliated with, the Company. The
fourth trustee will be a financial institution that is unaffiliated with the
Company, which trustee will serve as institutional trustee under the Trust
Agreement and as indenture trustee for the purposes of compliance with the
provisions of the Trust Indenture Act (the "Property Trustee"). State Street
Bank and Trust Company, a state chartered trust company organized under the laws
of the Commonwealth of Massachusetts, will be the Property Trustee until removed
or replaced by the holder of the Common Securities. For purposes of compliance
with the provisions of the Trust Indenture Act, State Street Bank and Trust
Company will also act as trustee (the "Guarantee Trustee") under the Guarantee
and as Debenture Trustee (as defined herein) under the Indenture. The fifth
trustee will be an entity that maintains its principal place of business in the
State of Delaware (the "Delaware Trustee"). Wilmington Trust Company, a Delaware
chartered trust company, will act as Delaware Trustee.
The Property Trustee will hold title to the Subordinated Debentures for
the benefit of the holders of the Trust Securities and in such capacity will
have the power to exercise all rights, powers and privileges under the
Indenture. The Property Trustee will also maintain exclusive control of a
segregated non-interest-bearing bank account (the "Property Account") to hold
all payments made in respect of the Subordinated Debentures for the benefit of
the holders of the Trust Securities. The Property Trustee will make payments of
Distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities out of funds from the Property Account. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Preferred Securities. The Company, as the holder of all the Common Securities,
will have the right to appoint, remove or replace any Trustee and to increase or
decrease the number of Trustees. The Company will pay all fees and expenses
related to the Trust and the offering of the Trust Securities.
The rights of the holders of the Preferred Securities, including
economic rights, rights to information and voting rights, are set forth in the
Trust Agreement, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
USE OF PROCEEDS
The Trust will use the gross proceeds from the sale of the Preferred
Securities to purchase Subordinated Debentures of the Company. The Company
intends to use the net proceeds of the sale of the Subordinated Debentures for
general corporate purposes, including the repurchase of outstanding equity
securities of the Company, contributions to the Bank to fund its operations and
the financing of one or more future acquisitions by the Company if and when
suitable opportunities arise. Initially, the net proceeds may be used to make
investments in short-term investment securities pending its use for the purposes
described above.
On October 21, 1996, the Federal Reserve approved the use of certain
cumulative preferred stock instruments such as the Preferred Securities as Tier
1 capital for bank holding companies such as the Company. The Company has
elected to issue the Preferred Securities because the Company expects the
Preferred Securities to qualify as Tier 1 capital and the Distributions payable
on the Preferred Securities to be a tax deductible expense of the Company. The
Company expects that Preferred Securities having an aggregate Liquidation Amount
of approximately $10.6 million will be eligible to qualify as Tier 1 capital
under the capital guidelines of the Federal Reserve. Preferred Securities
representing an aggregate Liquidation Amount in excess of that amount are
expected to be treated as Tier 2 capital until all or some of that excess is
eligible to qualify as Tier 1 capital under the capital guidelines of the
Federal Reserve.
20
MARKET FOR THE PREFERRED SECURITIES
Application has been made to have the Preferred Securities approved for
quotation on The Nasdaq Stock Market's National Market under the symbol of
PBKBP. Although the Underwriters have informed the Company that they presently
intend to make a market in the Preferred Securities, there can be no assurance
that an active and liquid trading market will develop, or, if developed, that
such a market will continue. The offering price and distribution rate have been
determined by negotiations among representatives of the Company and the
Underwriters, and the offering price of the Preferred Securities may not be
indicative of the market price following the offering. See "Underwriting."
ACCOUNTING TREATMENT
The Trust will be treated, for financial reporting purposes, as a
subsidiary of the Company and, accordingly, the accounts of the Trust will be
included in the consolidated financial statements of the Company. The Preferred
Securities will be presented as a separate category of long-term debt in the
consolidated balance sheet of the Company under the caption "Guaranteed
Preferred Beneficial Interests in the Company's Subordinated Debentures," and
appropriate disclosures about the Preferred Securities, the Guarantee and the
Subordinated Debentures will be included in the notes to consolidated financial
statements. The Company will record Distributions payable on the Preferred
Securities as an expense in the consolidated statements of income for financial
reporting purposes.
All future reports of the Company filed under the Exchange Act will (a)
present the Trust Securities issued by the Trust on the balance sheet as a
separate category of long-term debt item entitled "Guaranteed preferred
beneficial interests in the Company's subordinated debentures," (b) include in a
footnote to the financial statements disclosure that the sole assets of the
Trust are the Subordinated Debentures (including the outstanding principal
amount, interest rate and maturity date of such Subordinated Debentures), and
(c) include in an audited footnote to the financial statements disclosure that
the Company owns all of the Common Securities of the Trust, that the sole assets
of the Trust are the Subordinated Debentures, and that the back-up obligations,
in the aggregate, constitute a full and unconditional guarantee by the Company
of the obligations of the Trust under the Preferred Securities.
21
CAPITALIZATION
The following table sets forth (i) the consolidated capitalization of
the Company at March 31, 1997 and (ii) the consolidated capitalization of the
Company giving effect to the issuance of the Preferred Securities hereby offered
by the Trust and receipt by the Company of the net proceeds from the
corresponding sale of the Subordinated Debentures to the Trust, as if the sale
of the Preferred Securities had been consummated on March 31, 1997 and assuming
the Underwriters' over-allotment option was not exercised.
------------------
<TABLE>
<CAPTION>
MARCH 31, 1997
--------------------
AS
ACTUAL ADJUSTED
(DOLLARS IN THOUSANDS)
LONG-TERM DEBT:
<S> <C> <C>
Guaranteed preferred beneficial interests in the Company's subordinated
debentures:............................................................... $ - $ 12,000
STOCKHOLDERS' EQUITY:
Serial preferred stock par value $.10 per share; 10,000,000 shares authorized,
no shares issued and outstanding, actual and as adjusted................ -
Common stock, par value $.10 per share; shares 20,000,000 authorized;
3,592,170 shares issued and outstanding, actual and as adjusted......... 359 359
Additional paid-in capital.................................................... 23,119 23,119
Retained earnings............................................................. 9,547 9,547
Net unrealized loss on securities available for sale, after tax effects... (2,235) (2,235)
------
Total stockholders' equity........................................... 30,790 30,790
------ ------
Total capitalization................................................. $ 30,790 $ 42,790
======== ========
CAPITAL RATIOS:
Stockholders' equity to total assets.......................................... 5.61% 5.49%
Leverage ratio(2)(3)(4)....................................................... 5.89% 7.68%
Risk-based capital ratios(3)(4):
Tier 1 capital to risk-weighted assets......................... 12.70% 16.93%
Total risk-based capital to risk-weighted assets............... 13.95% 18.76%
</TABLE>
- -------------------------
(1) In connection with the issuance of the guaranteed preferred beneficial
interests in the Company's Subordinated Debentures, the Company estimates
it will incur expenses of $_________ (including Underwriters' compensation
of $_________). The Subordinated Debentures will mature on June 30, 2027,
which date may be, if certain conditions are met, (a) shortened to a date
not earlier than June 30, 2002, or (b) extended to a date not later than
June 30, 2036.
(2) The leverage ratio is Tier 1 capital divided by average quarterly assets,
after deducting intangible assets and net deferred tax assets in excess of
regulatory maximum limits.
(3) The capital ratios, as adjusted, are computed including the total estimated
net proceeds from the sale of the Preferred Securities, in a manner
consistent with Federal Reserve guidelines.
(4) Federal Reserve guidelines for calculation of Tier 1 capital to
risk-weighted assets limit the amount of cumulative preferred stock and
securities similar to the Preferred Securities which can be included in
Tier 1 capital to 25% of other Tier 1 capital.
22
DESCRIPTION OF PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Trust Agreement. The Trust Agreement will be qualified as an indenture under the
Trust Indenture Act. The Property Trustee, State Street Bank and Trust Company,
will act as indenture trustee for the Preferred Securities under the Trust
Agreement for purposes of complying with the provisions of the Trust Indenture
Act. The terms of the Preferred Securities will include those stated in the
Trust Agreement and those made part of the Trust Agreement by the Trust
Indenture Act. The following summary of the material terms and provisions of the
Preferred Securities and the Trust Agreement does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the Trust
Agreement and the Trust Indenture Act. Wherever particular defined terms of the
Trust Agreement are referred to, but not defined herein, such defined terms are
incorporated herein by reference. The form of the Trust Agreement has been filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part.
GENERAL
Pursuant to the terms of the Trust Agreement, the Trustees, on behalf of
the Trust, will issue the Trust Securities. All of the Common Securities will be
owned by the Company. The Preferred Securities will represent preferred
undivided beneficial interests in the assets of the Trust and the holders
thereof will be entitled to a preference over the Common Securities in certain
circumstances with respect to Distributions and amounts payable on redemption or
liquidation, as well as other benefits as described in the Trust Agreement. The
Trust Agreement does not permit the issuance by the Trust of any securities
other than the Trust Securities or the incurrence of any indebtedness by the
Trust.
The Preferred Securities will rank pari passu, and payments will be made
thereon pro rata with the Common Securities, except as described under
"--Subordination of Common Securities." Legal title to the Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Trust Securities. The Guarantee executed by the Company 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 payment of Distributions or amounts payable on redemption or
liquidation of such Preferred Securities when the Trust does not have funds on
hand available to make such payments. State Street Bank and Trust Company, as
Guarantee Trustee, will hold the Guarantee for the benefit of the holders of the
Preferred Securities. See "Description of the Guarantee."
DISTRIBUTIONS
Payment of Distributions. Distributions on each Preferred Security will
be payable at the annual rate of _______ % of the stated Liquidation Amount of
$10, payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, to the holders of the Preferred Securities on the
relevant record dates (each date on which Distributions are payable in
accordance with the foregoing, a "Distribution Date"). The record date will be
the 15th day of the month in which the relevant Distribution Date occurs.
Distributions will accumulate from June __, 1997, the date of original issuance.
The first Distribution Date for the Preferred Securities will be September 30,
1997. The amount of Distributions payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which Distributions are payable on the Preferred Securities is not a Business
Day, then payment of the Distributions payable on such date will be made on the
next succeeding day that is a Business Day (and without any additional
Distributions, interest or other payment in respect of any such delay) with the
same force and effect as if made on the date such payment was originally due and
payable. "Business Day" means any day other than a Saturday or a Sunday, a day
on which banking institutions in the City of New York are authorized or required
by law or executive order to remain closed or a day on which the corporate trust
office of the Property Trustee or the Debenture Trustee is closed for business.
Extension Period. The Company has the right under the Indenture, so long
as no Debenture Event of Default has occurred and is continuing, to defer the
payment of interest on the Subordinated Debentures at any time, or from time to
time (each, an "Extension Period"), which, if exercised, would defer quarterly
Distributions on the Preferred Securities during any such Extension Period.
Distributions to which holders of
23
the Preferred Securities are entitled will accumulate additional Distributions
thereon at the rate per annum of _________ % thereof, compounded quarterly from
the relevant Distribution Date. "Distributions," as used herein, includes any
such additional Distributions. The right to defer the payment of interest on the
Subordinated Debentures is limited, however, to a period, in each instance, not
exceeding 20 consecutive quarters and no Extension Period may extend beyond the
Stated Maturity of the Subordinated Debentures. During any such Extension
Period, the Company may not (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of the Company's capital stock, (ii) make any payment of principal, interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu with or junior in interest to the Subordinated
Debentures or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the Subordinated
Debentures (other than payments under the Guarantee), or (iii) redeem, purchase
or acquire less than all of the Subordinated Debentures or any of the Preferred
Securities. Prior to the termination of any such Extension Period, the Company
may further defer the payment of interest; provided, that such Extension Period
may not exceed 20 consecutive quarters or extend beyond the Stated Maturity of
the Subordinated Debentures. Upon the termination of any such Extension Period
and the payment of all amounts then due, the Company may elect to begin a new
Extension Period, subject to the above requirements. Subject to the foregoing,
there is no limitation on the number of times that the Company may elect to
begin an Extension Period.
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures.
Source of Distributions. The funds of the Trust available for
distribution to holders of its Preferred Securities will be limited to payments
under the Subordinated Debentures in which the Trust will invest the proceeds
from the issuance and sale of its Trust Securities. See "Description of the
Subordinated Debentures." Distributions will be paid through the Property
Trustee who will hold amounts received in respect of the Subordinated Debentures
in the Property Account for the benefit of the holders of the Trust Securities.
If the Company does not make interest payments on the Subordinated Debentures,
the Property Trustee will not have funds available to pay Distributions on the
Preferred Securities. The payment of Distributions (if and to the extent the
Trust has funds legally available for the payment of such Distributions and cash
sufficient to make such payments) is guaranteed by the Company. See "Description
of the Guarantee."
REDEMPTION OR EXCHANGE
General. The Subordinated Debentures will mature on June 30, 2027. The
Company will have the right to redeem the Subordinated Debentures (i) on or
after June 30, 2002, in whole at any time or in part from time to time, or (ii)
at any time, in whole (but not in part), within 180 days following the
occurrence of a Tax Event, a Capital Treatment Event or an Investment Company
Event, in each case subject to receipt of prior approval by the Federal Reserve
if then required under applicable capital guidelines or policies of the Federal
Reserve. The Company will not have the right to purchase the Subordinated
Debentures, in whole or in part, from the Trust until after June 30, 2002. See
"Description of the Subordinated Debentures--General."
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of any Subordinated Debentures, whether at Stated Maturity or upon earlier
redemption as provided in the Indenture, the proceeds from such repayment or
redemption will be applied by the Property Trustee to redeem a Like Amount (as
defined herein) of the Trust Securities, upon not less than 30 nor more than 60
days notice, at a redemption price (the "Redemption Price") equal to the
aggregate Liquidation Amount of such Trust Securities plus accrued but unpaid
Distributions thereon to the date of redemption (the "Redemption Date"). See
"Description of the Subordinated Debentures--Redemption or Exchange." If less
than all of the Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption will be
allocated to the redemption of the Trust Securities pro rata.
Distribution of Subordinated Debentures. Subject to the Company having
received prior approval of the Federal Reserve if so required under applicable
capital guidelines or policies of the Federal Reserve, the Company will have the
right at any time to dissolve the Trust and, after satisfaction of the
liabilities of creditors of the Trust as provided by applicable law, cause the
Subordinated Debentures to be
24
distributed to the holders of Trust Securities in liquidation of the Trust. See
"--Liquidation Distribution Upon Dissolution."
Tax Event Redemption, Capital Treatment Event Redemption or Investment
Company Event Redemption. If a Tax Event, a Capital Treatment Event or an
Investment Company Event in respect of the Trust Securities occurs and is
continuing, the Company has the right to redeem the Subordinated Debentures in
whole (but not in part) and thereby cause a mandatory redemption of such Trust
Securities in whole (but not in part) at the Redemption Price within 180 days
following the occurrence of such Tax Event, Capital Treatment Event or
Investment Company Event. In the event a Tax Event, a Capital Treatment Event or
an Investment Company Event in respect of the Trust Securities has occurred and
the Company does not elect to redeem the Subordinated Debentures and thereby
cause a mandatory redemption of such Trust Securities or to liquidate the Trust
and cause the Subordinated Debentures to be distributed to holders of such Trust
Securities in liquidation of the Trust as described below under "--Liquidation
Distribution Upon Dissolution," such Preferred Securities will remain
outstanding and Additional Interest (as defined herein) may be payable on the
Subordinated Debentures. "Additional Interest" means the additional amounts as
may be necessary in order that the amount of Distributions then due and payable
by the Trust on the outstanding Trust Securities 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.
"Like Amount" means (i) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to that portion
of the principal amount of Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, which will be used to pay the
Redemption Price of such Trust Securities, and (ii) with respect to a
distribution of Subordinated Debentures to holders of Trust Securities in
connection with a dissolution or liquidation of the Trust, Subordinated
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the holder to whom such Subordinated Debentures are
distributed. Each Subordinated Debenture distributed pursuant to clause (ii)
above will carry with it accumulated interest in an amount equal to the
accumulated and unpaid interest then due on such Subordinated Debenture.
"Liquidation Amount" means the stated amount of $10 per Trust Security.
After the liquidation date fixed for any distribution of Subordinated
Debentures for Preferred Securities (i) such Preferred Securities will no longer
be deemed to be outstanding, and (ii) any certificates representing Preferred
Securities will be deemed to represent the Subordinated Debentures having a
principal amount equal to the Liquidation Amount of such Preferred Securities,
and bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on the Preferred Securities until such certificates are
presented to the Administrative Trustees or their agent for transfer or
reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities if a dissolution and liquidation of the Trust were to
occur. The Preferred Securities that an investor may purchase, or the
Subordinated Debentures that an investor may receive on dissolution and
liquidation of the Trust, may, therefore, trade at a discount to the price that
the investor paid to purchase the Preferred Securities offered hereby.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date will be redeemed
at the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the 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 such Redemption Price. See "--Subordination of Common
Securities."
If the Trust gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, New York time, on the Redemption Date, to the
extent funds are available, the Property Trustee will irrevocably deposit with
the paying agent for the Preferred Securities funds sufficient to pay the
aggregate Redemption Price and will give the paying agent for the Preferred
Securities irrevocable instructions and authority to pay the
25
Redemption Price to the holders thereof upon surrender of their certificates
evidencing such Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Preferred
Securities called for redemption will be payable to the holders of such
Preferred Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption will have been given and funds deposited as
required, then upon the date of such deposit, all rights of the holders of such
Preferred Securities so called for redemption will cease, except the right of
the holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price, and such Preferred Securities will
cease to be outstanding. In the event that any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day which is a Business
Day (and without any additional Distribution, interest or other payment in
respect of any such delay) with the same force and effect as if made on such
date. In the event that payment of the Redemption Price in respect of Preferred
Securities called for redemption is improperly withheld or refused and not paid
either by the Trust, or by the Company pursuant to the Guarantee, Distributions
on such Preferred Securities will continue to accrue at the then applicable
rate, from the Redemption Date originally established by the Trust for such
Preferred Securities to the date such Redemption Price is actually paid, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price. See "Description of
the Guarantee."
Subject to applicable law (including, without limitation, United States
federal securities law), and, further provided that the Company does not and is
not continuing to exercise its right to defer interest payments on the
Subordinated Debentures, the Company or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Subordinated Debentures to holders of Preferred Securities will
be made to the applicable record holders thereof as they appear on the register
for the Preferred Securities on the relevant record date, which date will be the
date 15 days prior to the Redemption Date or liquidation date, as applicable.
If less than all of the Trust Securities are to be redeemed on a
Redemption Date, then the aggregate Liquidation Amount of such Trust Securities
to be redeemed will be allocated pro rata to the Trust Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed will be selected by the Property Trustee from the
outstanding Preferred Securities not previously called for redemption, by such
method as the Property Trustee deems fair and appropriate and which may provide
for the selection for redemption of portions (equal to $10 or an integral
multiple of $10 in excess thereof) of the Liquidation Amount of Preferred
Securities of a denomination larger than $10. The Property Trustee will promptly
notify the 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 thereof 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 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 at least 30 days but not more
than 60 days before the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address. Unless the Company defaults in payment of
the redemption price on the Subordinated Debentures, on and after the Redemption
Date interest will cease to accrue on such Subordinated Debentures or portions
thereof (and Distributions will cease to accrue on the related Preferred
Securities or portions thereof) called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price 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;
provided, however, that if on any Distribution Date or Redemption Date a
Debenture Event of Default has occurred and is continuing, no payment of any
Distribution on, or Redemption Price of, any of the Common Securities, and no
other payment on account of the redemption, liquidation or other acquisition of
such Common Securities, will be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the outstanding Preferred
Securities for all Distribution periods terminating on or prior
26
thereto, or in the case of payment of the Redemption Price the full amount of
such Redemption Price on all of the outstanding Preferred Securities then called
for redemption, will have been made or provided for, and all funds available to
the Property Trustee will first be applied to the payment in full in cash of all
Distributions on, or Redemption Price of, the Preferred Securities then due and
payable.
In the case of any Event of Default resulting from a Debenture Event of
Default, the Company as holder of the Common Securities will be deemed to have
waived any right to act with respect to any such Event of Default under the
Trust Agreement until the effect of all such Events of Default with respect to
the Preferred Securities have been cured, waived or otherwise eliminated. Until
any such Events of Default under the Trust Agreement with respect to the
Preferred Securities has been so cured, waived or otherwise eliminated, the
Property Trustee will act solely on behalf of the holders of the Preferred
Securities and not on behalf of the Company, as 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.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The Company will have the right at any time to dissolve the Trust and
cause the Subordinated Debentures, after satisfaction of liabilities to
creditors of the Trust, to be distributed to the holders of the Preferred
Securities. Such right is subject, however, to the Company having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve.
Pursuant to the Trust Agreement, the Trust will automatically dissolve
upon expiration of its term and will dissolve earlier on the first to occur of
(i) certain events of bankruptcy, dissolution or liquidation of the Company,
(ii) the Company, as depositor, giving written direction to the Property Trustee
to dissolve the Trust (which direction is optional and wholly within the
discretion of the Company, as depositor), (iii) redemption of all of the
Preferred Securities as described under "Description of the Preferred
Securities--Redemption or Exchange--Mandatory Redemption," or (iv) the entry of
an order for the dissolution of the Trust by a court of competent jurisdiction.
If an early dissolution occurs as described in clause (i), (ii) or (iv)
of the preceding paragraph, the Trust will be liquidated by the Trustees as
expeditiously as the Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, to the holders of such Trust Securities a Like Amount of the Subordinated
Debentures, unless such distribution is determined by the Property Trustee not
to be practical, in which event such holders will be entitled to receive out of
the assets of the 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 holders of Preferred Securities, the
aggregate of the Liquidation Amount plus accrued but unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on the
Preferred Securities will be paid on a pro rata basis. The Company, as the
holder of the Common Securities, will be entitled to receive distributions upon
any such liquidation pro rata with the holders of the Preferred Securities,
except that, if a Debenture Event of Default has occurred and is continuing, the
Preferred Securities will have a priority over the Common Securities. See
"--Subordination of Common Securities."
Under current United States federal income tax law and interpretations
and assuming, as expected, that the Trust is treated as a grantor trust, a
distribution of the Subordinated Debentures should not be a taxable event to
holders of the Preferred Securities. Should there be a change in law, a change
in legal interpretation, a Tax Event or other circumstances, however, the
distribution could be a taxable event to holders of the Preferred Securities.
See "Certain Federal Income Tax Consequences--Receipt of Subordinated Debentures
or Cash Upon Liquidation of the Trust." If the Company elects neither to redeem
the Subordinated Debentures prior to maturity nor to liquidate the Trust and
distribute the Subordinated Debentures to holders of the Preferred Securities,
the Preferred Securities will remain outstanding until the repayment of the
Subordinated Debentures.
27
If the Company elects to dissolve the Trust and thereby causes the
Subordinated Debentures to be distributed to holders of the Preferred Securities
in liquidation of the Trust, the Company will continue to have the right to
shorten or extend the maturity of such Subordinated Debentures, subject to
certain conditions. See "Description of the Subordinated Debentures--General."
LIQUIDATION VALUE
The amount of the Liquidation Distribution payable on the Preferred
Securities in the event of any liquidation of the Trust is $10 per Preferred
Security plus accrued but unpaid Distributions thereon to the date of payment,
which may be in the form of a distribution of such amount in Subordinated
Debentures, subject to certain exceptions. See "--Liquidation Distribution Upon
Dissolution."
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an event of default under
the Trust Agreement (an "Event of Default") with respect to the Preferred
Securities (whatever the reason for such Event of Default and whether voluntary
or involuntary or effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description of
the Subordinated Debentures--Debenture Events of Default"); or
(ii) default by the Trust in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of 30
days; or
(iii) default by the Trust in the payment of any Redemption Price of any
Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in the Trust Agreement (other than a
covenant or warranty a default in the performance of which or the breach of
which is dealt with in clauses (ii) or (iii) 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 Trustee(s) 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" under the Trust Agreement;
or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Company to appoint a
successor Property Trustee within 60 days thereof.
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 such Event of Default to the holders of the Preferred Securities, the
Administrative Trustees and the Company, as depositor, unless such Event of
Default has been cured or waived. The Company, as depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities will have a preference over the Common Securities upon
dissolution of the Trust. See "--Liquidation Distribution Upon Dissolution." The
existence of an Event of Default does not entitle the holders of Preferred
Securities to accelerate the maturity thereof.
REMOVAL OF THE TRUST TRUSTEES
Unless a Debenture Event of Default has occurred and is continuing, any
Trustee may be removed at any time by the holder of the Common Securities. If a
Debenture Event of Default has occurred and is continuing, the Property Trustee
and the Delaware Trustee may be removed at such time by the holders of a
majority in
28
Liquidation Amount of the outstanding Preferred Securities. In no event,
however, will the holders of the Preferred Securities have the right to vote to
appoint, remove or replace the Administrative Trustees, which voting rights are
vested exclusively in the Company as the holder of the Common Securities. No
resignation or removal of a Trustee and no appointment of a successor trustee
will be effective until the acceptance of appointment by the successor trustee
in accordance with the provisions of the Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE.
Unless an Event of Default has occurred and is continuing, at any time
or 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 (as
defined in the Trust Agreement) may at the time be located, the Company, as the
holder of the Common Securities, will have power to appoint one or more Persons
(as defined in the Trust Agreement) either to act as a co-trustee, jointly with
the Property Trustee, of all or any part of such Trust Property, or to act as
separate trustee of any such Trust Property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in such Person or
Persons in such capacity any property, title, right or power deemed necessary or
desirable, subject to the provisions of the Trust Agreement. In case a Debenture
Event of Default has occurred and is continuing, the Property Trustee alone will
have power to make such appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Trustee is a party, or any Person
succeeding to all or substantially all the corporate trust business of such
Trustee, will be the successor of such Trustee under the Trust Agreement,
provided such Person is otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described below. The Trust
may, at the request of the Company, with the consent of the Administrative
Trustees and without the consent of the holders of the Preferred Securities, the
Property Trustee or the Delaware Trustee, merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State; provided, that (i) such successor entity either (a) expressly
assumes all of the obligations of the Trust with respect to the Preferred
Securities, or (b) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Preferred
Securities rank in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly appoints a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee in its capacity as the holder of the Subordinated Debentures,
(iii) the Successor Securities are listed, or any Successor Securities will be
listed upon notification of issuance, on any national securities exchange or
other organization on which the Preferred Securities are then listed (including,
if applicable, The Nasdaq Stock Market's National Market), if any, (iv) 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, (v) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Company has received an opinion from
independent counsel to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Trust nor such successor entity will be required
to register as an "investment company" under the Investment Company Act, and
(vi) the Company 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, the Indenture, the
Subordinated Debentures, the Trust Agreement and the Expense Agreement.
Notwithstanding the foregoing, the Trust will not, except with the consent of
holders of 100% in
29
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 Person or permit any other
Person to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Trust or the successor entity to be classified as other than a
grantor trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under "Description of the
Guarantee--Amendments and Assignment" and as otherwise required by the Trust Act
and the Trust Agreement, the holders of the Preferred Securities will have no
voting rights.
The Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) with respect to acceptance of
appointment by a successor trustee, (ii) to cure any ambiguity, correct or
supplement any provisions in such 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 such amendment is not
inconsistent with the other provisions of the Trust Agreement), or (iii) to
modify, eliminate or add to any provisions of the Trust Agreement to such extent
as is necessary to ensure that the Trust will be classified for United States
federal income tax purposes as a grantor trust at all times that any Trust
Securities are outstanding or to ensure that the Trust will not be required to
register as an "investment company" under the Investment Company Act; provided,
however, that in the case of clause (ii), such action may not adversely affect
in any material respect the interests of any holder of Trust Securities, and any
amendments of such Trust Agreement will become effective when notice thereof is
given to the holders of Trust Securities. The Trust Agreement may be amended by
the Trustees and the Company with (i) the consent of holders representing not
less than a majority in the aggregate Liquidation Amount of the outstanding
Trust Securities, and (ii) receipt by the Trustees of an opinion of counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect the Trust's status as
a grantor trust for United States federal income tax purposes or the Trust's
exemption from status as an "investment company" under the Investment Company
Act. Notwithstanding anything in this paragraph to the contrary, without the
consent of each holder of Trust Securities, the Trust Agreement may not be
amended to (a) 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 (b)
restrict the right of a holder of Trust Securities to institute suit for the
enforcement of any such payment on or after such date.
The Trustees will not, so long as any Subordinated Debentures are held
by the Property Trustee, (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Property Trustee with respect to the
Subordinated Debentures, (ii) waive any past default that is waivable under the
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Subordinated Debentures will be due and payable, or (iv)
consent to any amendment, modification or termination of the Indenture or the
Subordinated Debentures, where such consent is required, without, in each case,
obtaining the prior approval of the holders of a majority in aggregate
Liquidation Amount of all outstanding Preferred Securities; provided, however,
that where a consent under the Indenture requires the consent of each holder of
Subordinated Debentures affected thereby, no such consent will be given by the
Property Trustee without the prior consent of each holder of the Preferred
Securities. The Trustees 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 each holder of Preferred Securities of any notice of default with
respect to the 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 Trustees must obtain an opinion of counsel experienced in
such matters to the effect that the Trust will not be classified as an
association taxable as a corporation for United States federal income tax
purposes on account of such action.
Any required approval of holders of Preferred Securities may be given at
a meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of any
matter upon
30
which action by written consent of such holders is to be taken, to be given to
each holder of record of Preferred Securities in the manner set forth in the
Trust Agreement.
No vote or consent of the holders of Preferred Securities will be
required for the Trust to redeem and cancel its Preferred Securities in
accordance with the Trust Agreement.
Notwithstanding the fact that holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Preferred Securities that are owned by the Company, the Trustees or any
affiliate of the Company or any Trustee, will, for purposes of such vote or
consent, be treated as if they were not outstanding.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities will be made by check
mailed to the address of the holder entitled thereto as such address will appear
on the register of holders of the Preferred Securities. The paying agent for the
Preferred Securities will initially be the Property Trustee and any co-paying
agent chosen by the Property Trustee and acceptable to the Administrative
Trustees and the Company. The paying agent for the Preferred Securities may
resign as paying agent upon 30 days' written notice to the Property Trustee and
the Company. In the event that the Property Trustee no longer is the paying
agent for the Preferred Securities, the Administrative Trustees will appoint a
successor (which must be a bank or trust company acceptable to the
Administrative Trustees and the Company) to act as paying agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as the registrar and the 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 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 Preferred Securities after such Preferred
Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than upon the occurrence and during the
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trust Agreement and, upon the occurrence and
during the continuance of an Event of Default, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Property Trustee is under no
obligation to exercise any of the powers vested in it by the Trust Agreement at
the request of any holder of Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby. If no Event of Default has occurred and is continuing and the
Property Trustee is required to decide between alternative causes of action,
construe ambiguous provisions in the Trust Agreement or is unsure of the
application of any provision of the Trust Agreement, and the matter is not one
on which holders of Preferred Securities are entitled under the Trust Agreement
to vote, then the Property Trustee will take such action as is directed by the
Company and if not so directed, will take such action as it deems advisable and
in the best interests of the holders of the Trust Securities and will have no
liability except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States federal income tax purposes and so that the Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. The Company and the Administrative Trustees are
authorized, in this connection, to take any action, not inconsistent with
applicable law, the certificate of trust of the Trust or the Trust Agreement,
that the Company and the Administrative Trustees determine in their discretion
to be necessary or desirable for such purposes.
31
Holders of the Preferred Securities have no preemptive or similar
rights.
The Trust Agreement and the Preferred Securities will be governed by,
and construed in accordance with, the internal laws of the State of Delaware.
DESCRIPTION OF THE SUBORDINATED DEBENTURES
Concurrently with the issuance of the Preferred Securities, the Trust
will invest the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Subordinated Debentures issued by the
Company. The Subordinated Debentures will be issued as unsecured debt under the
Indenture, to be dated as of June __, 1997 (the "Indenture"), between the
Company and State Street Bank and Trust Company, as trustee (the "Debenture
Trustee"). The Indenture will be qualified as an indenture under the Trust
Indenture Act. The following summary of the material terms and provisions of the
Subordinated Debentures and the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Indenture and
to the Trust Indenture Act. Wherever particular defined terms of the Indenture
are referred to, but not defined herein, such defined terms are incorporated
herein by reference. The form of the Indenture has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.
GENERAL
The Subordinated Debentures will be limited in aggregate principal
amount to approximately $12,371,500 (or $14,227,000 if the option described
under the heading "Underwriting" is exercised by the Underwriters), such amount
being the sum of the aggregate stated Liquidation Amount of the Trust
Securities. The Subordinated Debentures will bear interest at the annual rate of
___% of the principal amount thereof, payable quarterly in arrears on March 31,
June 30, September 30, and December 31 of each year (each, an "Interest Payment
Date") beginning September 30, 1997, to the Person (as defined in the Indenture)
in whose name each Subordinated Debenture is registered, subject to certain
exceptions, at the close of business on the fifteenth day of the last month of
the calendar quarter. It is anticipated that, until the liquidation of the
Trust, the Subordinated Debentures will be held in the name of the Property
Trustee in trust for the benefit of the holders of the Preferred Securities. The
amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Subordinated Debentures is not a Business Day, then
payment of the interest payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay), with the same force and effect as if made on the date such
payment was originally payable. Accrued interest that is not paid on the
applicable Interest Payment Date will bear additional interest on the amount
thereof (to the extent permitted by law) at the rate per annum of __% thereof,
compounded quarterly. The term "interest," as used herein, includes quarterly
interest payments, interest on quarterly interest payments not paid on the
applicable Interest Payment Date and Additional Interest, as applicable.
The Subordinated Debentures will mature on June 30, 2027 (such date, as
it may be shortened or extended as hereinafter described, the "Stated
Maturity"). Such date may be shortened at any time by the Company to any date
not earlier than June 30, 2002, subject to the Company having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve. Such date may also be extended at
any time at the election of the Company but in no event to a date later than
June 30, 2036, provided that at the time such election is made and at the time
of extension (i) the Company is not in bankruptcy, otherwise insolvent or in
liquidation, (ii) the Company is not in default in the payment of any interest
or principal on the Subordinated Debentures, (iii) the Trust is not in arrears
on payments of Distributions on the Preferred Securities and no deferred
Distributions are accumulated, and (iv) the Company has a Senior Debt rating of
investment grade. In the event that the Company elects to shorten or extend the
Stated Maturity of the Subordinated Debentures, it will give notice thereof to
the Debenture Trustee, the Trust and to the holders of the Subordinated
Debentures no more than 180 days and no less than 90 days prior to the
effectiveness thereof. The Company will not have the right to purchase the
Subordinated Debentures, in whole or in part, from the Trust until after June
30, 2002, except if a Tax Event, a Capital Treatment Event or an Investment
Company Event has occurred and is continuing.
32
The Subordinated Debentures will be unsecured and will rank junior and
be subordinate in right of payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company. Because the Company is a holding
company, the right of the Company to participate in any distribution of assets
of the Bank, upon the Bank's liquidation or reorganization or otherwise (and
thus the ability of holders of the Subordinated Debentures to benefit indirectly
from such distribution), is subject to the prior claim of creditors of the Bank,
except to the extent that the Company may itself be recognized as a creditor of
the Bank. The Subordinated Debentures will, therefore, be effectively
subordinated to all existing and future liabilities of the Bank, and holders of
Subordinated Debentures should look only to the assets of the Company for
payments on the Subordinated Debentures. The Indenture does not limit the
incurrence or issuance of other secured or unsecured debt of the Company,
including Senior Debt, Subordinated Debt and Additional Senior Obligations,
whether under the Indenture or any existing indenture or other indenture that
the Company may enter into in the future or otherwise. See "--Subordination."
The Indenture does not contain provisions that afford holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction or other similar transaction involving the Company that may
adversely affect such holders.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Indenture at any time during the
term of the Subordinated Debentures, so long as no Debenture Event of Default
has occurred and is continuing, to defer the payment of interest at any time, or
from time to time (each, an "Extension Period"). The right to defer the payment
of interest on the Subordinated Debentures is limited, however, to a period, in
each instance, not exceeding 20 consecutive quarters and no Extension Period may
extend beyond the Stated Maturity of the Subordinated Debentures. At the end of
each Extension Period, the Company must pay all interest then accrued and unpaid
(together with interest thereon at the annual rate of ____%, compounded
quarterly, to the extent permitted by applicable law). During an Extension
Period, interest will continue to accrue and holders of Subordinated Debentures
(or the holders of Preferred Securities if such securities are then outstanding)
will be required to accrue and recognize income for United States federal income
tax purposes. See "Certain Federal Income Tax Consequences--Potential Extension
of Interest Payment Period and Original Issue Discount."
During any such Extension Period, the Company may not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock, (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu
with or junior in interest to the Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any subsidiary of the Company if such guarantee ranks pari passu or junior in
interest to the Subordinated Debentures (other than payments under the
Guarantee), or (iii) redeem, purchase or acquire less than all of the
Subordinated Debentures or any of the Preferred Securities. Prior to the
termination of any such Extension Period, the Company may further defer the
payment of interest; provided, that no Extension Period may exceed 20
consecutive quarters or extend beyond the Stated Maturity of the Subordinated
Debentures. Upon the termination of any such Extension Period and the payment of
all amounts then due on any Interest Payment Date, the Company may elect to
begin a new Extension Period subject to the above requirements. No interest will
be due and payable during an Extension Period, except at the end thereof. The
Company has no present intention of exercising its rights to defer payments of
interest on the Subordinated Debentures. The Company must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of its
election of such Extension Period at least two Business Days prior to the
earlier of (i) the next succeeding date on which Distributions on the Trust
Securities would have been payable except for the election to begin such
Extension Period, or (ii) the date the Trust is required to give notice of the
record date, or the date such Distributions are payable, to The Nasdaq Stock
Market's National Market (or other applicable self-regulatory organization) or
to holders of the Preferred Securities, but in any event at least one Business
Day before such record date. Subject to the foregoing, there is no limitation on
the number of times that the Company may elect to begin an Extension Period.
33
ADDITIONAL SUMS
If the Trust or the Property Trustee is required to pay any additional
taxes, duties or other governmental charges as a result of the occurrence of a
Tax Event, the Company will pay as additional amounts (referred to herein as
"Additional Interest") on the Subordinated Debentures such additional amounts as
may be required so that the net amounts received and retained by the Trust after
paying any such additional taxes, duties or other governmental charges will not
be less than the amounts the Trust would have received had such additional
taxes, duties or other governmental charges not been imposed.
REDEMPTION OR EXCHANGE
The Company will have the right to redeem the Subordinated Debentures
prior to maturity (i) on or after June 30, 2002, in whole at any time or in part
from time to time, or (ii) at any time in whole (but not in part), within 180
days following the occurrence of a Tax Event, a Capital Treatment Event or an
Investment Company Event, in each case at a redemption price equal to the
accrued and unpaid interest on the Subordinated Debentures so redeemed to the
date fixed for redemption, plus 100% of the principal amount thereof. Any such
redemption prior to the Stated Maturity will be subject to prior approval of the
Federal Reserve if then required under applicable capital guidelines or policies
of the Federal Reserve.
"Tax Event" means the receipt by the Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) interest payable by the Company on the Subordinated
Debentures is not, or within 90 days of the date of such opinion will not be,
deductible by the Company, in whole or in part, for United States federal income
tax purposes, (ii) the Trust is, or will be within 90 days after the date of
such opinion of counsel, subject to United States federal income tax with
respect to income received or accrued on the Subordinated Debentures, or (iii)
the Trust is, or will be within 90 days after the date of such opinion of
counsel, subject to more than a de minimis amount of other taxes, duties,
assessments or other governmental charges. The Company must request and receive
an opinion with regard to such matters within a reasonable period of time after
it becomes aware of the possible occurrence of any of the events described in
clauses (i) through (iii) above.
"Capital Treatment Event" means the receipt by the Trust of an opinion
of counsel experienced in such matters to the effect that, as a result of any
amendment to or any change (including any announced prospective change) in the
laws (or any regulations thereunder) of the United States or any political
subdivision thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which proposed change,
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk of impairment of the Company's ability to treat the aggregate
Liquidation Amount of the Preferred Securities (or any substantial portion
thereof) as "Tier 1 Capital" (or the then equivalent thereof) for purposes of
the capital adequacy guidelines of the Federal Reserve, as then applicable to
the Company; provided, however, that the inability of the Company to treat all
or any portion of the Liquidation Amount of the Preferred Securities as Tier 1
Capital shall not constitute the basis for a Capital Treatment Event if such
inability results from the Company having cumulative preferred capital in excess
of the amount which may qualify for treatment as Tier 1 Capital under applicable
capital adequacy guidelines of the Federal Reserve.
"Investment Company Event" means the receipt by the Trust of an opinion
of counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, the Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, which change becomes effective on or after the date of original
issuance of the Preferred Securities.
34
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of Subordinated
Debentures to be redeemed at its registered address. Unless the Company defaults
in payment of the redemption price for the Subordinated Debentures, on and after
the redemption date interest ceases to accrue on such Subordinated Debentures or
portions thereof called for redemption.
The Subordinated Debentures will not be subject to any sinking fund.
DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Preferred Securities--Liquidation
Distribution Upon Dissolution," under certain circumstances involving the
dissolution of the Trust, the Subordinated Debentures may be distributed to the
holders of the Preferred Securities in liquidation of the Trust after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law. Any such distribution will be subject to receipt of prior approval by the
Federal Reserve if then required under applicable policies or guidelines of the
Federal Reserve. If the Subordinated Debentures are distributed to the holders
of Preferred Securities upon the dissolution of the Trust, the Company will use
its best efforts to list the Subordinated Debentures on The Nasdaq Stock
Market's National Market or such stock exchanges, if any, on which the Preferred
Securities are then listed. There can be no assurance as to the market price of
any Subordinated Debentures that may be distributed to the holders of Preferred
Securities.
RESTRICTIONS ON CERTAIN PAYMENTS
If at any time (i) there has occurred a Debenture Event of Default, (ii)
the Company is in default with respect to its obligations under the Guarantee or
(iii) the Company has given notice of its election of an Extension Period as
provided in the Indenture with respect to the Subordinated Debentures and has
not rescinded such notice, or such Extension Period, or any extension thereof,
is continuing, the Company will not (1) 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, (2) make any payment of
principal, interest or premium, if any, on or repay or repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu or junior in interest to the
Subordinated Debentures (other than payments under the Guarantee), or (3)
redeem, purchase or acquire less than all of the Subordinated Debentures or any
of the Preferred Securities.
SUBORDINATION
The Indenture provides that the Subordinated Debentures issued
thereunder are subordinated and junior in right of payment to all Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company. Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceedings of the Company, the holders of Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company will first be entitled to
receive payment in full of principal of (and premium, if any) and interest, if
any, on such Senior Debt, Subordinated Debt and Additional Senior Obligations of
the Company before the holders of Subordinated Debentures will be entitled to
receive or retain any payment in respect of the principal of or interest on the
Subordinated Debentures.
In the event of the acceleration of the maturity of any Subordinated
Debentures, the holders of all Senior Debt, Subordinated Debt and Additional
Senior Obligations of the Company outstanding at the time of such acceleration
will first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders of the
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the principal of or interest on the Subordinated Debentures.
No payments on account of principal or interest in respect of the
Subordinated Debentures may be made if there has occurred and is continuing a
default in any payment with respect to Senior Debt, Subordinated Debt or
Additional Senior Obligations of the Company or an event of default with respect
to any Senior Debt,
35
Subordinated Debt or Additional Senior Obligations of the Company resulting in
the acceleration of the maturity thereof, or if any judicial proceeding is
pending with respect to any such default.
"Debt" means, with respect to any Person, whether recourse is to all or
a portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), (v) every capital lease obligation of such Person, and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.
"Senior Debt" means, with respect to the Company, the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not such claim for post-petition interest is allowed in such
proceeding), on Debt, whether incurred on or prior to the date of the Indenture
or thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Subordinated Debentures
or to other Debt which is pari passu with, or subordinated to, the Subordinated
Debentures; provided, however, that Senior Debt will not be deemed to include
(i) any Debt of the Company which when incurred and without respect to any
election under section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Company, (ii) any Debt of the Company to
any of its subsidiaries, (iii) any Debt to any employee of the Company, (iv) any
Debt which by its terms is subordinated to trade accounts payable or accrued
liabilities arising in the ordinary course of business to the extent that
payments made to the holders of such Debt by the holders of the Subordinated
Debentures as a result of the subordination provisions of the Indenture would be
greater than they otherwise would have been as a result of any obligation of
such holders to pay amounts over to the obligees on such trade accounts payable
or accrued liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject, and (v) Debt which
constitutes Subordinated Debt.
"Subordinated Debt" means, with respect to the Company, the principal of
(and premium, if any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating to
the Company whether or not such claim for post-petition interest is allowed in
such proceeding), on Debt, whether incurred on or prior to the date of the
Indenture or thereafter incurred, which is by its terms expressly provided to be
junior and subordinate to other Debt of the Company (other than the Subordinated
Debentures).
"Additional Senior Obligations" means, with respect to the Company, all
indebtedness, whether incurred on or prior to the date of the Indenture or
thereafter incurred, for claims in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; provided, however, that Additional Senior Obligations do not
include claims in respect of Senior Debt or Subordinated Debt or obligations
which, by their terms, are expressly stated to be not superior in right of
payment to the Subordinated Debentures or to rank pari passu in right of payment
with the Subordinated Debentures. "Claim," as used herein, has the meaning
assigned thereto in Section 101(4) of the United States Bankruptcy Code of 1978,
as amended.
The Indenture places no limitation on the amount of additional Senior
Debt, Subordinated Debt or Additional Senior Obligations that may be incurred by
the Company. The Company expects from time to time to incur additional
indebtedness constituting Senior Debt, Subordinated Debt and Additional Senior
Obligations. As of May 31, 1997, the Company had no outstanding Senior Debt,
Subordinated Debt or Additional Senior Obligations. Because the Company is a
holding company, the Subordinated Debentures are effectively subordinated to all
existing and future liabilities of the Company's subsidiaries, including
obligations to depositors of the Bank.
36
PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on the Subordinated Debentures
will be made at the office of the Debenture Trustee in New York, New York,
except that, at the option of the Company, payment of any interest may be made
(i) by check mailed to the address of the Person entitled thereto as such
address appears in the register of holders of the Subordinated Debentures, or
(ii) by transfer to an account maintained by the Person entitled thereto as
specified in the register of holders of the Subordinated Debentures, provided
that proper transfer instructions have been received by the regular record date.
Payment of any interest on Subordinated Debentures will be made to the Person in
whose name such Subordinated Debenture is registered at the close of business on
the regular record date for such interest, except in the case of defaulted
interest. The Company may at any time designate additional paying agents for the
Subordinated Debentures or rescind the designation of any paying agent for the
Subordinated Debentures; however, the Company will at all times be required to
maintain a paying agent in New York, New York and each place of payment for the
Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent for
the Subordinated Debentures, or then held by the Company in trust, for the
payment of the principal of or interest on the Subordinated Debentures and
remaining unclaimed for two years after such principal or interest has become
due and payable will be repaid to the Company on May 31 of each year or (if then
held in trust by the Company) will be discharged from such trust and the holder
of such Subordinated Debenture will thereafter look, as a general unsecured
creditor, only to the Company for payment thereof.
REGISTRAR AND TRANSFER AGENT
The Debenture Trustee will act as the registrar and the transfer agent
for the Subordinated Debentures. Subordinated Debentures may be presented for
registration of transfer (with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed), in New York, New
York or at the office of the registrar in Boston, Massachusetts. The Company may
at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts; provided that
the Company maintains a transfer agent in New York, New York. The Company may at
any time designate additional transfer agents with respect to the Subordinated
Debentures. In the event of any redemption, neither the Company nor the
Debenture Trustee will be required to (i) issue, register the transfer of or
exchange Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of Subordinated
Debentures and ending at the close of business on the day of mailing of the
relevant notice of redemption, or (ii) transfer or exchange any Subordinated
Debentures so selected for redemption, except, in the case of any Subordinated
Debentures being redeemed in part, any portion thereof not to be redeemed.
MODIFICATION OF INDENTURE
The Company and the Debenture Trustee may, from time to time without the
consent of the holders of the Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies and qualifying, or maintaining
the qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting the Company and the Debenture Trustee, with the
consent of the holders of not less than a majority in principal amount of the
outstanding Subordinated Debentures, to modify the Indenture; provided, that no
such modification may, without the consent of the holder of each outstanding
Subordinated Debenture affected by such proposed modification, (i) extend the
fixed maturity of the Subordinated Debentures, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
or (ii) reduce the percentage of principal amount of Subordinated Debentures,
the holders of which are required to consent to any such modification of the
Indenture; provided that so long as any of the Preferred Securities remain
outstanding, no such modification may be made that requires the consent of the
holders of the Subordinated Debentures, and no termination of the Indenture may
occur, and no waiver of any Debenture Event of Default may be effective, without
the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of the Preferred Securities and that if the consent of the
holder of each Subordinated Debenture is required, such modification will not be
effective until each holder of Trust Securities has consented thereto.
37
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Subordinated Debentures that has occurred and is
continuing constitutes an event of default (each, a "Debenture Event of
Default") with respect to the Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Subordinated
Debentures, when due (subject to the deferral of any due date in the case of an
Extension Period); or
(ii) failure to pay any principal on the Subordinated Debentures when
due whether at maturity, upon redemption by declaration or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice to
the Company from the Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of the Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of
the Subordinated Debentures have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Debenture Trustee.
The Debenture Trustee, or the holders of not less than 25% in aggregate
outstanding principal amount of the Subordinated Debentures, may declare the
principal due and payable immediately upon a Debenture Event of Default. The
holders of a majority in aggregate outstanding principal amount of the
Subordinated Debentures may annul such declaration and waive the default if the
default (other than the non-payment of the principal of the Subordinated
Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
Should the holders of the Subordinated Debentures fail to annul such declaration
and waive such default, the holders of a majority in aggregate Liquidation
Amount of the Preferred Securities will have such right.
The Company is required to file annually with the Debenture Trustee a
certificate as to whether or not the Company is in compliance with all the
conditions and covenants applicable to it under the Indenture.
If a Debenture Event of Default has occurred and is continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such Subordinated Debentures, and any other amounts payable under
the Indenture, to be forthwith due and payable and to enforce its other rights
as a creditor with respect to such Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest on or
principal of the Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Preferred Securities may institute
a legal proceeding directly against the Company for enforcement of payment to
such holder of the principal of or interest on such Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities of such holder (a "Direct Action"). In connection with such
Direct Action, the Company will have a right of set-off under the Indenture to
the extent of any payment made by the Company to such holder of Preferred
Securities in the Direct Action. The Company may not amend the Indenture to
remove the foregoing right to bring a Direct Action without the prior written
consent of the holders of all of the Preferred Securities. If the right to bring
a Direct Action is removed, the Trust may become subject to the reporting
obligations under the Exchange Act.
The holders of the Preferred Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the Subordinated Debentures unless there has been an
Event of Default under the Trust Agreement. See "Description of the Preferred
Securities--Events of Default; Notice."
38
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Company may not consolidate with or merge into any other Person or
convey or transfer its properties and assets substantially as an entirety to any
Person, and no Person may consolidate with or merge into the Company or sell,
convey, transfer or otherwise dispose of its properties and assets substantially
as an entirety to the Company, unless (i) in the event the Company consolidates
with or merges into another Person or conveys or transfers its properties and
assets substantially as an entirety to any Person, the successor Person is
organized under the laws of the United States or any State or the District of
Columbia, and such successor Person expressly assumes by supplemental indenture
the Company obligations on the Subordinated Debentures issued under the
Indenture, (ii) immediately after giving effect thereto, no Debenture Event of
Default, and no event which, after notice or lapse of time or both, would become
a Debenture Event of Default, has occurred and is continuing, and (iii) certain
other conditions prescribed in the Indenture are met.
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect (except as to the
Company's obligations to pay certain sums due pursuant to the Indenture and to
provide certain officers' certificates and opinions of counsel described
therein) and the Company will be deemed to have satisfied and discharged the
Indenture when, among other things, all Subordinated Debentures not previously
delivered to the Debenture Trustee for cancellation (i) have become due and
payable, or (ii) will become due and payable at their Stated Maturity within one
year or are to be called for redemption within one year, and the Company
deposits or causes to be deposited with the Debenture Trustee funds, in trust,
for the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation, for the principal and interest to the date
of the deposit or to the Stated Maturity or redemption date, as the case may be.
GOVERNING LAW
The Indenture and the Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of Delaware.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee has and is subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Subordinated Debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The Debenture Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance of
its duties if the Debenture Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
MISCELLANEOUS
The Company has agreed, pursuant to the Indenture, for so long as Trust
Securities remain outstanding, (i) to maintain directly or indirectly 100%
ownership of the Common Securities of the Trust (provided that certain
successors which are permitted pursuant to the Indenture may succeed to the
Company's ownership of the Common Securities), (ii) not to voluntarily dissolve
the Trust, except upon prior approval of the Federal Reserve if then so required
under applicable capital guidelines or policies of the Federal Reserve, and (a)
in connection with a distribution of 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 (iii) to use its reasonable efforts, consistent with the terms
and provisions of the Trust Agreement, to cause the Trust to remain classified
as a grantor trust and not as an association taxable as a corporation for United
States federal income tax purposes.
39
DESCRIPTION OF THE GUARANTEE
The Preferred Securities Guarantee Agreement (the "Guarantee") will be
executed and delivered by the Company concurrently with the issuance of the
Preferred Securities for the benefit of the holders of the Preferred Securities.
The Guarantee will be qualified as an indenture under the Trust Indenture Act.
The Guarantee Trustee will act as indenture trustee under the Guarantee for
purposes of complying with the provisions of the Trust Indenture Act. The
Guarantee Trustee, State Street Bank and Trust Company, will hold the Guarantee
for the benefit of the holders of the Preferred Securities. The following
summary of the material terms and provisions of the Guarantee does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Guarantee and the Trust Indenture Act. Wherever
particular defined terms of the Guarantee are referred to, but not defined
herein, such defined terms are incorporated herein by reference. The form of the
Guarantee has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.
GENERAL
The Company will, pursuant to the Guarantee, irrevocably agree to pay in
full on a subordinated basis, to the extent set forth therein, the Guarantee
Payments (as defined below) to the holders of the Preferred Securities, as and
when due, regardless of any defense, right of set-off or counterclaim that the
Trust may have or assert other than the defense of payment. The following
payments with respect to the Preferred Securities, to the extent not paid by or
on behalf of the Trust (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accrued and unpaid Distributions required to be paid on the
Preferred Securities, to the extent that the Trust has funds available therefor
at such time, (ii) the Redemption Price with respect to any Preferred Securities
called for redemption to the extent that the Trust has funds available therefor
at such time, and (iii) upon a voluntary or involuntary dissolution, winding up
or liquidation of the Trust (other than in connection with the distribution of
Subordinated Debentures to the holders of Preferred Securities or a redemption
of all of the Preferred Securities), the lesser of (a) the amount of the
Liquidation Distribution, to the extent the Trust has funds available therefor
at such time, and (b) the amount of assets of the Trust remaining available for
distribution to holders of Preferred Securities in liquidation of the Trust. The
obligation of the Company to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the Preferred
Securities or by causing the Trust to pay such amounts to such holders.
The Guarantee will not apply to any payment of Distributions except to
the extent the Trust has funds available therefor. If the Company does not make
interest payments on the Subordinated Debentures held by the Trust, the Trust
will not pay Distributions on the Preferred Securities and will not have funds
legally available therefor.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company in the same
manner as the Subordinated Debentures. The Guarantee does not place a limitation
on the amount of additional Senior Debt, Subordinated Debt or Additional Senior
Obligations that may be incurred by the Company. The Company expects from time
to time to incur additional indebtedness constituting Senior Debt, Subordinated
Debt and Additional Senior Obligations.
The Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against any other Person). The Guarantee
will not be discharged except by payment of the Guarantee Payments in full to
the extent not paid by the Trust or upon distribution of the Subordinated
Debentures to the holders of the Preferred Securities. Because the Company is a
holding company, the right of the Company to participate in any distribution of
assets of the Bank upon the Bank's liquidation or reorganization or otherwise is
subject to the prior claims of creditors of the Bank, except to the extent the
Company may itself be recognized as a creditor of the Bank. The Company's
obligations under the Guarantee, therefore, will be effectively subordinated to
all existing and future liabilities of the Company's subsidiaries, and claimants
should look only to the assets of the Company for payments thereunder.
40
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely
affect the rights of holders of the Preferred Securities (in which case no vote
will be required), the Guarantee may not be amended without the prior approval
of the holders of not less than a majority of the aggregate Liquidation Amount
of the outstanding Preferred Securities. See "Description of the Preferred
Securities--Voting Rights; Amendment of Trust Agreement." All guarantees and
agreements contained in the Guarantee will bind the successors, assigns,
receivers, trustees and representatives of the Company and will inure to the
benefit of the holders of the Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
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.
Any holder of Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Trust, the Guarantee Trustee or
any other Person.
The Company, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance
of a default by the Company in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to such provisions, the Guarantee Trustee is under
no obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of any Preferred Securities, unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
(a) full payment of the Redemption Price of the Preferred Securities, (b) full
payment of the amounts payable upon liquidation of the Trust, or (c)
distribution of the Subordinated Debentures to the holders of the Preferred
Securities. The Guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of the Preferred Securities must
restore payment of any sums paid under such Preferred Securities or the
Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the
laws of the State of Delaware.
EXPENSE AGREEMENT
The Company will, pursuant to the Agreement as to Expenses and
Liabilities entered into by it under the Trust Agreement (the "Expense
Agreement"), irrevocably and unconditionally guarantee to each person or entity
to whom the Trust becomes indebted or liable, the full payment of any costs,
expenses or liabilities of
41
the Trust, other than obligations of the Trust to pay to the holders of the
Preferred Securities or other similar interests in the Trust of the amounts due
such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be. Third party creditors of the Trust may
proceed directly against the Company under the Expense Agreement, regardless of
whether such creditors had notice of the Expense Agreement.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred
Securities (to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of the Guarantee." The Company and the Trust
believe that, taken together, the obligations of the Company under the
Subordinated Debentures, the Indenture, the Trust Agreement, the Expense
Agreement, and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis, of payment of Distributions
and other amounts due on the Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of the obligations of the Trust under the Preferred Securities. If and to the
extent that the Company does not make payments on the Subordinated Debentures,
the Trust will not pay Distributions or other amounts due on the Preferred
Securities. The Guarantee does not cover payment of Distributions when the Trust
does not have sufficient funds to pay such Distributions. In such event, the
remedy of a holder of Preferred Securities is to institute a legal proceeding
directly against the Company for enforcement of payment of such Distributions to
such holder. The obligations of the Company under the Guarantee are subordinate
and junior in right of payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
the Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Preferred Securities, primarily
because (i) the aggregate principal amount of the Subordinated Debentures will
be equal to the sum of the aggregate stated Liquidation Amount of the Trust
Securities, (ii) the interest rate and interest and other payment dates on the
Subordinated Debentures will match the Distribution rate and Distribution and
other payment dates for the Preferred Securities, (iii) the Company will pay for
all and any costs, expenses and liabilities of the Trust (except the obligations
of the Trust to holders of the Preferred Securities), and (iv) 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.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, the Trust or
any other Person. A default or event of default under any Senior Debt,
Subordinated Debt or Additional Senior Obligations of the Company would not
constitute a default or Event of Default. In the event, however, of payment
defaults under, or acceleration of, Senior Debt, Subordinated Debt or Additional
Senior Obligations of the Company, the subordination provisions of the Indenture
provide that no payments may be made in respect of the Subordinated Debentures
until such Senior Debt, Subordinated Debt or Additional Senior Obligations has
been paid in full or any payment default thereunder has been cured or waived.
Failure to make required payments on the Subordinated Debentures would
constitute an Event of Default.
LIMITED PURPOSE OF THE TRUST
The Preferred Securities evidence a preferred undivided beneficial
interest in the assets of the Trust. The Trust exists for the exclusive purposes
of (i) issuing the Trust Securities representing undivided beneficial
42
interests in the assets of the Trust, (ii) investing the gross proceeds of the
Trust Securities in the Subordinated Debentures issued by the Company, and (iii)
engaging in only those other activities necessary, advisable, or incidental
thereto. A principal difference between the rights of a holder of a Preferred
Security and the rights of a holder of a Subordinated Debenture is that a holder
of a Subordinated Debenture is entitled to receive from the Company the
principal amount of and interest accrued on Subordinated Debentures held, while
a holder of Preferred Securities is entitled to receive Distributions from the
Trust (or from the Company under the Guarantee) if and to the extent the Trust
has funds available for the payment of such Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of the Trust involving the
liquidation of the Subordinated Debentures, the holders of the Preferred
Securities will be entitled to receive, out of assets held by the Trust, the
Liquidation Distribution in cash. See "Description of the Preferred
Securities--Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the Subordinated Debentures, would be a subordinated creditor of the
Company, subordinated in right of payment to all Senior Debt, Subordinated Debt
and Additional Senior Obligations of the Company (as set forth in the
Indenture), but entitled to receive payment in full of principal and interest
before any shareholders of the Company receive payments or distributions. Since
the Company is the guarantor under the Guarantee and has agreed to pay for all
costs, expenses and liabilities of the Trust (other than the obligations of the
Trust to the holders of its Preferred Securities), the positions of a holder of
the Preferred Securities and a holder of the Subordinated Debentures relative to
other creditors and to shareholders of the Company in the event of liquidation
or bankruptcy of the Company are expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a summary of the material United States federal income
tax considerations that may be relevant to the purchasers of Preferred
Securities which has been passed upon by Goodwin, Procter & Hoar LLP, counsel to
the Company and the Trust insofar as it relates to matters of law and legal
conclusions. The conclusions expressed herein are based upon current provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), regulations
thereunder and current administrative rulings and court decisions, all of which
are subject to change at any time, with possible retroactive effect. Subsequent
changes may cause tax consequences to vary substantially from the consequences
described below. Furthermore, the authorities on which the following summary is
based are subject to various interpretations, and it is therefore possible that
the United States federal income tax treatment of the purchase, ownership, and
disposition of Preferred Securities may differ from the treatment described
below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Preferred
Securities. Moreover, the discussion generally focuses on holders of Preferred
Securities who are individual citizens or residents of the United States and who
acquire Preferred Securities on their original issue at their offering price and
hold Preferred Securities as capital assets. The discussion has only limited
application to dealers in securities, corporations, estates, trusts or
nonresident aliens and does not address all the tax consequences that may be
relevant to holders who may be subject to special tax treatment, such as, for
example, banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors, or persons that will hold the Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. The following summary also does not address the tax consequences
to persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of Preferred
Securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the Preferred Securities.
Accordingly, each prospective investor should consult, and should rely
exclusively on, such
43
investor's own tax advisors in analyzing the federal, state, local and foreign
tax consequences of the purchase, ownership or disposition of Preferred
Securities.
CLASSIFICATION OF THE SUBORDINATED DEBENTURES
The Company intends to take the position that the Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Company under current law, and, by acceptance of a Preferred
Security, each holder covenants to treat the Subordinated Debentures as
indebtedness and the Preferred Securities as evidence of an indirect beneficial
ownership interest in the Subordinated Debentures. No assurance can be given,
however, that such position of the Company will not be challenged by the
Internal Revenue Service or, if challenged, that such a challenge will not be
successful. The remainder of this discussion assumes that the Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Company.
CLASSIFICATION OF THE TRUST
Under current law and assuming full compliance with the terms of the
Trust Agreement and Indenture (and certain other documents described herein),
the Trust will be classified for United States federal income tax purposes as a
grantor trust and not as an association taxable as a corporation. Accordingly,
for United States federal income tax purposes, each holder of Preferred
Securities generally will be treated as owning an undivided beneficial interest
in the Subordinated Debentures, and upon the occurrence of an Extension Period
each holder will be required to include in his gross income any original issue
discount ("OID") accrued with respect to its allocable share of the Subordinated
Debentures whether or not cash is actually distributed to such holder.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations (the "Regulations"), a debt
instrument will be deemed to be issued with OID if there is more than a "remote"
contingency that periodic stated interest payments due on the instrument will
not be timely paid. Because the exercise by the Company of its option to defer
the payment of stated interest on the Subordinated Debentures would prevent the
Company from declaring dividends on any class of equity, the Company believes
that the likelihood of its exercising the option is "remote" within the meaning
of the Regulations. As a result, the Company intends to take the position that
the Subordinated Debentures will not be deemed to be issued with OID.
Accordingly, based on this position, stated interest payments on the
Subordinated Debentures will be includible in the ordinary income of a holder at
the time that such payments are paid or accrued in accordance with the holder's
regular method of accounting. Because the Regulations have not yet been
addressed in any published rulings or other published interpretations issued by
the Internal Revenue Service, it is possible that the Internal Revenue Service
could take a position contrary to the position taken by the Company.
If the Company were to exercise its option to defer the payment of
stated interest on the Subordinated Debentures, the Subordinated Debentures
would be treated, solely for purpose of the OID rules, as being "reissued" at
such time with OID. Under these rules, a holder of the Subordinated Debentures
would be required to include OID in ordinary income, on a current basis, over
the period that the instrument is held even though the Company would not be
making any actual cash payments during the extended interest payment period. The
amount of interest income includible in the taxable income of a holder of the
Subordinated Debentures would be determined on the basis of a constant yield
method over the remaining term of the instrument and the actual receipt of
future payments of stated interest on the Subordinated Debentures would no
longer be separately reported as taxable income. The amount of OID that would
accrue, in the aggregate, during the extended interest payment period would be
approximately equal to the amount of the cash payment due at the end of such
period. Any OID included in income would increase the holder's adjusted tax
basis in the Subordinated Debentures and the holder's actual receipt of interest
payments would reduce such basis.
Because income on the Preferred Securities will constitute interest
income for United States federal income tax purposes, corporate holders of
Preferred Securities will not be entitled to claim a dividends received
deduction in respect of such income.
44
MARKET DISCOUNT AND ACQUISITION PREMIUM
Holders of Preferred Securities other than a holder who purchased the
Preferred Securities upon original issuance may be considered to have acquired
their undivided interests in the Subordinated Debentures with "market discount"
or "acquisition premium" as such phrases are defined for United States federal
income tax purposes. Such holders are advised to consult their tax advisors as
to the income tax consequences of the acquisition, ownership and disposition of
the Preferred Securities.
RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under "Description of the
Preferred Securities--Redemption or Exchange" and "--Liquidation Distribution
Upon Dissolution," the Subordinated Debentures may be distributed to holders of
Preferred Securities upon a liquidation of the Trust. Under current United
States federal income tax law, such a distribution would be treated as a
nontaxable event to each such holder and would result in such holder having an
adjusted tax basis in the Subordinated Debentures received in the liquidation
equal to such holder's adjusted tax basis in the Preferred Securities
immediately before the distribution. A holder's holding period in the
Subordinated Debentures so received in liquidation of the Trust would include
the period for which such holder held the Preferred Securities.
If, however, a Tax Event occurs which results in the Trust being treated
as an association taxable as a corporation, the distribution would likely
constitute a taxable event to holders of the Preferred Securities. Under certain
circumstances described herein, the Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Under current law, such a redemption would, for
United States federal income tax purposes, constitute a taxable disposition of
the redeemed Preferred Securities, and a holder would recognize gain or loss as
if the holder sold such Preferred Securities for cash. See "Description of the
Preferred Securities--Redemption or Exchange" and "--Liquidation Distribution
Upon Dissolution."
DISPOSITION OF PREFERRED SECURITIES
Upon the sale of the Preferred Securities, a holder will recognize gain
or loss in an amount equal to the difference between his adjusted tax basis in
the Preferred Securities and the amount realized in the sale (except to the
extent of any amount received in respect of accrued but unpaid interest not
previously included in income). A holder's adjusted tax basis in the Preferred
Securities generally will be his initial purchase price increased by OID (if
any) previously includible in the holder's gross income to the date of
disposition and decreased by payments (if any) received on the Preferred
Securities in respect of OID (if any) to the date of disposition. Such gain or
loss generally will be a capital gain or loss and will be a long-term capital
gain or loss if the Preferred Securities have been held for more than one year
at the time of the sale.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest (or OID if the Subordinated
Debentures are treated as having been issued, or reissued, with OID) with
respect to the underlying Subordinated Debentures. A holder who disposes of his
Preferred Securities will be required to include in ordinary income (i) any
portion of the amount realized that is attributable to such accrued but unpaid
interest to the extent not previously included in income, or (ii) any amount of
OID, in either case, that has accrued on his pro rata share of the underlying
Subordinated Debentures during the taxable year of sale through the date of
disposition. Any such income inclusion will increase the holder's adjusted tax
basis in his Preferred Securities disposed of. To the extent that the amount
realized in the sale is less than the holder's adjusted tax basis, a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes.
EFFECT OF PROPOSED CHANGES IN TAX LAWS
On March 19, 1996, President Clinton proposed certain tax law changes
that would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "1996 Proposed Legislation") if such debt obligations have a maximum
term in excess of 20 years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. On March 29, 1996, Senate Finance
Committee Chairman William V. Roth, Jr. and House Ways and Means Committee
Chairman Bill Archer issued a joint statement (the "Joint Statement") indicating
their intent that certain legislative proposals initiated by the Clinton
administration, including the 1996 Proposed Legislation,
45
that may be adopted by either of the tax-writing committees of Congress would
have an effective date that is no earlier than the date of "appropriate
Congressional action." In addition, subsequent to the publication of the Joint
Statement, Senator Daniel Patrick Moynihan and Representatives Sam. M. Gibbons
and Charles B. Rangel wrote letters to Treasury Department officials concurring
with the views expressed in the Joint Statement. Neither the 1996 Proposed
Legislation nor similar legislation was enacted during the 104th Congress. On
February 6, 1997, President Clinton proposed in the administration's fiscal year
1998 budget certain tax law changes (the "1997 Proposed Legislation") that
would, among other things, generally deny corporate issuers a deduction for
interest or OID in respect of certain debt obligations if such debt obligations
have a maximum term in excess of 15 years and are not shown as indebtedness on
the issuer's applicable consolidated balance sheet. The 1997 Proposed
Legislation also contains a provision that would deny a deduction to corporate
issuers for interest or OID with respect to debt instruments that have a maximum
term of more than 40 years (including rights to extend, renew or relend), or are
payable in stock of the issuer or a related party. The U.S. Treasury
Department's summary of the 1997 Proposed Legislation states that the above
provisions regarding the deduction of interest would generally be effective for
instruments issued on or after the date of first Congressional committee action
with respect to the 1997 Proposed Legislation. The Ways and Means Committee
began a full committee hearing on the President's fiscal 1998 budget on February
11, 1997. There can be no assurance that the effective date guidance in the 1997
Proposed Legislation will be adopted if the proposed change to the tax law is
enacted, or that other legislation enacted after the date hereof will not
otherwise adversely affect the ability of the Company to deduct the interest
payable on the Subordinated Debentures. Consequently, there can be no assurance
that a Tax Event will not occur. A Tax Event would permit the Company, upon
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve, to cause a redemption of the
Preferred Securities before, as well as after, June 30, 2002. See "Description
of the Subordinated Debentures--Redemption or Exchange" and "Description of the
Preferred Securities--Redemption or Exchange--Tax Event Redemption, Capital
Treatment Event Redemption or Investment Company Event Redemption."
BACKUP WITHHOLDING AND INFORMATION REPORTING
The amount of OID accrued on the Preferred Securities held of record by
individual citizens or residents of the United States, or certain trusts,
estates, and partnerships, will be reported to the Internal Revenue Service on
Forms 1099, which forms should be mailed to such holders of Preferred Securities
by January 31 following each calendar year. Payments made on, and proceeds from
the sale of, the Preferred Securities may be subject to a "backup" withholding
tax (currently at 31%) unless the holder complies with certain identification
and other requirements. Any amounts withheld under the backup withholding rules
will be allowed as a credit against the holder's United States federal income
tax liability, provided the required information is provided to the Internal
Revenue Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON
THE PARTICULAR SITUATION OF A HOLDER OF PREFERRED SECURITIES. HOLDERS OF
PREFERRED SECURITIES SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER
TAX LAWS.
ERISA CONSIDERATIONS
Employee benefit plans that are subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
("Plans"), generally may purchase Preferred Securities, subject to the investing
fiduciary's determination that the investment in Preferred Securities satisfies
ERISA's fiduciary standards and other requirements applicable to investments by
the Plan.
In any case, the Company and/or any of its affiliates may be considered
a "party in interest" (within the meaning of ERISA) or a "disqualified person"
(within the meaning of Section 4975 of the Code) with respect to certain plans
(generally, Plans maintained or sponsored by, or contributed to by, any such
persons with respect to which the Company or an affiliate is a fiduciary or
Plans for which the Company or an affiliate
46
provides services). The acquisition and ownership of Preferred Securities by a
Plan (or by an individual retirement arrangement or other Plans described in
Section 4975(e)(1) of the Code) with respect to which the Company or any of its
affiliates is considered a party in interest or a disqualified person may
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Code, unless such Preferred Securities are acquired pursuant to and in
accordance with an applicable exemption.
As a result, Plans with respect to which the Company or any of its
affiliates is a party in interest or a disqualified person should not acquire
Preferred Securities unless such Preferred Securities are acquired pursuant to
and in accordance with an applicable exemption. Any other Plans or other
entities whose assets include Plan assets subject to ERISA or Section 4975 of
the Code proposing to acquire Preferred Securities should consult with their own
counsel.
UNDERWRITING
The Underwriters named below, represented by Sandler O'Neill & Partners,
L.P. (the "Representative"), have severally agreed, subject to the terms and
conditions set forth in the Underwriting Agreement, the form of which is filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part, to purchase from the Trust the number of Preferred Securities set forth
opposite their respective names below. The several Underwriters have agreed in
the Underwriting Agreement, subject to the terms and conditions set forth
therein, to purchase all the Preferred Securities offered hereby if any of the
Preferred Securities are purchased. In the event of default by an Underwriter,
the Underwriting Agreement provides that, in certain circumstances, purchase
commitments of the nondefaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
UNDERWRITER NUMBER OF PREFERRED
SECURITIES
Sandler O'Neill & Partners, L.P.......................
Stifel, Nicolaus & Company, Incorporated..............
Total...........................................
The Representative has advised the Trust that it proposes initially to
offer the Preferred Securities to the public at the public offering price set
forth on the cover page of this Prospectus, and to certain dealers at such price
less a concession not in excess of $___ per Preferred Security. The Underwriters
may allow, and such dealers may reallow, a discount not in excess of $___ per
Preferred Security to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Debentures of the Company,
the Underwriting Agreement provides that the Company will pay as compensation to
the Underwriters arranging the investment therein of such proceeds, an amount in
immediately available funds of $___ per Preferred Security (or $___ in the
aggregate) for the accounts of the several Underwriters.
The Trust has granted the Underwriters an option to purchase up to an
additional 180,000 Preferred Securities at the public offering price. Such
option, which expires 30 days from the date of this Prospectus, may be exercised
solely to cover over-allotments. To the extent that the Underwriters exercise
such option, each of the Underwriters will have a firm commitment, subject to
certain conditions, to purchase approximately the same percentage of the
additional Preferred Securities that the number of Preferred Securities to be
purchased initially by the Underwriter is of the 1,200,000 Preferred Securities
initially purchased by the Underwriters.
To the extent that the Underwriters exercise their option to purchase
additional Preferred Securities, the Trust will issue and sell to the Company
additional Common Securities in such aggregate Liquidation Amount as is required
for the Company to continue to hold Common Securities in an aggregate
Liquidation Amount
47
equal to at least 3% of the total capital of the Trust and the Company will
issue and sell to the Trust Subordinated Debentures in an aggregate principal
amount equal to the total aggregate Liquidation Amount of the additional
Preferred Securities being purchased pursuant to the option and the additional
Common Securities.
In connection with the offering of the Preferred Securities, the
Underwriters and any selling group members and their respective affiliates may
engage in transactions effected in accordance with Rule 104 of the Securities
and Exchange Commission's Regulation M that are intended to stabilize, maintain
or otherwise affect the market price of the Preferred Securities. Such
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 such 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 completion of the initial offering of the Preferred
Securities. 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 the foregoing 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. Neither the Company nor any of the
Underwriters makes 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 any of the foregoing transactions and, if commenced, such transactions may be
discontinued at any time without notice.
During a period of 180 days from the date of this Prospectus, neither
the Trust nor the Company will, subject to certain exceptions, without the prior
written consent of the Representative, directly or indirectly, sell, offer to
sell, grant any option for sale of, or otherwise dispose of, any Preferred
Securities, any security convertible into or exchangeable into or exercisable
for Preferred Securities or Subordinated Debentures or any debt securities
substantially similar to the Subordinated Debentures or equity securities
substantially similar to the Preferred Securities (except for Subordinated
Debentures and the Preferred Securities offered hereby).
Application has been made to have the Preferred Securities approved for
quotation on The Nasdaq Stock Market's National Market. The Representative has
advised the Trust that it presently intends to make a market in the Preferred
Securities after the commencement of trading on The Nasdaq Stock Market's
National Market, but no assurances can be made as to the liquidity of such
Preferred Securities or that an active and liquid trading market will develop
or, if developed, that it will continue. The offering price and distribution
rate have been determined by negotiations among representatives of the Company
and the Underwriters, and the offering price of the Preferred Securities may not
be indicative of the market price following the Offering. The Representative
will have no obligation to make a market in the Preferred Securities, however,
and may cease market-making activities, if commenced, at any time.
The Trust and the Company have agreed to indemnify the Underwriters
against, or contribute to payments that the Underwriters may be required to make
in respect of, certain liabilities, including liabilities under the Securities
Act.
Sandler O'Neill & Partners, L.P. engages in transactions with, and, from
time to time, has performed services for, the Company and its subsidiaries in
the ordinary course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the
Preferred Securities, the enforceability of the Trust Agreement and the
formation of the Trust will be passed upon by Morris, Nichols, Arsht & Tunnell,
Wilmington, Delaware, special Delaware counsel to the Company and the Trust.
Certain legal matters for the Company and the Trust, including the validity of
the Guarantee and the Subordinated Debentures and matters relating to United
States federal income tax considerations, will be passed upon for the Company
and the Trust
48
by Goodwin, Procter & Hoar LLP, Boston, Massachusetts, counsel to the Company
and the Trust. Certain legal matters will be passed upon for the Underwriters by
Bryan Cave LLP, St. Louis, Missouri. Goodwin, Procter & Hoar LLP will rely on
the opinion of Morris, Nichols, Arsht & Tunnell as to matters of Delaware law.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996 and 1995, and for each of the years in the three-year period ended December
31, 1996, appearing in the 1996 Annual Report of the Company to its shareholders
and incorporated by reference in the Annual Report on Form 10-K for the year
ended December 31, 1996, have been incorporated by reference in this Prospectus
and in the Registration Statement of which this Prospectus forms a part, in
reliance upon the report of Wolf & Company, P.C., independent public
accountants, incorporated by reference herein, whose report thereon appears
therein, and upon the authority of said firm as experts in accounting and
auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated into this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996 (attached hereto as Appendix A); and
2. The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997(attached hereto as Appendix B).
In addition, the following portions of the Company's 1996 Annual Report
to Shareholders are incorporated herein by reference (and are included as
Appendix C hereto):
1. Management's Discussion and Analysis of Financial Condition
and Results of Operations; and
2. Consolidated Balance Sheets, Consolidated Statements of
Income, Consolidated Statements of Operations, Consolidated
Statements of Changes in Stockholders' Equity, Consolidated
Statements of Cash Flows, and Notes to Consolidated
Financial Statements.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED BY REFERENCE HEREIN (OTHER
THAN EXHIBITS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
IN SUCH DOCUMENTS). REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED TO: PEOPLE'S
BANCSHARES, INC., 545 PLEASANT STREET, NEW BEDFORD, MASSACHUSETTS 02740, ATTN:
CHIEF FINANCIAL OFFICER (TELEPHONE (508) 991- 2601).
As used herein, the terms "Prospectus" and "herein" mean this
Prospectus, including the documents incorporated or deemed to be incorporated
herein by reference, as the same may be amended, supplemented or otherwise
modified from time to time. Statements contained in this Prospectus as to the
contents of any contract or other document referred to herein do not purport to
be complete, and where reference is made to the particular provisions of such
contract or other document, such provisions are qualified in all respects by
reference to all of the provisions of such contract or other document.
49
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material may also be obtained by
mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. If available, such information
also may be accessed through the Commission's electronic data gathering,
analysis and retrieval system ("EDGAR") via electronic means, including the
Commission's home page on the Internet (http://www.sec.gov). The Company's
common stock is traded on the Nasdaq National Market. Such reports, proxy
statements and other information concerning the Company also may be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-2 (the "Registration Statement") pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules relating thereto as
permitted by the rules and regulations of the Commission. For further
information pertaining to the Company and the securities offered hereby,
reference is made to the Registration Statement and the exhibits thereto. Items
of information omitted from this Prospectus, but contained in the Registration
Statement, may be obtained at prescribed rates or inspected without charge at
the offices of the Commission set forth above. Any statements contained herein
concerning the provisions of any document are not necessarily complete, and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
No separate financial statements of the Trust have been included herein.
The Company does not consider that such financial statements would be material
to holders of the Preferred Securities because (i) all of the voting securities
of the Trust will be owned by the Company, a reporting company under the
Exchange Act, (ii) the Trust has no independent operations but exists for the
sole purpose of issuing securities representing undivided beneficial interest in
the assets of the Trust and investing the proceeds thereof in the Subordinated
Debentures issued by the Company, and (iii) the obligations of the Company
described herein to provide certain indemnities in respect of and be responsible
for certain costs, expenses, debts and liabilities of the Trust under the
Indenture and pursuant to the Trust Agreement, the guarantee issued by the
Company with respect to the Preferred Securities, and the Subordinated
Debentures purchased by the Trust and the related Indenture, taken together,
constitute, in the belief of the Company and the Trust, a full and unconditional
guarantee of payments due on the Preferred Securities. See "Description of the
Subordinated Debentures" and "Description of the Guarantee."
The Trust is not currently subject to the information reporting
requirements of the Exchange Act. The Trust will become subject to such
requirements upon the effectiveness of the Registration Statement, although it
intends to seek and expects to receive an exemption therefrom.
50
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE TRUST OR BY THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN AFFAIRS OF THE COMPANY OR THE TRUST SINCE THE
DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
--------------
TABLE OF CONTENTS
Page
Summary......................................................................5
Summary Consolidated Financial Data.........................................10
Risk Factors .............................................................11
People's Bancshares, Inc....................................................19
People's Bancshares Capital Trust...........................................19
Use of Proceeds.............................................................20
Market for the Preferred Securities.........................................21
Accounting Treatment........................................................21
Capitalization..............................................................22
Description of Preferred Securities.........................................23
Description of the Subordinated Debentures..................................32
Description of the Guarantee................................................40
Expense Agreement...........................................................41
Relationship Among the Preferred Securities,
the Subordinated Debentures and the Guarantee
............................................................................42
Certain Federal Income Tax Consequences.....................................43
ERISA Considerations........................................................46
Underwriting................................................................47
Legal Matters...............................................................48
Experts.....................................................................49
Incorporation of Certain Documents by
Reference..................................................................49
Available Information.......................................................50
================================================================================
1,200,000 Preferred Securities
PEOPLE'S BANCSHARES
CAPITAL TRUST
__% CUMULITIVE TRUST
PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER PREFERRED SECURITY)
GUARANTEED, AS DESCRIBED HEREIN, BY
PEOPLE'S BANCSHARES, INC.
------------------------
$12,000,000
__% SUBORDINATED DEBENTURES OF
PEOPLE'S BANCSHARES, INC.
------------------------
PROSPECTUS
JUNE__, 1997
------------------------
SANDLER O'NEILL & PARTNERS, L.P.
STIFEL, NICOLAUS & COMPANY
INCORPORATED
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (1).
NATURE OF EXPENSE AMOUNT
----------------- ------
SEC filing fee (2)................................... $ 4,181.82
Nasdaq Listing Fee...................................
N.A.S.D. Filing Fee.................................. $ 1,880.00
Printing, postage and mailing........................
Legal fees and expenses..............................
Accounting fees and expenses.........................
Trustees' fees and expenses..........................
Transfer Agent and Registrar fees....................
Marketing fees, selling commissions, and
underwriter's expenses (including counsel
fees)..............................................
Blue Sky fees and expenses...........................
Miscellaneous........................................
TOTAL $
==========
- --------------------
(1) The amounts set forth above, except for the SEC and N.A.S.D. fees, are
in each case estimated.
(2) Based upon the sale of 1,200,000 Preferred Securities at $10 per
Preferred Security.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Indemnification. The Company is a Massachusetts corporation.
Massachusetts General Laws Chapter 156B, Section 67 provides that a corporation
may, subject to certain limitations, indemnify its directors, officers,
employees and other agents, and persons who serve at its request as directors,
officers, employees or other agents of another organization, or who serve at its
request in any capacity with respect to any employee benefit plan, to the extent
specified or authorized by the corporation's articles of organization, a by-law
adopted by the stockholders, or a vote adopted by the holders of a majority of
the shares of stock entitled to vote on the election of directors.
Section 67 also provides that a corporation may purchase and maintain
insurance against liability incurred by an officer or director in his capacity
as officer or director, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability.
The Company's By-laws provide that directors and officers of the Company
shall, and in the discretion of the Board of Directors, non-officer employees
may, be indemnified by the Company against liabilities and expenses arising out
of service for or on behalf of the Company. The
II-1
By-laws provide that such indemnification shall not be provided if it is
determined that the action giving rise to the liability was not taken in good
faith in the reasonable belief that the action was in the best interests of the
Company. The By-laws provide that the indemnification provision in the By-laws
does not limit any other right to indemnification existing independently of the
By-laws. The By-laws also provide that the right of directors and officers to
indemnification is a contract right.
Under the By-laws, indemnification may include payment by the Company of
expenses incurred in defending a civil or criminal action or proceeding in
advance of the final disposition of such action or proceeding, upon receipt of
an undertaking by the person indemnified to repay such payment if he shall be
adjudicated to be not entitled to such indemnification under the Bylaws, which
undertaking may be accepted without reference to the financial ability of such
person to make repayment. Any such indemnification may be provided even if the
person to be indemnified is no longer an officer, director, or employee of the
Company.
The By-laws provide that the Company shall not indemnify a director or
officer in connection with any action, suit, proceeding or investigation
initiated by the director or officer unless such initiation was approved by the
Board of Directors of the Company.
The By-laws provide that the Company is authorized to enter into
agreements with its directors and officers providing indemnification procedures
different from those set forth in the By-laws, and to purchase and maintain
liability insurance for itself and any director, officer, employee or agent of
the Company.
Limitation of Liability. Massachusetts General Laws Chapter 156B,
Section 13 enables a corporation in its original articles of organization or an
amendment thereto to eliminate or limit the personal liability of a director for
monetary damages for violations of the director's fiduciary duty, except (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Sections
61 and 62 of Chapter 156B (providing for liability of directors for authorizing
illegal distributions and for making loans to directors, officers and certain
shareholders) or (iv) for any transaction from which a director derived an
improper personal benefit. The Company's Articles and By-laws currently contain
no limitation of liability provisions.
ITEM 16. EXHIBITS.
The following is a complete list of exhibits filed as part of this
Registration Statement.
1.1 Underwriting Agreement, dated as of June __, 1997, by and between
the Company and Sandler O'Neill & Partners, L.P., as
representative of the several Underwriters.
4.1 Form of Indenture of the Company relating to the Subordinated
Debentures
4.2 Form of Subordinated Debenture (included as an exhibit to Exhibit
4.1)
4.3 Certificate of Trust of People's Bancshares Capital Trust
II-2
4.4 Form of Amended and Restated Trust Agreement of People's
Bancshares Capital Trust
4.5 Form of Preferred Security Certificate for People's Bancshares
Capital Trust (included as an exhibit to Exhibit 4.4)
4.6 Form of Preferred Securities Guarantee Agreement of the
Corporation relating to the Preferred Securities
4.7 Form of Agreement as to Expenses and Liabilities (included as an
exhibit to Exhibit 4.4).
5.1* Opinion of Goodwin, Procter & Hoar LLP as to legality of the
Subordinated Debentures and the Guarantee to be issued by the
Corporation
5.2* Opinion of Morris, Nichols, Arsht & Tunnell as to legality of the
Preferred Securities to be issued by People's Bancshares Capital
Trust
8.1* Opinion of Goodwin, Procter & Hoar LLP as to certain federal
income tax matters
12.1* Computation of ratio of earnings to fixed charges (excluding
interest on deposits)
12.2* Computation of ratio of earnings to fixed charges (including
interest on deposits)
13.1 Annual Report on Form 10-K of People's Bancshares, Inc. for the
fiscal year ended December 31, 1996 (the "10-K") (filed with the
Commission on March 31, 1997)
13.2 Quarterly Report on Form 10-Q of People's Bancshares, Inc. for
the fiscal quarter ended March 31, 1997 (filed with the
Commission on May 14, 1997)
13.3 1996 Annual Report to Shareholders of People's Bancshares, Inc.
(filed with the Commission as Exhibit 13 to the 10-K)
23.1 Consent of Wolf & Company, P.C.
23.2* Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1)
23.3* Consent of Morris, Nichols, Arsht & Tunnell (included in Exhibit
5.2)
24.1 Power of Attorney of certain officers and directors of the
Corporation (located on the signature page hereto)
25.1 Form T-1 Statement of Eligibility of State Street Bank and Trust
Company to act as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of State Street Bank and Trust
Company to act as trustee under the Declaration of Trust of
People's Bancshares Capital Trust
25.3 Form T-1 Statement of Eligibility of State Street Bank and Trust
Company under the Guarantee for the benefit of the holders of
Preferred Securities of People's Bancshares Capital Trust
-----------
* To be filed by amendment
II-3
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"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 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered 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 Act may be
permitted to directors, officers and controlling persons of each undersigned
Registrant pursuant to the foregoing provisions, or otherwise, each Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by each undersigned Registrant of
expenses incurred or paid by a director, officer of controlling person of each
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, each Registrant will, unless in the opinion of its
counsel the matter has been settled by the controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The undersigned Registrant hereby undertakes that: (1) For purposes of
determining any liability under the Act, the information omitted from the form
of prospectus filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Company pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this Registration Statement as of the time it was declared effective; and (2)
for the purpose of determining any liability under the 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.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-2 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of New Bedford, Commonwealth of Massachusetts, on
June 6, 1997.
PEOPLE'S BANCSHARES, INC.
By:/s/Richard S. Straczynski
--------------------------
Richard S. Straczynski
President and Chief Executive
Officer
Pursuant to the requirements of Securities Act of 1933, People's
Bancshares Capital Trust certifies that it has reasonable grounds to believe
that it meets all the requirements for filing on Form S-2 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of New Bedford, Commonwealth of
Massachusetts, on June 6, 1997.
PEOPLE'S BANCSHARES CAPITAL
TRUST
By:/s/ Richard S. Straczynski
--------------------------
Richard S. Straczynski
Administrative Trustee
By:/s/Colin C. Blair
-------------------------
Colin C. Blair
Administrative Trustee
By:/s/ Donna L. Boulanger
-------------------------
Donna L. Boulanger
Administrative Trustee
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of People's Bancshares, Inc. hereby severally constitute Richard S.
Straczynski and Colin C. Blair and each of them singly, our true and lawful
attorneys with full power to them, and each of
II-5
them singly, to sign for us and in our names in the capacities indicated below,
the Registration Statement filed herewith and any and all amendments to said
Registration Statement, and generally to do all such things in our names and in
our capacities as officers and directors to enable People's Bancshares, Inc. to
comply with the provisions of the Securities Act of 1933, and all requirements
of the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys, or any of them, to said
Registration Statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/Richard S. Straczynski President and Chief June 6, 1997
- -------------------------- Executive Officer
Richard S. Straczynski (principal executive officer)
/s/Colin C. Blair Chief Financial Officer and June 6, 1997
- -------------------------- Treasurer
Colin C. Blair (principal financial and
accounting officer)
/s/ Frederick W. Adami, III Director June 6, 1997
- --------------------------
Frederick W. Adami, III
/s/ Virginia M. Burke Director June 6, 1996
- -------------------------
Virginia M. Burke
/s/ B. Benjamin Cavallo Director June 6, 1996
- -------------------------
B. Benjamin Cavallo
/s/ John R. Eaton Director June 6, 1997
- -------------------------
John R. Eaton
/s/ David Goldberg Director June 6, 1997
- -------------------------
S. David Goldberg
/s/ Terrence Gomes Director June 6, 1997
- -------------------------
Terrence Gomes
II-6
/s/ Fred W. Green Director June 6, 1997
- -------------------------
Fred W. Green
/s/ Dr. Loring C. Johnson Director June 6, 1997
- -------------------------
Dr. Loring C. Johnson
/s/ Richard D. Matthews Director June 6, 1997
- -------------------------
Richard D. Matthews
/s/ Gerald R. Rodman Director June 6, 1997
- -------------------------
Gerald R. Rodman
/s/ Davis H. Scudder Director June 6, 1997
- -------------------------
Davis H. Scudder
/s/ Stanley D. Siskind Director June 6, 1997
- -------------------------
Stanley D. Siskind
</TABLE>
II-7
EXHIBIT INDEX
1.1 Underwriting Agreement, dated as of June __, 1997, by and between
the Company and Sandler O'Neil & Partners, L.P., as
representative of the several Underwriters.
4.1 Form of Indenture of the Company relating to the Subordinated
Debentures
4.2 Form of Subordinated Debenture (included as an exhibit to Exhibit
4.1)
4.3 Certificate of Trust of People's Bancshares Capital Trust
4.4 Form of Amended and Restated Trust Agreement of People's
Bancshares Capital Trust
4.5 Form of Preferred Security Certificate for People's Bancshares
Capital Trust (included as an exhibit to Exhibit 4.4)
4.6 Form of Preferred Securities Guarantee Agreement of the
Corporation relating to the Preferred Securities
4.7 Form of Agreement as to Expenses and Liabilities (included as an
exhibit to Exhibit 4.4).
5.1* Opinion of Goodwin, Procter & Hoar LLP as to legality of the
Subordinated Debentures and the Guarantee to be issued by the
Corporation
5.2* Opinion of Morris, Nichols, Arsht & Tunnell as to legality of the
Preferred Securities to be issued by People's Bancshares Capital
Trust
8.1* Opinion of Goodwin, Procter & Hoar LLP as to certain federal
income tax matters
12.1* Computation of ratio of earnings to fixed charges (excluding
interest on deposits)
12.2* Computation of ratio of earnings to fixed charges (including
interest on deposits)
13.1 Annual Report on Form 10-K of People's Bancshares, Inc. for the
fiscal year ended December 31, 1996 (the "10-K") (filed with the
Commission on March 31, 1997)
13.2 Quarterly Report on Form 10-Q of People's Bancshares, Inc. for
the fiscal quarter ended March 31, 1997 (filed with the
Commission on May 14, 1997)
13.3 1996 Annual Report to Shareholders of People's Bancshares, Inc.
(filed with the Commission as Exhibit 13 to the 10-K)
23.1 Consent of Wolf & Company, P.C.
23.2* Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1)
23.3* Consent of Morris, Nichols, Arsht & Tunnell (included in Exhibit
5.2)
24.1 Power of Attorney of certain officers and directors of the
Corporation (located on the signature page hereto)
25.1 Form T-1 Statement of Eligibility of State Street Bank and Trust
Company to act as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of State Street Bank and Trust
Company to act as trustee under the Declaration of Trust of
People's Bancshares Capital Trust
25.3 Form T-1 Statement of Eligibility of State Street Bank and Trust
Company under the Guarantee for the benefit of the holders of
Preferred Securities of People's Bancshares Capital Trust
-----------
* To be filed by amendment
EXHIBIT 1.1
1,200,000 Preferred Securities
People's Bancshares Capital Trust
___% Cumulative Trust Preferred Securities
(Liquidation Amount of $10 per Preferred Security)
UNDERWRITING AGREEMENT
----------------------
__________ __, 1997
SANDLER O'NEILL & PARTNERS, L.P.
As Representative of the Several Underwriters
named in Schedule I hereto
Two World Trade Center, 104th Floor
New York, New York 10048
Ladies and Gentlemen:
People's Bancshares, Inc., a Massachusetts corporation (the
"Company") and its financing subsidiary, People's Bancshares Capital Trust, a
Delaware business trust (the "Trust", and hereinafter together with the Company,
the "Offerors"), propose that the Trust issue and sell to the several
underwriters listed on Schedule I hereto (the "Underwriters"), pursuant to the
terms of this Agreement, 1,200,000 of the Trust's ____% Cumulative Trust
Preferred Securities, with a liquidation amount of $10 per preferred security
(the "Preferred Securities"), to be issued under the Trust Agreement (as
hereinafter defined), the terms of which are more fully described in the
Prospectus (as hereinafter defined). The aforementioned 1,200,000 Preferred
Securities to be sold to the Underwriters are herein called the "Firm Preferred
Securities". Solely for the purpose of covering over-allotments in the sale of
the Firm Preferred Securities, the Offerors further propose that the Trust issue
and sell to the Underwriters, at their option, up to an additional 180,000
Preferred Securities (the "Option Preferred Securities") upon exercise of the
over-allotment option granted in Section 1 hereof. The Firm Preferred Securities
and any Option Preferred Securities are herein collectively referred to as the
"Designated Preferred Securities". You are acting as representative of the
Underwriters and in such capacity are sometimes herein referred to as the
"Representative."
The Offerors hereby confirm as follows their agreement with
each of the Underwriters in connection with the proposed purchase of the
Designated Preferred Securities. The terms, conditions, covenants and agreements
set forth in this Agreement supercede and preempt the terms, conditions,
covenants and agreements of the parties set forth in any and all other
agreements among the parties hereto relating to the issuance of the Preferred
Securities.
1. SALE, PURCHASE AND DELIVERY OF DESIGNATED PREFERRED
SECURITIES; DESCRIPTION OF DESIGNATED PREFERRED SECURITIES.
(a) On the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions herein set
forth, the Offerors hereby agree that the Trust shall issue and sell to each of
the Underwriters and each of the Underwriters agrees, severally and not jointly,
to purchase from the Trust, at a purchase price of $10 per share (the "Purchase
Price"), the respective number of Firm Preferred Securities set forth opposite
the name of such Underwriter in Schedule I hereto. Because the proceeds from the
sale of the Firm Preferred Securities will be used to purchase from the Company
its Subordinated Debentures (as hereinafter defined and as described in the
Prospectus), the Company shall pay to each Underwriter a commission of $____ per
Firm Preferred Security purchased (the "Firm Preferred Securities Commission").
The Representative may by notice to the Company amend Schedule I to add,
eliminate or substitute names set forth therein (other than to eliminate the
name of the Representative) and to amend the number of firm Preferred Securities
to be purchased by any firm or corporation listed thereon, provided that the
total number of Firm Preferred Securities listed on Schedule I shall equal
1,200,000.
In addition, on the basis of the representations, warranties
and agreements herein contained and subject to the terms and conditions herein
set forth, the Trust hereby grants to the Underwriters, severally and not
jointly, an option to purchase all or any portion of the 180,000 Option
Preferred Securities, and upon the exercise of such option in accordance with
this Section 1, the Offerors hereby agree that the Trust shall issue and sell to
the Underwriters, severally and not jointly, all or any portion of the Option
Preferred Securities at the same Purchase Price per share paid for the Firm
Preferred Securities. If any Option Preferred Securities are to be purchased,
each Underwriter, severally and not jointly, agrees to purchase from the Trust
that proportion (subject to adjustment as you may determine to avoid fractional
shares) of the number of Option Preferred Securities to be purchased that the
number of Firm Preferred Securities set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to 1,200,000. Because the proceeds from the sale of the
Option Preferred Securities will be used to purchase from the Company its
Subordinated Debentures, the Company shall pay to the Underwriters a commission
of $______ per Option Preferred Security for each Option Preferred Security
purchased (the "Option Preferred Securities Commission"). The option hereby
granted (the "Option") shall expire 30 days after the date upon which the
Registration Statement (as hereinafter defined) becomes effective and may be
exercised only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Firm Preferred Securities.
The Option may be exercised in whole or in part at any time (but not more than
once) by you giving notice (confirmed in writing) to the Trust setting forth the
number of Option Preferred Securities as to which the Underwriters are
exercising the Option and the time, date and place for payment and delivery of
certificates for such Option Preferred Securities. Such time and date of payment
and delivery for the Option Preferred Securities (the "Option Closing Date")
shall be determined by you, but shall not be earlier than two nor later than
five full business days after the exercise of such Option, nor in any event
prior to the Closing Date (as hereinafter defined). The Option Closing Date may
be the same as the Closing Date.
2
Payment of the Purchase Price and the Firm Preferred
Securities Commission and delivery of certificates for the Firm Preferred
Securities shall be made at the offices of Sandler O'Neill & Partners, L.P., Two
World Trade Center, 104th Floor, New York, New York 10048, or such other place
as shall be agreed to by you and the Offerors, at 11:00 a.m., New York time, on
_____ __, 1997, or at such other time not more than five full business days
thereafter as the Offerors and you shall determine (the "Closing Date"). If the
Underwriters exercise the option to purchase any or all of the Option Preferred
Securities, payment of the Purchase Price and Option Preferred Securities
Commission and delivery of certificates for such Option Preferred Securities
shall be made on the Option Closing Date at the Underwriters' offices, or at
such other place as the Offerors and you shall determine. Such payments shall be
made to an account designated by the Trust by wire transfer or certified or bank
cashier's check, in clearing house or similar next day available funds, in the
amount of the Purchase Price therefor, against delivery by or on behalf of the
Trust to you for the respective accounts of the several Underwriters of
certificates for the Designated Preferred Securities to be purchased by the
Underwriters.
The Agreement contained herein with respect to the timing of
the Closing Date and Option Closing Date is intended to, and does, constitute an
express agreement, as described in Rule 15c6-1(c) and (d) promulgated under the
1934 Act (as defined herein), for a settlement date other than four business
days after the date of the contract.
Certificates for Designated Preferred Securities to be
purchased by the Underwriters shall be delivered by the Offerors in such
authorized denominations and registered in such names as you shall request in
writing not later than 1:00 p.m., New York time, two business days prior to the
Closing Date and, if applicable, the Option Closing Date in fully registered
form. Certificates for Designated Preferred Securities to be purchased by the
Underwriters shall be made available by the Offerors to you at such office as
you may designate in writing for inspection, checking and packaging not later
than 2:00 p.m., New York time, on the last business day prior to the Closing
Date and, if applicable, on the last business day prior to the Option Closing
Date.
Time shall be of the essence, and delivery of the certificates
for the Designated Preferred Securities at the time and place specified pursuant
to this Agreement is a further condition of the obligations of each Underwriter
hereunder.
(b) The Offerors propose that the Trust issue the Designated
Preferred Securities pursuant to an Amended and Restated Trust Agreement among
State Street Bank and Trust Company, as Property Trustee, Wilmington Trust
Company, as Delaware Trustee, the Administrative Trustees named therein,
(collectively, the "Trustees"), and the Company, in substantially the form
heretofore delivered to the Underwriters, said Agreement being hereinafter
referred to as the "Trust Agreement". In connection with the issuance of the
Designated Preferred Securities, the Company proposes (i) to issue its
Subordinated Debentures ( the "Debentures") pursuant to an Indenture, dated as
of _____________, 1997, between the Company and State Street Bank and Trust
Company, as Trustee (the "Indenture") and (ii) to guarantee certain payments on
the Designated Preferred Securities pursuant to a Guarantee Agreement between
the Company and State Street Bank and Trust Company, as guarantee trustee (the
"Guarantee"), to the extent described therein.
3
2. Representations and Warranties.
(a) The Offerors jointly and severally represent and warrant
to, and agree with, each of the Underwriters that:
(i) The reports filed with the Securities and
Exchange Commission (the "Commission") by the Company under the
Securities Exchange Act of 1934, as amended (the "1934 Act") and the
rules and regulations thereunder (the "1934 Act Regulations") at the
time they were filed with the Commission, complied as to form in all
material respects with the requirements of the 1934 Act and the 1934
Act Regulations and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading.
(ii) The Offerors have prepared and filed with the
Commission a registration statement on Form S-2 (File Numbers 333-_____
and 333-_____-01) for the registration of the Designated Preferred
Securities, the Guarantee and $13,800,000 aggregate principal amount of
Debentures under the Securities Act of 1933, as amended (the "1933
Act"), including the related prospectus subject to completion, and one
or more amendments to such registration statement may have been so
filed, in each case in conformity in all material respects with the
requirements of the 1933 Act, the rules and regulations promulgated
thereunder (the "1933 Act Regulations") and the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act") and the rules and
regulations thereunder. Copies of such registration statement,
including any amendments thereto, each Preliminary Prospectus (as
defined herein) contained therein and the exhibits, financial
statements and schedules to such registration statement, as finally
amended and revised, have heretofore been delivered by the Offerors to
the Representative. After the execution of this Agreement, the Offerors
will file with the Commission (A) if such registration statement, as it
may have been amended, has been declared by the Commission to be
effective under the 1933 Act, a prospectus in the form most recently
included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with
such changes or insertions as are required by Rule 430A of the 1933 Act
Regulations ("Rule 430A") or permitted by Rule 424(b) of the 1933 Act
Regulations ("Rule 424(b)") and as have been provided to and not
objected to by the Representative prior to (or as are agreed to by the
Representative subsequent to) the execution of this Agreement, or (B)
if such registration statement, as it may have been amended, has not
been declared by the Commission to be effective under the 1933 Act, an
amendment to such registration statement, including a form of final
prospectus, necessary to permit such registration statement to become
effective, a copy of which amendment has been furnished to and not
objected to by the Representative prior to (or is agreed to by the
Representative subsequent to) the execution of this Agreement. As used
in this Agreement, the term "Registration Statement" means such
registration statement, as amended at the time when it was or is
declared effective under the 1933 Act, including (1) all financial
schedules and exhibits thereto, (2) all documents (or portions thereof)
incorporated by reference therein filed under the 1934 Act, and (3) any
information omitted therefrom pursuant to Rule 430A and included in the
Prospectus (as
4
hereinafter defined); the term "Preliminary Prospectus" means each
prospectus subject to completion filed with such registration statement
or any amendment thereto including all documents (or portions thereof)
incorporated by reference therein under the 1934 Act (including the
prospectus subject to completion, if any, included in the Registration
Statement and each prospectus filed pursuant to Rule 424(a) under the
1933 Act); and the term "Prospectus" means the prospectus first filed
with the Commission pursuant to Rule 424(b)(1) or (4) or, if no
prospectus is required to be filed pursuant to Rule 424(b)(1) or (4),
the prospectus included in the Registration Statement, in each case
including the financial schedules and all documents (or portions
thereof) incorporated by reference therein under the 1934 Act. The date
on which the Registration Statement becomes effective is hereinafter
referred to as the "Effective Date."
(iii) The documents incorporated by reference in the
Preliminary Prospectus or Prospectus or from which information is so
incorporated by reference, when they became effective or were filed
with the Commission, as the case may be, complied in all material
respects with the requirements of the 1934 Act and the 1934 Act
Regulations, and when read together and with the other information in
the Preliminary Prospectus or Prospectus, as the case may be, at the
time the Registration Statement became or becomes effective and at the
Closing Date and any Option Closing Date, did not or will not, as the
case may be, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
(iv) No order preventing or suspending the use of any
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) has been issued by the Commission, nor has the
Commission, to the knowledge of the Offerors, threatened to issue such
an order or instituted proceedings for that purpose. Each Preliminary
Prospectus, at the time of filing thereof, (A) complied in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and (B) did not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Offerors by any of the
Underwriters expressly for inclusion in the Prospectus beneath the
heading "Underwriting" (such information referred to herein as the
"Underwriters' Information").
(v) At the Effective Date and at all times subsequent
thereto, up to and including the Closing Date and, if applicable, the
Option Closing Date, the Registration Statement and any post-effective
amendment thereto (A) complied and will comply in all material respects
with the requirements of the 1933 Act, the 1933 Act Regulations and the
Trust Indenture Act (and the rules and regulations thereunder) and (B)
did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, not misleading. At the
Effective Date and at all times when the Prospectus is required to be
delivered in connection with offers and sales of Designated Preferred
Securities, including, without
5
limitation, the Closing Date and, if applicable, the Option Closing
Date, the Prospectus, as amended or supplemented, (A) complied and will
comply in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations and the Trust Indenture Act (and the rules
and regulations thereunder) and (B) did not contain and will not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that this representation and
warranty does not apply to Underwriters' Information.
(vi) (A) The Company is duly organized, validly
existing and in good standing under the laws of the State of
Massachusetts, with full corporate and other power and authority to
own, lease and operate its properties and conduct its business as
described in and contemplated by the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and as currently being conducted and is duly
registered as a bank holding company under the Bank Holding Company Act
of 1956, as amended (the "BHC Act").
(B) The Trust has been duly created and is
validly existing as a statutory business trust in good standing under
the Delaware Business Trust Act with the power and authority (trust and
other) to own its property and conduct its business as described in the
Registration Statement and Prospectus, to issue and sell its common
securities (the "Common Securities") to the Company pursuant to the
Trust Agreement, to issue and sell the Designated Preferred Securities,
to enter into and perform its obligations under this Agreement and to
consummate the transactions herein contemplated; the Trust has no
subsidiaries and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
the ownership of its property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Trust; the Trust has
conducted and will conduct no business other than the transactions
contemplated by this Agreement and described in the Prospectus; the
Trust is not a party to or bound by any agreement or instrument other
than this Agreement, the Trust Agreement and the agreements and
instruments contemplated by the Trust Agreement and described in the
Prospectus; the Trust has no liabilities or obligations other than
those arising out of the transactions contemplated by this Agreement
and the Trust Agreement and described in the Prospectus; the Trust is
not a party to or subject to any action, suit or proceeding of any
nature; the Trust is not, and at the Closing Date or any Option Closing
Date will not be, to the knowledge of the Offerors, classified as an
association taxable as a corporation for United States federal income
tax purposes; and the Trust is, and as of the Closing Date or any
Option Closing Date will be, treated as a consolidated subsidiary of
the Company pursuant to generally accepted accounting principles.
(vii) The Company has nine subsidiaries. They are
listed on Exhibit A attached hereto and incorporated herein (the
"Subsidiaries"). The Company does not own or control, directly or
indirectly, more than 5% of any class of equity security of any
corporation, association or other entity other than the Subsidiaries.
People's Savings Bank of Brockton is referred to herein as the "Bank".
Each Subsidiary is a bank,
6
corporation, security corporation or Delaware business trust duly
incorporated (or created, as the case may be), validly existing and in
good standing under the laws of its respective jurisdiction of
incorporation. Each such Subsidiary has full corporate and other power
and authority to own, lease and operate its properties and to conduct
its business as described in and contemplated by the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and as currently
being conducted. The deposit accounts of the Bank are insured by the
Savings Association Insurance Fund administered by the Federal Deposit
Insurance Corporation up to the maximum amount provided by law; and no
proceedings for the modification, termination or revocation of any such
insurance are pending or, to the knowledge of the Offerors, threatened.
(viii) Each of the Company and the Subsidiaries is
duly qualified to transact business as a foreign corporation and is in
good standing in each other jurisdiction in which it owns or leases
property or conducts its business so as to require such qualification
and in which the failure to so qualify would, individually or in the
aggregate, have a material adverse effect on the condition (financial
or otherwise), earnings, business, prospects or results of operations
of the Company and the Subsidiaries on a consolidated basis. All of the
issued and outstanding shares of capital stock of the Subsidiaries (A)
have been duly authorized and are validly issued, (B) are fully paid
and nonassessable except to the extent such shares may be deemed
assessable under 12 U.S.C. Section 55 or 12 U.S.C. Section 1831o, and
(C) except as disclosed in the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), are directly
owned by the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance, restriction upon voting or transfer,
preemptive rights, claim or equity. Except as disclosed in the
Prospectus, there are no outstanding rights, warrants or options to
acquire or instruments convertible into or exchangeable for any capital
stock or equity securities of the Offerors or the Subsidiaries.
(ix) The capital stock of the Company and the equity
securities of the Trust conform to the description thereof contained in
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus). The outstanding shares of capital stock
and equity securities of each Offeror have been duly authorized and
validly issued and are fully paid and nonassessable, and no such shares
were issued in violation of the preemptive or similar rights of any
security holder of an Offeror; no person has any preemptive or similar
right to purchase any shares of capital stock or equity securities of
the Offerors. Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no outstanding rights, options or warrants to
acquire any securities of the Offerors, and there are no outstanding
securities convertible into or exchangeable for any such securities and
no restrictions upon the voting or transfer of any capital stock of the
Company or equity securities of the Trust pursuant to the Company's
corporate charter or bylaws, the Trust Agreement or any agreement or
other instrument to which an Offeror is a party or by which an Offeror
is bound.
(x) (A) The Trust has all requisite power and
authority to issue, sell
7
and deliver the Designated Preferred Securities in accordance with and
upon the terms and conditions set forth in this Agreement, the Trust
Agreement, the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus). All corporate and trust action required to be taken by the
Offerors for the authorization, issuance, sale and delivery of the
Designated Preferred Securities in accordance with such terms and
conditions has been validly and sufficiently taken. The Designated
Preferred Securities, when delivered in accordance with this Agreement,
will be duly and validly issued and outstanding, will be fully paid and
nonassessable undivided beneficial interests in the assets of the
Trust, will be entitled to the benefits of the Trust Agreement, will
not be issued in violation of or subject to any preemptive or similar
rights, and will conform to the description thereof in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and the Trust
Agreement. None of the Designated Preferred Securities, immediately
prior to delivery, will be subject to any security interest, lien,
mortgage, pledge, encumbrance, restriction upon voting or transfer,
preemptive rights, claim, equity or other defect.
(B) The Debentures have been duly and
validly authorized, and, when duly and validly executed, authenticated
and issued as provided in the Indenture and delivered to the Trust
pursuant to the Trust Agreement, will constitute valid and legally
binding obligations of the Company entitled to the benefits of the
Indenture and will conform to the description thereof contained in the
Prospectus.
(C) The Guarantee has been duly and validly
authorized, and, when duly and validly executed and delivered to the
guarantee trustee for the benefit of the Trust, will constitute a valid
and legally binding obligation of the Company and will conform to the
description thereof contained in the Prospectus.
(D) The Agreement as to Expenses and
Liabilities (the "Expense Agreement") has been duly and validly
authorized, and, when duly and validly executed and delivered to the
Company, will constitute a valid and legally binding obligation of the
Company and will conform to the description thereof contained in the
Prospectus.
(xi) The Offerors and the Subsidiaries have complied
in all material respects with all federal, state and local statutes,
regulations, ordinances and rules applicable to the ownership and
operation of their properties or the conduct of their businesses as
described in and contemplated by the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and as currently being conducted.
(xii) The Offerors and the Subsidiaries have all
material permits, easements, consents, licenses, franchises and other
governmental and regulatory authorizations from all appropriate
federal, state, local or other public authorities ("Permits") as are
necessary to own and lease their properties and conduct their
businesses in the manner described in and contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary
8
Prospectus) and as currently being conducted in all material respects.
All such Permits are in full force and effect and each of the Offerors
and the Subsidiaries are in all material respects complying therewith,
and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or will result in any
other material impairment of the rights of the holder of any such
Permit, subject in each case to such qualification as may be adequately
disclosed in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus). Such Permits contain no
restrictions that would materially impair the ability of the Company or
the Subsidiaries to conduct their businesses in the manner consistent
with their past practices. Neither the Offerors nor any of the
Subsidiaries have received notice or otherwise has knowledge of any
proceeding or action relating to the revocation or modification of any
such Permit.
(xiii) Neither of the Offerors nor any of the
Subsidiaries is in breach or violation of their corporate charter,
by-laws or other governing documents (including without limitation, the
Trust Agreement). Neither of the Offerors nor any of the Subsidiaries
are, and to the knowledge of the Offerors no other party is, in
violation, breach or default (with or without notice or lapse of time
or both) in the performance or observance of any term, covenant,
agreement, obligation, representation, warranty or condition contained
in (A) any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease, franchise, license, Permit or any other
agreement or instrument to which it is a party or by which it or any of
its properties may be bound, which such breach, violation or default
could have material adverse consequences to the Offerors and the
Subsidiaries on a consolidated basis, and to the knowledge of the
Offerors, no other party has asserted that the Offerors or any of the
Subsidiaries is in such violation, breach or default (provided that the
foregoing shall not apply to defaults by borrowers from the Banks), or
(B) except as disclosed in the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), any order,
decree, judgment, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality, domestic or
foreign, having jurisdiction over the Offerors or the Subsidiaries or
any of their respective properties the breach, violation or default of
which could have a material adverse effect on the condition, financial
or otherwise, earnings, affairs, business, prospects, or results of
operations of the Offerors and the Subsidiaries on a consolidated
basis.
(xiv) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement, the Trust Agreement, the Registration Statement and the
Prospectus (or, if the Prospectus in not in existence, the most recent
Preliminary Prospectus) do not and will not conflict with, result in
the creation or imposition of any material lien, claim, charge,
encumbrance or restriction upon any property or assets of the Offerors
or the Subsidiaries or the Designated Preferred Securities pursuant to,
constitute a breach or violation of, or constitute a default under,
with or without notice or lapse of time or both, any of the terms,
provisions or conditions of the charter or by-laws of the Company or
the Subsidiaries, the Trust Agreement, the Guarantee, the Indenture,
any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease, franchise, license, Permit or any other
agreement or instrument to which the Offerors or the Subsidiaries is a
party or
9
by which any of them or any of their respective properties may be bound
or any order, decree, judgment, rule or regulation of any court,
arbitrator, government, or governmental agency or instrumentality,
domestic or foreign, having jurisdiction over the Offerors or the
Subsidiaries or any of their respective properties which conflict,
creation, imposition, breach, violation or default would have either
singly or in the aggregate a material adverse effect on the condition,
financial or otherwise, earnings, affairs, business, prospects or
results of operations of the Offerors and the Subsidiaries on a
consolidated basis. No authorization, approval, consent or order of, or
filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is
required in connection with the transactions contemplated by this
Agreement, the Trust Agreement, the Indenture, the Guarantee, the
Registration Statement and the Prospectus (or such Preliminary
Prospectus), except such as may be required under the 1933 Act, and
such as may be required under state securities laws in connection with
the purchase and distribution of the Designated Preferred Securities by
the Underwriters. No authorization, approval, consent or order of or
filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is
required in connection with the transactions contemplated by this
Agreement, the Trust Agreement, the Indenture, the Guarantee, the
Registration Statement and the Prospectus, except such as have been
obtained under the 1933 Act, and such as may be required under state
securities laws or Interpretations or Rules of the National Association
of Securities Dealers, Inc. ("NASD") in connection with the purchase
and distribution of the Designated Preferred Securities by the
Underwriters.
(xv) The Offerors have all requisite corporate power
and authority to enter into this Agreement and this Agreement has been
duly and validly authorized, executed and delivered by the Offerors and
constitutes the legal, valid and binding agreement of the Offerors,
enforceable against the Offerors in accordance with its terms, except
as the enforcement thereof may be limited by general principles of
equity and by bankruptcy or other laws relating to or affecting
creditors' rights generally and except as any indemnification or
contribution provisions thereof may be limited under applicable
securities laws. Each of the Indenture, the Trust Agreement, the
Guarantee and the Expense Agreement has been duly authorized by the
Company, and, when executed and delivered by the Company on the Closing
Date, each of said agreements will constitute a valid and legally
binding obligation of the Company and will be enforceable against the
Company in accordance with its terms, except as the enforcement thereof
may be limited by general principles of equity and by bankruptcy or
other laws relating to or affecting creditors' rights generally and
except as any indemnification or contribution provisions thereof may be
limited under applicable securities laws. Each of the Indenture, the
Trust Agreement and the Guarantee has been duly qualified under the
Trust Indenture Act and will conform to the description thereof
contained in the Prospectus.
(xvi) The Company and the Subsidiaries have good and
marketable title in fee simple to all real property and good title to
all personal property owned by them and material to their business, in
each case free and clear of all security interests, liens, mortgages,
pledges, encumbrances, restrictions, claims, equities and other defects
except such as are referred to in the Prospectus (or, if the Prospectus
is not in existence, the most
10
recent Preliminary Prospectus) or such as do not materially affect the
value of such property in the aggregate and do not materially interfere
with the use made or proposed to be made of such property; and all of
the leases under which the Company or the Subsidiaries hold real or
personal property are valid, existing and enforceable leases and in
full force and effect with such exceptions as are not material and do
not materially interfere with the use made or proposed to be made of
such real or personal property, and neither the Company nor any of the
Subsidiaries is in default in any material respect of any of the terms
or provisions of any leases.
(xvii) Wolf & Company, P.C., who have certified
certain of the consolidated financial statements of the Company and the
Subsidiaries including the notes thereto, included in the Registration
Statement and Prospectus, are independent public accountants with
respect to the Company and the Subsidiaries, as required by the 1933
Act and the 1933 Act Regulations.
(xviii) The consolidated financial statements
including the notes thereto, included by incorporation or otherwise in
the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) with respect
to the Company and the Subsidiaries comply in all material respects
with the 1933 Act and the 1933 Act Regulations and present fairly the
consolidated financial position of the Company and the Subsidiaries as
of the dates indicated and the consolidated results of operations, cash
flows and shareholders' equity of the Company and the Subsidiaries for
the periods specified and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis.
The selected and summary consolidated financial data concerning the
Offerors and the Subsidiaries included in the Registration Statement
and the Prospectus (or such Preliminary Prospectus) comply in all
material respects with the 1933 Act and the 1933 Act Regulations,
present fairly the information set forth therein, and have been
compiled on a basis consistent with that of the consolidated financial
statements of the Offerors and the Subsidiaries in the Registration
Statement and the Prospectus (or such Preliminary Prospectus). The
other financial, statistical and numerical information included in the
Registration Statement and the Prospectus (or such Preliminary
Prospectus) comply in all material respects with the 1933 Act and the
1933 Act Regulations, present fairly the information shown therein, and
to the extent applicable have been compiled on a basis consistent with
the consolidated financial statements of the Company and the
Subsidiaries included in the Registration Statement and the Prospectus
(or such Preliminary Prospectus).
(xix) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), except as otherwise stated therein:
(A) neither of the Offerors nor any of the
Subsidiaries have sustained any loss or interference with its
business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree which is
material to the condition (financial or otherwise), earnings,
business, prospects or results of operations of
11
the Offerors and the Subsidiaries on a consolidated basis;
(B) there has not been any material adverse
change in, or any development which is reasonably likely to
have a material adverse effect on, the condition (financial or
otherwise), earnings, business, prospects or results of
operations of the Offerors and the Subsidiaries on a
consolidated basis, whether or not arising in the ordinary
course of business;
(C) neither of the Offerors nor any of the
Subsidiaries have incurred any liabilities or obligations,
direct or contingent, or entered into any material
transactions, other than in the ordinary course of business
which is material to the condition (financial or otherwise),
earnings, business, prospects or results of operations of the
Offerors and the Subsidiaries on a consolidated basis;
(D) neither of the Offerors have declared or
paid any dividend, and neither of the Offerors nor any of the
Subsidiaries have become delinquent in the payment of
principal or interest on any outstanding borrowings; and
(E) there has not been any change in the
capital stock, equity securities, long-term debt, obligations
under capital leases or, other than in the ordinary course of
business, short-term borrowings of the Offerors or the
Subsidiaries.
(xx) Except as set forth in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), no charge,
investigation, action, suit or proceeding is pending or, to the
knowledge of the Offerors, threatened, against or affecting the
Offerors or the Subsidiaries or any of their respective properties
before or by any court or any regulatory, administrative or
governmental official, commission, board, agency or other authority or
body, or any arbitrator, wherein an unfavorable decision, ruling or
finding could have a material adverse effect on the consummation of
this Agreement or the transactions contemplated herein or the condition
(financial or otherwise), earnings, affairs, business, prospects or
results of operations of the Offerors and the Subsidiaries on a
consolidated basis or which is required to be disclosed in the
Registration Statement or the Prospectus (or such Preliminary
Prospectus) and is not so disclosed.
(xxi) There are no contracts or other documents
required to be filed as exhibits to the Registration Statement by the
1933 Act or the 1933 Act Regulations or the Trust Indenture Act (or any
rules or regulations thereunder) which have not been filed as exhibits
or incorporated by reference to the Registration Statement, or that are
required to be summarized in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) that are not
so summarized.
(xxii) Neither of the Offerors has taken, directly or
indirectly, any action designed to result in or which has constituted
or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Offerors to facilitate the sale or resale of the Designated Preferred
Securities, and neither of the
12
Offerors is aware of any such action taken or to be taken by any
affiliate of the Offerors.
(xxiii) The Offerors and the Subsidiaries own, or
possess adequate rights to use, all patents, copyrights, trademarks,
service marks, trade names and other rights necessary to conduct the
businesses now conducted by them in all material respects or as
described in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) and neither the Offerors nor
the Subsidiaries have received any notice of infringement or conflict
with asserted rights of others with respect to any patents, copyrights,
trademarks, service marks, trade names or other rights which,
individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on
the condition (financial or otherwise), earnings, affairs, business,
prospects or results of operations of the Offerors and the Subsidiaries
on a consolidated basis, and the Offerors do not know of any basis for
any such infringement or conflict.
(xxiv) Except as adequately disclosed in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), no labor dispute involving the Company or the
Subsidiaries exists or, to the knowledge of the Offerors, is imminent
which might be expected to have a material adverse effect on the
condition (financial or otherwise), earnings, affairs, business,
prospects or results of operations of the Offerors and the Subsidiaries
on a consolidated basis or which is required to be disclosed in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). Neither the Company nor any of the
Subsidiaries have received notice of any existing or threatened labor
dispute by the employees of any of its principal suppliers, customers
or contractors which might be expected to have a material adverse
effect on the condition (financial or otherwise), earnings, affairs,
business, prospects or results of operations of the Company and the
Subsidiaries on a consolidated basis.
(xxv) The Offerors and the Subsidiaries have timely
and properly prepared and filed all necessary federal, state, local and
foreign tax returns which are required to be filed and have paid all
taxes shown as due thereon and have paid all other taxes and
assessments to the extent that the same shall have become due, except
such as are being contested in good faith or where the failure to so
timely and properly prepare and file would not have a material adverse
effect on the condition (financial or otherwise), earnings, affairs,
business, prospects or results of operations of the Offerors and the
Subsidiaries on a consolidated basis. The Offerors have no knowledge of
any tax deficiency which has been or might be assessed against the
Offerors or the Subsidiaries which, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on
the condition (financial or otherwise), earnings, affairs, business,
prospects or results of operations of the Offerors and the Subsidiaries
on a consolidated basis.
(xxvi) Each of the material contracts, agreements and
instruments described or referred to in the Registration Statement or
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) and each contract, agreement and
instrument filed as an exhibit to the Registration Statement is in full
force and effect and is the legal, valid and binding agreement of the
Offerors or the
13
Subsidiaries, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by general principles of equity and
by bankruptcy or other laws relating to or affecting creditors' rights
generally. Except as disclosed in the Prospectus (or such Preliminary
Prospectus), to the knowledge of the Offerors, no other party to any
such agreement is (with or without notice or lapse of time or both) in
breach or default in any material respect thereunder.
(xxvii) No relationship, direct or indirect, exists
between or among the Offerors or the Subsidiaries, on the one hand, and
the directors, officers, trustees, shareholders, customers or suppliers
of the Offerors or the Subsidiaries, on the other hand, which is
required to be described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) which is not adequately described therein.
(xxviii) No person has the right to request or
require the Offerors or the Subsidiaries to register any securities for
offering and sale under the 1933 Act by reason of the filing of the
Registration Statement with the Commission or the issuance and sale of
the Designated Preferred Securities except as adequately disclosed in
the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(xxix) The Designated Preferred Securities have been
approved for quotation on the Nasdaq National Market subject to
official notice of issuance.
(xxx) Except as described in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no contractual encumbrances or restrictions or
material legal restrictions, on the ability of the Subsidiaries (A) to
pay dividends or make any other distributions on its capital stock or
to pay any indebtedness owed to the Offerors, (B) to make any loans or
advances to, or investments in, the Offerors or (C) to transfer any of
its property or assets to the Offerors.
(xxxi) Neither of the Offerors is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(xxxii) The Offerors have not distributed and will
not distribute prior to the Closing Date any prospectus in connection
with the Offering, other than a Preliminary Prospectus, the Prospectus,
the Registration Statement and the other materials permitted by the
1933 Act and the 1933 Act Regulations and reviewed by the
Representative.
3. OFFERING BY THE UNDERWRITERS. After the Registration Statement
becomes effective or, if the Registration Statement is already effective, after
this Agreement becomes effective, the Underwriters propose to offer the Firm
Preferred Securities for sale to the public upon the terms and conditions set
forth in the Prospectus. The Underwriters may from time to time thereafter
reduce the public offering price and change the other selling terms, provided
the proceeds to the Trust shall not be reduced as a result of such reduction or
change.
14
The Underwriters may reserve and sell such of the Designated
Preferred Securities purchased by the Underwriters as the Underwriters may elect
to dealers chosen by it (the "Selected Dealers") at the public offering price
set forth in the Prospectus less the applicable Selected Dealers' concessions
set forth therein, for re-offering by Selected Dealers to the public at the
public offering price. The Underwriters may allow, and Selected Dealers may
re-allow, a concession set forth in the Prospectus to certain other brokers and
dealers.
4. CERTAIN COVENANTS OF THE OFFERORS. The Offerors jointly and
severally covenant with the Underwriters as follows:
(a) The Offerors shall use their best efforts to cause the
Registration Statement and any amendments thereto, if not effective at the time
of execution of this Agreement, to become effective as promptly as possible. If
the Registration Statement has become or becomes effective pursuant to Rule 430A
and information has been omitted therefrom in reliance on Rule 430A, then, the
Offerors will prepare and file in accordance with Rule 430A and Rule 424(b)
copies of the Prospectus or, if required by Rule 430A, a post-effective
amendment to the Registration Statement (including the Prospectus) containing
all information so omitted and will provide evidence satisfactory to the
Representative of such timely filing.
(b) The Offerors shall notify you immediately, and confirm
such notice in writing:
(i) when the Registration Statement, or any
post-effective amendment to the Registration Statement, has become
effective, or when the Prospectus or any supplement to the Prospectus
or any amended Prospectus has been filed;
(ii) of the receipt of any comments or requests from
the Commission;
(iii) of any request of the Commission to amend or
supplement the Registration Statement, any Preliminary Prospectus or
the Prospectus or for additional information; and
(iv) of the issuance by the Commission or any state
or other regulatory body of any stop order or other order suspending
the effectiveness of the Registration Statement, preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, or
suspending the qualification of any of the Designated Preferred
Securities for offering or sale in any jurisdiction or the institution
or threat of institution of any proceedings for any of such purposes.
The Offerors shall use their best efforts to prevent the issuance of
any such stop order or of any other such order and if any such order is
issued, to cause such order to be withdrawn or lifted as soon as
possible.
(c) The Offerors shall furnish to the Underwriters, from time
to time without charge, as soon as available, as many copies as the Underwriters
may reasonably request of (i) the registration statement as originally filed and
of all amendments thereto, in executed form, including exhibits, whether filed
before or after the Registration Statement becomes effective, (ii) all exhibits
and documents incorporated therein or filed therewith, (iii) all consents and
certificates of experts in executed form, (iv) each Preliminary Prospectus and
all amendments
15
and supplements thereto, and (v) the Prospectus, and all amendments and
supplements thereto.
(d) During the time when a prospectus is required to be
delivered under the 1933 Act, the Offerors shall comply to the best of their
ability with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the
1934 Act Regulations so as to permit the completion of the distribution of the
Designated Preferred Securities as contemplated herein and in the Trust
Agreement and the Prospectus. The Offerors shall not file any amendment to the
registration statement as originally filed or to the Registration Statement and
shall not file any amendment thereto or make any amendment or supplement to any
Preliminary Prospectus or to the Prospectus of which you shall not previously
have been advised in writing and provided a copy a reasonable time prior to the
proposed filings thereof or to which you or counsel to the Underwriters shall
object. If it is necessary, in the Company's reasonable opinion or in the
reasonable opinion of the Company's counsel to amend or supplement the
Registration Statement or the Prospectus in connection with the distribution of
the Designated Preferred Securities, the Offerors shall forthwith amend or
supplement the Registration Statement or the Prospectus, as the case may be, by
preparing and filing with the Commission (provided you or counsel to the
Underwriters does not reasonably object), and furnishing to you, such number of
copies as you may reasonably request of an amendment or amendments of, or a
supplement or supplements to, the Registration Statement or the Prospectus, as
the case may be (in form and substance reasonably satisfactory to you and
counsel to the Underwriters). If any event shall occur as a result of which it
is necessary to amend or supplement the Prospectus to correct an untrue
statement of a material fact or to include a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or if for any reason it is necessary at any time to amend or
supplement the Prospectus to comply with the 1933 Act and the 1933 Act
Regulations, the Offerors shall, subject to the second sentence of this
subsection (d), forthwith amend or supplement the Prospectus by preparing and
filing with the Commission, and furnishing to you, such number of copies as you
may reasonably request of an amendment or amendments of, or a supplement or
supplements to, the Prospectus (in form and substance satisfactory to you and
counsel to the Underwriters) so that, as so amended or supplemented, the
Prospectus shall not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) The Offerors shall cooperate with you and counsel to the
Underwriters in order to qualify the Designated Preferred Securities for
offering and sale under the securities or blue sky laws of such jurisdictions as
you may reasonably request and shall continue such qualifications in effect so
long as may be advisable for distribution of the Designated Preferred
Securities; provided, however, that the Offerors shall not be required to
qualify to do business as a foreign corporation or file a general consent to
service of process in any jurisdiction in connection with the foregoing. The
Offerors shall file such statements and reports as may be required by the laws
of each jurisdiction in which the Designated Preferred Securities have been
qualified as above. The Offerors will notify you immediately of, and confirm in
writing, the suspension of qualification of the Designated Preferred Securities
or threat thereof in any jurisdiction.
(f) The Offerors shall make generally available to their
security holders in the
16
manner contemplated by Rule 158 of the 1933 Act Regulations and furnish to you
as soon as practicable, but in any event not later than 16 months after the
Effective Date, a consolidated earnings statement of the Offerors conforming
with the requirements of Section 11(a) of the 1933 Act and Rule 158.
(g) The Offerors shall use the proceeds from the sale of the
Designated Preferred Securities to be sold by the Trust hereunder in the manner
specified in the Prospectus under the caption "Use of Proceeds."
(h) For five years from the Effective Date, the Offerors shall
furnish to the Representative copies of all reports and communications
(financial or otherwise) furnished by the Offerors to the holders of the
Designated Preferred Securities as a class, copies of all reports and financial
statements filed with or furnished to the Commission (other than portions for
which confidential treatment has been obtained from the Commission) or with any
national securities exchange or the Nasdaq National Market and such other
documents, reports and information concerning the business and financial
conditions of the Offerors as the Representative may reasonably request, other
than such documents, reports and information for which the Offerors has the
legal obligation not to reveal to the Representative.
(i) For a period of 180 days from the Effective Date, the
Offerors shall not, directly or indirectly, offer for sale, sell or agree to
sell or otherwise dispose of any Designated Preferred Securities other than
pursuant to this Agreement, any other beneficial interests in the assets of the
Trust or any securities of the Trust or the Company that are substantially
similar to the Designated Preferred Securities or the Debentures, including any
guarantee of such beneficial interests or substantially similar securities, or
securities convertible into or exchangeable for or that represent the right to
receive any such beneficial interest or substantially similar securities,
without the prior written consent of the Representative.
(j) The Offerors shall use their best efforts to cause the
Designated Preferred Securities to become quoted on the Nasdaq National Market,
or in lieu thereof a national securities exchange, and to remain so quoted for
at least five years from the Effective Date or for such shorter period as may be
specified in a written consent of the Representative, provided this shall not
prevent the Company from redeeming the Designated Preferred Securities pursuant
to the terms of the Trust Agreement. If the Designated Preferred Securities are
exchanged for Debentures, the Company will use its best efforts to have the
Debentures promptly listed on the Nasdaq National Market or other organization
on which the Designated Preferred Securities are then listed, and to have the
Debentures promptly registered under the Exchange Act.
(k) Subsequent to the date of this Agreement and through the
date which is the later of (i) the day following the date on which the
Underwriters' option to purchase the Option Preferred Securities shall expire or
(ii) the day following the Option Closing Date with respect to any Option
Preferred Securities that the Underwriters shall elect to purchase, except as
described in or contemplated by the Prospectus, neither the Offerors nor any of
the Subsidiaries shall take any action (or refrain from taking any action) which
will result in the Offerors or the Subsidiaries incurring any material liability
or obligation, direct or contingent, or enter into any material transaction,
except in the ordinary course of business, and there will not be any material
change in the financial position, capital stock, or any material increase in
long-term debt, obligations
17
under capital leases or short-term borrowings of the Offerors and the
Subsidiaries on a consolidated basis.
(l) The Offerors shall not, for a period of 180 days after the
date hereof, without the prior written consent of the Representative, purchase,
redeem or call for redemption, or prepay or give notice of prepayment (or
announce any redemption or call for redemption, or any repayment or notice of
prepayment) of any of the Offerors' securities.
(m) The Offerors shall not take, directly or indirectly, any
action designed to result in or which has constituted or which might reasonably
be expected to cause or result in stabilization or manipulation of the price of
any security of the Offerors to facilitate the sale or resale of the Designated
Preferred Securities and the Offerors are not aware of any such action taken or
to be taken by any affiliate of the Offerors.
(n) Prior to the Closing Date (and, if applicable, the Option
Closing Date), the Offerors will not issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Offerors, the Subsidiaries or the offering of the Designated Preferred
Securities (the "Offering") without your prior written consent.
5. PAYMENT OF EXPENSES. Whether or not this Agreement is terminated or
the sale of the Designated Preferred Securities to the Underwriters is
consummated, the Company covenants and agrees that it will pay or cause to be
paid (directly or by reimbursement) all costs and expenses incident to the
performance of the obligations of the Offerors under this Agreement, including:
(a) the preparation, printing, filing, delivery and shipping
of the initial registration statement, the Preliminary Prospectus or
Prospectuses, the Registration Statement and the Prospectus and any amendments
or supplements thereto, and the printing, delivery and shipping of this
Agreement and any other underwriting documents (including, without limitation,
selected dealers agreements), the certificates for the Designated Preferred
Securities and the Preliminary and Final Blue Sky Memoranda and any legal
investment surveys and any supplements thereto;
(b) all fees, expenses and disbursements of the Offerors'
counsel and accountants;
(c) all fees and expenses incurred in connection with the
qualification of the Designated Preferred Securities, Debentures and the
Guarantee under the securities or blue sky laws of such jurisdictions as you may
request, including all filing fees and fees and disbursements of counsel to the
Underwriters in connection therewith, including, without limitation, in
connection with the preparation of the Preliminary and Final Blue Sky Memoranda
and any legal investment surveys and any supplements thereto;
(d) all fees and expenses incurred in connection with filings
made with the NASD;
(e) any applicable fees and other expenses incurred in
connection with the
18
listing of the Designated Preferred Securities and, if applicable, the Guarantee
and the Debentures on the Nasdaq National Market;
(f) the cost of furnishing to you copies of the initial
registration statements, any Preliminary Prospectus, the Registration Statement
and the Prospectus and all amendments or supplements thereto;
(g) the costs and charges of any transfer agent or registrar
and the fees and disbursements of counsel to any transfer agent or registrar;
(h) all costs and expenses (including stock transfer taxes)
incurred in connection with the printing, issuance and delivery of the
Designated Preferred Securities to the Underwriters;
(i) all expenses incident to the preparation, execution and
delivery of the Trust Agreement, the Indenture and the Guarantee; and
(j) all other costs and expenses incident to the performance
of the obligations of the Company hereunder and under the Trust Agreement that
are not otherwise specifically provided for in this Section 5.
If the sale of Designated Preferred Securities contemplated by
this Agreement is not completed for any reason whatsoever, whether or not such
termination is allowable hereunder, the Company will pay you your accountable
out-of-pocket expenses in connection herewith or in contemplation of the
performance of your obligations hereunder, including without limitation travel
expenses, reasonable fees, expenses and disbursements of counsel or other
out-of-pocket expenses incurred by you in connection with any discussion of the
Offering or the contents of the Registration Statement, any investigation of the
Offerors and the Subsidiaries, or any preparation for the marketing, purchase,
sale or delivery of the Designated Preferred Securities, in each case following
presentation of reasonably detailed invoices therefor.
If the sale of Designated Preferred Securities contemplated by
this Agreement is completed, the Company shall not be responsible for payment of
fees or disbursements of counsel to the Underwriters other than in accordance
with paragraph (c) above, or for the reimbursement of any expenses of the
Underwriters.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters to purchase and pay for the Firm Preferred Securities and,
following exercise of the option granted by the Offerors in Section 1 of this
Agreement, the Option Preferred Securities, are subject, in your sole
discretion, to the accuracy of and compliance with the representations and
warranties and agreements of the Offerors herein as of the date hereof and as of
the Closing Date (or in the case of the Option Preferred Securities, if any, as
of the Option Closing Date), to the accuracy of the written statements of the
Offerors made pursuant to the provisions hereof, to the performance by the
Offerors of their covenants and obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement or any amendment thereto
filed prior to the
19
Closing Date has not been declared effective prior to the time of execution
hereof, the Registration Statement shall become effective not later than 11:00
a.m., New York time, on the first business day following the time of execution
of this Agreement, or at such later time and date as you may agree to in
writing. If required, the Prospectus and any amendment or supplement thereto
shall have been timely filed in accordance with Rule 424(b) and Rule 430A under
the 1933 Act and Section 4(a) hereof. No stop order suspending the effectiveness
of the Registration Statement or any amendment or supplement thereto shall have
been issued under the 1933 Act or any applicable state securities laws and no
proceedings for that purpose shall have been instituted or shall be pending, or,
to the knowledge of the Offerors or the Representative, shall be contemplated by
the Commission or any state authority. Any request on the part of the Commission
or any state authority for additional information (to be included in the
Registration Statement or Prospectus or otherwise) shall have been disclosed to
you and complied with to your satisfaction and to the satisfaction of counsel to
the Underwriters.
(b) No Underwriter shall have advised the Company at or before
the Closing Date (and, if applicable, the Option Closing Date) that the
Registration Statement or any post- effective amendment thereto, or the
Prospectus or any amendment or supplement thereto, contains an untrue statement
of a fact which, in your opinion, is material or omits to state a fact which, in
your opinion, is material and is required to be stated therein or is necessary
to make statements therein (in the case of the Prospectus or any amendment or
supplement thereto, in light of the circumstances under which they were made)
not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Trust Agreement,
and the Designated Preferred Securities, and the authorization and form of the
Registration Statement and Prospectus, other than financial statements and other
financial data, and all other legal matters relating to this Agreement and the
transactions contemplated hereby or by the Trust Agreement shall be satisfactory
in all respects to counsel to the Underwriters, and the Offerors and the
Subsidiaries shall have furnished to such counsel all documents and information
relating thereto that they may reasonably request to enable them to pass upon
such matters.
(d) Goodwin, Procter & Hoar LLP, counsel to the Offerors,
shall have furnished to you their signed opinion, dated the Closing Date or the
Option Closing Date, as the case may be, in form and substance satisfactory to
counsel to the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is
validly existing and in good standing under the laws of the State of
Massachusetts, and is duly registered as a bank holding company under
the BHC Act. Each of the Subsidiaries is duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and the Subsidiaries has full
corporate power and authority to own or lease its properties and to
conduct its business as such business is described in the Prospectus
and is currently conducted in all material respects. All outstanding
shares of capital stock of the Subsidiaries have been duly authorized
and validly issued and are fully paid and nonassessable except to the
extent such shares may be deemed assessable under 12 U.S.C. Section
1831 and, to the best of such counsel's knowledge, except as disclosed
in the Prospectus, there are no outstanding rights, options or warrants
to purchase any such shares or securities convertible into or
exchangeable for
20
any such shares.
(ii) The capital stock, Debentures and Guarantee of
the Company and the equity securities of the Trust conform to the
description thereof contained in the Prospectus in all material
respects. The capital stock of the Company authorized and issued as of
March 31, 1997 is as set forth under the caption "Capitalization" in
the Prospectus, has been duly authorized and validly issued, and is
fully paid and nonassessable. To the best of such counsel's knowledge,
there are no outstanding rights, options or warrants to purchase, no
other outstanding securities convertible into or exchangeable for, and
no commitments, plans or arrangements to issue, any shares of capital
stock of the Company or equity securities of the Trust, except as
described in the Prospectus.
(iii) The issuance, sale and delivery of the
Designated Preferred Securities and Debentures in accordance with the
terms and conditions of this Agreement and the Indenture have been duly
authorized by all necessary actions of the Offerors. All of the
Designated Preferred Securities have been duly and validly authorized
and, when delivered in accordance with this Agreement will be duly and
validly issued, fully paid and nonassessable, and will conform to the
description thereof in the Registration Statement, the Prospectus and
the Trust Agreement. The Designated Preferred Securities have been
approved for quotation on the Nasdaq National Market subject to
official notice of issuance. There are no preemptive or other rights to
subscribe for or to purchase, and other than as disclosed in the
Prospectus no restrictions upon the voting or transfer of, any shares
of capital stock or equity securities of the Offerors or the
Subsidiaries pursuant to the corporate charter, by-laws or other
governing documents (including without limitation, the Trust Agreement)
of the Offerors or the Subsidiaries, or, to the best of such counsel's
knowledge, any agreement or other instrument to which either Offeror or
any of the Subsidiaries is a party or by which either Offeror or any of
the Subsidiaries may be bound.
(iv) The Offerors have all requisite corporate and
trust power to enter into and perform their obligations under this
Agreement, and this Agreement has been duly and validly authorized,
executed and delivered by the Offerors and constitutes the legal, valid
and binding obligations of the Offerors enforceable in accordance with
its terms, except as the enforcement hereof or thereof may be limited
by general principles of equity and by bankruptcy or other laws
relating to or affecting creditors' rights generally, and except as the
indemnification and contribution provisions hereof may be limited under
applicable laws and certain remedies may not be available in the case
of a non-material breach.
(v) Each of the Indenture, the Trust Agreement and
the Guarantee has been duly qualified under the Trust Indenture Act,
has been duly authorized, executed and delivered by the Company, and is
a valid and legally binding obligation of the Company enforceable in
accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, receivership, moratorium and other laws
affecting the rights and remedies of creditors generally and of general
principles of equity;
21
(vi) The Debentures have been duly authorized,
executed, authenticated and delivered by the Company, are entitled to
the benefits of the Indenture and are legal, valid and binding
obligations of the Company enforceable against the Company in
accordance with their terms, subject to the effect of bankruptcy,
insolvency, reorganization, receivership, moratorium and other laws
affecting the rights and remedies of creditors generally and of general
principles of equity;
(vii) The Expense Agreement has been duly authorized,
executed and delivered by the Company, and is a valid and legally
binding obligation of the Company enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity;
(viii) To the best of such counsel's knowledge,
neither of the Offerors nor any of the Subsidiaries is in breach or
violation of, or default under, with or without notice or lapse of time
or both, its corporate charter, by-laws or governing document
(including without limitation, the Trust Agreement). The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement, and the Trust Agreement do
not and will not conflict with, result in the creation or imposition of
any material lien, claim, charge, encumbrance or restriction upon any
property or assets of the Offerors or the Subsidiaries or the
Designated Preferred Securities pursuant to, or constitute a material
breach or violation of, or constitute a material default under, with or
without notice or lapse of time or both, any of the terms, provisions
or conditions of the charter, by-laws or governing document (including
without limitation, the Trust Agreement) of the Offerors or the
Subsidiaries, or to the best of such counsel's knowledge, any material
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease, franchise, license or any other agreement or instrument to
which either Offeror or the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound or any order,
decree, judgment, franchise, license, Permit, rule or regulation of any
court, arbitrator, government, or governmental agency or
instrumentality, domestic or foreign, known to such counsel having
jurisdiction over the Offerors or the Subsidiaries or any of their
respective properties which, in each case, is material to the Offerors
and the Subsidiaries on a consolidated basis. No authorization,
approval, consent or order of, or filing, registration or qualification
with, any person (including, without limitation, any court,
governmental body or authority) is required under Massachusetts law in
connection with the transactions contemplated by this Agreement in
connection with the purchase and distribution of the Designated
Preferred Securities by the Underwriters.
(ix) To the best of such counsel's knowledge, holders
of securities of the Offerors either do not have any right that, if
exercised, would require the Offerors to cause such securities to be
included in the Registration Statement or have waived such right. To
the best of such counsel's knowledge, neither the Offerors nor any of
the Subsidiaries is a party to any agreement or other instrument which
grants rights for or relating to the registration of any securities of
the Offerors.
(x) Except as set forth in the Registration Statement
and the
22
Prospectus, to the best of such counsel's knowledge, (i) no action,
suit or proceeding at law or in equity is pending or threatened in
writing to which the Offerors or the Subsidiaries is or may be a party,
and (ii) no action, suit or proceeding is pending or threatened in
writing against or affecting the Offerors or the Subsidiaries or any of
their properties, before or by any court or governmental official,
commission, board or other administrative agency, authority or body, or
any arbitrator, wherein an unfavorable decision, ruling or finding
could have a material adverse effect on the consummation of this
Agreement or the issuance and sale of the Designated Preferred
Securities as contemplated herein or the condition (financial or
otherwise), earnings, affairs, business, or results of operations of
the Offerors and the Subsidiaries on a consolidated basis or which is
required to be disclosed in the Registration Statement or the
Prospectus and is not so disclosed.
(xi) No authorization, approval, consent or order of
or filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is
required in connection with the transactions contemplated by this
Agreement, the Trust Agreement, the Registration Statement and the
Prospectus, except such as have been obtained under the 1933 Act, and
except such as may be required under state securities laws or
Interpretations or Rules of the NASD in connection with the purchase
and distribution of the Designated Preferred Securities by the
Underwriters.
(xii) The Registration Statement and the Prospectus
and any amendments or supplements thereto (other than the financial
statements or other financial data included therein or omitted
therefrom and Underwriters' Information, as to which such counsel need
express no opinion) comply as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations as of their
respective dates of effectiveness.
(xiii) To the best of such counsel's knowledge, there
are no contracts, agreements, leases or other documents of a character
required to be disclosed in the Registration Statement or Prospectus or
to be filed as exhibits to the Registration Statement that are not so
disclosed or filed.
(xiv) The statements under the captions "Regulation
of the Company and the Bank", "Government Regulation", "Description of
the Preferred Securities", "Description of the Subordinated
Debentures", "Description of the Guarantee", "Expense Agreement",
"Relationship Among the Preferred Securities, the Subordinated
Debentures and the Guarantee", "Certain Federal Income Tax
Consequences", and "ERISA Considerations" in the Prospectus (or
incorporated therein by reference), insofar as such statements
constitute a summary of legal and regulatory matters, documents,
instruments or proceedings referred to therein are accurate in all
material respects and fairly present the information called for with
respect to such legal matters, documents, instruments and proceedings,
other than financial and statistical data as to which said counsel
expresses no opinion or belief.
23
(xv) Such counsel has been advised by the staff of
the Commission that the Registration Statement has become effective
under the 1933 Act; any required filing of the Prospectus pursuant to
Rule 424(b) has been made within the time period required by Rule
424(b); to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for a stop order are pending or threatened by
the Commission.
(xvi) Except as set forth in the Prospectus, to the
best of such counsel's knowledge, there are no contractual encumbrances
or restrictions, or material legal restrictions on the ability of the
Subsidiaries (A) to pay dividends or make any other distributions on
its capital stock or to pay indebtedness owed to the Offerors, (B) to
make any loans or advances to, or investments in, the Offerors or (C)
to transfer any of its property or assets to the Offerors.
(xvii) To the best of such counsel's knowledge, (A)
the business and operations of the Offerors and the Subsidiaries comply
in all material respects with all statutes, ordinances, laws, rules and
regulations applicable thereto and which are material to the Offerors
and the Subsidiaries on a consolidated basis, except in those instances
where non-compliance would not materially impair the ability of the
Offerors and the Subsidiaries to conduct their business; and (B) the
Offerors and the Subsidiaries possess and are operating in all material
respects in compliance with the terms, provisions and conditions of all
Permits required to conduct their businesses as described in the
Prospectus and which are material to the Offerors and the Subsidiaries
on a consolidated basis, except in those instances where the loss
thereof or non-compliance therewith would not have a material adverse
effect on the condition (financial or otherwise), earnings, affairs,
business, prospects or results of operations of the Offerors and the
Subsidiaries on a consolidated basis; to the best of such counsel's
knowledge, all such Permits are valid and in full force and effect,
and, to the best of such counsel's knowledge, no action, suit or
proceeding is pending or threatened which may lead to the revocation,
termination, suspension or non-renewal of any such Permit, except in
those instances where the loss thereof or non-compliance therewith
would not materially impair the ability of the Offerors or the
Subsidiaries to conduct their businesses.
In giving the above opinion, such counsel may state that,
insofar as such opinion involves factual matters, they have relied upon
certificates of officers of the Offerors including, without limitation,
certificates as to the identity of any and all material contracts, indentures,
mortgages, deeds of trust, loans or credit agreements, notes, leases,
franchises, licenses or other agreements or instruments, and all material
permits, easements, consents, licenses, franchises and government regulatory
authorizations, for purposes of paragraphs (viii), (xiii) and (xvii) hereof and
certificates of public officials. In giving such opinion, such counsel may rely
as to matters of Delaware law upon the opinion of Morris, Nichols, Arsht &
Tunnell described herein.
Such counsel shall also confirm that, in connection with the
preparation of the Registration Statement and Prospectus, such counsel has
participated in conferences with officers and representatives of the Offerors
and with their independent public accountants and with you and your counsel, at
which conferences such counsel made inquiries of such officers, representatives
and accountants and discussed in detail the contents of the Registration
Statement
24
and Prospectus and such counsel has no reason to believe (A) that the
Registration Statement or any amendment thereto (except for the financial
statements and related schedules and statistical data included therein or
omitted therefrom or Underwriters' Information, as to which such counsel need
express no opinion), at the time the Registration Statement or any such
amendment became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading or (B) that the Prospectus or any amendment or
supplement thereto (except for the financial statements and related schedules
and statistical data included therein or omitted therefrom or Underwriters'
Information, as to which such counsel need express no opinion), at the time the
Registration Statement became effective (or, if the term "Prospectus" refers to
the prospectus first filed pursuant to Rule 424(b) of the 1933 Act Regulations,
at the time the Prospectus was issued), at the time any such amended or
supplemented Prospectus was issued, at the Closing Date and, if applicable, the
Option Closing Date, contained or contains any untrue statement of a material
fact or omitted or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or (C) that
there is any amendment to the Registration Statement required to be filed that
has not already been filed.
(e) Morris, Nichols, Arsht & Tunnell, special Delaware counsel
to the Offerors, shall have furnished to you their signed opinion, dated as of
Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to such counsel, to the effect that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware
Business Trust Act and, under the Trust Agreement and the Delaware
Business Trust Act, has the trust power and authority to conduct its
business as described in the Prospectus.
(ii) The Trust Agreement is a legal, valid and
binding agreement of the Trust and the Trustees, and is enforceable
against the Trust and the Trustees, in accordance with its terms.
(iii) Under the Trust Agreement and the Delaware
Business Trust Act, the execution and delivery of the Underwriting
Agreement by the Trust, and the performance by the Trust of its
obligations thereunder, have been authorized by all requisite trust
action on the part of the Trust.
(iv) The Designated Preferred Securities have been
duly authorized by the Trust Agreement, and when issued and sold in
accordance with the Trust Agreement, the Designated Preferred
Securities will be, subject to the qualifications set forth in
paragraph (v) below, fully paid and nonassessable beneficial interest
in the assets of the Trust and entitled to the benefits of the Trust
Agreement. The form of certificates to evidence the Designated
Preferred Securities has been approved by the Trust and is in due and
proper form and complies with all applicable requirements.
(v) Holders of Designated Preferred Securities, as
beneficial owners of the Trust, will be entitled to the same limitation
of personal liability extended to
25
shareholders of private, for-profit corporations organized under the
General Corporation Law of the State of Delaware. Such opinion may note
that the holders of Designated Preferred Securities may be obligated to
make payments as set forth in the Trust Agreement.
(vi) Under the Delaware Business Trust Act and the
Trust Agreement, the issuance of the Designated Preferred Securities is
not subject to preemptive rights.
(vii) The issuance and sale by the Trust of the
Designated Preferred Securities and the Common Securities, the
execution, delivery and performance by the Trust of this Agreement, and
the consummation of the transactions contemplated by this Agreement, do
not violate (a) the Trust Agreement, or (b) any applicable Delaware
law, rule or regulation.
Such opinion may state that it is limited to the laws of the
State of Delaware and that the opinion expressed in paragraph (ii) above is
subject to the effect upon the Trust Agreement of (i) bankruptcy, insolvency,
moratorium, receivership, reorganization, liquidation, fraudulent conveyance and
other similar laws relating to or affecting the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law relating to
fiduciary duties (regardless of whether considered and applied in a proceeding
in equity or at law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or contribution.
(f) Bryan Cave LLP, counsel to the Underwriters, shall have
furnished you their signed opinion, dated the Closing Date or the Option Closing
Date, as the case may be, with respect to the sufficiency of all corporate
procedures and other legal matters relating to this Agreement, the validity of
the Designated Preferred Securities, the Registration Statement, the Prospectus
and such other related matters as you may reasonably request and there shall
have been furnished to such counsel such documents and other information as they
may request to enable them to pass on such matters. In giving such opinion,
Bryan Cave LLP may rely as to matters of fact upon statements and certifications
of officers of the Offerors and of other appropriate persons and may rely as to
matters of law, other than law of the United States and the State of Missouri,
and upon the opinions of Goodwin, Procter & Hoar LLP and Morris, Nichols, Arsht
& Tunnell described herein.
(g) On the date of this Agreement and on the Closing Date
(and, if applicable, any Option Closing Date), the Representative shall have
received from Wolf & Company, P.C. a letter, dated the date of this Agreement
and the Closing Date (and, if applicable, the Option Closing Date),
respectively, in form and substance satisfactory to the Representative,
confirming that they are independent public accountants with respect to Company,
within the meaning of the 1933 Act and the 1933 Act Regulations, and stating in
effect that:
(i) In their opinion, the consolidated financial
statements of the Company audited by them and included in the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations.
26
(ii) On the basis of the procedures specified by the
American Institute of Certified Public Accountants as described in SAS
No. 71, "Interim Financial Information", inquiries of officials of the
Company responsible for financial and accounting matters, and such
other inquiries and procedures as may be specified in such letter,
which procedures do not constitute an audit in accordance with U.S.
generally accepted auditing standards, nothing came to their attention
that caused them to believe that, if applicable, the unaudited interim
consolidated financial statements of the Company included in the
Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
and 1933 Act Regulations or are not in conformity with U.S. generally
accepted accounting principles applied on a basis substantially
consistent, except as noted in the Registration Statement, with the
basis for the audited consolidated financial statements of the Company
included in the Registration Statement.
(iii) On the basis of limited procedures, not
constituting an audit in accordance with U.S. generally accepted
auditing standards, consisting of a reading of the unaudited interim
financial statements and other information referred to below, a reading
of the latest available unaudited condensed consolidated financial
statements of the Company, inspection of the minute books of the
Company since the date of the latest audited financial statements of
the Company included in the Registration Statement, inquiries of
officials of the Company responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in
such letter, nothing came to their attention that caused them to
believe that:
(A) as of a specified date not more than
five days prior to the date of such letter, there have been
any changes in the consolidated capital stock of the Company,
any increase in the consolidated debt of the Company, any
decreases in consolidated total assets or shareholders equity
of the Company, or any changes, decreases or increases in
other items specified by the Underwriters, in each case as
compared with amounts shown in the latest unaudited interim
consolidated statement of financial condition of the Company
included in the Registration Statement except in each case for
changes, increases or decreases which the Registration
Statement specifically discloses, have occurred or may occur
or which are described in such letter; and
(B) for the period from the date of the
latest unaudited interim consolidated financial statements
included in the Registration Statement to the specified date
referred to in Clause (iii)(A), there were any decreases in
the consolidated interest income, net interest income, or net
income of the Company or in the per share amount of net income
of the Company, or any changes, decreases or increases in any
other items specified by the Representative, in each case as
compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Underwriters, except in each case for increases or decreases
which the Registration Statement discloses have occurred or
may occur, or which are described in such letter.
27
(iv) In addition to the audit referred to in their
report included in the Registration Statement and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (ii) and (iii) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with U.S. generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by the
Underwriters which are derived from the general accounting records and
consolidated financial statements of the Company which appear in the
Registration Statement specified by the Underwriters in the
Registration Statement, and have compared such amounts, percentages and
financial information with the accounting
records and the material derived from such records and consolidated
financial statements of the Company have found them to be in agreement.
In the event that the letters to be delivered referred to
above set forth any such changes, decreases or increases as specified in Clauses
(iii)(A) or (iii)(B) above, or any exceptions from such agreement specified in
Clause (iv) above, it shall be a further condition to the obligations of the
Underwriters that the Representative shall have determined, after discussions
with officers of the Company responsible for financial and accounting matters,
that such changes, decreases, increases or exceptions as are set forth in such
letters do not (x) reflect a material adverse change in the items specified in
Clause (iii)(A) above as compared with the amounts shown in the latest unaudited
consolidated statement of financial condition of the Company included in the
Registration Statement, (y) reflect a material adverse change in the items
specified in Clause (iii)(B) above as compared with the corresponding periods of
the prior year or other period specified by the Representative, or (z) reflect a
material change in items specified in Clause (iv) above from the amounts shown
in the Preliminary Prospectus distributed by the Underwriters in connection with
the offering contemplated hereby or from the amounts shown in the Prospectus.
(h) At the Closing Date and, if applicable, the Option Closing
Date, you shall have received certificates of the chief executive officer and
the chief financial and accounting officer of the Company, which certificates
shall be deemed to be made on behalf of the Company dated as of the Closing Date
and, if applicable, the Option Closing Date, evidencing satisfaction of the
conditions of Section 6(a) and stating that (i) the representations and
warranties of the Company set forth in Section 2(a) hereof are accurate as of
the Closing Date and, if applicable, the Option Closing Date, and that the
Offerors have complied with all agreements and satisfied all conditions on their
part to be performed or satisfied at or prior to such Closing Date; (ii) since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any material adverse change in
the condition (financial or otherwise), earnings, affairs, business, prospects
or results of operations of the Offerors and the Subsidiaries on a consolidated
basis; (iii) since such dates there has not been any material transaction
entered into by the Offerors or the Subsidiaries other than transactions in the
ordinary course of business; and (iv) they have carefully examined the
Registration Statement and the Prospectus as amended or supplemented and nothing
has come to their attention that would lead them to believe that either the
Registration Statement or the Prospectus, or any amendment or supplement thereto
as of their respective effective or issue dates, contained, and the Prospectus
as amended or supplemented at such Closing Date (and, if applicable, the Option
Closing Date), contains any untrue statement of a material fact, or omits to
state a material fact required to be
28
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and (v)
covering such other matters as you may reasonably request. The officers'
certificate of the Company shall further state that no stop order affecting the
Registration Statement is in effect or, to their knowledge, threatened.
(i) At the Closing Date and, if applicable, the Option Closing
Date, you shall have received a certificate of an authorized representative of
the Trust to the effect that to the best of his or her knowledge based upon a
reasonable investigation, the representations and warranties of the Trust in
this Agreement are true and correct as though made on and as of the Closing Date
(and, if applicable, the Option Closing Date); the Trust has complied with all
the agreements and satisfied all the conditions required by this Agreement to be
performed or satisfied by the Trust on or prior to the Closing Date and since
the most recent date as of which information is given in the Prospectus, except
as contemplated by the Prospectus, the Trust has not incurred any material
liabilities or obligations, direct or contingent, or entered into any material
transactions not in the ordinary course of business and there has not been any
material adverse change in the condition (financial or otherwise) of the Trust.
(j) On the Closing Date, you shall have received duly executed
counterparts of the Trust Agreement, the Guarantee, the Indenture and the
Expense Agreement.
(k) The NASD, upon review of the terms of the public offering
of the Designated Preferred Securities, shall not have objected to the
Underwriters' participation in such offering.
(l) Prior to the Closing Date and, if applicable, the Option
Closing Date, the Offerors shall have furnished to you and counsel to the
Underwriters all such other documents, certificates and opinions as they have
reasonably requested.
All opinions, certificates, letters and other documents shall
be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you. The Offerors shall furnish you with
conformed copies of such opinions, certificates, letters and other documents as
you shall reasonably request.
If any of the conditions referred to in this Section 6 shall
not have been fulfilled when and as required by this Agreement, this Agreement
and all of the Underwriters' obligations hereunder may be terminated by you on
notice to the Company at, or at any time before, the Closing Date or the Option
Closing Date, as applicable. Any such termination shall be without liability of
the Underwriters to the Offerors.
29
7. INDEMNIFICATION AND CONTRIBUTION.
30
(a) The Offerors agree to jointly and severally indemnify and
hold harmless each Underwriter, each of its directors, officers and agents, and
each person, if any, who controls any Underwriter within the meaning of the 1933
Act, against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and reasonable attorney fees and
expenses), joint or several, arising out of or based (i) upon any untrue
statement or alleged untrue statement of a material fact made by the Company or
the Trust contained in Section 2(a) of this Agreement (or any certificate
delivered by the Company or the Trust pursuant to Sections 6(h), 6(i) or 6(l)
hereof) or the registration statement as originally filed or the Registration
Statement, any Preliminary Prospectus or the Prospectus, or in any amendment or
supplement thereto, (ii) upon any blue sky application or other document
executed by the Company or the Trust specifically for that purpose or based upon
written information furnished by the Company or the Trust filed in any state or
other jurisdiction in order to qualify any of the Designated Preferred
Securities under the securities laws thereof ( any such application, document or
information being hereinafter referred to as a "Blue Sky Application"), (iii)
any omission or alleged omission to state a material fact in the registration
statement as originally filed or the Registration Statement, any Preliminary
Prospectus or the Prospectus, or in any amendment or supplement thereto, or in
any Blue Sky Application required to be stated therein or necessary to make the
statements therein not misleading, and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation
and attorney fees), joint or several, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus, or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading or (iv) the enforcement of this indemnification provision
or the contribution provisions of Section 7(d); and shall reimburse each such
indemnified party for any reasonable legal or other expenses as incurred, but in
no event less frequently than 30 days after each invoice is submitted, incurred
by them in connection with investigating or defending against or appearing as a
third-party witness in connection with any such loss, claim, damage, liability
or action, notwithstanding the possibility that payments for such expenses might
later be held to be improper, in which case such payments shall be promptly
refunded; provided, however, that the Offerors shall not be liable in any such
case to the extent, but only to the extent, that any such losses, claims,
damages, liabilities and expenses arise out of or are based upon any untrue
statement or omission or allegation thereof that has been made therein or
omitted therefrom in reliance upon and in conformity with the Underwriters'
Information; provided, that the indemnification contained in this paragraph with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or of any person controlling any Underwriter) to the extent any
such losses, claims, damages, liabilities or expenses directly results from the
fact that such Underwriter sold Designated Preferred Securities to a person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus (as amended or supplemented if any
amendments or supplements thereto shall have been furnished to you in sufficient
time to distribute same with or prior to the written confirmation of the sale
involved), if required by law, and if such loss, claim, damage, liability or
expense would not have arisen but for the failure to give or send such person
such document. The foregoing indemnity agreement is in addition to any liability
the Company or the Trust may otherwise have to any such indemnified party.
31
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless each Offeror, each of its directors, each of its
officers who signed the Registration Statement and each person, if any, who
controls an Offeror within the meaning of the 1933 Act, to the same extent as
required by the foregoing indemnity from the Company to each Underwriter, but
only with respect to the Underwriters' Information or information relating to
such Underwriter furnished in writing to an Offeror through such Underwriter by
or on behalf of it expressly for use in a Blue Sky Application. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to any such indemnified party.
(c) If any action or claim shall be brought or asserted
against any indemnified party or any person controlling an indemnified party in
respect of which indemnity may be sought from the indemnifying party, such
indemnified party or controlling person shall promptly notify the indemnifying
party in writing, and the indemnifying party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all expenses; provided, however, that the failure so to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under such paragraph, and
further, shall only relieve it from liability under such paragraph to the extent
prejudiced thereby. Any indemnified party or any such controlling person shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or such controlling person unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) the indemnifying party has failed to assume the defense or to
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
such indemnified party or such controlling person and the indemnifying party and
such indemnified party or such controlling person shall have been advised by
such counsel that there may be one or more legal defenses available to it that
are different from or in addition to those available to the indemnifying party
(in which case, if such indemnified party or controlling person notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party
or such controlling person) it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys at any time and for all
such indemnified party and controlling persons, which firm shall be designated
in writing by the indemnified party (and, if such indemnified parties are
Underwriters, by you, as Representative). Each indemnified party and each
controlling person, as a condition of such indemnity, shall use reasonable
efforts to cooperate with the indemnifying party in the defense of any such
action or claim. The indemnifying party shall not be liable for any settlement
of any such action effected without its written consent, but if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party and any such controlling
person from and against any loss, claim, damage, liability or expense by reason
of such settlement or judgment.
An indemnifying party shall not, without the prior written
consent of each
32
indemnified party, settle, compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnity may be sought hereunder (whether or not such indemnified party or any
person who controls such indemnified party within the meaning of the 1933 Act is
a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes a release of each such indemnified party
reasonably satisfactory to each such indemnified party and each such controlling
person from all liability arising out of such claim, action, suit or proceeding
or unless the indemnifying party shall confirm in a written agreement with each
indemnified party, that notwithstanding any federal, state or common law, such
settlement, compromise or consent shall not alter the right of any indemnified
party or controlling person to indemnification or contribution as provided in
this Agreement.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) hereof in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Offerors on the one hand and the
Underwriters on the other from the offering of the Designated Preferred
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Offerors on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Offerors on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Designated
Preferred Securities (before deducting expenses) received by the Offerors bear
to the total underwriting discounts, commissions and compensation received by
the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault of the Offerors on the one hand and of the
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Offerors or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Offerors and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this paragraph
(d) were determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in the first sentence of
this paragraph (d) shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this paragraph (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Designated Preferred Securities underwritten by such
Underwriter and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriters has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission
33
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this paragraph (d), each person who controls
an Underwriter within the meaning of the 1933 Act shall have the same rights to
contribution as such Underwriter, and each person who controls an Offeror within
the meaning of the 1933 Act, each officer and trustee of an Offeror who shall
have signed the Registration Statement and each director of an Offeror shall
have the same rights to contribution as the Offerors subject in each case to the
preceding sentence. The obligations of the Offerors under this paragraph (d)
shall be in addition to any liability which the Offerors may otherwise have and
the obligations of the Underwriters under this paragraph (d) shall be in
addition to any liability that the Underwriters may otherwise have.
(e) The indemnity and contribution agreements contained in
this Section 7 and the representations and warranties of the Offerors set forth
in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling an Underwriter or by or on behalf of the Offerors, or
such directors, trustees or officers (or any person controlling an Offeror, (ii)
acceptance of any Designated Preferred Securities and payment therefor hereunder
and (iii) any termination of this Agreement. A successor of any Underwriter or
of an Offeror, such directors, trustees or officers (or of any person
controlling an Underwriter or an Offeror) shall be entitled to the benefits of
the indemnity, contribution and reimbursement agreements contained in this
Section 7.
(f) The Company agrees to indemnify the Trust against any and
all losses, claims, damages or liabilities that may become due from the Trust
under this Section 7.
8. TERMINATION. You shall have the right to terminate this Agreement at
any time at or prior to the Closing Date or, with respect to the Underwriters'
obligation to purchase the Option Preferred Securities, at any time at or prior
to the Option Closing Date, without liability on the part of the Underwriters to
the Offerors, if:
(a) Either Offeror shall have failed, refused, or been unable
to perform any agreement on its part to be performed under this Agreement, or
any of the conditions referred to in Section 6 shall not have been fulfilled,
when and as required by this Agreement;
(b) The Offerors or any of the Subsidiaries shall have
sustained any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree which in the
judgment of the Representative materially impairs the investment quality of the
Designated Preferred Securities;
(c) There has been since the respective dates as of which
information is given in the Registration Statement or the Prospectus, any
materially adverse change in, or any development which is reasonably likely to
have a material adverse effect on, the condition (financial or otherwise),
earnings, affairs, business, prospects or results of operations of the Offerors
and the Subsidiaries on a consolidated basis, whether or not arising in the
ordinary
34
course of business;
(d) There has occurred any outbreak of hostilities or other
calamity or crisis or material change in general economic, political or
financial conditions, or internal conditions, the effect of which on the
financial markets of the United States is such as to make it, in your reasonable
judgment, impracticable to market the Designated Preferred Securities or enforce
contracts for the sale of the Designated Preferred Securities;
(e) Trading generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been suspended,
or minimum or maximum prices for trading shall have been fixed, or maximum
ranges for prices for securities shall have been required, by any of said
exchanges or market system or by the Commission or any other governmental
authority;
(f) A banking moratorium shall have been declared by either
federal or Massachusetts authorities; or
(g) Any action shall have been taken by any government in
respect of its monetary affairs which, in your reasonable judgment, has a
material adverse effect on the United States securities markets.
If this Agreement shall be terminated pursuant to this Section
8, the Offerors shall not then be under any liability to the Underwriters except
as provided in Sections 5 and 7 hereof.
9. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters shall
default in its or their obligations to purchase Designated Preferred Securities
hereunder, the other Underwriters shall be obligated severally, in proportion to
their respective commitments hereunder, to purchase the Designated Preferred
Securities which such defaulting Underwriter or Underwriters agreed but failed
to purchase; provided, however, that the non-defaulting Underwriters shall be
under no obligation to purchase such Designated Preferred Securities if the
aggregate number of Designated Preferred Securities to be purchased by such
non-defaulting Underwriters shall exceed 110% of the aggregate underwriting
commitments set forth in Schedule I hereto, and provided further, that no
non-defaulting Underwriter shall be obligated to purchase Designated Preferred
Securities to the extent that the number of such Designated Preferred Securities
is more than 110% of such Underwriter's underwriting commitment set forth in
Schedule I hereto.
In the event that the non-defaulting Underwriters are not
obligated under the above paragraph to purchase the Designated Preferred
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase, the Representative may in its discretion arrange for one or more of
the Underwriters or for another party or parties to purchase such Designated
Preferred Securities on the terms contained herein. If within one business day
after such default the Representative does not arrange for the purchase of such
Designated Preferred Securities, then the Company shall be entitled to a further
period of one business day within which to procure another party or parties
satisfactory to the Representative to purchase such Designated Preferred
Securities on such terms.
35
In the event that the Representative or the Company do not
arrange for the purchase of any Designated Preferred Securities to which a
default relates as provided above, this Agreement shall be terminated.
If the remaining Underwriters or substituted underwriters are
required hereby or agree to take up all or a part of the Designated Preferred
Securities of a defaulting Underwriter or Underwriters as provided in this
Section 9, (i) you shall have the right to postpone the Closing Date for a
period of not more than five full business days, in order to effect any changes
that, in the opinion of counsel to the Underwriters or the Company, may thereby
be made necessary in the Registration Statement or the Prospectus, or in any
other documents or agreements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which,
in its opinion, may thereby be made necessary and (ii) the respective numbers of
Designated Preferred Securities to be purchased by the remaining Underwriters or
substituted underwriters shall be taken as the basis of their underwriting
obligation for all purposes of this Agreement. Nothing herein contained shall
relieve any defaulting Underwriter of any liability it may have for damages
occasioned by its default hereunder. Any termination of this Agreement pursuant
to this Section 9 shall be without liability on the part of any non-defaulting
Underwriter or the Company, except for expenses to be paid or reimbursed
pursuant to Section 5 and except for the provisions of Section 7.
10. EFFECTIVE DATE OF AGREEMENT. If the Registration Statement is not
effective at the time of execution of this Agreement, this Agreement shall
become effective on the Effective Date at the time the Commission declares the
Registration Statement effective. The Company shall immediately notify the
Underwriters when the Registration Statement becomes effective.
If the Registration Statement is effective at the time of
execution of this Agreement, this Agreement shall become effective at the
earlier of 11:00 a.m. St. Louis time, on the first full business day following
the day on which this Agreement is executed, or at such earlier time as the
Representative shall release the Designated Preferred Securities for initial
public offering. The Representative shall notify the Offerors immediately after
it has taken any action which causes this Agreement to become effective.
Until such time as this Agreement shall have become effective,
it may be terminated by the Offerors, by notifying you or by you, as
Representative of the several Underwriters, by notifying either Offeror, except
that the provisions of Sections 5 and 7 shall at all times be effective.
11. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. The
representations, warranties, indemnities, agreements and other statements of the
Offerors and their officers and trustees set forth in or made pursuant to this
Agreement and the agreements of the Underwriters contained in Section 7 hereof
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Offerors or controlling persons of
either Offeror, or by or on behalf of the Underwriters or controlling persons of
the Underwriters or any termination or cancellation of this Agreement and shall
survive delivery of and payment for the Designated Preferred Securities.
12. NOTICES. Except as otherwise provided in this Agreement, all
notices and other
36
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand, mailed by registered or certified mail, return
receipt requested, or transmitted by any standard form of telecommunication and
confirmed. Notices to either Offeror shall be sent to 545 Pleasant Street, New
Bedford, Massachusetts 02740, Attention: Richard S. Straczynski (with a copy to
Goodwin, Procter & Hoar LLP, Exchange Place, Boston, Massachusetts 02109,
Attention: Regina M. Pisa, P.C.); and notices to the Underwriters shall be sent
to Sandler O'Neill & Partners, L.P., Two World Trade Center, 104th Floor, New
York, New York 10048, Attention: Jonathan D. Bisgaier (with a copy to Bryan Cave
LLP, One Metropolitan Square, 211 North Broadway, Suite 3600, St. Louis,
Missouri 63102-2750, Attention: James L. Nouss, Jr., Esq.). In all dealings with
the Company under this Agreement, Sandler O'Neill & Partners, L.P. shall act as
representative of and on behalf of the several Underwriters, and the Company
shall be entitled to act and rely upon any statement, request, notice or
agreement on behalf of the Underwriters, made or given by Sandler O'Neill &
Partners, L.P. on behalf of the Underwriters, as if the same shall have been
made or given in writing by the Underwriters.
13. PARTIES. The Agreement herein set forth is made solely for the
benefit of the Underwriters and the Offerors and, to the extent expressed,
directors, trustees and officers of the Offerors, any person controlling the
Offerors or the Underwriters, and their respective successors and assigns. No
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser, in
his or her status as such purchaser, from the Underwriters of the Designated
Preferred Securities.
14. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Missouri, without giving effect to the choice of law or conflicts of
law principles thereof.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and when a counterpart has been executed by each party hereto all
such counterparts taken together shall constitute one and the same Agreement.
[Remainder of page intentionally left blank]
37
If the foregoing is in accordance with the your understanding
of our agreement, please sign and return to us a counterpart hereof, whereupon
this shall become a binding agreement between the Company, the Trust and you in
accordance with its terms.
38
Very truly yours,
PEOPLE'S BANCSHARES, INC.
By:______
Name:
Title:
PEOPLE'S BANCSHARES CAPITAL TRUST
By:______
Name:
Title:
CONFIRMED AND ACCEPTED,
as of ___________ __, 1997.
SANDLER O'NEILL & PARTNERS, L.P.
By:________________________________________
Name:
Title:
For itself and as Representative of the several Underwriters
named in Schedule I hereto.
39
SCHEDULE I
--------------
Underwriter No. of Preferred Securities
Sandler O'Neill & Partners, L.P..................................._______
Stifel, Nicolaus & Company, Incorporated.........................._______
Total....................................................1,200,000
40
EXHIBIT A
LIST OF SUBSIDIARIES
--------------------
People's Savings Bank of Brockton
People's Mortgage Company
PSB Security Company I
PSB Security Company II
PSB Security Company III
[3 unnamed companies engaging in the management and sale of foreclosed real
estate]
People's Bancshares Capital Trust
41
EXHIBIT 4.1
PEOPLE'S BANCSHARES, INC.
AND
STATE STREET BANK AND TRUST COMPANY
AS TRUSTEE
INDENTURE
______% SUBORDINATED DEBENTURES DUE 2027
DATED AS OF _________________________, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. Definitions..................................................................2
Section 1.1. Definitions of Terms..............................................2
ARTICLE II. Issue, Description, Terms, Conditions Registration and Exchange of the
Debentures .................................................................9
Section 2.1 Designation and Principal Amount...................................9
Section 2.2. Maturity.........................................................10
Section 2.3. Form and Payment.................................................11
Section 2.4. [Intentionally Omitted]..........................................11
Section 2.5. Interest.........................................................11
Section 2.6. Execution and Authentications....................................12
Section 2.7. Registration of Transfer and Exchange. ..........................13
Section 2.8. Temporary Debentures.............................................13
Section 2.9. Mutilated, Destroyed, Lost or Stolen Debentures. ................14
Section 2.10. Cancellation....................................................15
Section 2.11. Benefit of Indenture............................................15
Section 2.12. Authentication Agent............................................15
ARTICLE III. Redemption of Debentures .................................................16
Section 3.1. Redemption.......................................................16
Section 3.2. Special Event Redemption.........................................16
Section 3.3. Optional Redemption by Company...................................17
Section 3.4. Notice of Redemption.............................................17
Section 3.5. Payment Upon Redemption..........................................18
Section 3.6. No Sinking Fund..................................................19
ARTICLE IV. Extension of Interest Payment Period ......................................19
Section 4.1. Extension of Interest Payment Period. ...........................19
Section 4.2. Notice of Extension..............................................19
Section 4.3. Limitation on Transactions.......................................20
ARTICLE V. Particular Covenants of the Company ........................................20
Section 5.1. Payment of Principal And Interest. ..............................20
Section 5.2. Maintenance of Agency............................................20
Section 5.3. Paying Agents....................................................21
Section 5.4. Appointment To Fill Vacancy in Office of Trustee. ...............22
Section 5.5. Compliance with Consolidation Provisions. .......................22
1
Section 5.6. Limitation on Transactions.......................................22
Section 5.7. Covenants as to the Trust........................................22
Section 5.8. Covenants as to Purchases........................................23
ARTICLE VI. Debentureholders' Lists and Reports by the Company and the Trustee ........23
Section 6.1. Company To Furnish Trustee Names and Addresses of
Debentureholders.................................................23
Section 6.2. Preservation of Information Communications with Debentureholders.23
Section 6.3. Reports by the Company...........................................24
Section 6.4. Reports by the Trustee...........................................24
ARTICLE VII. Remedies of the Trustee and Debentureholders on Event of Default 25
Section 7.1. Events of Default................................................25
Section 7.2. Collection of Indebtedness and Suits for Enforcement by Trustee..26
Section 7.3. Application of Moneys Collected..................................28
Section 7.4. Limitation on Suits..............................................28
Section 7.5. Rights and Remedies Cumulative; Delay or Omission Not Waiver ....29
Section 7.6. Control by Debentureholders......................................29
Section 7.7. Undertaking to Pay Costs.........................................30
ARTICLE VIII. Form of Debenture and Original Issue ....................................30
Section 8.1. Form of Debenture................................................30
Section 8.2. Original Issue of Debentures.....................................30
ARTICLE IX. Concerning the Trustee ....................................................31
Section 9.1. Certain Duties and Responsibilities Trustee. ....................31
Section 9.2. Notice of Defaults...............................................32
Section 9.3. Certain Rights of Trustee........................................32
Section 9.4. Trustee Not Responsible for Recitals, Etc. ......................33
Section 9.5. May Hold Debentures..............................................34
Section 9.6. Moneys Held in Trust.............................................34
Section 9.7. Compensation and Reimbursement...................................34
Section 9.8. Reliance on Officers' Certificate. ..............................35
Section 9.9. Disqualification; Conflicting Interests. ........................35
Section 9.10. Corporate Trustee Required; Eligibility. .......................35
Section 9.11. Resignation and Removal; Appointment of Successor 35
Section 9.12. Acceptance of Appointment by Successor. ........................37
Section 9.13. Merger, Conversion, Consolidation or Succession to Business ....37
Section 9.14. Preferential Collection of Claims Against the Company ..........37
2
ARTICLE X. Concerning the Debentureholders ............................................38
Section 10.1. Evidence of Action by Holders...................................38
Section 10.2. Proof of Execution by Debentureholders. ........................38
Section 10.3. Who May Be Deemed Owners........................................39
Section 10.4. Certain Debentures Owned by Company Disregarded. ...............39
Section 10.5. Actions Binding on Future Debentureholders. ....................39
ARTICLE XI. Supplemental Indentures ...................................................40
Section 11.1. Supplemental Indentures Without the Consent of Debentureholders.40
Section 11.2. Supplemental Indentures with Consent of Debentureholders. ......41
Section 11.3. Effect of Supplemental Indentures. .............................41
Section 11.4. Debentures Affected by Supplemental Indentures. ................41
Section 11.5. Execution of Supplemental Indentures. ..........................42
ARTICLE XII. Successor Corporation ....................................................42
Section 12.1. Company May Consolidate, Etc....................................42
Section 12.2. Successor Corporation Substituted. .............................43
Section 12.3. Evidence of Consolidation, Etc. to Trustee. ....................43
ARTICLE XIII. Satisfaction and Discharge ..............................................43
Section 13.1. Satisfaction and Discharge of Indenture. 43
Section 13.2. Discharge of Obligations........................................44
Section 13.3. Deposited Moneys To Be Held in Trust ...........................44
Section 13.4. Payment of Monies Held by Paying Agents ........................44
Section 13.5. Repayment to Company............................................45
ARTICLE XIV. Immunity of Incorporators, Stockholders, Officers and Directors ..........45
Section 14.1. No Recourse.....................................................45
ARTICLE XV. Miscellaneous Provisions ..................................................46
Section 15.1. Effect on Successors and Assigns. ..............................46
Section 15.2. Actions by Successor............................................46
Section 15.3. Surrender of Company Powers.....................................46
Section 15.4. Notices.........................................................46
Section 15.5. Governing Law...................................................46
Section 15.6. Treatment of Debentures as Debt. ...............................46
Section 15.7. Compliance Certificates and Opinions. ..........................47
Section 15.8. Payments on Business Days.......................................47
Section 15.9. Conflict with Trust Indenture Act. .............................47
Section 15.10. Counterparts...................................................47
Section 15.11. Separability...................................................47
3
Section 15.12. Assignment.....................................................48
Section 15.13. Acknowledgment of Rights; Right of Setoff. ....................48
ARTICLE XVI. Subordination of Debentures ..............................................48
Section 16.1. Agreement to Subordinate........................................48
Section 16.2. Default on Senior Debt, Subordinated Debt or Additional Senior
Obligations..................................................49
Section 16.3. Liquidation; Dissolution; Bankruptcy. ..........................50
Section 16.4. Subrogation.....................................................51
Section 16.5. Trustee To Effectuate Subordination. ...........................52
Section 16.6. Notice by the Company...........................................52
Section 16.7. Rights of the Trustee; Holders of Senior Indebtedness. .........53
Section 16.8. Subordination May Not Be Impaired. .............................53
</TABLE>
4
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Indenture
- ------------------- ---------
<S> <C>
310(a)...................................................................................................9.10
310(b)..............................................................................................9.9, 9.11
310(c).........................................................................................Not Applicable
311(a)...................................................................................................9.14
311(b)...................................................................................................9.14
311(c).........................................................................................Not Applicable
312(a)........................................................................................... 6.1, 6.2(a)
312(b)................................................................................................ 6.2(c)
312(c)................................................................................................ 6.2(c)
313(a)................................................................................................ 6.4(a)
313(b)................................................................................................ 6.4(b)
313(c).........................................................................................6.4(a), 6.4(b)
313(d).................................................................................................6.4(c)
314(a).................................................................................................6.3(a)
314(b).........................................................................................Not Applicable
314(c)...................................................................................................15.7
314(d).........................................................................................Not Applicable
314(e)...................................................................................................15.7
314(f).........................................................................................Not Applicable
315(a)............................................................................................9.1(a), 9.3
315(b)....................................................................................................9.2
315(c).................................................................................................9.1(a)
315(d).................................................................................................9.1(b)
315(e)....................................................................................................7.7
316(a)...............................................................................................1.1, 7.6
316(b).................................................................................................7.4(b)
316(c)................................................................................................10.1(b)
317(a)....................................................................................................7.2
317(b)....................................................................................................5.3
318(a)...................................................................................................15.9
</TABLE>
Note: This Cross-Reference Table does not constitute part of this Indenture and
shall not affect the interpretation of any of its terms or provisions.
5
INDENTURE
INDENTURE, dated as of __________, 1997, between PEOPLE'S
BANCSHARES, INC., a Massachusetts corporation (the "Company"), and STATE STREET
BANK AND TRUST COMPANY, a trust company duly organized and existing under the
laws of the Commonwealth of Massachusetts, as property trustee (the "Trustee");
RECITALS
WHEREAS, for its lawful corporate purposes, the Company has
duly authorized the execution and delivery of this Indenture to provide for the
issuance of securities to be known as its ____% Subordinated Debentures due 2027
(hereinafter referred to as the "Debentures"), the form and substance of such
Debentures and the terms, provisions and conditions thereof to be set forth as
provided in this Indenture;
WHEREAS, People's Bancshares Capital Trust, a Delaware
statutory business trust (the "Trust"), has offered to the public up to $13.8
million aggregate liquidation amount of its Preferred Securities (as defined
herein) and proposes to invest the proceeds from such offering, together with
the proceeds of the issuance and sale by the Trust to the Company of up to
$427,000 aggregate liquidation amount of its Common Securities (as defined
herein), in $14,227,000 aggregate principal amount of the Debentures; and
WHEREAS, the Company has requested that the Trustee execute
and deliver this Indenture; and
WHEREAS, all requirements necessary to make this Indenture a
valid instrument in accordance with its terms, and to make the Debentures, when
executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been
1
performed, and the execution and delivery of this Indenture have been duly
authorized in all respects:
WHEREAS, to provide the terms and conditions upon which the
Debentures are to be authenticated, issued and delivered, the Company has duly
authorized the execution of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid
agreement of the Company, in accordance with its terms, have been don .
NOW, THEREFORE, in consideration of the premises and the
purchase of the Debentures by the holders thereof, it is mutually covenanted and
agreed as follows for the equal and ratable benefit of the holders of the
Debentures:
ARTICLE I
Definitions
SECTION 1.1. DEFINITIONS OF TERMS.
The terms defined in this Section 1.1 (except as in this
Indenture otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1 and shall
include the plural as well as the singular. All other terms used in this
Indenture that are defined in the Trust Indenture Act, or that are by reference
in the Trust Indenture Act defined in the Securities Act (except as herein
otherwise expressly provided or unless the context otherwise requires), shall
have the meanings assigned to such terms in the Trust Indenture Act and in the
Securities Act as in force at the date of the execution of this instrument. All
accounting terms used herein and not expressly defined shall have the meanings
assigned to such terms in accordance with Generally Accepted Accounting
Principles.
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"Accelerated Maturity Date" means if the Company elects to
accelerate the Maturity Date in accordance with Section 2.2(c), the date
selected by the Company which is prior to the Scheduled Maturity Date, but is
after June 30, 2002.
"Additional Interest" shall have the meaning set forth in
Section 2.5.
"Additional Senior Obligations" means all indebtedness of the
Company whether incurred on or prior to the date of this Indenture or thereafter
incurred, for claims in respect of derivative products such as interest and
foreign exchange rate contracts, commodity contracts and similar arrangements;
provided, however, that Additional Senior Obligations does not include claims in
respect of Senior Debt or Subordinated Debt or obligations which, by their
terms, are expressly stated to be not superior in right of payment to the
Debentures or to rank pari passu in right of payment with the Debentures. For
purposes of this definition, "claim" shall have the meaning assigned thereto in
Section 101(4) of the United States Bankruptcy Code of 1978, as amended.
"Administrative Trustees" shall have the meaning set forth in
the Trust Agreement.
"Affiliate" means, with respect to a specified Person, (a) any
Person directly or indirectly owning, controlling or holding with power to vote
10% or more of the outstanding voting securities or other ownership interests of
the specified Person; (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person; (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person; (d) a partnership in which the specified Person is a
general partner; (e) any officer or director of the specified Person; and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
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"Authenticating Agent" means an authenticating agent with
respect to the Debentures appointed by the Trustee pursuant to Section 2.12.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the
Company or any duly authorized committee of such Board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day" means, with respect to the Debentures, any day
other than a Saturday or a Sunday or a day on which federal or state banking
institutions in the Borough of Manhattan, The City of New York, are authorized
or required by law, executive order or regulation to close, or a day on which
the Corporate Trust Office of the Trustee or the Property Trustee is closed for
business.
"Capital Treatment Event" means the receipt by the Trust of an
Opinion of Counsel, rendered by a law firm experienced in such matters to the
effect that, as a result of any amendment to or any change (including any
announced prospective change) in the laws (or any regulations thereunder) of the
United States or any political subdivision thereof or therein, or as a result of
any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such proposed change, pronouncement or decision is announced on or after the
date of issuance of the Preferred Securities under the Trust Agreement, there is
more than an insubstantial risk of impairment of the Company's ability to treat
the aggregate Liquidation Amount of the Preferred Securities (or any substantial
portion thereof) as "Tier 1 Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve, as then
applicable to the Company,
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provided, however, that the inability of the Company to treat all or any portion
of the Liquidation Amount of the Preferred Securities as Tier 1 Capital shall
not constitute the basis for a Capital Treatment Event if such inability results
from the Company having cumulative preferred capital in excess of the amount
which may qualify for treatment as Tier 1 Capital under applicable capital
adequacy guidelines of the Federal Reserve.
"Certificate" means a certificate signed by the principal
executive officer, the principal financial officer, the principal accounting
officer, the treasurer or any vice president of the Company. The Certificate
need not comply with the provisions of Section 15.7.
"Change in 1940 Act Law" shall have the meaning set forth in
the definition of "Investment Company Event."
"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 at such time.
"Common Securities" means undivided beneficial interests in
the assets of the Trust which rank pari passu with the Preferred Securities;
provided, however, that upon the occurrence of an Event of Default, the rights
of holders of Common Securities to payment in respect of (i) distributions, and
(ii) payments upon liquidation, redemption and otherwise, are subordinated to
the rights of holders of Preferred Securities.
"Company" means People's Bancshares, Inc., a corporation duly
organized and existing under the laws of the Commonwealth of Massachusetts, and,
subject to the provisions of Article XII, shall also include its successors and
assigns.
"Compounded Interest" shall have the meaning set forth in
Section 4.1.
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"Corporate Trust Office" means the office of the Trustee at
which, at any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at Two International
Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust
Department.
"Coupon Rate" shall have the meaning set forth in Section 2.5.
"Custodian" means any receiver, trustee, assignee, liquidator,
or similar official under any Bankruptcy Law.
"Debentures" shall have the meaning set forth in the Recitals
hereto.
"Debentureholder," "holder of Debentures," "registered
holder," or other similar term, means the Person or Persons in whose name or
names a particular Debenture shall be registered on the books of the Company or
the Trustee kept for that purpose in accordance with the terms of this
Indenture.
"Debenture Register" shall have the meaning set forth in
Section 2.7(b).
"Debenture Registrar" shall have the meaning set forth in
Section 2.7(b).
"Debt" means with respect to any Person, whether recourse is
to all or a portion of the assets of such Person and whether or not contingent,
(i) every obligation of such Person for money borrowed; (ii) every obligation of
such Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) and every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of
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another Person the payment of which, in either case, such Person has guaranteed
or is responsible or liable, directly or indirectly, as obligor or otherwise.
"Default" means any event, act or condition that with notice
or lapse of time, or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in
Section 4.1.
"Dissolution Event" means that as a result of the occurrence
and continuation of a Special Event, the Trust is to be dissolved in accordance
with the Trust Agreement and the Debentures held by the Property Trustee are to
be distributed to the holders of the Trust Securities issued by the Trust pro
rata in accordance with the Trust Agreement.
"Distribution" shall have the meaning set forth in the Trust
Agreement.
"Event of Default" means, with respect to the Debentures, any
event specified in Section 7.1, which has continued for the period of time, if
any, and after the giving of the notice, if any, therein designated.
"Exchange Act," means the Securities Exchange Act of 1934, as
amended, as in effect at the date of execution of this instrument.
"Extended Maturity Date" means if the Company elects to extend
the Maturity Date in accordance with Section 2.2(b), the date selected by the
Company which is after the Scheduled Maturity Date but before June 30, 2036.
"Extension Period" shall have the meaning set forth in Section
4.1.
"Federal Reserve" means the Board of Governors of the Federal
Reserve System.
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"Generally Accepted Accounting Principles" means such
accounting principles as are generally accepted at the time of any computation
required hereunder.
"Governmental Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged; or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America that, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such Governmental
Obligation or a specific payment of principal of or interest on any such
Governmental Obligation held by such custodian for the account of the holder of
such depositary receipt; provided, however, that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.
"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.
"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 in accordance with the terms hereof.
"Interest Payment Date" shall have the meaning set forth in
Section 2.5.
"Investment Company Act," means the Investment Company Act of
1940, as amended, as in effect at the date of execution of this instrument.
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"Investment Company Event" means the receipt by the Trust of
an Opinion of Counsel, rendered by a law firm experienced in such matters, to
the effect that, as a result of the occurrence of a change in law or regulation
or a change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a "Change
in 1940 Act Law"), the Trust is or shall be considered an "investment company"
that is required to be registered under the Investment Company Act, which Change
in 1940 Act Law becomes effective on or after the date of original issuance of
the Preferred Securities under the Trust Agreement.
"Maturity Date" means the date on which the Debentures mature
and on which the principal shall be due and payable together with all accrued
and unpaid interest thereon including Compounded Interest and Additional
Interest, if any.
"Ministerial Action" shall have the meaning set forth in
Section 3.2.
"Officers' Certificate" means a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Controller or an Assistant Controller or the Secretary or an Assistant
Secretary of the Company that is delivered to the Trustee in accordance with the
terms hereof. Each such certificate shall include the statements provided for in
Section 15.7, if and to the extent required by the provisions thereof.
"Opinion of Counsel" means an opinion in writing of legal
counsel, who may be an employee of or counsel for the Company, that is delivered
to the Trustee in accordance with the terms hereof. Each such opinion shall
include the statements provided for in Section 15.7, if and to the extent
required by the provisions thereof.
"Outstanding," when used with reference to the Debentures,
means, subject to the provisions of Section 10.4, as of any particular time, all
Debentures theretofore authenticated and delivered by the Trustee under this
Indenture, except (a) Debentures theretofore canceled by the
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Trustee or any paying agent, or delivered to the Trustee or any paying agent for
cancellation or that have previously been canceled; (b) Debentures or portions
thereof for the payment or redemption of which moneys or Governmental
Obligations in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been set
aside and segregated in trust by the Company (if the Company shall act as its
own paying agent); provided, however, that if such Debentures or portions of
such Debentures are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as in Article III provided, or provision
satisfactory to the Trustee shall have been made for giving such notice; and (c)
Debentures in lieu of or in substitution for which other Debentures shall have
been authenticated and delivered pursuant to the terms of Section 2.7.
"Paying Agent" means any paying agent or co-paying agent
appointed pursuant to Section 5.3.
"Person" means any individual, corporation, partnership,
joint-venture, joint-stock company, unincorporated organization or government or
any agency or political subdivision thereof.
"Predecessor Debenture" means every previous Debenture
evidencing all or a portion of the same debt as that evidenced by such
particular Debenture; and, for the purposes of this definition, any Debenture
authenticated and delivered under Section 2.9 in lieu of a lost, destroyed or
stolen Debenture shall be deemed to evidence the same debt as the lost,
destroyed or stolen Debenture.
"Preferred Securities" means undivided beneficial interests in
the assets of the Trust which rank pari passu with Common Securities issued by
the Trust; provided, however, that upon the occurrence of an Event of Default,
the rights of holders of Common Securities to payment in respect of (i)
distributions, and (ii) payments upon liquidation, redemption and otherwise, are
subordinated to the rights of holders of Preferred Securities.
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"Preferred Securities Guarantee" means any guarantee that the
Company may enter into with the Trustee or other Persons that operate directly
or indirectly for the benefit of holders of Preferred Securities.
"Property Trustee" has the meaning set forth in the Trust
Agreement.
"Responsible Officer" when used with respect to the Trustee
means the Chairman of the Board of Directors, the President, any Vice President,
the Secretary, the Treasurer, any trust officer, any corporate trust officer or
any other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Scheduled Maturity Date" means June 30, 2027.
"Securities Act," means the Securities Act of 1933, as
amended, as in effect at the date of execution of this instrument.
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of this Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Debentures or to other Debt which is pari
passu with, or subordinated to, the Debentures; provided, however, that Senior
Debt shall not be deemed to include (i) any Debt of the Company which when
incurred and without respect to any election under section 1111(b) of the United
States Bankruptcy Code of 1978, as amended, was without recourse to the Company;
(ii) any Debt of the Company to any of its subsidiaries; (iii) Debt to any
employee of the
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Company; (iv) Debt which by its terms is subordinated to trade accounts payable
or accrued liabilities arising in the ordinary course of business to the extent
that payments made to the holders of such Debt by the holders of the Debentures
as a result of the subordination provisions of this Indenture would be greater
than they otherwise would have been as a result of any obligation of such
holders to pay amounts over to the obligees on such trade accounts payable or
accrued liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject; and (v) Debt which
constitutes Subordinated Debt.
"Senior Indebtedness" shall have the meaning set forth in
Section 16.1.
"Special Event" means a Tax Event, a Capital Treatment Event
or an Investment Company Event.
"Subordinated Debt" means the principal of (and premium, if
any) and interest, if any (including interest accruing on or after the filing of
any petition in bankruptcy or for reorganization relating to the Company whether
or not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of this Indenture or thereafter
incurred, which is by its terms expressly provided to be junior and subordinate
to other Debt of the Company (other than the Debentures).
"Subsidiary" means, with respect to any Person, (i) any
corporation at least a majority of whose outstanding Voting Stock shall at the
time be owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries; (ii) any
general partnership, joint venture, trust or similar entity, at least a majority
of whose outstanding partnership or similar interests shall at the time be owned
by such Person, or by one or more of its Subsidiaries, or by such Person and one
or more of its Subsidiaries; and (iii) any limited partnership of which such
Person or any of its Subsidiaries is a general partner.
"Tax Event" means the receipt by the Trust of an Opinion of
Counsel, rendered by a law firm experienced in such matters, to the effect that,
as a result of any amendment to, or
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change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Trust is, or shall be within 90 days after the
date of such Opinion of Counsel, subject to United States federal income tax
with respect to income received or accrued on the Debentures; (ii) interest
payable by the Company on the Debentures is not, or within 90 days after the
date of such Opinion of Counsel, shall not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes; or (iii) the
Trust is, or shall be within 90 days after the date of such Opinion of Counsel,
subject to more than a deminimis amount of other taxes, duties, assessments or
other governmental charges. The Trust or the Company shall request and receive
such Opinion of Counsel with regard to such matters within a reasonable period
of time after the Trust or the Company shall have become aware of the possible
occurrence of any of the events described in clauses (i) through (iii) above.
"Trust" means People's Bancshares Capital Trust, a Delaware
statutory business trust.
"Trust Agreement" means the Amended and Restated Trust
Agreement, dated as of ____________, 1997, of the Trust.
"Trustee" means State Street Bank and Trust Company and,
subject to the provisions of Article IX, shall also include its successors and
assigns, and, if at any time there is more than one Person acting in such
capacity hereunder, "Trustee" shall mean each such Person.
"Trust Indenture Act," means the Trust Indenture Act of 1939,
as amended,
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subject to the provisions of Sections 11.1, 11.2, and 12.1, as in effect at the
date of execution of this instrument.
"Trust Securities" means the Common Securities and Preferred
Securities, collectively.
"Voting Stock," as applied to stock of any Person, means
shares, interests, participations or other equivalents in the equity interest
(however designated) in such Person having ordinary voting power for the
election of a majority of the directors (or the equivalent) of such Person,
other than shares, interests, participations or other equivalents having such
power only by reason of the occurrence of a contingency.
ARTICLE II
ISSUE, DESCRIPTION, TERMS, CONDITIONS REGISTRATION AND EXCHANGE OF THE
DEBENTURES
SECTION 2.1 DESIGNATION AND PRINCIPAL AMOUNT.
There is hereby authorized Debentures designated the ___%
Subordinated Debentures due 2027," limited in aggregate principal amount up to
$14,227,000, which amount shall be as set forth in any written order of the
Company for the authentication and delivery of Debentures pursuant to Section
2.6.
SECTION 2.2. MATURITY.
(a) The Maturity Date shall be either:
(i) the Scheduled Maturity Date; or
(ii) if the Company elects to extend the Maturity Date beyond the
Scheduled Maturity Date in accordance with Section 2.2(b), the Extended
Maturity Date; or
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(iii) if the Company elects to accelerate the Maturity Date to be a
date prior to the Scheduled Maturity Date in accordance with Section
2.2(c), the Accelerated Maturity Date.
(b) The Company may at any time before the day which is 90
days before the Scheduled Maturity Date, elect to extend the Maturity Date to
the Extended Maturity Date, provided that the Company has received the prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve and further provided that the
following conditions in this Section 2.2(b) are satisfied both at the date the
Company gives notice in accordance with Section 2.2(d) of its election to extend
the Maturity Date and at the Scheduled Maturity Date:
(i) the Company is not in bankruptcy, otherwise
insolvent or in liquidation;
(ii) the Company is not in default in the payment of
interest or principal on the Debentures;
(iii) the Trust is not in arrears on payments of
Distributions on the Trust Securities issued by it and no deferred
Distributions are accumulated; and
(iv) the Company has a rating on its Senior Debt of
investment grade.
(c) The Company may, on one occasion, at any time before the
day which is 90 days before the Scheduled Maturity Date and after June 30, 2002,
elect to shorten the Maturity Date to the Accelerated Maturity Date provided
that the Company has received the prior approval of the Federal Reserve if then
required under applicable capital guidelines or policies of the Federal Reserve.
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(d) If the Company elects to extend the Maturity Date in
accordance with Section 2.2(b), the Company shall give notice to the registered
holders of the Debentures, the Property Trustee and the Trust of the extension
of the Maturity Date and the Extended Maturity Date at least 90 days and no more
than 180 days before the Scheduled Maturity Date.
(e) If the Company elects to accelerate the Maturity Date in
accordance with Section 2.2(c), the Company shall give notice to the registered
holders of the Debentures, the Property Trustee and the Trust of the
acceleration of the Maturity Date and the Accelerated Maturity Date at least 90
days and no more than 180 days before the Accelerated Maturity Date.
SECTION 2.3. FORM AND PAYMENT.
The Debentures shall be issued in fully registered
certificated form without interest coupons. Principal and interest on the
Debentures issued in certificated form shall be payable, the transfer of such
Debentures shall be registrable and such Debentures shall be exchangeable for
Debentures bearing identical terms and provisions at the office or agency of the
Trustee; provided, however, that payment of interest may be made at the option
of the Company by check mailed to the holder at such address as shall appear in
the Debenture Register or by wire transfer to an account maintained by the
holder as specified in the Debenture Register, provided that the holder provides
proper transfer instructions by the regular record date. Notwithstanding the
foregoing, so long as the holder of any Debentures is the Property Trustee, the
payment of the principal of and interest (including Compounded Interest and
Additional Interest, if any) on such Debentures held by the Property Trustee
shall be made at such place and to such account as may be designated by the
Property Trustee.
SECTION 2.4. [INTENTIONALLY OMITTED]
SECTION 2.5. INTEREST.
(a) Each Debenture shall bear interest at the rate of ___% per
annum
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(the "Coupon Rate") from the original date of issuance until the principal
thereof becomes due and payable, and on any overdue principal and (to the extent
that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the Coupon Rate, compounded quarterly,
payable (subject to the provisions of Article IV) quarterly in arrears on March
31, June 30, September 30, and December 31 of each year (each, an "Interest
Payment Date," commencing on September 30, 1997), to the Person in whose name
such Debenture or any Predecessor Debenture is registered, at the close of
business on the regular record date for such interest installment, which shall
be the fifteenth day of the last month of the calendar quarter.
(b) The amount of interest payable for any period shall be
computed on the basis of a 360-day year of twelve 30-day months. The amount of
interest payable for any period shorter than a full quarterly period for which
interest is computed shall be computed on the basis of the number of days
elapsed in a 360-day year of twelve 30-day months. In the event that any date on
which interest is payable on the Debentures is not a Business Day, then payment
of interest payable on such date shall be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay) with the same force and effect as if made on the date such payment
was originally payable.
(c) If, at any time while the Property Trustee is the holder
of any Debentures, the Trust or the Property Trustee is required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States, or any other taxing
authority, then, in any case, the Company shall pay as additional interest
("Additional Interest") on the Debentures held by the Property Trustee, such
additional amounts as shall be required so that the net amounts received and
retained by the Trust and the Property Trustee after paying such taxes, duties,
assessments or other governmental charges shall be equal to the amounts the
Trust and the Property Trustee would have received had no such taxes, duties,
assessments or other government charges been imposed.
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SECTION 2.6. EXECUTION AND AUTHENTICATIONS.
(a) The Debentures shall be signed on behalf of the Company by
its Chief Executive Officer, President or one of its Vice Presidents, under its
corporate seal attested by its Secretary or one of its Assistant Secretaries.
Signatures may be in the form of a manual or facsimile signature. The Company
may use the facsimile signature of any Person who shall have been a Chief
Executive Officer, President or Vice President thereof, or of any Person who
shall have been a Secretary or Assistant Secretary thereof, notwithstanding the
fact that at the time the Debentures shall be authenticated and delivered or
disposed of such Person shall have ceased to be the Chief Executive Officer,
President or a Vice President, or the Secretary or an Assistant Secretary, of
the Company. The seal of the Company may be in the form of a facsimile of such
seal and may be impressed, affixed, imprinted or otherwise reproduced on the
Debentures. The Debentures may contain such notations, legends or endorsements
required by law, stock exchange rule or usage. Each Debenture shall be dated the
date of its authentication by the Trustee.
(b) A Debenture shall not be valid until manually
authenticated by an authorized signatory of the Trustee, or by an Authenticating
Agent. Such signature shall be conclusive evidence that the Debenture so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.
(c) At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Debentures executed by the
Company to the Trustee for authentication, together with a written order of the
Company for the authentication and delivery of such Debentures signed by its
Chief Executive Officer, President or any Vice President and its Treasurer or
any Assistant Treasurer, and the Trustee in accordance with such written order
shall authenticate and deliver such Debentures.
(d) In authenticating such Debentures and accepting the
additional responsibilities under this Indenture in relation to such Debentures,
the Trustee shall be entitled
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to receive and (subject to Section 9.1) shall be fully protected in relying
upon, an Opinion of Counsel stating that the form and terms thereof have been
established in conformity with the provisions of this Indenture.
(e) The Trustee shall not be required to authenticate such
Debentures if the issue of such Debentures pursuant to this Indenture shall
affect the Trustee's own rights, duties or immunities under the Debentures and
this Indenture or otherwise in a manner that is not reasonably acceptable to the
Trustee.
SECTION 2.7. REGISTRATION OF TRANSFER AND EXCHANGE.
(a) Debentures may be exchanged upon presentation thereto at
the office or agency of the Company designated for such purpose in the Borough
of Manhattan, the City of New York, or at the office of the Debenture Registrar,
for other Debentures and for a like aggregate principal amount, upon payment of
a sum sufficient to cover any tax or other governmental charge in relation
thereto, all as provided in this Section 2.7. In respect of any Debentures so
surrendered for exchange, the Company shall execute, the Trustee shall
authenticate and such office or agency shall deliver in exchange therefor the
Debenture or Debentures that the Debentureholder making the exchange shall be
entitled to receive, bearing numbers not contemporaneously outstanding.
(b) The Company shall keep, or cause to be kept, at its office
or agency designated for such purpose in the Borough of Manhattan, the City of
New York, or at the office of the Debenture Registrar, or such other location
designated by the Company a register or registers (herein referred to as he
"Debenture Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall register the Debentures and the transfers of
Debentures as provided in this Article II and which at all reasonable times
shall be open for inspection by the Trustee. The registrar for the purpose of
registering Debentures and transfer of Debentures as herein provided shall
initially be the Trustee and thereafter as may be appointed by
19
the Company as authorized by Board Resolution (the "Debenture Registrar"). Upon
surrender for transfer of any Debenture at the office or agency of the Company
designated for such purpose, the Company shall execute, the Trustee shall
authenticate and such office or agency shall deliver in the name of the
transferee or transferees a new Debenture or Debentures for a like aggregate
principal amount. All Debentures presented or surrendered for exchange or
registration of transfer, as provided in this Section 2.7, shall be accompanied
(if so required by the Company or the Debenture Registrar) by a written
instrument or instruments of transfer, in form satisfactory to the Company or
the Debenture Registrar, duly executed by the registered holder or by such
holder's duly authorized attorney in writing.
(c) No service charge shall be made for any exchange or
registration of transfer of Debentures, or issue of new Debentures in case of
partial redemption, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge in relation thereto, other than
exchanges pursuant to Section 2.8, Section 3.5(b) and Section 11.4 not involving
any transfer.
(d) The Company shall not be required (i) to issue, exchange
or register the transfer of any Debentures during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of less than all the Outstanding Debentures and ending at the close
of business on the day of such mailing; nor (ii) to register the transfer of or
exchange any Debentures or portions thereof called for redemption.
SECTION 2.8. TEMPORARY DEBENTURES.
Pending the preparation of definitive Debentures, the Company
may execute, and the Trustee shall authenticate and deliver, temporary
Debentures (printed, lithographed, or typewritten). Such temporary Debentures
shall be substantially in the form of the definitive Debentures in lieu of which
they are issued, but with such omissions, insertions and variations as may be
appropriate for temporary Debentures, all as may be determined by the Company.
Every temporary Debenture shall be executed by the Company and be authenticated
by the Trustee
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upon the same conditions and in substantially the same manner, and with like
effect, as the definitive Debentures. Without unnecessary delay the Company
shall execute and shall furnish definitive Debentures and thereupon any or all
temporary Debentures may be surrendered in exchange therefor (without charge to
the holders), at the office or agency of the Company designated for the purpose
in the Borough of Manhattan, the City of New York, and the Trustee shall
authenticate and such office or agency shall deliver in exchange for such
temporary Debentures an equal aggregate principal amount of definitive
Debentures, unless the Company advises the Trustee to the effect that definitive
Debentures need not be executed and furnished until further notice from the
Company. Until so exchanged, the temporary Debentures shall be entitled to the
same benefits under this Indenture as definitive Debentures authenticated and
delivered hereunder.
SECTION 2.9. MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES.
(a) In case any temporary or definitive Debenture shall become
mutilated or be destroyed, lost or stolen, the Company (subject to the next
succeeding sentence) shall execute, and upon the Company's request the Trustee
(subject as aforesaid) shall authenticate and deliver, a new Debenture bearing a
number not contemporaneously outstanding, in exchange and substitution for the
mutilated Debenture, or in lieu of and in substitution for the Debenture so
destroyed, lost or stolen. In every case the applicant for a substituted
Debenture shall furnish to the Company and the Trustee such security or
indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee evidence to their satisfaction of the destruction,
loss or theft of the applicant's Debenture and of the ownership thereof. The
Trustee may authenticate any such substituted Debenture and deliver the same
upon the written request or authorization of the Chairman, President or any Vice
President and the Treasurer or any Assistant Treasurer of the Company. Upon the
issuance of any substituted Debenture, 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)
21
connected therewith. In case any Debenture that has matured or is about to
mature shall become mutilated or be destroyed, lost or stolen, the Company may,
instead of issuing a substitute Debenture, pay or authorize the payment of the
same (without surrender thereof except in the case of a mutilated Debenture) if
the applicant for such payment shall furnish to the Company and the Trustee such
security or indemnity as they may require to save them harmless, and, in case of
destruction, loss or theft, evidence to the satisfaction of the Company and the
Trustee of the destruction, loss or theft of such Debenture and of the ownership
thereof.
(b) Every replacement Debenture issued pursuant to the
provisions of this Section 2.9 shall constitute an additional contractual
obligation of the Company whether or not the mutilated, destroyed, lost or
stolen Debenture shall be found at any time, or be enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Debentures duly issued hereunder. All
Debentures shall be held and owned upon the express condition that the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Debentures, and shall preclude (to the
extent lawful) any and all other rights or remedies, notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.
SECTION 2.10. CANCELLATION.
All Debentures surrendered for the purpose of payment,
redemption, exchange or registration of transfer shall, if surrendered to the
Company or any paying agent, be delivered to the Trustee for cancellation, or,
if surrendered to the Trustee, shall be canceled by it, and no Debentures shall
be issued in lieu thereof except as expressly required or permitted by any of
the provisions of this Indenture. On request of the Company at the time of such
surrender, the Trustee shall deliver to the Company canceled Debentures held by
the Trustee. In the absence of such request the Trustee may dispose of canceled
Debentures in accordance with its standard procedures and deliver a certificate
of disposition to the Company. If the Company shall otherwise acquire any of the
Debentures, however, such acquisition shall not operate as a
22
redemption or satisfaction of the indebtedness represented by such Debentures
unless and until the same are delivered to the Trustee for cancellation.
SECTION 2.11. BENEFIT OF INDENTURE.
Nothing in this Indenture or in the Debentures, express or
implied, shall give or be number construed to give to any Person, other than the
parties hereto and the holders of the Debentures (and, with respect to the
provisions of Article XVI, the holders of Senior Indebtedness) any legal or
equitable right, remedy or claim under or in respect of this Indenture, or under
any covenant, condition or provision herein contained; all such covenants,
conditions and provisions being for the sole benefit of the parties hereto and
of the holders of the Debentures (and, with respect to the provisions of Article
XVI, the holders of Senior Indebtedness).
SECTION 2.12. AUTHENTICATION AGENT.
(a) So long as any of the Debentures remain Outstanding there
may be an Authenticating Agent for any or all such Debentures, which the Trustee
shall have the right to appoint. Said Authenticating Agent shall be authorized
to act on behalf of the Trustee to authenticate Debentures issued upon exchange,
transfer or partial redemption thereof, and Debentures 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. All references in
this Indenture to the authentication of Debentures by the Trustee shall be
deemed to include authentication by an Authenticating Agent. Each Authenticating
Agent shall be acceptable to the Company and shall be a corporation that has a
combined capital and surplus, as most recently reported or determined by it,
sufficient under the laws of any jurisdiction under which it is organized or in
which it is doing business to conduct a trust business, and that is otherwise
authorized under such laws to conduct such business and is subject to
supervision or examination by federal or state authorities. If at any time any
Authenticating Agent shall cease to be eligible in accordance with these
provisions, it shall resign immediately.
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(b) Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company. The Trustee may
at any time (and upon request by the Company shall) terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or
cessation of eligibility of any Authenticating Agent, he Trustee may appoint an
eligible successor Authenticating Agent acceptable to the Company. Any successor
Authenticating Agent, upon acceptance of its appointment hereunder, shall become
vested with all the rights, powers and duties of its predecessor hereunder as if
originally named as an Authenticating Agent pursuant hereto.
ARTICLE III
REDEMPTION OF DEBENTURES
SECTION 3.1. REDEMPTION.
Subject to the Company having received prior approval of the
Federal Reserve, if then required under the applicable capital guidelines or
policies of the Federal Reserve, the Company may redeem the Debentures issued
hereunder on and after the dates set forth in and in accordance with the terms
of this Article III.
SECTION 3.2. SPECIAL EVENT REDEMPTION.
Subject to the Company having received the prior approval of
the Federal Reserve, if then required under the applicable capital guidelines or
policies of the Federal Reserve, if a Special Event has occurred and is
continuing, then, notwithstanding Section 3.3(a) but subject to Section 3.3(b),
the Company shall have the right upon not less than 30 days nor more than 60
days notice to the holders of the Debentures to redeem the Debentures, in whole
but not in part, for cash within 180 days following the occurrence of such
Special Event (the A180-Day Period") at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued and unpaid interest thereon to
the date of such redemption (the "Redemption
24
Price"), provided that if at the time there is available to the Company the
opportunity to eliminate, within the 180-Day Period, a Tax Event by taking some
ministerial action (a "Ministerial Action"), such as filing a form or making an
election, or pursuing some other similar reasonable measure which has no adverse
effect on the Company, the Trust or the holders of the Trust Securities issued
by the Trust, the Company shall pursue such Ministerial Action in lieu of
redemption, and, provided further, that the Company shall have no right to
redeem the Debentures while the Trust is pursuing any Ministerial Action
pursuant to its obligations under the Trust Agreement. The Redemption Price
shall be paid prior to 12:00 noon, New York time, on the date of such redemption
or such earlier time as the Company determines, provided that the Company shall
deposit with the Trustee an amount sufficient to pay the Redemption Price by
10:00 a.m., New York time, on the date such Redemption Price is to be paid.
SECTION 3.3. OPTIONAL REDEMPTION BY COMPANY.
(a) Subject to the provisions of Section 3.3(b), except as
otherwise may be specified in this Indenture, the Company shall have the right
to redeem the Debentures, in whole or in part, from time to time, on or after
June 30, 2002, at a Redemption Price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest thereon to the date of such
redemption. Any redemption pursuant to this Section 3.3(a) shall be made upon
not less than 30 days nor more than 60 days notice to the holder of the
Debentures, at the Redemption Price. If the Debentures are only partially
redeemed pursuant to this Section 3.3, the Debentures shall be redeemed pro rata
or by lot or in such other manner as the Trustee shall deem appropriate and fair
in its discretion. The Redemption Price shall be paid prior to 12:00 noon, New
York time, on the date of such redemption or at such earlier time as the Company
determines provided that the Company shall deposit with the Trustee an amount
sufficient to pay the Redemption Price by 10:00 a.m., New York time, on the date
such Redemption Price is to be paid.
(b) If a partial redemption of the Debentures would result in
the delisting of
25
the Preferred Securities issued by the Trust from The Nasdaq Stock Market's
National Market or any national securities exchange or other organization on
which the Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the Debentures
in whole.
SECTION 3.4. NOTICE OF REDEMPTION.
(a) In case the Company shall desire to exercise such right to
redeem all or, as the case may be, a portion of the Debentures in accordance
with the right reserved so to do, the Company shall, or shall cause the Trustee
to upon receipt of 45 days' written notice from the Company (which notice shall,
in the event of a partial redemption, include a representation to the effect
that such partial redemption shall not result in the delisting of the Preferred
Securities as described in Section 3.3(b) above), give notice of such redemption
to holders of the Debentures to be redeemed by mailing, first class postage
prepaid, a notice of such redemption not less than 30 days and not more than 60
days before the date fixed for redemption to such holders at their last
addresses as they shall appear upon the Debenture Register unless a shorter
period is specified in the Debentures to be redeemed. Any notice that is mailed
in the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the registered holder receives the notice. In any case,
failure duly to give such notice to the holder of any Debenture designated for
redemption in whole or in part, or any defect in the notice, shall not affect
the validity of the proceedings for the redemption of any other Debentures. In
the case of any redemption of Debentures prior to the expiration of any
restriction on such redemption provided in the terms of such Debentures or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with any such restriction. Each such
notice of redemption shall specify the date fixed for redemption and the
Redemption Price and shall state that payment of the Redemption Price shall be
made at the office or agency of the Company in the Borough of Manhattan, The
City of New York or at the Corporate Trust Office, upon presentation and
surrender of such Debentures, that interest accrued to the date fixed for
redemption shall be paid as specified in said notice and that from and after
said date interest shall cease to accrue. If less than all the Debentures are to
be redeemed, the
26
notice to the holders of the Debentures shall specify the particular Debentures
to be redeemed. If the Debentures are to be redeemed in part only, the notice
shall state the portion of the principal amount thereof to be redeemed and shall
state that on and after the redemption date, upon surrender of such Debenture, a
new Debenture or Debentures in principal amount equal to the unredeemed portion
thereof shall be issued.
(b) If less than all the Debentures are to be redeemed, the
Company shall give the Trustee at least 45 days' notice in advance of the date
fixed for redemption as to the aggregate principal amount of Debentures to be
redeemed, and thereupon the Trustee shall select, by lot or in such other manner
as it shall deem appropriate and fair in its discretion, the portion or portions
(equal to $10 or any integral multiple thereof) of the Debentures to be redeemed
and shall thereafter promptly notify the Company in writing of the numbers of
the Debentures to be redeemed, in whole or in part. The Company may, if and
whenever it shall so elect pursuant to the terms hereof, by delivery of
instructions signed on its behalf by its President or any Vice President,
instruct the Trustee or any paying agent to call all or any part of the
Debentures for redemption and to give notice of redemption in the manner set
forth in this Section 3.4, such notice to be in the name of the Company or its
own name as the Trustee or such paying agent may deem advisable. In any case in
which notice of redemption is to be given by the Trustee or any such paying
agent, the Company shall deliver or cause to be delivered to, or permit to
remain with, the Trustee or such paying agent, as the case may be, such
Debenture Register, transfer books or other records, or suitable copies or
extracts therefrom, sufficient to enable the Trustee or such paying agent to
give any notice by mail that may be required under the provisions of this
Section 3.4.
SECTION 3.5. PAYMENT UPON REDEMPTION.
(a) If the giving of notice of redemption shall have been
completed as above provided, the Debentures or portions of Debentures to be
redeemed specified in such notice shall become due and payable on the date and
at the place stated in such notice at the applicable
27
Redemption Price, and interest on such Debentures or portions of Debentures
shall cease to accrue on and after the date fixed for redemption, unless the
Company shall default in the payment of such Redemption Price with respect to
any such Debenture or portion thereof. On presentation and surrender of such
Debentures on or after the date fixed for redemption at the place of payment
specified in the notice, said Debentures shall be paid and redeemed at the
Redemption Price (but if the date fixed for redemption is an interest payment
date, the interest installment payable on such date shall be payable to the
registered holder at the close of business on the applicable record date
pursuant to Section 3.3).
(b) Upon presentation of any Debenture that is to be redeemed
in part only, the Company shall execute and the Trustee shall authenticate and
the office or agency where the Debenture is presented shall deliver to the
holder thereof, at the expense of the Company, a new Debenture of authorized
denomination in principal amount equal to the unredeemed portion of the
Debenture so presented.
SECTION 3.6. NO SINKING FUND.
The Debentures are not entitled to the benefit of any sinking
fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. EXTENSION OF INTEREST PAYMENT PERIOD.
So long as no Event of Default has occurred and is continuing,
the Company shall have the right, at any time and from time to time during the
term of the Debentures, to defer payments of interest by extending the interest
payment period of such Debentures for a period not exceeding 20 consecutive
quarters (the "Extension Period"), during which Extension Period no interest
shall be due and payable; provided that no Extension Period may extend beyond
the Maturity Date. Interest, the payment of which has been deferred because of
the extension of the
28
interest payment period pursuant to this Section 4.1, shall bear interest
thereon at the Coupon Rate compounded quarterly for each quarter of the
Extension Period ("Compounded Interest"). At the end of the Extension Period,
the Company shall calculate (and deliver such calculation to the Trustee) and
pay all interest accrued and unpaid on the Debentures, including any Additional
Interest and Compounded Interest (together, "Deferred Interest") that shall be
payable to the holders of the Debentures in whose names the Debentures are
registered in the Debenture Register on the first record date after the end of
the Extension Period. Before the termination of any Extension Period, the
Company may further extend such period, provided that such period together with
all such further extensions thereof shall not exceed 20 consecutive quarters, or
extend beyond the Maturity Date of the Debentures. Upon the termination of any
Extension Period and upon the payment of all Deferred Interest then due, the
Company may commence a new Extension Period, subject to the foregoing
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof, but the Company may prepay at any time all or any
portion of the interest accrued during an Extension Period.
SECTION 4.2. NOTICE OF EXTENSION.
(a) If the Property Trustee is the only registered holder of
the Debentures at the time the Company selects an Extension Period, the Company
shall give written notice to the Administrative Trustees, the Property Trustee
an the Trustee of its selection of such Extension Period two Business Days
before the earlier of (i) the next succeeding date on which Distributions on the
Trust Securities issued by the Trust are payable; or (ii) the date the Trust is
required to give notice of the record date, or the date such Distributions are
payable, to The Nasdaq Stock Market's National Market or other applicable
self-regulatory organization or to holders of the Preferred Securities issued by
the Trust, but in any event at least one Business Day before such record date.
(b) If the Property Trustee is not the only holder of the
Debentures at the time the Company selects an Extension Period, the Company
shall give the holders of the Debentures
29
and the Trustee written notice of its selection of such Extension Period at
least two Business Days before the earlier of (i) the next succeeding Interest
Payment Date; or (ii) the date the Company is required to give notice of the
record or payment date of such interest payment to The Nasdaq Stock Market's
National Market or other applicable self-regulatory organization or to holders
of the Debentures.
(c) The quarter in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 4.2 shall be counted as one of the 20
quarters permitted in the maximum Extension Period permitted under Section 4.1.
SECTION 4.3. LIMITATION ON TRANSACTIONS.
If (i) the Company shall exercise its right to defer payment
of interest as provided in Section 4.1; or (ii) there shall have occurred any
Event of Default, the (a) the Company shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock; (b) the Company
shall not make any payment of interest, principal or premium, if any, or repay,
repurchase or redeem any debt securities issued by the Company which rank pari
passu with or junior to the Debentures; provided, however, that notwithstanding
the foregoing the Company may make payments pursuant to its obligations under
the Preferred Securities Guarantee; and (c) the Company shall not redeem,
purchase or acquire less than all of the Outstanding Debentures or any of the
Preferred Securities.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
SECTION 5.1. PAYMENT OF PRINCIPAL AND INTEREST.
The Company shall duly and punctually pay or cause to be paid
the principal of and interest on the Debentures at the time and place and in the
manner provided herein.
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SECTION 5.2. MAINTENANCE OF AGENCY.
So long as any of the Debentures remain Outstanding, the
Company shall maintain an office or agency in the Borough of Manhattan, The City
of New York, and at such other location or locations as may be designated as
provided in this Section 5.2, where (i) Debentures may be presented for payment;
(ii) Debentures may be presented as hereinabove authorized for registration of
transfer and exchange; and (iii) notices and demands to or upon the Company in
respect of the Debentures and this Indenture may be given or served, such
designation to continue with respect to such office or agency until the Company
shall, by written notice signed by its President or a Vice President and
delivered to the Trustee, designate some other office or agency for such
purposes or any of them. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, 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, notices and demands.
In addition to any such office or agency, the Company may from time to time
designate one or more offices or agencies outside of the Borough of Manhattan,
The City of New York, where the Debentures may be presented for registration or
transfer and for exchange in the manner provided herein, and the Company may
from time to time rescind such designation as the Company may deem desirable or
expedient; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain any such office or
agency in the Borough of Manhattan, The City of New York, for the purposes above
mentioned. The Company shall give the Trustee prompt written notice of any such
designation or rescission thereof.
SECTION 5.3. PAYING AGENTS.
(a) The Property Trustee shall act as the Paying Agent. If the
Company shall appoint one or more paying agents for the Debentures, other than
the Property Trustee, the Company shall cause each such paying agent to execute
and deliver to the Trustee an instrument
31
in which such agent shall agree with the Trustee, subject to the provisions of
this Section 5.3:
(i) that it shall hold all sums held by it as such
agent for the payment of the principal of or interest on the Debentures
(whether such sums have been paid to it by the Company or by any other
obligor of such Debentures) in trust for the benefit of the Persons
entitled thereto;
(ii) that it shallgive the Trustee notice of any
failure by the Company (or by any other obligor of such Debentures) to
make any payment of the principal of or interest on the Debentures when
the same shall be due and payable;
(iii) that it shall, at any time during the
continuance of any failure referred to in the preceding paragraph
(a)(ii) above, upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such Paying Agent; and
(iv) that it shall perform all other duties of Paying
Agent as set forth in this Indenture.
(b) If the Company shall act as its own Paying Agent with
respect to the Debentures, it shall on or before each due date of the principal
of or interest on such Debentures, set aside, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum sufficient to pay such
principal on interest so becoming due on Debentures until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and shall
promptly notify the Trustee of such action, or any failure (by it or any other
obligor on such Debentures) to take such action. Whenever the Company shall have
one or more Paying Agents for the Debentures, it shall, prior to each due date
of the principal of or interest on any Debentures, deposit with the Paying Agent
a sum sufficient to pay the principal or interest so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such principal or
interest, and (unless such Paying Agent is the Trustee) the Company shall
promptly notify the Trustee of this action or failure so to act.
32
(c) Notwithstanding anything in this Section 5.3 to the
contrary, (i) the agreement to hold sums in trust as provided in this Section
5.3 is subject to the provisions of Section 13.3 and 13.4; and (ii) 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 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 and conditions 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.
SECTION 5.4. APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE.
The Company, whenever necessary to avoid or fill a vacancy in
the office of Trustee, shall appoint, in the manner provided in Section 9.10, a
Trustee, is that there shall at all times be a Trustee hereunder.
SECTION 5.5. COMPLIANCE WITH CONSOLIDATION PROVISIONS.
The Company shall not, while any of the Debentures remain
outstanding, consolidate with, or merge into, or merge into itself, or sell or
convey all or substantially all of its property to any other company unless the
provisions of Article XII hereof are complied with.
SECTION 5.6. LIMITATION ON TRANSACTIONS.
If Debentures are issued to the Trust or a trustee of the
Trust in connection with the issuance of Trust Securities by the Trust and (i)
there shall have occurred any event that would constitute an Event of Default;
(ii) the Company shall be in default with respect to its payment of any
obligations under the Preferred Securities Guarantee relating to the Trust; or
(iii) the Company shall have given notice of its election to defer payments of
interest on such
33
Debentures by extending the interest payment period as provided in this
Indenture and such period, or any extension thereof, shall be continuing, then
(a) the Company shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock; (b) the Company shall not make any payment
of interest, principal or premium, if any, or repay, repurchase or redeem any
debt securities issued by the Company which rank pari passu with or junior to
the Debentures; provided, however, that the Company may make payments pursuant
to its obligations under the Preferred Securities Guarantee; and (c) the Company
shall not redeem, purchase or acquire less than all of the Outstanding
Debentures or any of the Preferred Securities.
SECTION 5.7. COVENANTS AS TO THE TRUST.
For so long as the Trust Securities of the Trust remain
outstanding, the Company shall (i) maintain 100% direct or indirect ownership of
the Common Securities of the Trust; provided, however, that any permitted
successor of the Company under this Indenture may succeed to the Company's
ownership of the Common Securities; (ii) not voluntarily terminate wind up or
liquidate the Trust, except upon prior approval of the Federal Reserve if then
so required under applicable capital guidelines or policies of the Federal
Reserve and use its reasonable efforts to cause the Trust (a) to remain a
business trust, except in connection with a distribution of Debentures, the
redemption of all of the Trust Securities of the Trust or certain mergers,
consolidations or amalgamations, each as permitted by the Trust Agreement; and
(b) to otherwise continue not to be treated as an association taxable as a
corporation or partnership for United States federal income tax purposes; and
(iii) use its reasonable efforts to cause each holder of Trust Securities to be
treated as owning an individual beneficial interest in the Debentures. In
connection with the distribution of the Debentures to the holders of the
Preferred Securities issued by the Trust upon a Dissolution Event, the Company
shall use its best efforts to list such Debentures on The Nasdaq Stock Market's
National Market or on such other exchange as the Preferred Securities are then
listed.
SECTION 5.8. COVENANTS AS TO PURCHASES.
34
Except upon the exercise by the Company of its right to redeem
the Debentures pursuant to Section 3.2 upon the occurrence and continuation of a
Special Event, the Company shall not purchase any Debentures, in whole or in
part, from the Trust prior to June 30, 2002.
ARTICLE VI
DEBENTUREHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 6.1. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
DEBENTUREHOLDERS.
The Company shall furnish or cause to be furnished to the
Trustee (a) on a quarterly basis on each regular record date (as described in
Section 2.5) a list, in such form as the Trustee may reasonably require, of the
names and addresses of the holders of the Debentures as of such regular record
date, provided that the Company shall not be obligated to furnish or cause to
furnish such list at any time that the list shall not differ in any respect from
the most recent list furnished to the Trustee by the Company (in the event the
Company fails to provide such list on a monthly basis, the Trustee shall be
entitled to rely on the most recent list provided by the Company); 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;
provided, however, that, in either case, no such list need be furnished if the
Trustee shall be the Debenture Registrar.
SECTION 6.2. PRESERVATION OF INFORMATION COMMUNICATIONS WITH
DEBENTUREHOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Debentures contained in the most recent list furnished to it as
provided in Section 6.1 and as to the names and addresses of holders of
Debentures received by the Trustee in its capacity as Debenture Registrar for
the Debentures (if acting in such capacity).
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(b) The Trustee may destroy any list furnished to it as
provided in Section 6.1 upon receipt of a new list so furnished.
(c) Debentureholders may communicate as provided in Section
312(b) of the Trust Indenture Act with other Debentureholders with respect to
their rights under this Indenture or under the Debentures.
SECTION 6.3. REPORTS BY THE COMPANY.
(a) Section 13 or Section 15(d) of the Exchange Act; or, if
the Company is not required to file information, documents or reports pursuant
to either of such sections, then to file with the Trustee and the Commission, in
accordance with the rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents and
reports that may be required pursuant to Section 13 of the Exchange Act in
respect of a security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee
and the Commission, in accordance with the rules and regulations prescribed from
to time by the Commission, such additional information, documents and reports
with respect to compliance by the Company with the conditions and covenants
provided for in this Indenture as may be required from time to time by such
rules and regulations.
(c) The Company covenants and agrees to transmit by mail,
first class postage prepaid, or reputable overnight delivery service that
provides for evidence of receipt, to the
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Debentureholders, as their names and addresses appear upon the Debenture
Register, within 30 days after the filing thereof with the Trustee, such
summaries of any information, documents and reports required to be filed by the
Company pursuant to subsections (a) and (b) of this Section 6.3 as may be requ
red by rules and regulations prescribed from time to time by the Commission.
SECTION 6.4. REPORTS BY THE TRUSTEE.
(a) On or before July 15 in each year in which any of the
Debentures are Outstanding, the Trustee hall transmit by mail, first class
postage prepaid, to the Debentureholders, as their names and addresses appear
upon the Debenture Register, a brief report dated as of the preceding May 15, if
and to the extent required under Section 313(a) of the Trust Indenture Act.
(b) The Trustee shall comply with Section 313(b) and 313(c) of
the Trust Indenture Act.
(c) A copy of each such report shall, at the time of such
transmission to Debentureholders, be filed by the Trustee with the Company, with
each stock exchange upon which any Debentures are listed (if so listed) and also
with the Commission. The Company agrees to notify the Trustee when any
Debentures become listed on any stock exchange.
ARTICLE VII
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON EVENT OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT.
(a) Whenever used herein with respect to the Debentures,
"Event of Default" means any one or more of the following events that has
occurred and is continuing:
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(i) the Company defaults in the payment of any
installment of interest upon any of the Debentures, as and when the
same shall become due and payable, and continuance of such default for
a period of 30 days; provided, however, that a valid extension of an
interest payment period by the Company in accordance with the terms of
this Indenture shall not constitute a default in the payment of
interest for this purpose;
(ii) the Company defaults in the payment of the
principal on the Debentures as and when the same shall become due and
payable whether at maturity, upon redemption, by declaration or
otherwise; provided, however, that a valid extension of the maturity of
such Debentures in accordance with the terms of this Indenture shall
not constitute a default in the payment of principal;
(iii) the Company fails to observe or perform any
other of its covenants or agreements with respect to the Debentures for
a period of 90 days after the date on which written notice of such
failure, requiring the same to be remedied and stating that such notice
is a "Notice of Default" hereunder, 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 principal
amount of the Debentures at the time Outstanding;
(iv) the Company pursuant to or within the meaning of
any Bankruptcy Law (i) commences a voluntary case; (ii) consents to the
entry of an order for relief against it in an involuntary case; (iii)
consents to the appointment of a Custodian of it or for all or
substantially all of its property; or (iv) makes a general assignment
for the benefit of its creditors;
(v) a court of competent jurisdict on enters an order
under any Bankruptcy Law that (i) is for relief against the Company in
an involuntary case; (ii) appoints a Custodian of the Company for all
or substantially all of its property; or (iii) orders the liquidation
of the Company, and the order or decree remains unstayed and in effect
for 90 days; or
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(vi) the Trust shall have voluntarily or
involuntarily dissolved, wound-up its business or otherwise terminated
its existence except in connection with (i) the distribution of
Debentures to holders of Trust Securities in liquidation of their
interests in the Trust; (ii) the redemption of all of the outstanding
Trust Securities of the Trust; or (iii) certain mergers, consolidations
or amalgamations, each as permitted by the Trust Agreement.
(b) In each and every such case, unless the principal of all
the Debentures shall have already become due and payable, either the Trustee or
the holders of not less than 25% in aggregate principal amount of the Debentures
then Outstanding hereunder, by notice in writing to the Company (and to the
Trustee if given by such Debentureholders) may declare the principal of all the
Debentures to be due and payable immediately, and upon any such declaration the
same shall become and shall be immediately due and payable, notwithstanding
anything contained in this Indenture or in the Debentures.
(c) At any time after the principal of the Debentures shall
have been so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, the holders of a majority in aggregate principal amount of the
Debentures then Outstanding hereunder, 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 all
matured installments of interest upon all the Debentures and the principal of
any and all Debentures that shall have become due otherwise than by acceleration
(with interest upon such principal, and upon overdue installments of interest,
at the rate per annum expressed in the Debentures to the date of such payment or
deposit) and the amount payable to the Trustee under Section 9.7; and (ii) any
and all Events of Default under this Indenture, other than the nonpayment of
principal on Debentures that shall not have become due by their terms, shall
have been remedied or waived as provided in Section 7.6. No such rescission and
annulment shall extend to or shall affect any subsequent default or impair any
right consequent thereon.
39
(d) In case the Trustee shall have proceeded to enforce any
right with respect to Debentures under this Indenture and such proceedings shall
have been discontinued or abandoned because of such rescission or annulment or
for any other reason or shall have been determined adversely to the Trustee,
then and in every such case the Company and the Trustee shall be restored
respectively to their former positions and rights hereunder, and all rights,
remedies and powers of the Company and the Trustee shall continue as though no
such proceedings had been taken.
SECTION 7.2. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE.
(a) The Company covenants that (1) in case it shall default in
the payment of any installment of interest on any of the Debentures, and such
default shall have continued for a period of 90 Business Days; or (2) in case it
shall default in the payment of the principal of any of the Debentures when the
same shall have become due and payable, whether upon maturity of the Debentures
or upon redemption or upon declaration or otherwise, then, upon demand of the
Trustee, the Company shall pay to the Trustee, for the benefit of the holders of
the Debentures, the whole amount that then shall have been become due and
payable on all such Debentures for principal or interest, or both, as the case
may be, with interest upon the overdue principal and upon overdue installments
of interest at the rate per annum expressed in the Debentures; and (if the
Debentures are held by the Trust or a trustee of the Trust, without duplication
of any other amounts paid by the Trust or trustee in respect thereof) upon
overdue installments of interest at the rate per annum expressed in the
Debentures; and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, and the amount payable to the
Trustee under Section 9.7.
(b) If the Company shall fail to pay such amounts set forth in
Section 7.2(a) forthwith upon such demand, the Trustee, in its own name and as
trustee of an express trust, shall be entitled and empowered to institute any
action or proceedings at law or in equity for the collection of the sums so due
and unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the
40
Company or other obligor upon the Debentures and collect the moneys adjudged or
decreed to be payable in the manner provided by law out of the property of the
Company or other obligor upon the Debentures, wherever situated.
(c) In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, readjustment, arrangement, composition or judicial
proceedings affecting the Company or the creditors or property thereof, the
Trustee shall have power to intervene in such proceedings and take any action
therein that may be permitted by the court and shall (except as may be otherwise
provided by law) be entitled to file such proofs of claim and other papers and
documents as may be necessary or advisable in order to have the claims of the
Trustee and of the holders of the Debentures allowed for the entire amount due
and payable by the Company under this Indenture at the date of institution of
such proceedings and for any additional amount that may become due and payable
by the Company after such date, and to collect and receive any moneys or other
property payable or deliverable on any such claim, and to distribute the same
after the deduction of the amount payable to the Trustee under Section 9.7; and
any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the holders of the Debentures to make such payments to the
Trustee, and, in the event that the Trustee shall consent to the making of such
payments directly to such Debentureholders, to pay to the Trustee any amount due
it under Section 9.7.
(d) All rights of action and of asserting claims under this
Indenture, or under any of the terms established with respect to Debentures,
may be enforced by the Trustee without the possession of any of such Debentures,
or the production thereof at any trial or other proceeding relative thereto, and
any such suit or proceeding instituted by the Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment shall,
after provision for payment to the Trustee of any amounts due under Section 9.7,
be for the ratable benefit of the holders of the Debentures. In case of an Event
of Default hereunder, the Trustee may in its discretion proceed to protect and
enforce the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and
41
enforce any of such rights, either at law or in equity or in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in this Indenture or in aid of the exercise of any power granted in
this Indenture, or to enforce any other legal or equitable right vested in the
Trustee by this Indenture or by law. Nothing contained herein shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Debentureholder any plan of reorganization, arrangement, adjustment or
composition affecting the Debentures or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Debentureholder in
any such proceeding.
SECTION 7.3. APPLICATION OF MONEYS COLLECTED.
Any moneys collected by the Trustee pursuant to this Article
VII with respect to the Debentures shall be applied in the following order, at
the date or dates fixed by the Trustee and, in case of the distribution of such
moneys on account of principal or interest, upon presentation of the Debentures,
and notation thereon of the payment, if only partially paid, and upon surrender
thereof if fully paid:
FIRST: To the payment of costs and expenses of collection and
of all amounts payable to the Trustee under Section 9.7;
SECOND: To the payment of all Senior Indebtedness of the
Company if and to the extent required by Article XVI; and
THIRD: To the payment of the amounts then due and unpaid upon
the Debentures for principal and 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
Debentures for principal and interest, respectively.
SECTION 7.4. LIMITATION ON SUITS.
(a) Except as provided in Section 15.13 hereof, no holder of
any Debenture
42
shall have any right by virtue or by availing of any provision of this Indenture
to institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless (i) such holder previously shall have
given to the Trustee written notice of an Event of Default and of the
continuance thereof with respect to the Debentures specifying such Event of
Default, as hereinbefore provided; (ii) the holders of not less than 25% in
aggregate principal amount of the Debentures then Outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as trustee hereunder; (iii) such holder or holders shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby; and (iv) the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity, shall have failed to institute any such action, suit or proceeding;
and (v) during such 60 day period, the holders of a majority in principal amount
of the Debentures do not give the Trustee a direction inconsistent with the
request.
(b) Notwithstanding anything contained herein to the contrary
or any other provisions of this Indenture, the right of any holder of the
Debentures to receive payment of the principal of and interest on the
Debentures, as therein provided, on or after the respective due dates expressed
in such Debenture (or in the case of redemption, on the redemption date), or to
institute suit for the enforcement of any such payment on or after such
respective dates or redemption date, shall not be impaired or affected without
the consent of such holder and by accepting a Debenture hereunder it is
expressly understood, intended and covenanted by the taker and holder of every
Debenture with every other such taker and holder and the Trustee, that no one or
more holders of Debentures shall have any right in any manner whatsoever by
virtue or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of the holders of any other of such Debentures, or to
obtain or seek to obtain priority over or preference to any other such holder,
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal, ratable and common benefit of all holders of
Debentures. For the protection and enforcement of the provisions of this Section
7.4, each and every Debentureholder
43
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
SECTION 7.5. RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT
WAIVER.
(a) Except as otherwise provided in Section 2.9, all powers
and remedies given by this Article VII to the Trustee or to the Debentureholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive of
any other powers and remedies available to the Trustee or the holders of the
Debentures, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or
otherwise established with respect to such Debentures.
(b) No delay or omission of the Trustee or of any holder of
any of the Debentures to exercise any right or power accruing upon any Event of
Default occurring and continuing as aforesaid shall impair any such right or
power, or shall be construed to be a waiver of any such default or an
acquiescence therein; and, subject to the provisions of Section 7.4, every power
and remedy given by this Article VII or by law to the Trustee or the
Debentureholders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Debentureholders.
SECTION 7.6. CONTROL BY DEBENTUREHOLDERS.
The holders of a majority in aggregate principal amount of the
Debentures at the time Outstanding, determined in accordance with Section 10.4,
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee; provided, however, hat such direction shall not
be in conflict with any rule of law or with this Indenture. Subject to the
provisions of Section 9.1, the Trustee shall have the right to decline to follow
any such direction if the Trustee in good faith shall, by a Responsible Officer
or Officers of the Trustee, determine that the proceeding so directed would
involve the Trustee in personal liability. The holders of a majority in
aggregate principal amount of the Debentures at the time Outstanding affected
thereby,
44
determined in accordance with Section 10.4, may on behalf of the holders of all
of the Debentures waive any past default in the performance of any of the
covenants contained herein and its consequences, except (i) a default in the
payment of the principal of or interest on, any of the Debentures as and when
the same shall become due by the terms of such Debentures otherwise than by
acceleration (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal has been deposited with the
Trustee (in accordance with Section 7.1(c)); (ii) a default in the covenants
contained in Section 5.6; or (iii) in respect of a covenant or provision hereof
which cannot be modified or amended without the consent of the holder of each
Outstanding Debenture affected; provided, however, that if the Debentures are
held by the Trust or a trustee of the Trust, such waiver or modification to such
waiver shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the Trust shall have consented to such waiver
or modification to such waiver; provided further, that if the consent of the
holder of each Outstanding Debenture is required, such waiver shall not be
effective until each holder of the Trust Securities of the Trust shall have
consented to such waiver. Upon any such waiver, the default covered thereby
shall be deemed to be cured for all purposes of this Indenture and the Company,
the Trustee and the holders of the Debentures shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other default or impair any right consequent thereon.
SECTION 7.7. UNDERTAKING TO PAY COSTS.
All parties to this Indenture agree, and each holder of any
Debentures by such holder's 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 7.8 shall not apply to any suit instituted by
45
the Trustee, to any suit instituted by any Debentureholder, or group of
Debentureholders holding more than 10% in aggregate principal amount of the
Outstanding Debentures, or to any suit instituted by any Debentureholder for the
enforcement of the payment of the principal of or interest on the Debentures, on
or after the respective due dates expressed in such Debenture or established
pursuant to this Indenture.
ARTICLE VIII
FORM OF DEBENTURE AND ORIGINAL ISSUE
SECTION 8.1. FORM OF DEBENTURE.
The Debenture and the Trustee's Certificate of Authentication
to be endorsed thereon are to be substantially in the forms contained as Exhibit
A attached hereto and incorporated herein by reference.
SECTION 8.2. ORIGINAL ISSUE OF DEBENTURES.
Debentures in the aggregate principal amount of $12,371,500
may, upon execution of this Indenture, be executed by the Company and delivered
to the Trustee for authentication. If the Underwriters exercise their Option and
there is an Option Closing Date (as such terms are defined in that certain
Underwriting Agreement, dated ______________, 1997, by and among the Company,
the Trust and Stifel, Nicolaus & Company, Incorporated, for itself and as
representative of the Underwriters named therein) then, on such Option Closing
Date, Debentures in the additional aggregate principal amount of $1,855,500 may
be executed by the Company and delivered to the Trustee for authentication. In
either such event, the Trustee shall thereupon authenticate and deliver said
Debentures to or upon the written order of the Company, signed by its Chairman,
its Vice Chairman, its President, or any Vice President and its Treasurer or an
Assistant Treasurer, without any further action by the Company.
ARTICLE IX.
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CONCERNING THE TRUSTEE
SECTION 9.1. CERTAIN DUTIES AND RESPONSIBILITIES OF TRUSTEE.
(a) The Trustee, prior to the occurrence of an Event of
Default and after the occuring of all Events of Default that may have occurred,
shall undertake to perform with respect to the Debentures such duties and only
such duties as are specifically set forth in this Indenture, and no implied
covenants shall be read into this Indenture against the Trustee. In case an
Event of Default has occurred that has not been cured or waived, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) prior to the occurrence of an Event of Default and
after the acuring or waiving of all such Events of Default that may have
occurred:
(i) the duties and obligations of the
Trustee shall with respect to the Debentures be determined
solely by the express provisions of this Indenture, and the
Trustee shall not be liable with respect to the Debentures
except for the performance of such duties and obligations as
are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on the part
of the Trustee, the Trustee may with respect to the Debentures
conclusively rely, as to the truth of the
47
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture;
but in the case of any such certificates or opinions that by
any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Indenture;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of he Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the holders of not less than a
majority in principal amount of the Debentures at the time Outstanding
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
Debentures; and
(4) none of the provisions contained in this
Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any
of its duties or in the exercise of any of its rights or powers, if
there is reasonable ground for believing that the repayment of such
funds or liability is not reasonably assured to it under the terms of
this Indenture or adequate indemnity against such risk is not
reasonably assured to it.
SECTION 9.2. 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
Debentures, the Trustee shall transmit by mail to all holders of the Debentures,
as their names and addresses appear in the Debenture
48
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 or interest (including any Additional Interest) on any
Debenture, 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
the directors and/or Responsible Officers of the Trustee determines in good
faith that the withholding of such notice is in the interests of the holders of
such Debentures; and provided, further, that in the case of any default of the
character specified in Section 7.1(a)(iii), no such notice to holders of
Debentures need be sent until at least 30 days after the occurrence thereof. For
the purposes of this Section 9.2, the term "default" means any event which is,
or after notice or lapse of time or both, would become, an Event of Default with
respect to the Debentures.
SECTION 9.3. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 9.1:
(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, consent, order, approval, bond, 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, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a Board Resolution or an
instrument signed in the name of the Company by the President or any Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer thereof (unless other evidence in respect thereof is
specifically prescribed herein);
(c) The Trustee shall not be deemed to have knowledge of a
default or an Event of Default, other than an Event of Default specified in
Section 7.1(a)(i); or (ii), unless and
49
until it receives written notification of such Event of Default from the Company
or by holders of at least 25% of the aggregate principal amount of the
Debentures at the time Outstanding;
(d) The Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full an complete
authorization and protection in respect of any action taken or suffered or
omitted 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, order or
direction of any of the Debentureholders, pursuant to the provisions of this
Indenture, unless such Debentureholders shall have offered to the Trustee
reasonable security or indemnity against the costs,expenses and liabilities that
may be incurred therein or thereby; nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the occurrence of an Event of
Default (that has not been cured or waived) to exercise with respect to the
Debentures such of the rights and powers vested in it by this Indenture, and to
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs;
(f) The Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture;
(g) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
security, or other papers or documents, unless requested in writing so to do by
the holders of not less than a majority in principal amount of the Outstanding
Debentures (determined as provided in Section 10.4); provided, however, that if
the payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such costs, expenses or liabilities as a condition
to so
50
proceeding. The reasonable expense of every such examination shall be paid by
the Company or, if paid by the Trustee, shall be repaid by the Company upon
demand; and
(h) 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 9.4. TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC.
(a) The Recitals contained herein and in the Debentures shall
be taken as the statement of the Company, and the Trustee assumes no
responsibility for the correctness of the same.
(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Debentures.
(c) The Trustee shall not be accountable for the use or
application by the Company of any of the Debentures or of the proceeds of such
Debentures, or for the use or application of any moneys paid over by the Trustee
in accordance with any provision of this Indenture, or for the use or
application of any moneys received by any paying agent other than the Trustee.
SECTION 9.5. MAY HOLD DEBENTURES.
The Trustee or any Paying Agent or Debenture Registrar for the
Debentures, in its individual or any other capacity, may become the owner or
pledgee of Debentures with the same rights it would have if it were not Trustee,
Paying Agent or Debenture Registrar.
SECTION 9.6. MONEYS HELD IN TRUST.
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Subject to the provisions of Section 13.5, all moneys received
by the Trustee shall, until used or applied as herein provided, be held in trust
for the purposes for which they were received, but 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 moneys received by it hereunder except such as it
may agree with the Company to pay thereon.
SECTION 9.7. COMPENSATION AND REIMBURSEMENT.
(a) The Company covenants and agrees to pay to the Trustee,
and the Trustee shall be entitled to, such reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust), as the Company and the Trustee may from time to
time agree in writing, for all services rendered by it in the execution of the
trusts hereby created and in the exercise and performance of any of the powers
and duties hereunder of the Trustee, and, except as otherwise expressly provided
herein, the Company shall pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all Persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith. The Company also
covenants to indemnify the Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on the part of the Trustee and arising
out of or in connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself against any claim of
liability in the premises.
(b) The obligations of the Company under this Section 9.7 to
compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder.
SECTION 9.8. RELIANCE ON OFFICERS' CERTIFICATE.
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Except as otherwise provided in Section 9.1, whenever in the
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting to take any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the
Trustee and such certificate, in the absence of negligence or bad faith on the
part of the Trustee, shall be full warrant to the Trustee for any action taken,
suffered or omitted to be taken by it under the provisions of this Indenture
upon the faith thereof.
SECTION 9.9. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and
the Company shall in all respects comply with the provisions of Section 310(b)
of the Trust Indenture Act.
SECTION 9.10. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee with respect to the
Debentures issued hereunder which shall at all times be a corporation organized
and doing business under the laws of the United States of America or any State
or Territory thereof or of the District of Columbia, or a corporation or other
Person permitted to act as trustee by the Commission, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by federal, state,
territorial, or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section 9.10, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The Company may not, nor may any Person
directly or indirectly controlling,
53
controlled by, or under common control with the Company, serve as Trustee. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 9.10, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.11.
SECTION 9.11. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) The Trustee or any successor hereafter appointed, may at
any time resign by giving written notice thereof to the Company and by
transmitting notice of resignation by mail, first class postage prepaid, to the
Debentureholders, as their names and addresses appear upon the Debenture
Register. Upon receiving such notice of resignation, the Company shall promptly
appoint a successor trustee with respect to Debentures by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee with respect to
Debentures, or any Debentureholder who has been a bona fide holder of a
Debenture or Debentures for at least six months may, subject to the provisions
of Section 9.9, on behalf of himself and all others similarly situated, petition
any such court for the appointment of a successor trustee. Such court may
thereupon after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(b) In case at any time any one of the following shall
occur:
(i) the Trustee shall fail to comply with the
provisions of Section 9.9 after written request therefor by the Company
or by any Debentureholder who has been a bona fide holder of a
Debenture or Debentures for at least six months; or
(ii) the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.10 and shall fail to resign
after written request therefor by the Company or by any such
Debentureholder; or
54
(iii) the Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or commence a voluntary
bankruptcy proceeding, or a receiver of the Trustee or of its property
shall be appointed or consented to, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then, in any
such case, the Company may remove the Trustee with respect to all
Debentures and appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of
which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee, or, subject to the provisions of Section
9.9, unless the Trustee's duty to resign is stayed as provided herein,
any Debentureholder who has been a bona fide holder of a Debenture or
Debentures for at least six months may, on behalf of that holder and
all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon after such notice, if any,
as it may deem proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal amount of
the Debentures a the time Outstanding may at any time remove the Trustee by so
notifying the Trustee and the Company and may appoint a successor Trustee with
the consent of the Company.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee with respect to the Debentures pursuant to any of the
provisions of this Section 9.11 shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 9.12.
(e) Any successor trustee appointed pursuant to this Section
9.11 may be appointed with respect to the Debentures, and at any time there
shall be only one Trustee with respect to the Debentures.
55
SECTION 9.12. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor
trustee with respect to the Debentures, every 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 successor trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, powers and trusts referred
to in paragraph (a) of this Section 9.12.
(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 IX.
(d) Upon acceptance of appointment by a successor trustee as
provided in this Section 9.12, the Company shall transmit notice of the
succession of such trustee hereunder by mail, first class postage prepaid, to
the Debentureholders, as their names and addresses appear upon the Debenture
Register. If the Company fails to transmit such notice within ten days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be transmitted at the expense of the Company.
SECTION 9.13. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any corporation into which the Trustee may be merged or
converted or with
56
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided that such corporation shall be
qualified under the provisions of Section 9.9 and eligible under the provisions
of Section 9.10, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. In case any Debentures 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 Debentures so authenticated with the same effect as if such
successor Trustee had itself authenticated such Debentures.
SECTION 9.14. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee shall comply with Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship described in Section 311(b)
of the Trust Indenture Act. A Trustee who has resigned or been removed shall be
subject to Section 311(a) of the Trust Indenture Act to the extent included
therein.
ARTICLE X.
CONCERNING THE DEBENTUREHOLDERS
SECTION 10.1. EVIDENCE OF ACTION BY HOLDERS.
(a) Whenever in this Indenture it is provided that the holders
of a majority or specified percentage in aggregate principal amount of the
Debentures may take any action (including the making of any demand or request,
the giving of any notice, consent or waiver or the taking of any other action),
the fact that at the time of taking any such action the holders of such majority
or specified percentage have joined therein may be evidenced by any instrument
or any number of instruments of similar tenor executed by such holders of
Debentures in Person or
57
by agent or proxy appointed in writing.
(b) If the Company shall solicit from the Debentureholders any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for the determination of
Debentureholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Debentureholders of record at the
close of business on the record date shall be deemed to be Debentureholders for
the purposes of determining whether Debentureholders of the requisite proportion
of Outstanding Debentures have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the Outstanding Debentures shall be computed as of
the record date; provided, however, that no such authorization, agreement or
consent by such Debentureholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six months after the record date.
SECTION 10.2. PROOF OF EXECUTION BY DEBENTUREHOLDERS.
Subject to the provisions of Section 9.1, proof of the
execution of any instrument by a Debentureholder (such proof shall not require
notarization) or his agent or proxy and proof of the holding by any Person of
any of the Debentures shall be sufficient if made in the following manner:
(a) The fact and date of the execution by any such Person of
any instrument may be proved in any reasonable manner acceptable to the Trustee.
(b) The ownership of Debentures shall be proved by the
Debenture Register of such Debentures or by a certificate of the Debenture
Registrar thereof.
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(c) The Trustee may require such additional proof of any
matter referred to in this Section 10.2 as it shall deem necessary.
SECTION 10.3. WHO MAY BE DEEMED OWNERS.
Prior to the due presentment for registration of transfer of
any Debenture, the Company, the Trustee, any Paying Agent, any Authenticating
Agent and any Debenture Registrar may deem and treat the Person in whose name
such Debenture shall be registered upon the books of the Company as the absolute
owner of such Debenture (whether or not such Debenture shall be overdue and
notwithstanding any notice of ownership or writing thereon made by anyone other
than the Debenture Registrar) for he purpose of receiving payment of or on
account of the principal of and interest on such Debenture (subject to Section
2.3) and for all other purposes; and neither the Company nor the Trustee nor any
Paying Agent nor any Authenticating Agent nor any Debenture Registrar shall be
affected by any notice to the contrary.
SECTION 10.4. CERTAIN DEBENTURES OWNED BY COMPANY DISREGARDED.
In determining whether the holders of the requisite aggregate
principal amount of Debentures have concurred in any direction, consent or
waiver under this Indenture, the Debentures that are owned by the Company or any
other obligor on the Debentures or by any Person directly or indirectly
controlling or controlled by or under common control with the Company or any
other obligor on the Debentures shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination, except that for the
purpose of determining whether the Trustee shall be protected in relying on any
such direction, consent or waiver, only Debentures that the Trustee actually
knows are so owned shall be so disregarded. The Debentures so owned that have
been pledged in good faith may be regarded as Outstanding for the purposes of
this Section 10.4, if the pledgee shall establish to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Debentures and that
the pledgee is not a Person directly or indirectly controlling or controlled by
or under direct or indirect common
59
control with the Company or any such other obligor. In case of a dispute as to
such right, any decision by the Trustee taken upon the advice of counsel shall
be full protection to the Trustee.
SECTION 10.5. ACTIONS BINDING ON FUTURE DEBENTUREHOLDERS.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 10.1, of the taking of any action by the holders
of the majority or percentage in aggregate principal amount of the Debentures
specified in this Indenture in connection with such action, any holder of a
Debenture that is shown by the evidence to be included in the Debentures the
holders of which have consented to such action may, by filing written notice
with the Trustee, and upon proof of holding as provided in Section 10.2, revoke
such action so far as concerns such Debenture. Except as aforesaid any such
action taken by the holder of any Debenture shall be conclusive and binding upon
such holder and upon all future holders and owners of such Debenture, and of any
Debenture issued in exchange therefor, on registration of transfer thereof or in
place thereof, irrespective of whether or not any notation in regard thereto is
made upon such Debenture. Any action taken by the holders of the majority or
percentage in aggregate principal amount of the Debentures specified in this
Indenture in connection with such action shall be conclusively binding upon the
Company, the Trustee and the holders of all the Debentures.
ARTICLE XI.
SUPPLEMENTAL INDENTURES
SECTION 11.1. SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF
DEBENTUREHOLDERS.
In addition to any supplemental indenture otherwise authorized
by this Indenture, the Company and the Trustee may from time to time and at any
time enter into an indenture or indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as then in effect), without
the consent of the Debentureholders, for one or more of the following purposes:
60
(a) to cure any ambiguity, defect, or inconsistency herein, or
in the
Debentures;
(b) to comply with Article X;
(c) to provide for uncertificated Debentures in addition to or
in place of certificated Debentures;
(d) to add to the covenants of the Company for the benefit of
the holders of all or any of the Debentures or to surrender any right or power
herein conferred upon the Company;
(e) to add to, delete from, or revise the conditions,
limitations, and restrictions on the authorized amount, terms, or purposes of
issue, authentication, and delivery of Debentures, as herein set forth;
(f) to make any change that does not adversely affect the
rights of any Debentureholder in any material respect;
(g) to provide for the issuance of and establish the form and
terms and conditions of the Debentures, to establish the form of any
certifications required to be furnished pursuant to the terms of this Indenture
or of the Debentures, or to add to the rights of the holders of the Debentures;
(h) qualify or maintain the qualification of this Indenture
under the Trust Indenture Act; or
(i) to evidence a consolidation or merger involving the
Company as permitted under Section 12.1.
The Trustee is hereby authorized to join with the Company in
the execution of
61
any such supplemental indenture, and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee 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.
Any supplemental indenture authorized by the provisions of this Section 11.1 may
be executed by the Company and the Trustee without the consent of the holders of
any of the Debentures at the time Outstanding, notwithstanding any of the
provisions of Section 11.2.
SECTION 11.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF DEBENTUREHOLDERS.
With the consent (evidenced as provided in Section 10.1) of
the holders of not less than a majority in aggregate principal amount of the
Debentures at the time Outstanding, the Company, when authorized by Board
Resolutions, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as then in effect for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner not covered by Section 11.1 the rights of the holders of the
Debentures under this Indenture; provided, however, that no such supplemental
indenture shall without the consent of the holders of each Debenture then
Outstanding and affected thereby, (i) extend the fixed maturity of any
Debentures, reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, without the consent of the holder of
each Debenture so affected; or (ii) reduce the aforesaid percentage of
Debentures, the holders of which are required to consent to any such
supplemental indenture; provided further, that if the Debentures are held by the
Trust or a trustee of the Trust, such supplemental indenture shall not be
effective until the holders of a majority in liquidation preference of Trust
Securities of the Trust shall have consented to such supplemental indenture;
provided further, that if the consent of the holder of each Outstanding
Debenture is required, such supplemental indenture shall not be effective until
each holder of the Trust Securities of the Trust shall have consented to such
supplemental indenture. It shall not be necessary for the consent of the
Debentureholders affected thereby under this Section 11.2 to approve the
particular form of
62
any proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
SECTION 11.3. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture pursuant to
the provisions of this Article XI, this Indenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under this Indenture
of the Trustee, the Company and the holders of Debentures shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 11.4. DEBENTURES AFFECTED BY SUPPLEMENTAL INDENTURES.
Debentures affected by a supplemental indenture, authenticated
and delivered after the execution of such supplemental indenture pursuant to the
provisions of this Article XI, may bear a notation in form approved by the
Company, provided such form meets the requirements of any exchange upon which
the Debentures may be listed, as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Debentures so modified as to
conform, in the opinion of the Board of Directors of the Company, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Company, authenticated by the Trustee and delivered in
exchange for the Debentures then Outstanding.
SECTION 11.5. EXECUTION OF SUPPLEMENTAL INDENTURES.
(a) Upon the request of the Company, accompanied by its Board
Resolutions authorizing the execution of any such supplemental indenture, and
upon the filing with the
63
Trustee of evidence of the consent of Debentureholders required to consent
thereto as aforesaid, the Trustee shall join with the Company in the execution
of such supplemental indenture unless such supplemental indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion but shall not be obligated to enter
into such supplemental indenture. The Trustee, subject to the provisions of
Sections 9.1, may receive an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article XI is authorized or
permitted by, and conforms to, the terms of this Article XI and that it is
proper for the Trustee under the provisions of this Article XI to join in the
execution thereof.
(b) Promptly after the execution by the Company and the
Trustee of any supplemental indenture pursuant to the provisions of this Section
11.5, the Trustee shall transmit by mail, first class postage prepaid, a notice,
setting forth in general terms the substance of such supplemental indenture, to
the Debentureholders as their names and addresses appear upon the Debenture
Register. Any failure of the Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
ARTICLE XII.
SUCCESSOR CORPORATION
SECTION 12.1. COMPANY MAY CONSOLIDATE, ETC.
Nothing contained in this Indenture or in any of the
Debentures shall prevent any consolidation or merger of the Company with or into
any other corporation or corporations (whether or not affiliated with the
Company, as the case may be), or successive consolidations or mergers in which
he Company, as the case may be, or its successor or successors shall be a party
or parties, or shall prevent any sale, conveyance, transfer or other disposition
of the property of the Company, as the case may be, or its successor or
successors as an entirety, or substantially as an entirety, to any other
corporation (whether or not affiliated with the Company, as the case may be, or
its successor or successors) authorized to acquire and operate the same;
provided, however,
64
that the Company hereby covenants and agrees that, (i) upon any such
consolidation, merger, sale, conveyance, transfer or other disposition, the due
and punctual payment, in the case of the Company, of the principal of and
interest on all of the Debentures, according to their tenor and the due and
punctual performance and observance of all the covenants and conditions of this
Indenture to be kept or performed by the Company as the case may be, shall be
expressly assumed, by supplemental indenture (which shall conform to the
provisions of the Trust Indenture Act, as then in effect) satisfactory in form
to the Trustee executed and delivered to the Trustee by the entity formed by
such consolidation, or into which the Company, as the case may be, shall have
been merged, or by the entity which shall have acquired such property; (ii) in
case the Company consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially then as an entirety to any
Person, the successor Person is organized under the laws of the United States or
any state or the District of Columbia; and (iii) immediately after giving effect
thereto, an Event of Default, and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have occurred and be
continuing.
SECTION 12.2. SUCCESSOR CORPORATION SUBSTITUTED.
(a) In case of any such consolidation, merger, sale,
conveyance, transfer or other disposition and upon the assumption by the
successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual payment
of the principal of and interest on all of the Debentures Outstanding and the
due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Company such successor corporation shall
succeed to and be substituted for the Company, with the same effect as if it had
been named as the Company herein, and thereupon the predecessor corporation
shall be relieved of all obligations and covenants under this Indenture and the
Debentures.
(b) In case of any such consolidation, merger, sale,
conveyance, transfer or
65
other disposition such changes in phraseology and form (but not in substance)
may be made in the Debentures thereafter to be issued as may be appropriate.
(c) Nothing contained in this Indenture or in any of the
Debentures shall prevent the Company from merging into itself or acquiring by
purchase or otherwise all or any part of the property of any other Person
(whether or not affiliated with the Company).
SECTION 12.3. EVIDENCE OF CONSOLIDATION, ETC. TO TRUSTEE.
The Trustee, subject to the provisions of Section 9.1, may
receive an Opinion of Counsel as conclusive evidence that any such
consolidation, merger, sale, conveyance, transfer or other disposition, and any
such assumption, comply with the provisions of this Article XII.
ARTICLE XII.
SATISFACTION AND DISCHARGE
SECTION 13.1 SATISFACTION AND DISCHARGE OF INDENTURE
If at any time: (a) the Company shall have delivered to the
Trustee for cancellation all Debentures theretofore authenticated (other than
any Debentures that shall have been destroyed, lost or stolen and that shall
have been replaced or paid as provided in Section 2.9) and Debentures for whose
payment money or Governmental Obligations have theretofore been deposited in
trust or segregated and held in trust by the Company (and thereupon repaid to
the Company or discharged from such trust, as provided in Section 13.5); or (b)
all such Debentures not theretofore delivered to the Trustee for cancellation
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption,
and the Company shall deposit or cause to be deposited with the Trustee as trust
funds the entire amount in moneys or Governmental Obligations sufficient or a
combination thereof, sufficient in the opinion of a nationally recognized firm
of independent
66
public accountants expressed in a written certification thereof delivered to the
Trustee, to pay at maturity or upon redemption all Debentures not theretofore
delivered to the Trustee for cancellation, including principal and interest due
or to become due to such date of maturity or date fixed for redemption, as the
case may be, and if the Company shall also pay or cause to be paid all other
sums payable hereunder by the Company; then this Indenture shall thereupon cease
to be of further effect except for the provisions of Sections 2.3, 2.7, 2.9,
5.1, 5.2, 5.3, 9.7 and 9.10, that shall survive until the date of maturity or
redemption date, as the case may be, and Sections 9.6 and 13.5, that shall
survive to such date and thereafter, and the Trustee, on demand of the Company
and at the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture.
SECTION 13.2. DISCHARGE OF OBLIGATIONS.
If at any time all Debentures not heretofore delivered to the
Trustee for cancellation or that have not become due and payable as described in
Section 13.1 shall have been paid by the Company by depositing irrevocably with
the Trustee as trust funds moneys or an amount of Governmental Obligations
sufficient in the opinion of a nationally recognized certified public accounting
firm to pay at maturity or upon redemption all Debentures not theretofore
delivered to the Trustee for cancellation, including principal and interest due
or to become due to such date of maturity or date fixed for redemption, as the
case may be, and if the Company shall also pay or cause to be paid all other
sums payable hereunder by the Company, then after the date such moneys or
Governmental Obligations, as the case may be, are deposited with the Trustee,
the obligations of the Company under this Indenture shall cease to be of further
effect except for the provisions of Sections 2.3, 2.7, 2.9, 5.1, 5.2, 5.3, 9.6,
9.10 and 13.5 hereof that shall survive until such Debentures shall mature and
be paid. Thereafter, Sections 9.6 and 13.5 shall survive.
SECTION 13.3. DEPOSITED MONEYS TO BE HELD IN TRUST.
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All monies or Governmental Obligation deposited with the
Trustee pursuant to Sections 13.1 or 13.2 shall be held in trust and shall be
available for payment as due, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent), to the holders of the
Debentures for the payment or redemption of which such moneys or Governmental
Obligations have been deposited with the Trustee.
SECTION 13.4. PAYMENT OF MONIES HELD BY PAYING AGENTS.
In connection with the satisfaction and discharge of this
Indenture, all moneys or Governmental Obligations then held by any Paying Agent
under the provisions of this Indenture shall, upon demand of the Company, be
paid to the Trustee and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys or Governmental Obligations.
SECTION 13.5. REPAYMENT TO COMPANY.
Any monies or Governmental Obligations deposited with any
Paying Agent or the Trustee, or then held by the company in trust, for payment
of principal of or interest on the Debentures that are not applied but remain
unclaimed by the holders of such Debentures for at least two years after the
date upon which the principal of or interest on such Debentures shall have
respectively become due and payable, shall be repaid to the Company, as the case
may be, on May 31 of each year or (if then held by the Company) shall be
discharged from such trust; and thereupon the Paying Agent and the Trustee shall
be released from all further liability with respect to such moneys or
Governmental Obligations, and the holder of any of the Debentures entitled to
receive such payment shall thereafter, as an unsecured general creditor, look
only to the Company for the payment thereof.
ARTICLE XIV.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
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SECTION 14.1. NO RECOURSE.
No recourse under or upon any obligation, covenant or
agreement of this Indenture, or of the Debentures, or for any claim based
thereon or otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director, past, present or future as such, of the
Company or of any predecessor or successor corporation, either directly or
through the Company or any such predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that this
Indenture and the obligations issued hereunder are solely corporate obligations,
and that no such personal liability whatever shall attach to, or is or shall be
incurred by, the incorporators, stockholders, officers or directors as such, of
the Company or of any predecessor or successor corporation, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Debentures or implied therefrom; and that any and all such
personal liability of every name and nature, either at common law or in equity
or by constitution or statute, of, and any and all such rights and claims
against, every such incorporator, stockholder, officer or director as such,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Debentures or implied therefrom, are hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Indenture and the issuance of such Debentures.
ARTICLE XV.
MISCELLANEOUS PROVISIONS
SECTION 15.1. EFFECT ON SUCCESSORS AND ASSIGNS.
All the covenants, stipulations, promises and agreements in
this Indenture contained by or on behalf of the Company shall bind their
respective successors an assigns,
69
whether so expressed or not.
SECTION 15.2. ACTIONS BY SUCCESSOR.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the corresponding board, committee or officer of any corporation that
shall at the time be the lawful sole successor of the Company.
SECTION 15.3. SURRENDER OF COMPANY POWERS.
The Company by instrument in writing executed by appropriate
authority of its Board of Directors and delivered to the Trustee may surrender
any of the powers reserved to the Company, and thereupon such power so
surrendered shall terminate both as to the Company, as the case may be, and as
to any successor corporation.
SECTION 15.4. NOTICES.
Except as otherwise expressly provided herein any notice or
demand that by any provision of this Indenture is required or permitted to be
given or served by the Trustee or by the holders of Debentures to or on the
Company may be given or served by being deposited first class postage prepaid in
a post-office letter box addressed (until another address is filed in writing by
the Company with the Trustee), as follows: c/o People's Bancshares, Inc. 545
Pleasant Street, New Bedford, Massachusetts 02740, Attention: Chief Financial
Officer. Any notice, election, request or demand by the Company or any
Debentureholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made in writing at the Corporate
Trust Office of the Trustee.
SECTION 15.5. GOVERNING LAW.
This Indenture and each Debenture shall be deemed to be a
contract made under
70
the internal laws of the Commonwealth of Massachusetts and for all purposes
shall be construed in accordance with the laws of said Commonwealth.
SECTION 15.6. TREATMENT OF DEBENTURES AS DEBT.
It is intended that the Debentures shall be treated as
indebtedness and not as equity for federal income tax purposes. The provisions
of this Indenture shall be interpreted to further this intention.
SECTION 15.7. COMPLIANCE CERTIFICATES AND OPINIONS.
(a) Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
(b) Each certificate or opinion of the Company provided for in
this Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant in this Indenture shall include (1) a statement that the
Person making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion of such
Person, he has made such examination or investigation as, in the opinion of such
Person, is necessary to enable him to express an informed opinion as to whether
or not such covenant or condition has been complied with; and (4) a statement as
to whether or not, in the opinion of such Person, such condition or
71
covenant has been complied with.
SECTION 15.8. PAYMENTS ON BUSINESS DAYS.
In any case where the date of maturity of interest or
principal of any Debenture or the date of redemption of any Debenture shall not
be a Business Day, then payment of interest or principal may (subject to Section
2.5) be made on the next succeeding Business Day with the same force and effect
as if made on the nominal date of maturity or redemption, and no interest shall
accrue for the period after such nominal date.
SECTION 15.9. CONFLICT WITH TRUST INDENTURE ACT.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 15.10. COUNTERPARTS.
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 15.11. SEPARABILITY.
In case any one or more of the provisions contained in this
Indenture or in the Debentures shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
the Debentures, but this Indenture and he Debentures shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.
SECTION 15.12. ASSIGNMENT.
72
The Company shall have the right at all times to assign an of
its respective rights or obligations under this Indenture to a direct or
indirect wholly owned Subsidiary of the Company, provided that, in the event of
any such assignment, the Company shall remain liable for all such obligations.
Subject to the foregoing, this Indenture is binding upon and inures to the
benefit of the parties thereto and their respective successors and assigns. This
Indenture may not otherwise be assigned by the parties thereto.
SECTION 15.13. ACKNOWLEDGMENT OF RIGHTS; RIGHT OF SETOFF.
(a) The Company acknowledges that, with respect to any
Debentures held by the Trust or a trustee of the Trust, if the Property Trustee
fails to enforce its rights under this Indenture as the holder of the Debentures
held as the assets of the Trust, any holder of Preferred Securities may
institute legal proceedings directly against the Company to enforce such
Property Trustee's rights under this Indenture without first instituting any
legal proceedings against such Property Trustee or any other person or entity.
Notwithstanding the foregoing, and notwithstanding the provisions of Section
7.4(a) hereof, if an Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or principal
on the Debentures on the date such interest or principal is otherwise payable
(or in the case of redemption, on the redemption date), the Company acknowledges
that a holder of Preferred Securities may directly institute a proceeding for
enforcement of payment to such holder of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such holder on or after the respective due date
specified in the Debentures.
(b) Notwithstanding anything to the contrary contained in this
Indenture, the Company shall have the right to setoff any payment it is
otherwise required to make hereunder in respect of any Trust Securities to the
extent that the Company has previously made, or is concurrently making, a
payment to the holder of such Trust Securities under the Guarantee or in
connection with a proceeding for enforcement of payment of the principal of or
interest on the
73
Debentures directly brought by holders of any Trust Securities.
ARTICLE XVI.
SUBORDINATION OF DEBENTURES
SECTION 16.1. AGREEMENT TO SUBORDINATE.
The Company covenants and agrees, and each holder of
Debentures issued hereunder by such holder's acceptance thereof likewise
covenants and agrees, that all Debentures shall be issued subject to the
provisions of this Article XVI; and each holder of a Debenture, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions. The payment by the Company of the principal of and
interest on all Debentures issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment to
the prior payment in full of all Senior Debt, Subordinated Debt and Additional
Senior Obligations (collectively, "Senior Indebtedness") to the extent provided
herein, whether outstanding at the date of this Indenture or thereafter
incurred. No provision of this Article XVI shall prevent the occurrence of any
default or Event of Default hereunder.
SECTION 16.2. DEFAULT ON SENIOR DEBT, SUBORDINATED DEBT OR ADDITIONAL
SENIOR OBLIGATIONS.
In the event and during the continuation of any default by the
Company in the payment of principal, premium, interest or any other payment due
on any Senior Indebtedness of the Company, or in the event that the maturity of
any Senior Indebtedness of the Company has been accelerated because of a
default, then, in either case, no payment shall be made by the Company with
respect to the principal (including redemption payments) of or interest on the
Debentures. In the event that, notwithstanding the foregoing, any payment shall
be received by the Trustee when such payment is prohibited by the preceding
sentence of this Section 16.2, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the
74
holders of Senior Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee in writing
within 90 days of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.
SECTION 16.3. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
(a) Upon any payment by the Company or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution or winding-up or liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due upon
all Senior Indebtedness of the Company shall first be paid in full, or payment
thereof provided for in money in accordance with its terms, before any payment
is made by the Company on account of the principal or interest on the
Debentures; and upon any such dissolution or winding-up or liquidation or
reorganization, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the holders of the Debentures or the Trustee would be entitled to receive
from the Company, except for the provisions of this Article XVI, shall be paid
by the Company or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by the holders of
the Debentures or by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Indebtedness of the Company (pro rata to such
holders on the basis of the respective amounts of Senior Indebtedness held by
such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full, in money or money's worth, after giving
75
effect to any concurrent payment or distribution to or for the holders of such
Senior Indebtedness, before any payment or distribution is made to the holders
of Debentures or to the Trustee.
(b) In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, prohibited by the foregoing, shall be
received by the Trustee before all Senior Indebtedness of the Company is paid in
full, or provision is made for such payment in money in accordance with its
terms, such payment or distribution shall be held in trust for the benefit of
and shall be paid over or delivered to the holders of such Senior Indebtedness
or their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may appear, as
calculated by the Company, for application to the payment of all Senior
Indebtedness of the Company, as the case may be, remaining unpaid to the extent
necessary to pay such Senior Indebtedness in full in money in accordance with
its terms, after giving effect to any concurrent payment or distribution to or
for the benefit of the holders of such Senior Indebtedness.
(c) For purposes of this Article XVI, the words "cash,
property or securities" shall not be deemed to include shares of stock of the
Company as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Article
XVI with respect to the Debentures to the payment of all Senior Indebtedness of
the Company, as the case may be, that may at the time be outstanding, provided
that (i) such Senior Indebtedness is assumed by the new corporation, if any,
resulting from any such reorganization or readjustment; and (ii) the rights of
the holders of such Senior Indebtedness are not, without the consent of such
holders, altered by such reorganization or readjustment. The consolidation of
the Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in
76
Article XII shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 16.3 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article XII. Nothing in Section 16.2 or in this
Section 16.3 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 9.7.
SECTION 16.4. SUBROGATION.
(a) Subject to the payment in full of all Senior Indebtedness
of the Company, the rights of the holders of the Debentures shall be subrogated
to the rights of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company, as the case may
be, applicable to such Senior Indebtedness until the principal of and interest
on the Debentures shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the holders of the
Debentures or the Trustee would be entitled except for the provisions of this
Article XVI, and no payment over pursuant to the provisions of this Article XVI
to or for the benefit of the holders of such Senior Indebtedness by holders of
the Debentures or the Trustee, shall, as between the Company, its creditors
other than holders of Senior Indebtedness of the Company, and the holders of the
Debentures, be deemed to be a payment by the Company to or on account of such
Senior Indebtedness. It is understood that the provisions of this Article XVI
are and are intended solely for the purposes of defining the relative rights of
the holders of the Debentures, on the one hand, and the holders of such Senior
Indebtedness on the other hand.
(b) Nothing contained in this Article XVI or elsewhere in this
Indenture or in the Debentures is intended to or shall impair, as between the
Company, its creditors (other than the holders of Senior Indebtedness of the
Company), and the holders of the Debentures, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Debentures the
principal of and interest on the Debentures as and when the same shall become
77
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the holders of the Debentures and creditors of the
Company, as the case may be, other than the holders of Senior Indebtedness of
the Company, as the case may be, nor shall anything herein or therein prevent
the Trustee or the holder of any Debenture from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article XVI of the holders of such Senior
Indebtedness in respect of cash, property or securities of the Company, as the
case may be, received upon the exercise of any such remedy.
(c) Upon any payment or distribution of assets of the Company
referred to in this Article XVI, the Trustee, subject to the provisions of
Article IX, and the holders of the Debentures shall be entitled to conclusively
rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding-up, liquidation or reorganization proceedings
are pending, or a certificate of the receiver, trustee in bankruptcy,
liquidation trustee, agent or other Person making such payment or distribution,
delivered to the Trustee or to the holders of the Debentures, for the purposes
of ascertaining the Persons entitled to participate in such distribution, the
holders of Senior Indebtedness and other indebtedness of the Company, as the
case may be, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
XVI.
SECTION 16.5. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each holder of Debentures by such holder's acceptance thereof
authorizes and directs the Trustee on such holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article XVI and appoints the Trustee such holder's attorney-in-fact for any
and all such purposes.
SECTION 16.6. NOTICE BY THE COMPANY.
(a) The Company shall give prompt written notice to a
Responsible Officer of
78
the Trustee of any fact known to the Company that would prohibit the making of
any payment of monies to or by the Trustee in respect of the Debentures pursuant
to the provisions of this Article XVI. Notwithstanding the provisions of this
Article XVI or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article XVI, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof
from the Company or a holder or holders of Senior Indebtedness or from any
trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Section 9.1, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 16.6 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of or interest on any Debenture), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purposes for which
they were received, and shall not be affected by any notice to the contrary that
may be received by it within two Business Days prior to such date.
(b) The Trustee, subject to the provisions of Section 9.1,
shall be entitled to conclusively rely on the delivery to it of a written notice
by a Person representing himself to be a holder of Senior Indebtedness of the
Company (or a trustee on behalf of such holder) to establish that such notice
has been given by a holder of such Senior Indebtedness or a trustee on behalf of
any such holder or holders. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of such Senior Indebtedness to participate in any payment or
distribution pursuant to this Article XVI, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of such Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article XVI, and, if
such evidence is not furnished, the
79
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 16.7. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS.
(a) The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article XVI in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder. The Trustee's right to compensation and
reimbursement of expenses as set forth in Section 9.7 shall not be subject to
the subordination provisions of the Article XVI.
(b) With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XVI, and
no implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of such Senior
Indebtedness and subject to the provisions of Section 9.1, the Trustee shall not
be liable to any holder of such Senior Indebtedness if it shall pay over or
deliver to holders of Debentures, the Company or any other Person money or
assets to which any holder of such Senior Indebtedness shall be entitled by
virtue of this Article XVI or otherwise.
SECTION 16.8. SUBORDINATION MAY NOT BE IMPAIRED.
(a) No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by he Company with the terms, provisions
and covenants of this Indenture, regardless of any knowledge thereof that any
such holder may have or otherwise be charged with.
80
(b) Without in any way limiting the generality of Section
16.8(a), the holders of Senior Indebtedness of the Company may, at any time and
from time to time, without the consent of or notice to the Trustee or the
holders of the Debentures, without incurring responsibility to the holders of
the Debentures and without impairing or releasing the subordination provided in
this Article XVI or the obligations hereunder of the holders of the Debentures
to the holders of such Senior Indebtedness, do any one or more of the following:
(i) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, such Senior Indebtedness, or otherwise amend or
supplement in any manner such Senior Indebtedness or any instrument evidencing
the same or any agreement under which such Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing such Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of such Senior Indebtedness; and
(iv) exercise or refrain from exercising any rights against the Company and any
other Person.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed an attested, all as of the day and year first above written.
PEOPLE'S BANCSHARES, INC.
By
Name:
Title:
Attest:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By
Name:
Title:
Attest:
Number
82
83
STATE OF _________ )
) ss
COUNTY OF __________ )
On this ______ day of ______________________, 1997, before me
appeared ___________________, to me personally known, who, being by me duly
sworn, did say that he is the ___________ _________ of PEOPLE'S BANCSHARES,
INC., and that the seal affixed to said instrument is the corporate seal of said
corporation, and that said instrument was signed and sealed in behalf of said
corporation by authority of its board of directors and said
_____________________________, acknowledged said instrument to be the free act
and deed of said corporation.
In testimony whereof I have hereunto set my hand and a fixed
my official seal at my office in said county and state the day and year last
above written.
Notary Public
My term expires:
[seal]
COMMONWEALTH OF MASSACHUSETTS )
) ss
COUNTY OF SUFFOLK )
84
On this ______ day of ______________________, 1997, before me
appeared_________________________,to me personally known, who, being by me duly
sworn, did say that he is the ____________________ of STATE STREET BANK AND
TRUST, and that the seal affixed to said instrument is the corporate seal of
said corporation, and that said instrument was signed and sealed in behalf of
said corporation by authority of its board of directors and said
__________________, acknowledged said instrument to be the free act and deed of
said corporation.
In testimony whereof I have hereunto set my hand and affixed
my official seal at my office in said county and commonwealth the day and year
last above written.
Notary Public
My term expires:
[seal]
85
EXHIBIT A
(FORM OF FACE OF DEBENTURE)
No. _____________________________
$-----------------------
CUSIP No. _______________________
PEOPLE'S BANCSHARES, INC.
___% SUBORDINATED DEBENTURE
DUE JUNE 30, 2027
People's Bancshares, Inc., a Massachusetts corporation (the
"Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to State
Street Bank and Trust Company as Property Trustee for People's Bancshares
Capital Trust, or registered assigns, the principal sum of ______________
Dollars ($___________) on June 30, 2027 (the "Stated Maturity"), and to pay
interest on said principal sum from [Date of original issuance], 1997, or from
the most recent interest payment date (each such date, an "Interest Payment
Date") to which interest has been paid or duly provided for, quarterly (subject
to deferral as set forth herein) in arrears on March 31, June 30, September 30
and December 31 of each year commencing September 30, 1997, at the rate of ___%
per annum until the principal hereof shall have become due and payable, and on
any overdue principal and (without duplication) on any overdue installment of
interest at the same rate per annum compounded quarterly. The amount of interest
payable on any Interest Payment Date shall be computed on the basis of a 360-day
year of twelve 30-day months. The amount of interest for any partial period
shall be computed on the basis of the number of days elapsed in a 360-day year
of twelve 30-day months. In the event that any date on which interest is payable
on this Debenture is not a business day, then payment of interest payable on
such date shall be made on the next succeeding day that is a business day (and
without any interest or other payment in respect of any such delay) with the
same force and effect as if made on such date. The interest installment so
payable, and punctually paid or duly provided for, on any Interest Payment Date
shall, as provided in the Indenture, be paid to the person in whose name this
Debenture (or one or more Predecessor Debentures, as defined in said Indenture)
is registered at the close of business on the regular record date for such
interest installment, which shall be the close of business on the fifteenth day
of the month in which the Interest Payment Date occurs unless otherwise provided
in the Indenture. Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the registered holders on
such regular record date and may be paid to the Person in whose name this
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered holders
of the Debentures not less than 10 days prior to such special record date, or
may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Debentures may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. The principal of and the interest on this Debenture
shall be payable at the office or agency of the Trustee
Exhibit A-1
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the registered holder at such address
as shall appear in the Debenture Register. Notwithstanding the foregoing, so
long as the holder of this Debenture is the Property Trustee, the payment of the
principal of and interest on this Debenture shall be made at such place and to
such account as may be designated by the Trustee.
The Stated Maturity may be shortened at any time by the
Company to any date not earlier than June 30, 2002, subject to the Company
having received prior approval of the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve. Such date may
also be extended at any time at the election of the Company for one or more
periods, but in no event to a date later than June 30, 2036, subject to certain
limitations described in the Indenture.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each holder of
this Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions; (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided; and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee.
The provisions of this Debenture are continued on the reverse
side hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to
be executed.
Dated ______________________
Exhibit A-2
PEOPLE'S BANCSHARES, INC.
By: _____________________________
Name: ___________________________
Title: __________________________
Attest:
By: _____________________________
Name: ___________________________
Title: __________________________
Exhibit A-3
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures described in the
within-mentioned Indenture.
Dated:
STATE STREET BANK AND TRUST COMPANY,
-----------------------------
as Trustee or Authentication
Agent
By ___________________________________ By___________________________
Authorized Signatory
Exhibit A-4
[FORM OF REVERSE OF DEBENTURE]
______________% SUBORDINATED DEBENTURE
(CONTINUED)
This Debenture is one of the subordinated debentures of the
Company (herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued under and pursuant to an Indenture dated
as of _________, 1997 (the "Indenture") duly executed and delivered between the
Company and State Street Bank and Trust Company, as Trustee (the "Trustee"), to
which Indenture reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Debentures. The Debentures are
limited in aggregate principal amount as specified in the Indenture.
In certain circumstances because of the occurrence and
continuation of a Special Event, this Debenture may become due and payable prior
to its stated maturity at the principal amount together with any interest
accrued thereon (the "Redemption Price"). The Redemption Price shall be paid
prior to 12:00 noon, Eastern Standard Time, time, on the date of such redemption
or at such earlier time as the Company determines. The Company shall have the
right to redeem this Debenture at the option of the Company, without premium or
penalty, in whole or in part at any time on or after June 30, 2002 (an "Optional
Redemption"), or at any time in certain circumstances upon the occurrence of a
Special Event, at a Redemption Price equal to 100% of the principal amount plus
any accrued but unpaid interest, to the date of such redemption. Any redemption
pursuant to this paragraph shall be made upon not less than 30 days nor more
than 60 days notice, at the Redemption Price. If the Debentures are only
partially redeemed by the Company pursuant to an Optional Redemption, the
Debentures shall be redeemed pro rata or by lot or by any other method utilized
by the Trustee.
In the event of redemption of this Debenture in part only, a
new Debenture or Debentures for the unredeemed portion hereof shall be issued in
the name of the holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of the Debentures
may be declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Debentures at the time outstanding, as defined
in the Indenture, to execute supplemental indentures for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of any supplemental indenture or of modifying in any manner
the rights of the holders of the Debentures; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of the Debentures
except as provided in the Indenture, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, without the
Exhibit A-5
consent of the holder of each Debenture so affected; or (ii)
reduce the aforesaid percentage of Debentures, the holders of which are required
to consent to any such supplemental indenture, without the consent of the
holders of each Debenture then outstanding and affected thereby. The Indenture
also contains provisions permitting the holders of a majority in aggregate
principal amount of the Debentures at the time outstanding, on behalf of all of
the holders of the Debentures, to waive any past default in the performance of
any of the covenants contained in the Indenture, or established pursuant to the
Indenture, and its consequences, except a default in the payment of the
principal of or interest on any of the Debentures. Any such consent or waiver by
the registered holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all future
holders and owners of this Debenture and of any Debenture issued in exchange
herefor or in place hereof (whether by registration of transfer or in place
hereof, irrespective of whether or not any notation of such consent or waiver is
made upon this Debenture).
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal and interest
on this Debenture at the time and place and at the rate and in the money herein
prescribed.
The Company shall have the right at any time during the term
of the Debentures and from time to time to extend the interest payment period of
such Debentures for up to 20 consecutive quarters (each, an "Extension Period"),
at the end of which period the Company shall pay all interest then accrued and
unpaid (together with interest thereon at the rate specified for the Debentures
to the extent that payment of such interest is enforceable under applicable
law). Before the termination of any such Extension Period, the Company may
further extend such Extension Period, provided that such Extension Period
together with all such further extensions thereof shall not exceed 20
consecutive quarters. At the termination of any such Extension Period and upon
the payment of all accrued and unpaid interest and any additional amounts then
due, the Company may commence a new Extension Period.
As provided in the Indenture and subject to certain
limitations therein set forth, this Debenture is transferable by the registered
holder hereof on the Debenture Register of the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Trustee
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company or the Trustee duly executed by the registered
holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Debentures of authorized denominations and for the same aggregate
principal amount shall be issued to the designated transferee or transferees. No
service charge shall be made for any such transfer, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and the Debenture
Registrar may deem and treat the registered holder hereof as the absolute owner
hereof (whether or not this Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Debenture
Registrar) for the purpose of receiving payment of or on account of the
principal hereof and interest due hereon and for all other purposes, and neither
the Company nor the Trustee nor any
Exhibit A-6
paying agent nor any Debenture Registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of
or the interest on this Debenture, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
The Debentures are issuable only in registered form without
coupons in denominations of $10 and any integral multiple thereof.
All terms used in this Debenture that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
Exhibit A-7
EXHIBIT 4.3
CERTIFICATE OF TRUST
OF
PEOPLE'S BANCSHARES CAPITAL TRUST
THIS CERTIFICATE OF TRUST OF PEOPLE'S BANCSHARES CAPITAL TRUST (the
"Trust"), dated as of June 6, 1997, is being duly executed and filed by
WILMINGTON TRUST COMPANY, a Delaware banking corporation, Richard S.
Straczynski, Colin C. Blair and Donna L. Boulanger, each an individual, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. Section 3801 et seq.).
1. NAME. The name of the business trust formed hereby is People's
Bancshares Capital Trust.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective on June
6, 1997.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY, as trustee
By: /s/ Donald G. MacKelcan
------------------------------------
Name: Donald G. MacKelcan
Title: Assistant Vice President
/s/ Richard S. Straczynski , as Trustee
------------------------------------
/s/ Colin C. Blair , as Trustee
------------------------------------
/s/ Donna L. Boulanger , as Trustee
------------------------------------
EXHIBIT 4.4
AMENDED AND RESTATED
TRUST AGREEMENT
AMONG
PEOPLE'S BANCSHARES, INC., AS DEPOSITOR
STATE STREET BANK AND TRUST COMPANY, AS PROPERTY TRUSTEE
WILMINGTON TRUST COMPANY, AS DELAWARE TRUSTEE,
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF _________________________, 1997
TABLE OF CONTENTS
Page
----
ARTICLE I Defined Terms........................................................2
Section 101. Definitions.......................................................2
ARTICLE II Establishment Of The Trust..........................................9
Section 201. Name..............................................................9
Section 202. Office Of The Delaware Trustee; Principal Place Of Business.......9
Section 203. Initial Contribution Of Trust Property; Organizational Expenses..10
Section 204. Issuance Of The Preferred Securities.............................10
Section 205. Issuance Of The Common Securities; Subscription And Purchase Of
Debentures.......................................................10
Section 206. Declaration Of Trust ............................................11
Section 207. Authorization To Enter Into Certain Transactions ................11
Section 208. Assets Of Trust .................................................15
Section 209. Title To Trust Property .........................................15
ARTICLE III Payment Account...................................................15
Section 301. Payment Account .................................................15
ARTICLE IV Distributions; Redemption..........................................15
Section 401. Distributions ...................................................15
Section 402. Redemption ......................................................16
Section 403. Subordination Of Common Securities ..............................18
Section 404. Payment Procedures. .............................................18
Section 405. Tax Returns And Reports .........................................19
Section 406. Payment Of Taxes, Duties, Etc. Of The Trust .....................19
Section 407. Payments Under Indenture. .......................................19
ARTICLE V Trust Securities Certificates.......................................19
Section 501. Initial Ownership ...............................................19
Section 502. The Trust Securities Certificates................................19
Section 503. Execution, Authentication And Delivery Of Trust Securities
i
Certificates ....................................................20
Section 504. Registration Of Transfer And Exchange Of Preferred Securities
Certificates ....................................................20
Section 505. Mutilated, Destroyed, Lost Or Stolen Trust Securities
Certificates ....................................................21
Section 506. Persons Deemed Securityholders ..................................22
Section 507. Access To List Of Securityholders' Names And Addresses ..........22
Section 508. Maintenance Of Office Or Agency..................................22
Section 509. Appointment Of Paying Agent .....................................23
Section 510. Ownership Of Common Securities By Depositor .....................23
Section 511. Preferred Securities Certificates ...............................23
Section 512. [Intentionally Omitted] .........................................24
Section 513. [Intentionally Omitted] .........................................24
Section 514. Rights Of Securityholders .......................................24
ARTICLE VI Acts Of Securityholders; Meetings; Voting..........................25
Section 601. Limitations On Voting Rights ....................................25
Section 602. Notice Of Meetings ..............................................26
Section 603. Meetings Of Preferred Securityholders ...........................26
Section 604. Voting Rights ...................................................26
Section 605. Proxies, Etc. ...................................................26
Section 606. Securityholder Action By Written Consent.........................27
Section 607. Record Date For Voting And Other Purposes .......................27
Section 608. Acts Of Securityholders .........................................27
Section 609. Inspection Of Records ...........................................28
ARTICLE VII Representations And Warranties....................................28
Section 701. Representations And Warranties Of The Bank And The Property
Trustee .........................................................28
Section 702. Representations And Warranties Of The Delaware Bank And The
Delaware Trustee. ...............................................29
Section 703. Representations And Warranties Of Depositor .....................31
ARTICLE VIII Trustees.........................................................31
ii
Section 801. Certain Duties And Responsibilities .............................31
Section 802. Certain Notices..................................................32
Section 803. Certain Rights Of Property Trustee ..............................33
Section 804. Not Responsible For Recitals Or Issuance Of Securities ..........35
Section 805. May Hold Securities .............................................35
Section 806. Compensation; Indemnity; Fees ...................................35
Section 807. Corporate Property Trustee Required; Eligibility Of Trustees ....36
Section 808. Conflicting Interests ...........................................36
Section 809. Co-Trustees And Separate Trustee.................................36
Section 810. Resignation And Removal; Appointment Of Successor ...............38
Section 811. Acceptance Of Appointment By Successor ..........................39
Section 812. Merger, Conversion, Consolidation Or Succession To Business .....40
Section 813. Preferential Collection Of Claims Against Depositor Or Trust ....40
Section 814. Reports By Property Trustee .....................................40
Section 815. Reports To The Property Trustee .................................40
Section 816. Evidence Of Compliance With Conditions Precedent ................41
Section 817. Number Of Trustees ..............................................41
Section 818. Delegation Of Power .............................................41
Section 819. Voting ..........................................................42
iii
ARTICLE IX Termination, Liquidation And Merger................................42
Section 901. Termination Upon Expiration Date ................................42
Section 902. Early Termination ...............................................42
Section 903. Termination .....................................................42
Section 904. Liquidation .....................................................43
Section 905. Mergers, Consolidations, Amalgamations Or Replacements Of The
Trust ...........................................................44
ARTICLE X Miscellaneous Provisions............................................45
Section 1001. Limitation Of Rights Of Securityholders ........................45
Section 1002. Amendment.......................................................45
Section 1003. Separability ...................................................46
Section 1004. Governing Law ..................................................46
Section 1005. Payments Due On Non-Business Day ...............................47
Section 1006. Successors .....................................................47
Section 1007. Headings .......................................................47
Section 1008. Reports, Notices And Demands ...................................47
Section 1009. Agreement Not To Petition ......................................48
Section 1010. Trust Indenture Act; Conflict With Trust Indenture Act .........48
Section 1011. Acceptance Of Terms Of Trust Agreement, Guarantee And
Indenture ......................................................49
iv
CROSS-REFERENCE TABLE
Section of Section of Amended
Trust Indenture Act and Restated
of 1939, as amended Trust Agreement
- ------------------- ---------------
310(a)(1)..................................................................807
310(a)(2)..................................................................807
310(a)(3)..................................................................807
310(a)(4)...........................................................207(a)(ii)
310(b).....................................................................808
311(a).....................................................................813
311(b).....................................................................813
312(a).....................................................................507
312(b).....................................................................507
312(c).....................................................................507
313(a)..................................................................814(a)
313(a)(4)...............................................................814(b)
313(b)..................................................................814(b)
313(c)....................................................................1008
313(d)..................................................................814(c)
314(a).....................................................................815
314(b)..........................................................Not Applicable
314(c)(1)..................................................................816
314(c)(2)..................................................................816
314(c)(3).......................................................Not Applicable
314(d)..........................................................Not Applicable
314(e)................................................................101, 816
315(a)..........................................................801(a), 803(a)
315(b)...............................................................802, 1008
315(c)..................................................................801(a)
v
315(d)................................................................801, 803
316(a)(2).......................................................Not Applicable
316(b)..........................................................Not Applicable
316(c).....................................................................607
317(a)(1).......................................................Not Applicable
317(a)(2).......................................................Not Applicable
317(b).....................................................................509
318(a)....................................................................1010
Note: This Cross-Reference Table does not constitute part of this Agreement and
shall not affect any interpretation of any of its terms or provisions.
vi
AMENDED AND RESTATED TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of _________,
1997, among (i) PEOPLE'S BANCSHARES, INC., a Massachusetts corporation
(including any successors or assigns, the "Depositor"), (ii) STATE STREET BANK
AND TRUST COMPANY, a trust company duly organized and existing under the laws of
the Commonwealth of Massachusetts, as property trustee (the "Property Trustee"
and, in its separate corporate capacity and not in its capacity as Property
Trustee, the "Bank"), (iii) WILMINGTON TRUST COMPANY, a Delaware banking
corporation duly organized and existing under the laws of the State of Delaware,
as Delaware trustee (the "Delaware Trustee," and, in its separate corporate
capacity and not in its capacity as Delaware Trustee, the "Delaware Bank") (iv)
___________________, an individual, __________________________, an individual,
and ______________________, an individual, each of whose address is c/o
_________________________________________, _______________ (each an
"Administrative Trustee" and collectively the "Administrative Trustees") (the
Property Trustee, the Delaware Trustee and the Administrative Trustees referred
to collectively as the "Trustees"), and (v) the several Holders (as hereinafter
defined).
RECITALS
WHEREAS, the Depositor, the Delaware Trustee, and
______________, ____________ and ________________, each as an Administrative
Trustee, have heretofore duly declared and established a business trust pursuant
to the Delaware Business Trust Act (as hereinafter defined) by the entering into
of that certain Trust Agreement, dated as of _________, 1997 (the "Original
Trust Agreement"), and by the execution and filing by the Delaware Trustee, the
Depositor and the Administrative Trustees with the Secretary of State of the
State of Delaware of the Certificate of Trust, filed on ______________, 1997,
the form of which is attached as Exhibit A; and
1
WHEREAS, the Depositor, the Delaware Trustee, the Property
Trustee and the Administrative Trustees desire to amend and restate the Original
Trust Agreement in its entirety as set forth herein to provide for, among other
things, (i) the issuance of the Common Securities (as defined herein) by the
Trust (as defined herein) to the Depositor; (ii) the issuance and sale of the
Preferred Securities (as defined herein) by the Trust pursuant to the
Underwriting Agreement (as defined herein); (iii) the acquisition by the Trust
from the Depositor of all of the right, title and interest in the Debentures (as
defined herein); and (iv) the appointment of the Trustees;
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 Securityholders (as
defined herein), hereby amends and restates the Original Trust Agreement in its
entirety and agrees as follows:
ARTICLE I
DEFINED TERMS
SECTION 101. 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 Article I 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) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 608.
"Additional Amount" means, with respect to Trust Securities of
a given Liquidation Amount and/or a given period, the amount of additional
interest accrued on interest in arrears and paid by the Depositor on a Like
Amount of Debentures for such period.
"Additional Interest" has the meaning specified in Section 1.1
of the Indenture.
2
"Administrative Trustee" means each of _______________,
_____________ and ______________, solely in his capacity as Administrative
Trustee of the Trust formed and continued hereunder and not in his individual
capacity, or such Administrative Trustee's successor in interest in such
capacity, or any successor trustee appointed as herein provided.
"Affiliate" means, with respect to a specified Person, (a) any
Person directly or indirectly owning, controlling or holding with power to vote
10% or more of the outstanding voting securities or other ownership interests of
the specified Person, any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person; (b) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person; (c) a partnership in which the specified Person is a
general partner; (d) any officer or director of the specified Person; and (e) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"Authenticating Agent" means an authenticating agent with
respect to the Preferred Securities appointed by the Property Trustee pursuant
to Section 503.
"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 adjudging such Person a bankrupt or insolvent, or
approving as properly filed a petition seeking liquidation or reorganization of
or in respect of such Person under the United States Bankruptcy Code of 1978, as
amended, or any other similar applicable federal or state law, and the
continuance of any such decree or order unvacated and unstayed for a period of
90 days; or the commencement of an involuntary case under the United States
Bankruptcy Code of 1978, as amended, in respect of such Person, which shall
continue undismissed for a period of 90 days or entry of an order for relief in
such case; or the entry of a decree or order of a court having jurisdiction in
the premises for the appointment on the ground of insolvency or bankruptcy of a
receiver, custodian, liquidator, trustee or assignee in bankruptcy or insolvency
of such Person or of its property, or for the winding up or liquidation of its
affairs, and such decree or order shall have remained in force unvacated and
unstayed for a period of 90 days; or
(b) the institution by such Person of proceedings to be
adjudicated a voluntary
3
bankrupt, or the consent by such Person to the filing of a bankruptcy proceeding
against it, or the filing by such Person of a petition or answer or consent
seeking liquidation or reorganization under the United States Bankruptcy Code of
1978, as amended, or other similar applicable Federal or State law, or the
consent by such Person to the filing of any such petition or to the appointment
on the ground of insolvency or bankruptcy of a receiver or custodian or
liquidator or trustee or assignee in bankruptcy or insolvency of such Person or
of its property, or shall make a general assignment for the benefit of
creditors.
"Bankruptcy Laws" has the meaning specified in Section 1009.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Depositor to have been duly
adopted by the Depositor's Board of Directors, or such committee of the Board of
Directors or officers of the Depositor to which authority to act on behalf of
the Board of Directors has been delegated, and to be in full force and effect on
the date of such certification, and delivered to the appropriate Trustee.
"Business Day" means a day other than a Saturday or Sunday, a
day on which banking institutions in the City of New York are authorized or
required by law, executive order or regulation to remain closed, or a day on
which the Property Trustee's Corporate Trust Office or the Corporate Trust
Office of the Debenture Trustee is closed for business.
"Certificate of Trust" means the certificate of trust filed
with the Secretary of State of the State of Delaware with respect to the Trust,
as amended or restated from time to time.
"Closing Date" means the date of execution and delivery of
this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Security" means an undivided beneficial interest in
the assets of the Trust, having a Liquidation Amount of $10 and having the
rights provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit C.
4
"Corporate Trust Office" means the office at which, at any
particular time, the corporate trust business of the Property Trustee or the
Debenture Trustee, as the case may be, shall be principally administered, which
office at the date hereof, in each such case, is located at Two International
Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust
Department.
"Debenture Event of Default" means an "Event of Default" as
defined in Section 7.1 of the Indenture.
"Debenture Redemption Date" means, with respect to any
Debentures to be redeemed under the Indenture, the date fixed for redemption
under the Indenture.
"Debenture Trustee" means State Street Bank and Trust Company,
a banking corporation company organized under the laws of the Commonwealth of
Massachusetts and any successor thereto, as trustee under the Indenture.
"Debentures" means the $14,227,000 aggregate principal amount
of the Depositor's ____% Subordinated Debentures due 2027, issued pursuant to
the Indenture.
"Delaware Bank" has the meaning specified in the Preamble to
this Trust Agreement.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of
the Delaware Code, 12 Delaware Code Sections 3801 et seq. as it may be amended
from time to time.
"Delaware Trustee" means the commercial bank or trust company
identified as the "Delaware Trustee" in the Preamble to this Trust Agreement
solely in its capacity as Delaware Trustee of the Trust formed and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor trustee appointed as herein provided.
"Depositor" has the meaning specified in the Preamble to this
Trust Agreement.
"Distribution Date" has the meaning specified in Section
401(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 401.
5
"Early Termination Event" has the meaning specified in Section
902.
"Event of Default" means any one of the following events
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Trust or the Property Trustee in the
payment of any Distribution when it becomes due and payable, and continuation of
such default for a period of 30 days; or
(c) default by the Trust or the Property Trustee in the
payment of any Redemption Price of any Trust Security when it becomes due and
payable; or
(d) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Trustees in this Trust Agreement
(other than a covenant or warranty a default in the performance 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 defaulting Trustee or Trustees 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 a Bankruptcy Event with respect to the
Property Trustee and the failure by the Depositor to appoint a successor
Property Trustee within 60 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expense Agreement" means the Agreement as to Expenses and
Liabilities between the Depositor and the Trust, substantially in the form
attached as Exhibit D, as amended from time to time.
"Expiration Date" has the meaning specified in Section 901.
"Extension Period" has the meaning specified in Section 4.1 of
the Indenture.
"Guarantee" means the Preferred Securities Guarantee Agreement
executed and delivered by the Depositor and State Street Bank and Trust Company,
as trustee, contemporaneously with the execution and delivery of this Trust
Agreement, for the benefit of the holders of the Preferred Securities, as
amended from time to time.
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"Indenture" means the Indenture, dated as of _______________,
1997, between the Depositor and the Debenture Trustee, as trustee, as amended or
supplemented from time to time pertaining to the Debentures of the Depositor.
"Investment Company Act," means the Investment Company Act of
1940, as amended, as in effect at the date of execution of this instrument.
"Lien" means any lien, pledge, charge, encumbrance, mortgage,
deed of trust, adverse ownership interest, hypothecation, assignment, security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Debentures to be contemporaneously redeemed in accordance with the
Indenture and the proceeds of which shall be used to pay the Redemption Price of
such Trust Securities; and (b) with respect to a distribution of Debentures to
Holders of Trust Securities in connection with a termination or liquidation of
the Trust, Debentures having a principal amount equal to the Liquidation Amount
of the Trust Securities of the Holder to whom such Debentures are distributed.
Each Debenture distributed pursuant to clause (6) above shall carry with it
accumulated interest in an amount equal to the accumulated and unpaid interest
then due on such Debenture.
"Liquidation Amount" means the stated amount of $10 per Trust
Security.
"Liquidation Date" means the date on which Debentures are to
be distributed to Holders of Trust Securities in connection with a termination
and liquidation of the Trust pursuant to Section 904(a).
"Liquidation Distribution" has the meaning specified in
Section 904(d).
"Officers' Certificate" means a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Controller or an Assistant Controller or the Secretary or an Assistant
Secretary, of the Depositor, and delivered to the appropriate Trustee. One of
the officers signing an Officers' Certificate given pursuant to Section 816
shall be the principal executive, financial or accounting officer of the
Depositor. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Trust Agreement shall include:
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(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means an opinion in writing of legal
counsel, who may be counsel for the Trust, the Property Trustee, the Delaware
Trustee or the Depositor, but not an employee of any thereof, and who shall be
reasonably acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the
Recitals to this Trust Agreement.
"Outstanding", when used with respect to Preferred Securities,
means, as of the date of determination, all Preferred Securities theretofore
executed and delivered under this Trust Agreement, except:
(a) Preferred Securities theretofore canceled by the Property
Trustee or delivered to the Property Trustee for cancellation;
(b) Preferred 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 Preferred Securities are to be redeemed, notice of such redemption has
been duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange
for or in lieu of which other Preferred Securities have been executed and
delivered pursuant to Sections 504, 505 and 511; provided, however, that in
determining whether the Holders of the requisite Liquidation Amount of the
Outstanding Preferred Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Preferred Securities owned by
the Depositor, any Trustee or any Affiliate of the Depositor or any Trustee
shall be disregarded and deemed not to be Outstanding, except that (a) in
determining whether any Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Preferred Securities that such Trustee knows to be so owned shall be so
disregarded; and (b) the
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foregoing shall not apply at any time when all of the outstanding Preferred
Securities are owned by the Depositor, one or more of the Trustees and/or any
such Affiliate. Preferred Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Administrative Trustees the pledgee's right so to act with
respect to such Preferred Securities and the Pledgee is not the Depositor or any
other Obligor upon the Preferred Securities or a Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Depositor or any Affiliate of the Depositor.
"Paying Agent" means any paying agent or co-paying agent
appointed pursuant to Section 509 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing
corporate trust account maintained by the Property Trustee with the Bank in its
trust department for the benefit of the Securityholders in which all amounts
paid in respect of the Debentures shall be held and from which the Property
Trustee shall make payments to the Securityholders in accordance with Sections
401 and 402.
"Person" means any individual, corporation, partnership, joint
venture, trust, limited liability company or corporation, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in
the assets of the Trust, having a Liquidation Amount of $10 and having the
rights provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate", means a certificate
evidencing ownership of Preferred Securities, substantially in the form attached
as Exhibit E.
"Property Trustee" means the commercial bank or trust company
identified as the "Property Trustee," in the Preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust heretofore 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.
"Redemption Date" means, with respect to any Trust Security to
be redeemed, the
9
date fixed for such redemption by or pursuant to this Trust Agreement; provided
that each Debenture Redemption Date and the stated maturity of the Debentures
shall be a Redemption Date for a Like Amount of Trust Securities.
"Redemption Price" means, with respect to any Trust Security,
the Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, paid by the Depositor upon the concurrent
redemption of a Like Amount of Debentures, allocated on a pro rata basis (based
on Liquidation Amounts) among the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section
810.
"Securities Register" and "Securities Registrar" have the
respective meanings specified in Section 504.
"Securityholder" or "Holder" means a Person in whose name a
Trust Security or Securities is registered in the Securities Register; any such
Person is a beneficial owner within the meaning of the Delaware Business Trust
Act.
"Trust" means the Delaware business trust created and
continued hereby and identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust
Agreement, as the same may be modified, amended or supplemented in accordance
with the applicable provisions hereof, including all exhibits hereto, including,
for all purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment or
supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, as in force at the date as of which this instrument was executed;
provided, however, that in the event the Trust Indenture Act of 1939, as
amended, is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures; (b) the rights of
the Property Trustee under the Guarantee; (c) any cash on deposit in, or owing
to, the Payment Account; and (d) all proceeds and rights in respect of the
foregoing and any other property and assets for the time being held or deemed to
be held by the Property Trustee pursuant to the trusts of this Trust Agreement.
"Trust Security" means any one of the Common Securities or the
Preferred
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Securities.
"Trust Securities Certificate" means any one of the Common
Securities Certificates or the Preferred Securities Certificates.
"Trustees" means, collectively, the Property Trustee, the
Delaware Trustee and the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement,
dated as of ____________, 1997, among the Trust, the Depositor and the
Underwriters named therein.
ARTICLE II
ESTABLISHMENT OF THE TRUST
SECTION 201. NAME.
The Trust created and continued hereby shall be known as
"People's Bancshares Capital Trust," as such name may be modified from time to
time by the Administrative Trustees following written notice to the Holders of
Trust Securities and the other Trustees, in which name the Trustees may engage
in the transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 202. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS.
The address of the Delaware Trustee in the State of Delaware
is c/o Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration, or
such other address in the State of Delaware as the Delaware Trustee may
designate by written notice to the Securityholders and the Depositor. The
principal executive office of the Trust is c/o People's Bancshares, Inc., 545
Pleasant Street, New Bedford, Massachusetts 02740, Attention: Chief Financial
Officer.
SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL
EXPENSES.
The Trustees acknowledge receipt in trust from the Depositor
in connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust Property. The Depositor shall pay organizational
expenses of the Trust as they arise or shall, upon request of any Trustee,
promptly reimburse such Trustee for any such expenses paid by such Trustee.
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The Depositor shall make no claim upon the Trust Property for the payment of
such expenses.
SECTION 204. ISSUANCE OF THE PREFERRED SECURITIES.
On __________, 1997, the Depositor and an Administrative
Trustee, on behalf of the Trust and pursuant to the Original Trust Agreement,
executed and delivered the Underwriting Agreement. Contemporaneously with the
execution and delivery of this Trust Agreement, an Administrative Trustee, on
behalf of the Trust, shall execute in accordance with Section 502 and deliver in
accordance with the Underwriting Agreement, Preferred Securities Certificates,
registered in the name of the Persons entitled thereto, in an aggregate amount
of 1,200,000 Preferred Securities having an aggregate Liquidation Amount of
$12,000,000 against receipt of the aggregate purchase price of such Preferred
Securities of $12,000,000, which amount such Administrative Trustee shall
promptly deliver to the Property Trustee. If the underwriters exercise their
Option and there is an Option Closing Date (as such terms are defined in the
Underwriting Agreement), then an Administrative Trustee, on behalf of the Trust,
shall execute in accordance with Section 502 and deliver in accordance with the
Underwriting Agreement, Preferred Securities Certificates, registered in the
name of the Persons entitled thereto, in an aggregate amount of up to 180,000
Preferred Securities having an aggregate Liquidation Amount of up to $1,800,000
against receipt of the aggregate purchase price of such Preferred Securities of
$1,800,000, which amount such Administrative Trustee shall promptly deliver to
the Property Trustee.
SECTION 205. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE
OF DEBENTURES.
(a) Contemporaneously with the execution and delivery of this
Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 502 and deliver to the Depositor, Common
Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of 37,150 Common Securities having an aggregate Liquidation
Amount of $371,500 against payment by the Depositor of such amount.
Contemporaneously therewith, an Administrative Trustee, on behalf of the Trust,
shall subscribe to and purchase from the Depositor, Debentures, registered in
the name of the Property Trustee on behalf of the Trust and having an aggregate
principal amount equal to $12,371,500, and, in satisfaction of the purchase
price for such Debentures, the Property Trustee, on behalf of the Trust, shall
deliver to the Depositor the sum of $12,371,500.
(b) If the underwriters exercise the Option and there is an
Option Closing Date, then an Administrative Trustee, on behalf of the Trust,
shall execute in accordance with Section 502 and deliver to the Depositor,
Common Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of 5,550 Common Securities having an aggregate Liquidation
Amount of up to $55,500 against payment by the Depositor of such amount.
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Contemporaneously therewith, an Administrative Trustee, on behalf of the Trust,
shall subscribe to and purchase from the Depositor, Debentures, registered in
the name of the Trust and having an aggregate principal amount of up to
$1,855,500, and, in satisfaction of the purchase price of such Debentures, the
Property Trustee, on behalf of the Trust, shall deliver to the Depositor the
amount received from one of the Administrative Trustees pursuant to the last
sentence of Section 204.
SECTION 206. DECLARATION OF TRUST.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Trust Securities and use the proceeds from such sale to acquire
the Debentures; and (b) to engage in those activities necessary, convenient or
incidental thereto. The Depositor hereby appoints the Trustees as trustees of
the Trust, to have all the rights, powers and duties to the extent set forth
herein, and the Trustees hereby accept such appointment. The Property Trustee
hereby declares that it shall hold the Trust Property in trust upon and subject
to the conditions set forth herein for the benefit of the Securityholders. The
Administrative Trustees shall have all rights, powers and duties set forth
herein and in accordance with applicable law with respect to accomplishing the
purposes of the Trust. The Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrative Trustees set
forth herein. The Delaware Trustee shall be one of the Trustees of the Trust for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Delaware Business Trust Act.
SECTION 207. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS.
(a) The Trustees shall conduct the affairs of the Trust in
accordance with the terms of this Trust Agreement. Subject to the limitations
set forth in paragraph (b) of this Section 207 and Article VIII, and in
accordance with the following provisions (i) and (ii), the Administrative
Trustees shall have the authority to enter into all transactions and agreements
determined by the Administrative Trustees to be appropriate in exercising the
authority, express or implied, otherwise granted to the Administrative Trustees
under this Trust Agreement, and to perform all acts in furtherance thereof,
including without limitation, the following:
(i) As among the Trustees, each Administrative Trustee, acting
singly or jointly, shall have the power and authority to act on behalf of the
Trust with respect to the following matters:
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(A) the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, the Expense
Agreement and such other agreements or documents as may be
necessary or desirable in connection with the purposes and
function of the Trust;
(C) assisting in the registration of the Preferred
Securities under the Securities Act of 1933, as amended, and
under state securities or blue sky laws, and the qualification
of this Trust Agreement as a trust indenture under the Trust
Indenture Act;
(D) assisting in the listing of the Preferred
Securities upon The Nasdaq Stock Market's National Market or
such securities exchange or exchanges as shall be determined
by the Depositor and the registration of the Preferred
Securities under the Exchange Act, and the preparation and
filing of all periodic and other reports and other documents
pursuant to the foregoing;
(E) the sending of notices (other than notices of
default) and other information regarding the Trust Securities
and the Debentures to the Securityholders in accordance with
this Trust Agreement;
(F) the appointment of a Paying Agent, Authenticating
Agent and Securities Registrar in accordance with this Trust
Agreement;
(G) to the extent provided in this Trust Agreement,
the winding up of the affairs of and liquidation of the Trust
and the preparation, execution and filing of the certificate
of cancellation with the Secretary of State of the State of
Delaware;
(H) to take all action that may be necessary or
appropriate for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges as
a statutory business trust under the laws of the State of
Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the
Holders of the Preferred Securities or to enable the Trust to
effect the purposes for which the Trust was created; and
(I) the taking of any action incidental to the
foregoing as the Administrative Trustees may from time to time
determine is necessary or advisable to give effect to the
terms of this Trust Agreement for the benefit of the
Securityholders (without consideration of the effect of any
such action on any
14
particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall have
the power, duty and authority to act on behalf of the Trust with respect to the
following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any
other payments made in respect of the Debentures in the
Payment Account;
(D) the distribution of amounts owed to the
Securityholders in respect of the Trust Securities in
accordance with the terms of this Trust Agreement;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Debentures;
(F) the sending of notices of default and other
information regarding the Trust Securities and the Debentures
to the Securityholders in accordance with this Trust
Agreement;
(G) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
the winding up of the affairs of and liquidation of the Trust;
(I) after an Event of Default, the taking of any
action incidental to the foregoing as the Property Trustee may
from time to time determine is necessary or advisable to give
effect to the terms of this Trust Agreement and protect and
conserve the Trust Property for the benefit of the
Securityholders (without consideration of the effect of any
such action on any particular Securityholder);
(J) registering transfers of the Trust Securities in
accordance
15
with this Trust Agreement; and
(K) except as otherwise provided in this Section
207(a)(ii), the Property Trustee shall have none of the
duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 207(a)(i).
(b) So long as this Trust Agreement remains in effect, the
Trust (or the Trustees acting on behalf of the Trust) shall not undertake any
business, activities or transaction except as expressly provided herein or
contemplated hereby. In particular, the Trustees shall not (i) acquire any
investments or engage in any activities not authorized by this Trust Agreement;
(ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise
dispose of any of the Trust Property or interests therein, including to
Securityholders, except as expressly provided herein; (iii) take any action that
would cause the Trust to fail or cease to qualify as a "grantor trust" for
United States federal income tax purposes; (iv) incur any indebtedness for
borrowed money or issue any other debt; or (v) take or consent to any action
that would result in the placement of a Lien on any of the Trust Property. The
Administrative Trustees shall defend all claims and demands of all Persons at
any time claiming any Lien on any of the Trust Property adverse to the interest
of the Trust or the Securityholders in their capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred
Securities, the Depositor shall have the right and responsibility to assist the
Trust with respect to, or effect on behalf of the Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation and filing by the Trust with the
Commission and the execution on behalf of the Trust of a
registration statement on the appropriate form in relation to
the Preferred Securities and the Debentures, including any
amendments thereto;
(ii) the determination of the States in which to take
appropriate action to qualify or, register for sale all or
part of the Preferred Securities and to do any and all such
acts, other than actions which must be taken by or on behalf
of the Trust, and advise the Trustees of actions they must
take on behalf of the Trust, and prepare for execution and
filing any documents to be executed and filed by the Trust or
on behalf of the Trust, as the Depositor deems necessary or
advisable in order to comply with the applicable laws of any
such States;
(iii) the preparation for filing by the Trust and
execution on behalf of the Trust of an application to The
Nasdaq Stock Market's National Market or a national stock
exchange or other organizations for listing upon notice of
issuance of any Preferred
16
Securities and to file or cause an Administrative Trustee to
file thereafter with such exchange or organization such
notifications and documents as may be necessary from time to
time;
(iv) the preparation for filing by the Trust with the
Commission and the execution on behalf of the Trust of a
registration statement on Form 8-A relating to the
registration of the Preferred Securities under Section 12(b)
or 12(g) of the Exchange Act, including any amendments
thereto;
(v) the negotiation of the terms of, and the
execution and delivery of, the Underwriting Agreement
providing for the sale of the Preferred Securities; and
(vi) the taking of any other actions necessary or
desirable to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the affairs of
the Trust and to operate the Trust so that the Trust shall not be deemed to be
an "investment company" required to be registered under the Investment Company
Act, shall be classified as a "grantor trust" and not as an association taxable
as a corporation for United States federal income tax purposes and so that the
Debentures shall be treated as indebtedness of the Depositor for United States
federal income tax purposes. In this connection, subject to Section 1002, the
Depositor and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law or this Trust Agreement, that each of the
Depositor and the Administrative Trustees determines in their discretion to be
necessary or desirable for such purposes.
SECTION 208. ASSETS OF TRUST.
The assets of the Trust shall consist of the Trust Property.
SECTION 209. TITLE TO TRUST PROPERTY.
Legal title to all Trust Property shall be vested at all times
in the Property Trustee (in its capacity as such) and shall be held and
administered by the Property Trustee for the benefit of the Securityholders in
accordance with this Trust Agreement.
ARTICLE III
17
PAYMENT ACCOUNT
SECTION 301. PAYMENT ACCOUNT.
(a) On or prior to the Closing Date, the Property Trustee
shall establish the Payment Account. The Property Trustee and any agent of the
Property Trustee shall have exclusive control and sole right of withdrawal with
respect to the Payment Account for the purpose of making deposits and
withdrawals from the Payment Account in accordance with this Trust Agreement.
All monies and other property deposited or held from time to time in the Payment
Account shall be held by the Property Trustee in the Payment Account for the
exclusive benefit of the Securityholders and for distribution as herein
provided, including (and subject to) any priority of payments provided for
herein.
(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and any
other payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
SECTION 401. DISTRIBUTIONS.
(a) Distributions on the Trust Securities shall be cumulative,
and shall accumulate whether or not there are funds of the Trust available for
the payment of Distributions. Distributions shall accumulate from __________,
1997, and, except during any Extension Period with respect to the Debentures,
shall be payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing on September 30, 1997. If any date on which
a Distribution is otherwise payable on the Trust Securities is not a Business
Day, then the payment of such Distribution shall be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay) with the same force and effect as if made on such date (each
date on which distributions are payable in accordance with this Section 401(a),
a "Distribution Date").
(b) The Trust Securities represent undivided beneficial
interests in the Trust Property. Distributions on the Trust Securities shall be
payable at a rate of ___% per annum of the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any full period shall be
computed on the basis of a 360-day year of twelve 30-day months. The amount of
Distributions for any partial period shall be computed on the basis of the
number of days elapsed in a 360-day year of twelve 30 day months. During any
Extension Period with respect to the Debentures, Distributions on the Preferred
Securities shall be deferred for a period equal to
18
the Extension Period. The amount of Distributions payable for any period shall
include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made by the
Property Trustee solely from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand and
immediately available by 12:30 p.m. on each Distribution Date in the Payment
Account for the payment of such Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date, which
shall be 15th day of the month in which the Distribution is payable.
SECTION 402. REDEMPTION.
(a) On each Debenture Redemption Date and on the stated
maturity of the Debentures, the Trust shall 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 Securities Register. The
Property Trustee shall have no responsibility for the accuracy of any CUSIP
number contained in such notice. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust
Securities are to be redeemed, the identification and the
aggregate Liquidation Amount of the particular Trust
Securities to be redeemed; and
(v) that, on the Redemption Date, the Redemption
Price shall become due and payable upon each such Trust
Security to be redeemed and that Distributions
19
thereon shall cease to accumulate on and after said date.
(c) The Trust Securities redeemed on each Redemption Date
shall be redeemed at the Redemption Price with the proceeds from the
contemporaneous redemption of Debentures. Redemptions of the Trust Securities
shall be made and the Redemption Price shall be payable on each Redemption Date
only to the extent that the Trust has immediately available 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 402(c), the Property Trustee shall
deposit with the Paying Agent funds sufficient to pay the applicable Redemption
Price and shall give the Paying Agent irrevocable instructions and authority to
pay the Redemption Price to the Holders thereof upon surrender of their
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 Securityholders holding Trust Securities so called for
redemption shall cease, except the right of such Securityholders to receive the
Redemption Price and any Distribution payable on or prior to the Redemption
Date, but without interest, and such Trust Securities shall cease to be
Outstanding. In the event that any date on which any Redemption Price is payable
is not a Business Day, then payment of the Redemption Price payable on such date
shall be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) with the same force and
effect as if made on such date. In the event that payment of the Redemption
Price in respect of any Trust Securities called for redemption is improperly
withheld or refused and not paid either by the Trust or by the Depositor
pursuant to the Guarantee, Distributions on such Trust Securities shall continue
to accumulate, at the then applicable rate, from the Redemption Date originally
established by the Trust for such Trust Securities to the date such Redemption
Price is actually paid, in which case the actual payment date shall be the date
fixed for redemption for purposes of calculating the Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities
shall be made to the record holders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which shall be
the date 15 days prior to the relevant Redemption Date.
(f) Subject to Section 403(a), if less than all the
Outstanding Trust Securities are to be redeemed on a Redemption Date, then the
aggregate Liquidation Amount of Trust Securities to be redeemed shall be
allocated on a pro rata basis (based on Liquidation Amounts) among the Common
Securities and the Preferred Securities. The particular Preferred Securities
20
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, by such method (including, without limitation,
by lot) as the Property Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to $10 or an
integral multiple of $10 in excess thereof) of the Liquidation Amount of
Preferred Securities of a denomination larger than $10. The Property Trustee
shall promptly notify the Securities Registrar in writing of the Preferred
Securities selected for redemption and, in the case of any Preferred Securities
selected for partial redemption, the Liquidation Amount thereof to be redeemed.
For all purposes of this Trust Agreement, unless the context otherwise requires,
all provisions relating to the redemption of Preferred Securities shall relate,
in the case of any Preferred Securities redeemed or to be redeemed only in part,
to the portion of the Liquidation Amount of Preferred Securities which has been
or is to be redeemed.
SECTION 403. SUBORDINATION OF COMMON SECURITIES.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Trust Securities, as
applicable, shall be made, subject to Section 402(f), pro rata among the Common
Securities and the Preferred Securities based on the Liquidation Amount of the
Trust Securities; provided, however, that if on any Distribution Date or
Redemption Date any Event of Default resulting from a Debenture Event of Default
shall have occurred and be continuing, no payment of any Distribution (including
Additional Amounts, if applicable) on, or Redemption Price of, any Common
Security, and no other payment on account of the redemption, liquidation or
other acquisition of Common Securities, shall be made unless payment in full in
cash of all accumulated and unpaid Distributions (including Additional Amounts,
if applicable) on all Outstanding Preferred Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all Outstanding
Preferred Securities then called for redemption, shall have been made or
provided for, and all funds immediately available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions (including
Additional Amounts, if applicable) on, or the Redemption Price of, Preferred
Securities then due and payable.
(b) In the case of the occurrence of any Event of Default
resulting from a Debenture Event of Default, the Holder of Common Securities
shall be deemed to have waived any right to act with respect to any such Event
of Default under this Trust Agreement until the effect of all such Events of
Default with respect to the Preferred Securities shall have been cured,
21
waived or otherwise eliminated. Until any such Event of Default under this Trust
Agreement with respect to the Preferred Securities shall 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 the Holder of the Common
Securities, and only the Holders of the Preferred Securities shall have the
right to direct the Property Trustee to act on their behalf.
SECTION 404. PAYMENT PROCEDURES.
Payments of Distributions (including Additional Amounts, if
applicable) in respect of the Preferred Securities shall be made by check mailed
to the address of the Person entitled thereto as such address shall appear on
the Securities Register. Payments in respect of the Common Securities shall be
made in such manner as shall be mutually agreed between the Property Trustee and
the Common Securityholder.
SECTION 405. TAX RETURNS AND REPORTS.
The Administrative Trustees shall prepare (or cause to be
prepared), at the Depositor's expense, and file all United States federal, state
and local tax and information returns and reports required to be filed by or in
respect of the Trust. In this regard, the Administrative Trustees shall (a)
prepare and file (or cause to be prepared and filed) the appropriate Internal
Revenue Service form required to be filed in respect of the Trust in each
taxable year of the Trust; and (b) prepare and furnish (or cause to be prepared
and furnished) to each Securityholder the appropriate Internal Revenue Service
form required to be furnished to such Securityholder or the information required
to be provided on such form. The Administrative Trustees shall provide the
Depositor with a copy of all such returns and reports promptly after such filing
or furnishing. The Property Trustee shall comply with United States federal
withholding and backup withholding tax laws and information reporting
requirements with respect to any payments to Securityholders under the Trust
Securities.
SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST.
Upon receipt under the Debentures of Additional Interest, the
Property Trustee, at the direction of an Administrative Trustee or the
Depositor, shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Trust by the
United States or any other taxing authority.
SECTION 407. PAYMENTS UNDER INDENTURE.
Any amount payable hereunder to any Holder of Preferred
Securities shall be reduced by the amount of any corresponding payment such
Holder has directly received under the Indenture pursuant to Section 514(b) or
(c) hereof.
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ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 501. INITIAL OWNERSHIP.
Upon the creation of the Trust and the contribution by the
Depositor pursuant to Section 203 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the Trust.
SECTION 502. THE TRUST SECURITIES CERTIFICATES.
The Preferred Securities Certificates shall be issued in
minimum denominations of $10 Liquidation Amount and integral multiples of $10 in
excess thereof, and the Common Securities Certificates shall be issued in
denominations of $10 Liquidation Amount and integral multiples thereof. The
Trust Securities Certificates shall be executed on behalf of the Trust by manual
or facsimile signature of at least one Administrative Trustee. Trust Securities
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be validly issued and entitled to the benefits of
this Trust Agreement, notwithstanding that such individuals or any of them shall
have ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Sections 504 and
511.
SECTION 503. EXECUTION, AUTHENTICATION AND DELIVERY OF TRUST SECURITIES
CERTIFICATES.
(a) On the Closing Date and on the date on which the
Underwriter exercises the Option, as applicable (the "Option Closing Date"), the
Administrative Trustees shall cause Trust Securities Certificates, in an
aggregate Liquidation Amount as provided in Sections 204 and 205, to be executed
on behalf of the Trust by at least one of the Administrative Trustees and
delivered to or upon the written order of the Depositor, signed by its Chief
Executive Officer, President, any Vice President, the Treasurer or any Assistant
Treasurer without further corporate action by the Depositor, in authorized
denominations.
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(b) A Preferred Securities Certificate shall not be valid
until authenticated by the manual signature of an authorized signatory of the
Property Trustee. The signature shall be conclusive evidence that the Preferred
Securities Certificate has been authenticated under this Trust Agreement. Each
Preferred Security Certificate shall be dated the date of its authentication.
(c) Upon the written order of the Trust signed by the
Administrative Trustee, the Property Trustee shall authenticate and make
available for delivery the Preferred Securities Certificates.
(d) The Property Trustee may appoint an Authenticating Agent
acceptable to the Trust to authenticate the Preferred Securities. An
Authenticating Agent may authenticate the Preferred Securities whenever the
Property Trustee may do so. Each reference in this Trust Agreement to
authentication by the Property Trustee includes authentication by such agent. An
Authenticating Agent has the same rights as the Property Trustee to deal with
the Depositor or the Trust.
SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES
CERTIFICATES.
(a) The Depositor shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 508, a register or registers for
the purpose of registering Trust Securities Certificates and transfers and
exchanges of Preferred Securities Certificates (herein referred to as the
"Securities Register") in which the registrar designated by the Depositor (the
"Securities Registrar"), subject to such reasonable regulations as it may
prescribe, shall provide for the registration of Preferred Securities
Certificates and Common Securities Certificates (subject to Section 510 in the
case of the Common Securities Certificates) and registration of transfers and
exchanges of Preferred Securities Certificates as herein provided. The Property
Trustee shall be the initial Securities Registrar.
(b) Upon surrender for registration of transfer of any
Preferred Securities Certificate at the office or agency maintained pursuant to
Section 508, the Administrative Trustees or any one of them shall execute and
deliver, in the name of the designated transferee or transferees, one or more
new Preferred Securities Certificates in authorized denominations of a like
aggregate Liquidation Amount dated the date of execution by such Administrative
Trustee or Trustees. The Securities Registrar shall not be required to register
the transfer of any Preferred Securities that have been called for redemption.
At the option of a Holder, Preferred Securities Certificates may be exchanged
for other Preferred Securities Certificates in authorized denominations of the
same class and of a like aggregate Liquidation Amount upon surrender of the
Preferred Securities Certificates to be exchanged at the office or agency
maintained pursuant to Section 508.
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(c) Every Preferred Securities Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form satisfactory to the Property Trustee and
the Securities Registrar duly executed by the Holder or his attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently disposed
of by the Property Trustee in accordance with its customary practice. The Trust
shall not be required to (i) issue, register the transfer of, or exchange any
Preferred Securities during a period beginning at the opening of business 15
calendar days before the date of mailing of a notice of redemption of any
Preferred Securities called for redemption and ending at the close of business
on the day of such mailing; or (ii) register the transfer of or exchange any
Preferred Securities so selected for redemption, in whole or in part, except the
unredeemed portion of any such Preferred Securities being redeemed in part.
(d) No service charge shall be made for any registration of
transfer or exchange of Preferred Securities Certificates, but the Securities
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Preferred Securities Certificates.
SECTION 505. 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, the Property Trustee and the Administrative Trustees such security or
indemnity as may be required by them to save each of them harmless, then in the
absence of notice that such Trust Securities Certificate shall have been
acquired by a bona fide purchaser, the Administrative Trustees, or any one of
them, on behalf of the Trust shall execute and make available for delivery, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Securities Certificate, a new Trust Securities Certificate of like class, tenor
and denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section 505, the Administrative Trustees or the
Securities Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Trust Securities Certificate issued pursuant to this Section 505
shall constitute conclusive evidence of an undivided beneficial interest in the
assets of the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Trust Securities Certificate shall be found at any time.
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SECTION 506. PERSONS DEEMED SECURITYHOLDERS.
The Trustees, the Paying Agent and the Securities Registrar
shall treat the Person in whose name any Trust Securities Certificate shall be
registered in the Securities Register as the owner of such Trust Securities
Certificate for the purpose of receiving Distributions and for all other
purposes whatsoever, and neither the Trustees nor the Securities Registrar shall
be bound by any notice to the contrary.
SECTION 507. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES.
At any time when the Property Trustee is not also acting as
the Securities Registrar, the Administrative Trustees or the Depositor shall
furnish or cause to be furnished to the Property Trustee (a) semi-annually on or
before January 15 and July 15 in each year, a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the
Securityholders as of the most recent record date; and (b) promptly after
receipt by any Administrative Trustee or the Depositor of a request therefor
from the Property Trustee in order to enable the Property Trustee to discharge
its obligations under this Trust Agreement, in each case to the extent such
information is in the possession or control of the Administrative Trustees or
the Depositor and is not identical to a previously supplied list or has not
otherwise been received by the Property Trustee in its capacity as Securities
Registrar. The rights of Securityholders to communicate with other
Securityholders with respect to their rights under this Trust Agreement or under
the Trust Securities, and the corresponding rights of the Trustee shall be as
provided in the Trust Indenture Act. Each Holder, by receiving and holding a
Trust Securities Certificate, and each owner shall be deemed to have agreed not
to hold the Depositor, the Property Trustee or the Administrative Trustees
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
SECTION 508. MAINTENANCE OF OFFICE OR AGENCY.
The Administrative Trustees shall maintain in a location or
locations designated by the Administrative Trustees, an office or offices or
agency or agencies where Preferred Securities Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Trustees in respect of the Trust Securities Certificates may be served.
The Administrative Trustees initially designate the Corporate Trust Office of
the Property Trustee, Two International Place, 4th Floor, Boston, Massachusetts
02110, as the principal corporate trust office for such purposes. The
Administrative Trustees shall give prompt written notice to the Depositor and to
the Securityholders of any change in the location of the Securities Register or
any such office or agency.
SECTION 509. APPOINTMENT OF PAYING AGENT.
26
The Paying Agent shall initially be the Property Trustee, and
any co-paying agent chosen by the Property Trustee must be acceptable to the
Administrative Trustees and the Depositor. The Paying Agent shall make
Distributions to Securityholders from the Payment Account and shall report the
amounts of such Distributions to the Property Trustee and the Administrative
Trustees. Any Paying Agent shall have the revocable power to withdraw funds from
the Payment Account for the purpose of making the Distributions referred to
above. The Administrative Trustees may revoke such power and remove the Paying
Agent if such Trustees determine in their sole discretion that the Paying Agent
shall have failed to perform its obligations under this Trust Agreement in any
material respect. Any Person acting as Paying Agent shall be permitted to resign
as Paying Agent upon 30 days' written notice to the Administrative Trustees, the
Property Trustee and the Depositor. In the event that the Property Trustee shall
no longer be the Paying Agent or a successor Paying Agent shall resign or its
authority to act be revoked, the Administrative Trustees shall appoint a
successor that is acceptable to the Property Trustee and the Depositor to act as
Paying Agent (which shall be a bank or trust company). The Administrative
Trustees shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Administrative Trustees to execute and deliver to the Trustees
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying Agent
or additional Paying Agent shall hold all sums, if any, held by it for payment
to the Securityholders in trust for the benefit of the Securityholders entitled
thereto until such sums shall be paid to such Securityholders. The Paying Agent
shall return all unclaimed funds to the Property Trustee and, upon removal of a
Paying Agent, such Paying Agent shall also return all funds in its possession to
the Property Trustee. The provisions of Sections 801, 803 and 806 shall apply to
the Property Trustee also in its role as Paying Agent, for so long as the
Property Trustee shall act as Paying Agent and, to the extent applicable, to any
other paying agent appointed hereunder. Any reference in this Trust Agreement to
the Paying Agent shall include any co-paying agent unless the context requires
otherwise.
SECTION 510. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.
On the Closing Date, the Depositor shall acquire and retain
beneficial and record ownership of the Common Securities. To the fullest extent
permitted by law, any attempted transfer of the Common Securities (other than a
transfer in connection with a merger or consolidation of the Depositor into
another corporation pursuant to Section 12.1 of the Indenture) shall be void.
The Administrative Trustees shall cause each Common Securities Certificate
issued to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
27
TRANSFERABLE".
SECTION 511. PREFERRED SECURITIES CERTIFICATES.
(a) Each owner shall receive a Preferred Securities
Certificate representing such owner's interest in such Preferred Securities.
Upon the issuance of Preferred Securities Certificates, the Trustees shall
recognize the record holders of the Preferred Securities Certificates as
Securityholders. The Preferred Securities Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Administrative Trustees, as evidenced by the execution thereof
by the Administrative Trustees or any one of them.
(b) A single Common Securities Certificate representing the
Common Securities shall be issued to the Depositor in the form of a definitive
Common Securities Certificate.
SECTION 512. [INTENTIONALLY OMITTED]
SECTION 513. [INTENTIONALLY OMITTED]
SECTION 514. RIGHTS OF SECURITYHOLDERS.
(a) The legal title to the Trust Property is vested
exclusively in the Property Trustee (in its capacity as such) in accordance with
Section 209, and the Securityholders shall not have any right or title therein
other than the undivided beneficial interest in the assets of the Trust
conferred by their Trust Securities and they shall have no right to call for any
partition or division of property, profits or rights of the Trust except as
described below. The Trust Securities shall be personal property giving only the
rights specifically set forth therein and in this Trust Agreement. The Trust
Securities shall have no preemptive or similar rights. When issued and delivered
to Holders of the Preferred Securities against payment of the purchase price
therefor, the Preferred Securities shall be fully paid and nonassessable
interests in the Trust. The Holders of the Preferred Securities, in their
capacities as such, shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
(b) For so long as any Preferred Securities remain
Outstanding, if, upon a Debenture Event of Default, the Debenture Trustee fails
or the holders of not less than 25% in principal amount of the outstanding
Debentures fail to declare the principal of all of the Debentures to be
immediately due and payable, the Holders of at least 25% in Liquidation Amount
of the Preferred Securities then Outstanding shall have such right by a notice
in writing to the Depositor and the Debenture Trustee; and upon any such
declaration such principal
28
amount of and the accrued interest on all of the Debentures shall become
immediately due and payable, provided that the payment of principal and interest
on such Debentures shall remain subordinated to the extent provided in the
Indenture.
(c) For so long as any Preferred Securities remain
outstanding, if, upon a Debenture Event of Default arising from the failure to
pay interest or principal on the Debentures, the Holders of any Preferred
Securities then Outstanding shall, to the fullest extent permitted by law, have
the right to directly institute proceedings for enforcement of payment to such
Holders of principal of or interest on the Debentures having a principal amount
equal to the Liquidation Amount of the Preferred Securities of such Holders.
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 601. LIMITATIONS ON VOTING RIGHTS.
(a) Except as provided in this Section 601, in Sections 514,
810 and 1002 and in the Indenture and as otherwise required by law, no Holder of
Preferred Securities shall have any right to vote or in any manner otherwise
control the administration, operation and management of the Trust or the
obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Trust Securities Certificates, be construed so as
to constitute the Securityholders from time to time as partners or members of an
association.
(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with respect to
such Debentures; (ii) waive any past default which is waivable under Article VII
of the Indenture; (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable; or (iv)
consent to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of at least a majority in
Liquidation Amount of all Outstanding Preferred Securities; provided, however,
that where a consent under the Indenture would require the consent of each
Holder of outstanding 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 Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Outstanding Preferred
29
Securities, except by a subsequent vote of the Holders of the Outstanding
Preferred Securities. The Property Trustee shall notify each Holder of the
Outstanding Preferred Securities of any notice of default received from the
Debenture Trustee with respect to the Debentures. In addition to obtaining the
foregoing approvals of the Holders of the Preferred Securities, prior to taking
any of the foregoing actions, the Trustees shall, at the expense of the
Depositor, obtain an Opinion of Counsel experienced in such matters to the
effect that the Trust shall continue to be classified as a grantor trust and not
as an association taxable as a corporation for United States federal income tax
purposes on account of such action.
(c) If any proposed amendment to the Trust Agreement provides
for, or the Trustees otherwise propose to effect, (i) any action that would
adversely affect in any material respect the powers, preferences or special
rights of the Preferred Securities, whether by way of amendment to the Trust
Agreement or otherwise; or (ii) the dissolution, winding-up or termination of
the Trust, other than pursuant to the terms of this Trust Agreement, then the
Holders of Outstanding Preferred Securities as a class shall be entitled to vote
on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a majority in
Liquidation Amount of the Outstanding Preferred Securities. No amendment to this
Trust Agreement may be made if, as a result of such amendment, the Trust would
cease to be classified as a grantor trust or would be classified as an
association taxable as a corporation for United States federal income tax
purposes.
SECTION 602. NOTICE OF MEETINGS.
Notice of all meetings of the Preferred Securityholders,
stating the time, place and purpose of the meeting, shall be given by the
Property Trustee pursuant to Section 1008 to each Preferred Securityholder of
record, at his registered address, at least 15 days and not more than 90 days
before the meeting. At any such meeting, any business properly before the
meeting may be so considered whether or not stated in the notice of the meeting.
Any adjourned meeting may be held as adjourned without further notice.
SECTION 603. MEETINGS OF PREFERRED SECURITYHOLDERS.
(a) No annual meeting of Securityholders is required to be
held. The Administrative Trustees, however, shall call a meeting of
Securityholders to vote on any matter in respect of which Preferred
Securityholders are entitled to vote upon the written request of the Preferred
Securityholders of 25% of the Outstanding Preferred Securities (based upon their
aggregate Liquidation Amount) and the Administrative Trustees or the Property
Trustee may, at any time in their discretion, call a meeting of Preferred
Securityholders to vote on any matters as to which the Preferred Securityholders
are entitled to vote.
(b) Preferred Securityholders of record of 50% of the
Outstanding Preferred
30
Securities (based upon their aggregate Liquidation Amount), present in person or
by proxy, shall constitute a quorum at any meeting of Securityholders.
(c) If a quorum is present at a meeting, an affirmative vote
by the Preferred Securityholders of record present, in person or by proxy,
holding more than a majority of the Preferred Securities (based upon their
aggregate Liquidation Amount) held by the Preferred Securityholders of record
present, either in person or by proxy, at such meeting shall constitute the
action of the Securityholders, unless this Trust Agreement requires a greater
number of affirmative votes.
SECTION 604. VOTING RIGHTS.
Securityholders shall be entitled to one vote for each $10 of
Liquidation Amount represented by their Trust Securities in respect of any
matter as to which such Securityholders are entitled to vote.
SECTION 605. PROXIES, ETC.
At any meeting of Securityholders, any Securityholder entitled
to vote thereat may vote by proxy, provided that no proxy, shall be voted at any
meeting unless it shall have been placed on file with the Administrative
Trustees, or with such other officer or agent of the Trust as the Administrative
Trustees may direct, for verification prior to the time at which such vote shall
be taken. When Trust Securities are held jointly by several persons, any one of
them may vote at any meeting in person or by proxy in respect of such Trust
Securities, but if more than one of them shall be present at such meeting in
person or by proxy, and such joint owners or their proxies so present disagree
as to any vote to be cast, such vote shall not be received in respect of such
Trust Securities. A proxy purporting to be executed by or on behalf of a
Securityholder shall be deemed valid unless challenged at or prior to its
exercise, and, the burden of proving invalidity shall rest on the challenger. No
proxy shall be valid more than three years after its date of execution.
SECTION 606. SECURITYHOLDER ACTION BY WRITTEN CONSENT.
Any action which may be taken by Securityholders at a meeting
may be taken without a meeting if Securityholders holding more than a majority
of all Outstanding Trust Securities (based upon their aggregate Liquidation
Amount) entitled to vote in respect of such
31
action (or such larger proportion thereof as shall be required by any express
provision of this Trust Agreement) shall consent to the action in writing (based
upon their aggregate Liquidation Amount).
SECTION 607. RECORD DATE FOR VOTING AND OTHER PURPOSES.
For the purposes of determining the Securityholders who are
entitled to notice of and to vote at any meeting or by written consent, or to
participate in any Distribution on the Trust Securities in respect of which a
record date is not otherwise provided for in this Trust Agreement, or for the
purpose of any other action, the Administrative Trustees may from time to time
fix a date, not more than 90 days prior to the date of any meeting of
Securityholders or the payment of Distribution or other action, as the case may
be, as a record date for the determination of the identity of the
Securityholders of record for such purposes.
SECTION 608. ACTS OF SECURITYHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Trust Agreement to
be given, made or taken by Securityholders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such
Securityholders in person or by an agent duly appointed in writing; and, except
as otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to an Administrative Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Securityholders
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 801) conclusive in favor
of the Trustees, if made in the manner provided in this Section 608.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Trustee receiving the same deems sufficient.
(c) The ownership of Preferred Securities shall be proved by
the Securities Register.
32
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Securityholder of any Trust Security shall
bind every future Securityholder of the same Trust Security and the
Securityholder of every Trust Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustees or the Trust in reliance thereon,
whether or not notation of such action is made upon such Trust Security.
(e) Without limiting the foregoing, a Securityholder entitled
hereunder to take any action hereunder with regard to any particular Trust
Security may do so with regard to all or any part of the Liquidation Amount of
such Trust Security or by one or more duly appointed agents each of which may do
so pursuant to such appointment with regard to all or any part of such
Liquidation Amount.
(f) A Securityholder may institute a legal proceeding directly
against the Depositor under the Guarantee to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee (as defined in the Guarantee), the Trust or any Person.
SECTION 609. INSPECTION OF RECORDS.
Upon reasonable notice to the Administrative Trustees and the
Property Trustee, the records of the Trust shall be open to inspection and
copying by Securityholders and their authorized representatives during normal
business hours for any purpose reasonably related to such Securityholder's
interest as a Securityholder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE BANK AND THE PROPERTY
TRUSTEE.
The Bank and the Property Trustee, each severally on behalf of
and as to itself, as of the date hereof, and each successor Property Trustee at
the time of the successor Property Trustee's acceptance of its appointment as
Property Trustee hereunder (the term "Bank" being used to refer to such
successor Property Trustee in its separate corporate capacity) hereby represents
and warrants (as applicable) for the benefit of the Depositor and the
Securityholders that:
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(a) the Bank is a trust company duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts;
(b) the Bank has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed
and delivered by the Property Trustee and constitutes the valid and legally
binding agreement of the Property Trustee enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors, rights and to general equity principles;
(d) the execution, delivery and performance by the Property
Trustee of this Trust Agreement has been duly authorized by all necessary
corporate or other action on the part of the Property Trustee and does not
require any approval of stockholders of the Bank and such execution, delivery
and performance shall not (i) violate the Bank's charter or by-laws; (ii)
violate any provision of, or constitute, with or without notice or lapse of
time, a default under, or result in the creation or imposition of, any Lien on
any properties included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or instrument
to which the Property Trustee or the Bank is a party or by which it is bound; or
(iii) violate any law, governmental rule or regulation of the United States or
the Commonwealth of Massachusetts, as the case may be, governing the banking or
trust powers of the Bank or the Property Trustee (as appropriate in context) or
any order, judgment or decree applicable to the Property Trustee or the Bank;
(e) neither the authorization, execution or delivery by the
Property Trustee of this Trust Agreement nor the consummation of any of the
transactions by the Property Trustee contemplated herein or therein requires the
consent or approval of, the giving of notice to, the registration with or the
taking of any other action with respect to any governmental authority or agency
under any existing federal law governing the banking or trust powers of the Bank
or the Property Trustee, as the case may be, under the laws of the United States
or the Commonwealth of Massachusetts; and
(f) there are no proceedings pending or, to the best of the
Property Trustee's knowledge, threatened against or affecting the Bank or the
Property Trustee in any court or before any governmental authority, agency or
arbitration board or tribunal which, individually or in the aggregate, would
materially and adversely affect the Trust or would question the right, power and
authority of the Property Trustee to enter into or perform its obligations as
one of the Trustees under this Trust Agreement.
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SECTION 702. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE BANK AND THE
DELAWARE TRUSTEE.
The Delaware Bank and the Delaware Trustee, each severally on
behalf of and as to itself, as of the date hereof, and each successor Delaware
Trustee at the time of the successor Delaware Trustee's acceptance of
appointment as Delaware Trustee hereunder (the term "Delaware Bank" being used
to refer to such successor Delaware Trustee in its separate corporate capacity),
hereby represents and warrants (as applicable) for the benefit of the Depositor
and the Securityholders that:
(a) the Delaware Bank is a Delaware banking corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware;
(b) the Delaware Bank has full corporate power, authority and
legal right to execute, deliver and perform its obligations under this Trust
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed
and delivered by the Delaware Trustee and constitutes the valid and legally
binding agreement of the Delaware Trustee enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors, rights and to general equity principles;
(d) the execution, delivery and performance by the Delaware
Trustee of this Trust Agreement has been duly authorized by all necessary
corporate or other action on the part of the Delaware Trustee and does not
require any approval of stockholders of the Delaware Bank and such execution,
delivery and performance shall not (i) violate the Delaware Bank's charter or
by-laws; (ii) violate any provision of, or constitute, with or without notice or
lapse of time, a default under, or result in the creation or imposition of, any
Lien on any properties included in the Trust Property pursuant to the provisions
of, any indenture, mortgage, credit agreement, license or other agreement or
instrument to which the Delaware Bank or the Delaware Trustee is a party or by
which it is bound; or (iii) violate any law, governmental rule or regulation of
the United States or the State of Delaware, as the case may be, governing the
banking or trust powers of the Delaware Bank or the Delaware Trustee (as
appropriate in context) or any order, judgment or decree applicable to the
Delaware Bank or the Delaware Trustee;
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(e) neither the authorization, execution or delivery by the
Delaware Trustee of this Trust Agreement nor the consummation of any of the
transactions by the Delaware Trustee contemplated herein or therein requires the
consent or approval of, the giving of notice to, the registration with or the
taking of any other action with respect to any governmental authority or agency
under any existing federal law governing the banking or trust powers of the
Delaware Bank or the Delaware Trustee, as the case may be, under the laws of the
United States or the State of Delaware; and
(f) there are no proceedings pending or, to the best of the
Delaware Trustee's knowledge, threatened against or affecting the Delaware Bank
or the Delaware Trustee in any court or before any governmental authority,
agency or arbitration board or tribunal which, individually or in the aggregate,
would materially and adversely affect the Trust or would question the right,
power and authority of the Delaware Trustee to enter into or perform its
obligations as one of the Trustees under this Trust Agreement.
SECTION 703. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR.
The Depositor hereby represents and warrants for the benefit
of the Securityholders that:
(a) the Trust Securities Certificates issued on the Closing
Date or the Option Closing Date, if applicable, on behalf of the Trust have been
duly authorized and, shall be, as of such date or dates, if applicable, duly and
validly executed, issued and delivered by the Administrative Trustees pursuant
to the terms and provisions of, and in accordance with the requirements of, this
Trust Agreement and the Securityholders shall be, as of such date or dates, if
applicable, entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges
payable by the Trust (or the Trustees on behalf of the Trust) under the laws of
the State of Delaware or any political subdivision thereof in connection with
the execution, delivery and performance by the Bank, the Property Trustee or the
Delaware Trustee, as the case may be, of this Trust Agreement.
ARTICLE VIII
TRUSTEES
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The duties and responsibilities of the Trustees shall be
as provided by this Trust Agreement and, in the case of the Property Trustee, by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Trust Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of
36
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. No Administrative Trustee nor the Delaware Trustee
shall be liable for its act or omissions hereunder except as a result of its own
gross negligence or willful misconduct. The Property Trustee's liability shall
be determined under the Trust Indenture Act. Whether or not therein expressly so
provided, every provision of this Trust Agreement relating to the conduct or
affecting the liability of or affording protection to the Trustees shall be
subject to the provisions of this Section 801. To the extent that, at law or in
equity, the Delaware Trustee or an Administrative Trustee has duties (including
fiduciary duties) and liabilities relating thereto to the Trust or to the
Securityholders, the Delaware Trustee or such Administrative Trustee shall not
be liable to the Trust or to any Securityholder for such Trustee's good faith
reliance on the provisions of this Trust Agreement. The provisions of this Trust
Agreement, to the extent that they restrict the duties and liabilities of the
Delaware Trustee or the Administrative Trustees otherwise existing at law or in
equity, are agreed by the Depositor and the Securityholders to replace such
other duties and liabilities of the Delaware Trustee and the Administrative
Trustees, as the case may be.
(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.
With respect to the relationship of each Securityholder and the Trustee, each
Securityholder, by its acceptance of a Trust Security, agrees that it shall look
solely to the revenue and proceeds from the Trust Property to the extent legally
available for distribution to it as herein provided and that the Trustees are
not personally liable to it for any amount distributable in respect of any Trust
Security or for any other liability in respect of any Trust Security. This
Section 801(b) does not limit the liability of the Trustees expressly set forth
elsewhere in this Trust Agreement or, in the case of the Property Trustee, in
the Trust Indenture Act.
(c) No provision of this Trust Agreement shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) the Property Trustee shall not be liable for any
error of judgment made in good faith by an authorized officer
of the Property Trustee, unless it shall be
37
proved that the Property Trustee was negligent in ascertaining
the pertinent facts;
(ii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of
not less than a majority in Liquidation Amount of the Trust
Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Trust Agreement;
(iii) the Property Trustee's sole duty with respect
to the custody, safe keeping and physical preservation of the
Debentures and the Payment Account shall be to deal with such
property in a similar manner as the Property Trustee deals
with similar property for its own account, subject to the
protections and limitations on liability afforded to the
Property Trustee under this Trust Agreement and the Trust
Indenture Act;
(iv) the Property Trustee shall not be liable for any
interest on any money received by it except as it may
otherwise agree 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 301 and except to the
extent otherwise required by law; and
(v) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or
the Depositor with their respective duties under this Trust
Agreement, nor shall the Property Trustee be liable for the
negligence, default or misconduct of the Administrative
Trustees or the Depositor.
SECTION 802. CERTAIN NOTICES.
(a) Within 5 Business Days after the occurrence of any Event
of Default actually known to the Property Trustee, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 1008, notice of
such Event of Default to the Securityholders, the Administrative Trustees and
the Depositor, unless such Event of Default shall have been cured or waived. For
purposes of this Section 802 the term "Event of Default" means any event that
is, or after notice or lapse of time or both would become, an Event of Default.
(b) The Administrative Trustees shall transmit, to the
Securityholders in the manner and to the extent provided in Section 1008, notice
of the Depositor's election to begin or further extend an Extension Period on
the Debentures (unless such election shall have been revoked) within the time
specified for transmitting such notice to the holders of the Debentures pursuant
to the Indenture as originally executed.
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SECTION 803. CERTAIN RIGHTS OF PROPERTY TRUSTEE.
Subject to the provisions of Section 801:
(a) the Property Trustee may rely and shall be protected in
acting or refraining from acting in good faith upon any resolution, Opinion of
Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) if (i) in performing its duties under this Trust Agreement
the Property Trustee is required to decide between alternative courses of
action; or (ii) in construing any of the provisions of this Trust Agreement the
Property Trustee finds the same ambiguous or inconsistent with other provisions
contained herein; or (iii) the Property Trustee is unsure of the application of
any provision of this Trust Agreement, then, except as to any matter as to which
the Preferred Securityholders are entitled to vote under the terms of this Trust
Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting written instructions of the Depositor as to the course of action to
be taken and the Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor within 10
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than 2 Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the Securityholders, in
which event the Property Trustee shall have no liability except for its own bad
faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the
Administrative Trustees contemplated by this Trust Agreement shall be
sufficiently evidenced by an Officers' Certificate;
(d) whenever in the administration of this Trust Agreement,
the Property Trustee shall deem it desirable that a matter be established before
undertaking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively rely upon an Officer's
Certificate which, upon receipt of such request, shall be promptly delivered by
39
the Depositor or the Administrative Trustees;
(e) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement, any filing under tax or securities laws or any filing
under tax or securities laws) or any rerecording, refiling or reregistration
thereof;
(f) the Property Trustee may consult with counsel of its
choice (which counsel may be counsel to the Depositor or any of its Affiliates)
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon and, in accordance with such advice, such
counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees; the Property Trustee shall have the right at any
time to seek instructions concerning the administration of this Trust Agreement
from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Trust Agreement at the
request or direction of any of the Securityholders pursuant to this Trust
Agreement, unless such Securityholders shall have offered to the Property
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(h) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by one or more
Securityholders, but the Property Trustee may make such further inquiry or
investigation into such facts or matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys, provided that the Property Trustee shall be
responsible for its own negligence or recklessness with respect to selection of
any agent or attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder the Property
Trustee (i) may request instructions from the Holders of the Trust Securities
which instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action; (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received; and (iii) shall
be protected in acting in accordance with such
40
instructions; and
(k) except as otherwise expressly provided by this Trust
Agreement, the Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this Trust Agreement. No
provision of this Trust Agreement shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The Recitals contained herein and in the Trust Securities
Certificates shall be taken as the statements of the Trust, and the Trustees do
not assume any responsibility for their correctness. The Trustees shall not be
accountable for the use or application by the Depositor of the proceeds of the
Debentures.
SECTION 805. MAY HOLD SECURITIES.
Any Trustee or any other agent of any Trustee or the Trust, in
its individual or any other capacity, may become the owner or pledgee of Trust
Securities and, subject to Sections 808 and 813 and except as provided in the
definition of the term "Outstanding" in Article I, may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such other
agent.
SECTION 806. COMPENSATION; INDEMNITY; FEES.
The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses, disbursements
and advances incurred or made by the
41
Trustees in accordance with any provision of this Trust Agreement (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to such Trustee's negligence, bad faith or willful misconduct (or,
in the case of the Administrative Trustees or the Delaware Trustee, any such
expense, disbursement or advance as may be attributable to its, his or her gross
negligence, bad faith or willful misconduct); and
(c) to indemnify each of the Trustees or any predecessor
Trustee for, and to hold the Trustees harmless against, any loss, damage,
claims, liability, penalty or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of this Trust Agreement, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder, except any such
expense, disbursement or advance as may be attributable to such Trustee's
negligence, bad faith or willful misconduct (or, in the case of the
Administrative Trustees or the Delaware Trustee, any such expense, disbursement
or advance as may be attributable to its, his or her gross negligence, bad faith
or willful misconduct).
No Trustee may claim any Lien or charge on any Trust Property
as a result of any amount due pursuant to this Section 806.
SECTION 807. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES.
(a) There shall at all times be a Property Trustee hereunder
with respect to the Trust Securities. The Property Trustee shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000. If any such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then for the purposes of
this Section 807, 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 807, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article VIII.
(b) There shall at all times be one or more Administrative
Trustees hereunder with respect to the Trust Securities. Each Administrative
Trustee shall be either a natural person who is at least 21 years of age or a
legal entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with
respect to the Trust Securities. The Delaware Trustee shall either be (i) a
natural person who is at least 21 years of age and a resident of the State of
Delaware; or (ii) a legal entity with its principal place of
42
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 808. CONFLICTING INTERESTS.
If the Property Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Property Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Trust Agreement.
SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE.
(a) Unless an Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust Property may at the time be located, the Depositor shall have power
to appoint, and upon the written request of the Property Trustee, the Depositor
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 809. If the Depositor does not
join in such appointment within 15 days after the receipt by it of a request so
to do, or in case a Debenture Event of Default has occurred and is continuing,
the Property Trustee alone shall have power to make such appointment. Any
co-trustee or separate trustee appointed pursuant to this Section 809 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,
43
but to such extent only, be appointed subject to the following terms, namely:
(i) The Trust Securities shall be executed and
delivered and all rights, powers, duties and obligations
hereunder in respect of the custody of securities, cash and
other personal property held by, or required to be deposited
or pledged with, the Trustees specified hereunder, shall be
exercised, solely by such Trustees and not by such co-trustee
or separate trustee.
(ii) The rights, powers, duties and obligations
hereby conferred or imposed upon the Property Trustee in
respect of any property covered by such appointment shall be
conferred or imposed upon and exercised or performed by the
Property Trustee or by the Property Trustee and such
co-trustee or separate trustee jointly, as shall be provided
in the instrument appointing such co-trustee or separate
trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed,
the Property Trustee shall be incompetent or unqualified to
perform such act, in which event such rights, powers, duties
and obligations shall be exercised and performed by such
co-trustee or separate trustee.
(iii) The Property Trustee at any time, by an
instrument in writing executed by it, with the written
concurrence of the Depositor, may accept the resignation of or
remove any co-trustee or separate trustee appointed under this
Section 809, and, in case a Debenture Event of Default has
occurred and is continuing, the Property Trustee shall have
the power to accept the resignation of, or remove, any such
co-trustee or separate trustee without the concurrence of the
Depositor. Upon the written request of the Property Trustee,
the Depositor shall join with the Property Trustee in the
execution, delivery and performance of all instruments and
agreements necessary or proper to effectuate such resignation
or removal. A successor to any co-trustee or separate trustee
so resigned or removed may be appointed in the manner provided
in this Section 809.
(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 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
44
(a) No resignation or removal of any Trustee (the "Relevant
Trustee") and no appointment of a successor Trustee pursuant to this Article
VIII shall become effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of Section 811.
(b) Subject to the immediately preceding paragraph, the
Relevant Trustee may resign at any time with respect to the Trust Securities by
giving written notice thereof to the Securityholders. If the instrument of
acceptance by the successor Trustee required by Section 811 shall not have been
delivered to the Relevant Trustee within 30 days after the giving of such notice
of resignation, the Relevant Trustee may petition, at the expense of the
Depositor, any court of competent jurisdiction for the appointment of a
successor Relevant Trustee with respect to the Trust Securities.
(c) Unless a Debenture Event of Default shall have occurred
and be continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative Trustee may
be removed by the Common Securityholder at any time.
(d) If any Trustee shall resign, be removed or become
incapable of acting as Trustee, or if a vacancy shall occur in the office of any
Trustee for any cause, at a time when no Debenture Event of Default shall have
occurred and be continuing, the Common Securityholder, by Act of the Common
Securityholder delivered to the retiring Trustee, shall promptly appoint a
successor Trustee or Trustees with respect to the Trust Securities and the
Trust, and the successor Trustee shall comply with the applicable requirements
of Section 811. If the Property Trustee or the Delaware Trustee shall resign, be
removed or become incapable of continuing to act as the Property Trustee or the
Delaware Trustee, as the case may be, at a time when a Debenture Event of
Default shall have occurred and is continuing, the Preferred Securityholders, by
Act of the Securityholders of a majority in Liquidation Amount of the Preferred
Securities then Outstanding delivered to the retiring Relevant Trustee, shall
promptly appoint a successor Relevant Trustee or Trustees with respect to the
Trust Securities and the Trust, and such successor Trustee shall comply with the
applicable requirements of Section 811. If an Administrative Trustee shall
resign, be removed or become incapable of acting as Administrative Trustee, at a
time when a Debenture Event of Default shall have occurred and be continuing,
the Common Securityholder,
45
by Act of the Common Securityholder delivered to an Administrative Trustee,
shall promptly appoint a successor Administrative Trustee or Administrative
Trustees with respect to the Trust Securities and the Trust, and such successor
Administrative Trustee or Administrative Trustees shall comply with the
applicable requirements of Section 811. If no successor Relevant Trustee with
respect to the Trust Securities shall have been so appointed by the Common
Securityholder or the Preferred Securityholders and accepted appointment in the
manner required by Section 811, any Securityholder who has been a Securityholder
of Trust Securities on behalf of himself and all others similarly situated may
petition a court of competent jurisdiction for the appointment of a successor
Relevant Trustee with respect to the Trust Securities.
(e) The Property Trustee shall give notice of each resignation
and each removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 1008 and shall give notice to
the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
(f) Notwithstanding the foregoing or any other provision of
this Trust Agreement, in the event any Administrative Trustee or a Delaware
Trustee who is a natural person dies or becomes, in the opinion of the
Depositor, incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by (a) the unanimous act of remaining
Administrative Trustees if there are at least two of them; or (b) otherwise by
the Depositor (with the successor in each case being a Person who satisfies the
eligibility requirement for Administrative Trustees set forth in Section 807).
SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor
Relevant Trustee with respect to the Trust Securities and the Trust, the
retiring Relevant Trustee and each successor Relevant Trustee with respect to
the Trust Securities shall execute and deliver an instrument hereto wherein each
successor Relevant 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 Relevant Trustee all the rights, powers, trusts
and duties of the retiring Relevant Trustee with respect to the Trust Securities
and the 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 Relevant Trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust; but, on request of the Trust or any successor
Relevant Trustee such retiring Relevant Trustee shall duly assign, transfer and
deliver to such successor Relevant Trustee all Trust Property, all proceeds
thereof and money held by such retiring Relevant Trustee hereunder with respect
to the Trust Securities and the Trust.
46
(b) Upon request of any such successor Relevant Trustee, the
Trust shall execute any and all instruments for more fully and certainly vesting
in and confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the immediately preceding paragraph, as the case may be.
(c) No successor Relevant Trustee shall accept its appointment
unless at the time of such acceptance such successor Relevant Trustee shall be
qualified and eligible under this Article VIII.
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any Person into which the Property Trustee, the Delaware
Trustee or any Administrative 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
corporation succeeding to all or substantially all the corporate trust business
of such Relevant Trustee, shall be the successor of such Relevant Trustee
hereunder, provided such 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 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST.
If and when the Property Trustee or the Delaware Trustee shall
be or become a creditor of the Depositor or the Trust (or any other obligor upon
the Debentures or the Trust Securities), the Property Trustee or the Delaware
Trustee, as the case may be, shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
SECTION 814. REPORTS BY PROPERTY TRUSTEE.
(a) The Property Trustee shall transmit to Securityholders
such reports concerning the Property Trustee, its actions under this Trust
Agreement and the property and funds in its possession as Property Trustee as
may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with The Nasdaq Stock
Market's National Market, and
47
each national securities exchange or other organization upon which the Trust
Securities are listed, and also with the Commission and the Depositor.
SECTION 815. REPORTS TO THE PROPERTY TRUSTEE.
The Depositor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as required by Section 314 of the Trust Indenture Act (if any) and
the compliance certificate required by Section 314(a) of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 816. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Depositor and the Administrative Trustees on
behalf of the Trust shall provide to the Property Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this Trust
Agreement that relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) of the Trust Indenture Act shall be given
in the form of an Officers' Certificate.
SECTION 817. NUMBER OF TRUSTEES.
(a) The number of Trustees shall be five, provided that the
Holder of all of the Common Securities by written instrument may increase or
decrease the number of Administrative Trustees. The Property Trustee and the
Delaware Trustee may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the
number of Administrative Trustees is not reduced pursuant to Section 817(a), or
if the number of Trustees is increased pursuant to Section 817(a), a vacancy
shall occur. The vacancy shall be filled with a Trustee appointed in accordance
with Section 810.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to annul the Trust. Whenever a vacancy in the number of Administrative Trustees
shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 810, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.
SECTION 818. DELEGATION OF POWER.
48
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 207(a); and
(b) The Administrative Trustees shall have power to delegate
from time to time to such of their number or to the Depositor the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
SECTION 819. VOTING.
Except as otherwise provided in this Trust Agreement, the
consent or approval of the Administrative Trustees shall require consent or
approval by not less than a majority of the Administrative Trustees, unless
there are only two, in which case both must consent.
ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER
SECTION 901. TERMINATION UPON EXPIRATION DATE.
Unless earlier dissolved, the Trust shall automatically
dissolve on March 31, 2051 (the "Expiration Date") subject to distribution of
the Trust Property in accordance with Section 904.
SECTION 902. EARLY TERMINATION.
The first to occur of any of the following events is an "Early
Termination Event:"
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) delivery of written direction to the Property Trustee by
the Depositor at any time (which direction is wholly optional and within the
discretion of the Depositor) to dissolve the Trust and distribute the Debentures
to Securityholders in exchange for the Preferred Securities in accordance with
Section 904;
49
(c) the redemption of all of the Preferred Securities in
connection with the redemption of all of the Debentures; and
(d) the entrance of an order for dissolution of the Trust by a
court of competent jurisdiction.
SECTION 903. TERMINATION.
The respective obligations and responsibilities of the
Trustees and the Trust created and continued hereby shall terminate upon the
latest to occur of the following: (a) the distribution by the Property Trustee
to Securityholders upon the liquidation of the Trust pursuant to Section 904, or
upon the redemption of all of the Trust Securities pursuant to Section 402, of
all amounts required to be distributed hereunder upon the final payment of the
Trust Securities; (b) the payment of any expenses owed by the Trust; (c) the
discharge of all administrative duties of the Administrative Trustees, including
the performance of any tax reporting obligations with respect to the Trust or
the Securityholders; and (d) the filing of a Certificate of Cancellation by the
Administrative Trustee under the Delaware Business Trust Act.
SECTION 904. LIQUIDATION.
(a) If an Early Termination Event specified in clause (a),
(b), or (d) of Section 902 occurs or upon the Expiration Date, the Trust shall
be liquidated by the Trustees as expeditiously as the Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, to each Securityholder a Like Amount of
Debentures, subject to Section 904(d). Notice of liquidation shall be given by
the Property Trustee by first-class mail, postage prepaid, mailed not later than
30 nor more than 60 days prior to the Liquidation Date to each Holder of Trust
Securities at such Holder's address appearing in the Securities Register. All
notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date,
the Trust Securities shall no longer be deemed to be
Outstanding and any Trust Securities Certificates not
surrendered for exchange shall be deemed to represent a Like
Amount of Debentures; and
(iii) provide such information with respect to the
mechanics by which Holders may exchange Trust Securities
Certificates for Debentures, or, if Section 904(d) applies,
receive a Liquidation Distribution, as the Administrative
Trustees or the Property Trustee shall deem appropriate.
(b) Except where Section 902(c) or 904(d) applies, in order to
effect the
50
liquidation of the Trust and distribution of the Debentures to Securityholders,
the Property Trustee shall establish a record date for such distribution (which
shall be not more than 45 days prior to the Liquidation Date) and, either itself
acting as exchange agent or through the appointment of a separate exchange
agent, shall establish such procedures as it shall deem appropriate to effect
the distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 902(c) or 904(d) applies, after the
Liquidation Date, (i) the Trust Securities shall no longer be deemed to be
outstanding; (ii) certificates representing a Like Amount of Debentures shall be
issued to holders of Trust Securities Certificates upon surrender of such
certificates to the Administrative Trustees or their agent for exchange; (iii)
the Depositor shall use its reasonable efforts to have the Debentures listed on
The Nasdaq Stock Market's National Market or on such other securities exchange
or other organization as the Preferred Securities are then listed or traded;
(iv) any Trust Securities Certificates not so surrendered for exchange shall be
deemed to represent a Like Amount of Debentures, accruing interest at the rate
provided for in the Debentures from the last Distribution Date on which a
Distribution was made on such Trust Securities Certificates until such
certificates are so surrendered (and until such certificates are so surrendered,
no payments of interest or principal shall be made to holders of Trust
Securities Certificates with respect to such Debentures); and (v) all rights of
Securityholders holding Trust Securities shall cease, except the right of such
Securityholders to receive Debentures upon surrender of Trust Securities
Certificates.
(d) In the event that, notwithstanding the other provisions of
this Section 904, whether because of an order for dissolution entered by a court
of competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Property Trustee in such manner as the
Property Trustee determines. In such event, on the date of the dissolution,
winding-up or other termination of the Trust, Securityholders shall be entitled
to receive out of the assets of the Trust available for distribution to
Securityholders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the Liquidation Amount per Trust
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If, upon any such
dissolution, winding-up or termination, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Trust on the Trust Securities shall be paid
on a
51
pro rata basis (based upon Liquidation Amounts). The holder of the Common
Securities shall be entitled to receive Liquidation Distributions upon any such
dissolution, winding-up or termination pro rata (determined as aforesaid) with
Holders of Preferred Securities, except that, if a Debenture Event of Default
has occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities.
SECTION 905. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF
THE TRUST.
The Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except pursuant
to this Section 905. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the holders of the Preferred
Securities, the Property Trustee or the Delaware Trustee, the Trust may merge
with or into, consolidate, amalgamate, be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any State; provided, that (i) such successor
entity either (a) expressly assumes all of the obligations of the Trust with
respect to the Preferred Securities; or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Preferred Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise; (ii) the
Depositor expressly appoints a trustee of such successor entity possessing
substantially the same powers and duties as the Property Trustee as the holder
of the Debentures; (iii) the Successor Securities are listed or traded, or any
Successor Securities shall be listed or traded upon notification of issuance, on
any national securities exchange or other organization on which the Preferred
Securities are then listed, if any; (iv) 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; (v)
prior to such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, the Depositor has received an Opinion of Counsel to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect; and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Trust nor such successor entity shall be required to register as an
"investment company" under the Investment Company Act; and (vi) the Depositor
owns all of the Common Securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at least to
the extent provided by the Guarantee, the Debentures, the Indenture, this Trust
Agreement and the Expense Agreement. Notwithstanding the foregoing, the 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
52
lease its properties and assets substantially as an entirety to any other Person
or permit any other Person to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or the successor entity to be classified as other than a grantor
trust for United States federal income tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 1001. LIMITATION OF RIGHTS OF SECURITYHOLDERS.
The death or incapacity of any Person having an interest,
beneficial or otherwise, in Trust Securities shall not operate to terminate this
Trust Agreement, nor entitle the legal representatives or heirs of such Person
or any Securityholder for such Person, to claim an accounting, take any action
or bring any proceeding in any court for a partition or winding-up of the
arrangements contemplated hereby, nor otherwise affect the rights, obligations
and liabilities of the parties hereto or any of them.
SECTION 1002. AMENDMENT.
(a) This Trust Agreement may be amended from time to time by
the Trustees and the Depositor, without the consent of any Securityholders, (i)
as provided in Section 811 with respect to acceptance of appointment by a
successor Trustee; (ii) to cure any ambiguity, correct or supplement any
provision herein or therein which may be inconsistent with any other provision
herein or therein, or to make any other provisions with respect to matters or
questions arising under this Trust Agreement, that shall not be inconsistent
with the other provisions of this Trust Agreement; or (iii) to modify, eliminate
or add to any provisions of this Trust Agreement to such extent as shall be
necessary to ensure that the Trust shall be classified for United States federal
income tax purposes as a grantor trust at all times that any Trust Securities
are outstanding or to ensure that the Trust shall not be required to register as
an "investment company" under the Investment Company Act; provided, however,
that in the case of clause (ii), such action shall not adversely affect in any
material respect the interests of any Securityholder, and any amendments of this
Trust Agreement shall become effective when notice thereof is given to the
Securityholders.
(b) Except as provided in Section 601(c) or Section 1002(c)
hereof, any provision of this Trust Agreement may be amended by the Trustees and
the Depositor (i) with the
53
consent of Trust Securityholders representing not less than a majority (based
upon Liquidation Amounts) of the Trust Securities then Outstanding; and (ii)
upon receipt by the Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment shall not affect the Trust's status as a grantor trust for
United States federal income tax purposes or the Trust's exemption from status
of an "investment company" under the Investment Company Act.
(c) In addition to and notwithstanding any other provision in
this Trust Agreement, without the consent of each affected Securityholder (such
consent being obtained in accordance with Section 603 or 606 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date; or (ii) restrict the right of a Securityholder to institute suit
for the enforcement of any such payment on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the Securityholders
(such consent being obtained in accordance with Section 603 or 606 hereof), this
paragraph (c) of this Section 1002 may not be amended.
(d) Notwithstanding any other provisions of this Trust
Agreement, no Trustee shall enter into or consent to any amendment to this Trust
Agreement which would cause the Trust to fail or cease to qualify for the
exemption from status of an "investment company" under the Investment Company
Act or to fail or cease to be classified as a grantor trust for United States
federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor, this Trust Agreement may not be
amended in a manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust Agreement is
made, the Administrative Trustees shall promptly provide to the Depositor a copy
of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee
shall be required to enter into any amendment to this Trust Agreement which
affects its own rights, duties or immunities under this Trust Agreement. The
Property Trustee shall be entitled to receive an Opinion of Counsel and an
Officers' Certificate stating that any amendment to this Trust Agreement is in
compliance with this Trust Agreement.
SECTION 1003. 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
54
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1004. GOVERNING LAW.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF
THE SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST
AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES).
SECTION 1005. 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 which is a Business Day, with
the same force and effect as though made on the date fixed for such payment, and
no distribution shall accumulate thereon for the period after such date.
SECTION 1006. SUCCESSORS.
This Trust Agreement shall be binding upon and shall inure to
the benefit of any successor to the Depositor, the Trust or the Relevant
Trustee(s), including any successor by operation of law. Except in connection
with a consolidation, merger or sale involving the Depositor that is permitted
under Article XII 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 1007. HEADINGS.
The Article and Section headings are for convenience only and
shall not affect the construction of this Trust Agreement.
SECTION 1008. REPORTS, NOTICES AND DEMANDS.
Any report, notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or served
to or upon any Securityholder
55
or the Depositor may be given or served in writing by deposit thereof,
first-class postage prepaid, in the United States mail, hand delivery or
facsimile transmission, in each case, addressed, (a) in the case of a Preferred
Securityholder, to such Preferred Securityholder as such Securityholder's name
and address may appear on the Securities Register; and (b) in the case of the
Common Securityholder or the Depositor, to People's Bancshares, Inc., 545
Pleasant Street, New Bedford, Massachusetts 02740 Attention: Chief Financial
Officer, facsimile no.: (508) 991-2705. Any notice to Preferred Securityholders
shall also be given to such owners as have, within two years preceding the
giving of such notice, filed their names and addresses with the Property Trustee
for that purpose. Such notice, demand or other communication to or upon a
Securityholder shall be deemed to have been sufficiently given or made, for all
purposes, upon hand delivery, mailing or transmission.
Any notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or served
to or upon the Trust, the Property Trustee or the Administrative Trustees shall
be given in writing addressed (until another address is published by the Trust)
as follows: (a) with respect to the Property Trustee to State Street Bank and
Trust Company, Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department; (b) with respect to the Delaware Trustee,
to Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration; and
(c) with respect to the Administrative Trustees, to them at the address above
for notices to the Depositor, marked "Attention: Administrative Trustees of
People's Bancshares Capital Trust." Such notice, demand or other communication
to or upon the Trust or the Property Trustee shall be deemed to have been
sufficiently given or made only upon actual receipt of the writing by the Trust
or the Property Trustee.
SECTION 1009. AGREEMENT NOT TO PETITION.
Each of the Trustees and the Depositor agree for the benefit
of the Securityholders that, until at least one year and 1 day after the Trust
has been terminated in accordance with Article IX, they shall not file, or join
in the filing of, a petition against the Trust under any bankruptcy, insolvency,
reorganization or other similar law (including, without limitation, the United
States Bankruptcy Code of 1978, as amended) (collectively, "Bankruptcy Laws") or
otherwise join in the commencement of any proceeding against the Trust under any
Bankruptcy Law. In the event the Depositor takes action in violation of this
Section 1009, the Property Trustee agrees, for the benefit of Securityholders,
that at the expense of the Depositor (which expense shall be paid prior to the
filing), it shall file an answer with the bankruptcy court or otherwise properly
contest the filing of such petition by the Depositor against the Trust or the
commencement of such action and raise the defense that the Depositor has agreed
in writing not to take such action and should be stopped and precluded
therefrom. The provisions of this Section 1009 shall survive the termination of
this Trust Agreement.
56
SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.
(a) This Trust Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this Trust Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts
with another provision hereof which is required to be included in this Trust
Agreement by any of the provisions of the Trust Indenture Act, such required
provision shall control. If any provision of this Trust Agreement modifies or
excludes any provision of the Trust Indenture Act which may be so modified or
excluded, the latter provision shall be deemed to apply to this Trust Agreement
as so modified or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust
Agreement shall not affect the nature of the Trust Securities as equity
securities representing undivided beneficial interests in the assets of the
Trust.
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST
THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND
THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH
SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND
SUCH SECURITYHOLDER AND SUCH OTHERS.
57
PEOPLE'S BANCSHARES, INC.
By
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Property Trustee
By
Name:
Title:
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By
Name:
Title:
, as Administrative Trustee
, as Administrative Trustee
, as Administrative Trustee
58
EXHIBIT A
CERTIFICATE OF TRUST
OF
PEOPLE'S BANCSHARES CAPITAL TRUST
THIS CERTIFICATE OF TRUST OF PEOPLE'S BANCSHARES CAPITAL TRUST (the
"Trust"), dated as of ________________, 1997, is being duly executed and filed
by WILMINGTON TRUST COMPANY, a Delaware banking corporation,
______________________, _________________ and _____________________, each an
individual, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. C. Section 3801 et seq.).
1. NAME. The name of the business trust formed hereby is People's
Bancshares Capital Trust.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective on June
6, 1997.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY, as trustee
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
___________________________________________
___________________, as Trustee
___________________________________________
___________________, as Trustee
___________________________________________
___________________, as Trustee
A-1
EXHIBIT B
[Intentionally Omitted]
B-1
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NUMBER ________. NUMBER OF COMMON SECURITIES
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
PEOPLE'S BANCSHARES CAPITAL TRUST
COMMON SECURITIES
PEOPLE'S BANCSHARES CAPITAL TRUST, a statutory business trust created
under the laws of the (LIQUIDATION AMOUNT $10 PER COMMON SECURITY) State of
Delaware (the "Trust"), hereby certifies that People's Bancshares, Inc. (the
"Holder") is the registered owner of ________________ (_____) common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust and designated the ___% Common Securities (liquidation amount $10 per
Common Security) (the "Common Securities"). In accordance with Section 510 of
the Trust Agreement (as defined below), the Common Securities are not
transferable and any attempted transfer hereof shall be void. The designations,
rights, privileges, restrictions, preferences, and other terms and provisions of
the Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust dated as of _______________, 1997, as the same may be amended from time to
time (the "Trust Agreement"), including the designation of the terms of the
Common Securities as set forth therein. The Trust shall furnish a copy of the
Trust Agreement to the Holder without charge upon written request to the Trust
at its principal place of business or registered office.
Upon receive of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this _____ day of __________, 1997.
PEOPLE'S BANCSHARES CAPITAL TRUST
By:______________________________________
Name:____________________________________
Title: Administrative Trustee
C-1
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") dated as of
_____________, 1997, between PEOPLE'S BANCSHARES, INC., a Massachusetts
corporation ("the Company"), and PEOPLE'S BANCSHARES CAPITAL TRUST, a Delaware
business trust (the "Trust").
RECITALS
WHEREAS, the Trust intends to issue its common securities (the "Common
Securities") to, and receive Debentures from, the Company and to issue and sell
up to 1,380,000 _____% Cumulative Trust Preferred Securities (the "Preferred
Securities") with such powers, preferences and special rights and restrictions
as are set forth in the Amended and Restated Trust Agreement of the Trust dated
as of ____________, 1997, as the same may be amended from time to time (the
"Trust Agreement");
WHEREAS, the Company shall directly or indirectly own all of the Common
Securities of the Trust and shall issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase the Company hereby agrees shall benefit the
Company and which purchase the Company acknowledges shall be made in reliance
upon the execution and delivery of this Agreement, the Company, including in its
capacity as holder of the Common Securities, and the Trust hereby agree as
follows:
ARTICLE I
SECTION 1.1. GUARANTEE BY THE COMPANY
Subject to the terms and conditions hereof, the Company, including in
its capacity as holder of the Common Securities, hereby irrevocably and
unconditionally guarantees to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment when
and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
liabilities of the Trust other than obligations of the Trust to pay to holders
of any Preferred Securities or other similar interests in the Trust the amounts
due such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be. This Agreement is intended to be for the
benefit of, and to be enforceable by, all such Beneficiaries, whether or not
such Beneficiaries have received notice hereof.
SECTION 1.2. TERM OF AGREEMENT
This Agreement shall terminate and be of no further force and effect
upon the later of (a) the date on which full payment has been made of all
amounts payable to all holders of all the Preferred Securities (whether upon
redemption, liquidation, exchange or otherwise); and (b) the date on which there
are no
D-1
Beneficiaries remaining; provided, however, that this Agreement shall continue
to be effective or shall be reinstated, as the case may be, if at any time any
holder of Preferred Securities or any Beneficiary must restore payment of any
sums paid under the Preferred Securities, under any obligation, under the
Preferred Securities Guarantee Agreement dated the date hereof by the Company
and State Street Bank and Trust Company as guarantee trustee, or under this
Agreement for any reason whatsoever. This Agreement is continuing, irrevocable,
unconditional and absolute.
SECTION 1.3. WAIVER OF NOTICE
The Company hereby waives notice of acceptance of this Agreement and of
any obligation to which it applies or may apply, and the Company hereby waives
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 1.4. NO IMPAIRMENT
The obligations, covenants, agreements and duties of the Company under
this Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all
or any portion of the obligations or for the performance of any other obligation
under, arising out of, or in connection with, the obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the obligations
or any action on the part of the Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement composition or readjustment of
debt of, or other similar proceedings affecting, the Trust or any of the assets
of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or
obtain the consent of, the Company with respect to the happening of any of the
foregoing.
SECTION 1.5. ENFORCEMENT
A Beneficiary may enforce this Agreement directly against the Company,
and the Company waives any right or remedy to require that any action be brought
against the Trust or any other person or entity before proceeding against the
Company.
D-2
ARTICLE II
SECTION 2.1. BINDING EFFECT
All guarantees and agreements contained in this Agreement shall bind
the successors, assigns, receivers, trustees and representatives of the Company
and shall inure to the benefit of the Beneficiaries.
SECTION 2.2. AMENDMENT
So long as there remains any Beneficiary or any Preferred Securities of
any series are outstanding, this Agreement shall not be modified or amended in
any manner adverse to such Beneficiary or to the holders of the Preferred
Securities.
SECTION 2.3. NOTICES
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same by facsimile
transmission (confirmed by mail), telex, or by registered or certified mail,
addressed as follows (and if so given, shall be deemed given when mailed or upon
receipt of an answer back, if sent by telex):
People's Bancshares Capital Trust c/o People's Bancshares, Inc., 545
Pleasant Street, New Bedford, Massachusetts 02740. Facsimile No.: (508) 991-2705
Attention: Chief Financial Officer.
People's Bancshares, Inc., 545 Pleasant Street, New Bedford,
Massachusetts 02740. Facsimile No.: (508) 991-2705 Attention: Chief Financial
Officer.
SECTION 2.4 This agreement shall be governed by and construed and
interpreted in accordance with the laws of the Commonwealth of Massachusetts
(without regard to conflict of laws principles).
THIS AGREEMENT is executed as of the day and year first above written.
PEOPLE'S BANCSHARES, INC.
By:____________________________________________
Name:
Title:
PEOPLE'S BANCSHARES CAPITAL TRUST
By:____________________________________________
Name:__________________________________________
Title: Administrative Trustee
D-3
EXHIBIT E
Certificate Number Number of Preferred Securities
P-
Certificate Evidencing Preferred Securities
of
People's Bancshares Capital Trust
% Cumulative Trust Preferred Securities
(liquidation amount $10 per Preferred Security)
People's Bancshares Capital Trust, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of _____ preferred
securities of the Trust representing undivided beneficial interests in the
assets of the Trust and designated the __________% Cumulative Trust Preferred
Securities (liquidation amount $10 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer as provided in Section
504 of the Trust Agreement. 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 Trust dated as of _____________,
1997, as the same may be amended from time to time (the "Trust Agreement"),
including the designation of the terms of Preferred Securities as set forth
therein. The Holder is entitled to the benefits of the Preferred Securities
Guarantee Agreement entered into by People's Bancshares, Inc., a Massachusetts
corporation, and State Street Bank and Trust Company, as guarantee trustee,
dated as of _______________, 1997 (the "Guarantee"), to the extent provided
therein. The Trust shall furnish a copy of the Trust Agreement and the Guarantee
to the Holder without charge upon written request to the Trust at its principal
place of business or registered office. Upon receive of this certificate, the
Holder is bound by the Trust Agreement and is entitled to the benefits
thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this _____day of _______________, 1997.
PEOPLE'S BANCSHARES CAPITAL TRUST
By:________________________________
Name:
Title: Administrative Trustee
E-1
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the _____% Cumulative Trust Preferred
Securities described in the within-mentioned Amended and Restated Trust
Agreement.
Dated:
STATE STREET BANK AND TRUST COMPANY, PEOPLE'S BANCSHARES CAPITAL TRUST
as Authentication Agent and Registrar
By_______________________________ By______________________________
Authorized Signatory Administrative Trustee
EXHIBIT 4.6
PREFERRED SECURITIES GUARANTEE AGREEMENT
BY AND BETWEEN
PEOPLE'S BANCSHARES, INC.
AND
STATE STREET BANK AND TRUST COMPANY
_______________, 1997
TABLE OF CONTENTS
Page
----
ARTICLE I Definitions And Interpretation.......................................1
Section 1.1. Definitions And Interpretation....................................1
ARTICLE II Trust Indenture Act.................................................4
Section 2.1. Trust Indenture Act; Application..................................4
Section 2.2. Lists Of Holders Of Securities....................................5
Section 2.3. Reports By The Preferred Guarantee Trustee........................5
Section 2.4. Periodic Reports To Preferred Guarantee Trustee...................5
Section 2.5. Evidence Of Compliance With Conditions Precedent..................5
Section 2.6. Events Of Default; Waiver.........................................5
Section 2.7. Event Of Default; Notice..........................................6
Section 2.8. Conflicting Interests.............................................6
i
ARTICLE III Powers, Duties And Rights Of Preferred Guarantee Trustee...........6
Section 3.1. Powers And Duties Of The Preferred Guarantee Trustee..............6
Section 3.2. Certain Rights Of Preferred Guarantee Trustee.....................8
Section 3.3. Not Responsible For Recitals Or Issuance Of Guarantee............10
ARTICLE IV Preferred Guarantee Trustee........................................10
Section 4.1. Preferred Guarantee Trustee; Eligibility.........................10
Section 4.2. Appointment, Removal And Resignation Of Preferred Guarantee
Trustee..........................................................11
ARTICLE V Guarantee...........................................................11
Section 5.1. Guarantee........................................................11
Section 5.2. Waiver Of Notice And Demand......................................12
Section 5.3. Obligations Not Affected.........................................12
Section 5.4. Rights Of Holders................................................13
ii
Section 5.5. Guarantee Of Payment.............................................13
Section 5.6. Subrogation......................................................13
Section 5.7. Independent Obligations..........................................13
ARTICLE VI Limitation Of Transactions; Subordination..........................14
Section 6.1. Limitation On Transactions.......................................14
Section 6.2. Ranking..........................................................14
ARTICLE VII Termination.......................................................14
Section 7.1. Termination......................................................14
ARTICLE VIII Indemnification..................................................14
Section 8.1. Exculpation......................................................14
Section 8.2. Indemnification..................................................15
iii
ARTICLE IX Miscellaneous......................................................15
Section 9.1. Successors And Assigns...........................................15
Section 9.2. Amendments.......................................................15
Section 9.3. Notices..........................................................16
Section 9.4. Benefit..........................................................16
Section 9.5. Governing Law....................................................16
iv
CROSS-REFERENCE TABLE
Section of
Trust Indenture Act Section of
of 1939, as amended Indenture
310(a)..................................................................4.1(a)
310(b).............................................................4.1(c), 2.8
310(c)..........................................................Not Applicable
311(a)..................................................................2.2(b)
311(b)..................................................................2.2(b)
311(c)..........................................................Not Applicable
312(a)................................................................. 2.2(a)
312(b)................................................................. 2.2(b)
313....................................................................... 2.3
314(a).....................................................................2.4
314(b)..........................................................Not Applicable
314(c).....................................................................2.5
314(d)..........................................................Not Applicable
314(e)............................................................1.1, 2.5,3.2
314(f)................................................................2.1, 3.2
315(a)..................................................................3.1(d)
315(b).....................................................................2.7
315(c).....................................................................3.1
315(d)..................................................................3.1(d)
316(a)...........................................................1.1, 2.6, 5.4
316(b).....................................................................5.3
317(a).....................................................................3.1
317(b)..........................................................Not Applicable
318(a).....................................................................2.1
318(b).....................................................................2.1
318(c)..................................................................2.1(b)
v
Note: This Cross-Reference Table does not constitute part of this Agreement and
shall not affect the interpretation of any of its terms or provisions.
vi
PREFERRED SECURITIES GUARANTEE AGREEMENT
THIS PREFERRED SECURITIES GUARANTEE AGREEMENT (this "Preferred
Securities Guarantee"), dated as of ___________, 1997, is executed and delivered
by PEOPLE'S BANCSHARES, INC., a Massachusetts corporation (the "Guarantor"), and
STATE STREET BANK AND TRUST COMPANY, a trust company organized and existing
under the laws of the Commonwealth of Massachusetts, as trustee (the "Preferred
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of People's
Bancshares Capital Trust, a Delaware statutory business trust (the "Trust").
RECITALS
WHEREAS, pursuant to an Amended and Restated Trust Agreement
(the "Trust Agreement"), dated as of ___________, 1997, among the trustees of
the Trust named therein, the Guarantor, as depositor, and the holders from time
to time of undivided beneficial interests in the assets of the Trust, the Trust
is issuing on the date hereof up to 1,380,000 preferred securities, having an
aggregate liquidation amount of up to $13,800,000, designated the ________%
Cumulative Trust Preferred Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Preferred Securities Guarantee, to pay to
the Holders of the Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the purchase by each
Holder of
1
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. DEFINITIONS AND INTERPRETATION.
In this Preferred Securities Guarantee, unless the context
otherwise requires:
(a) capitalized terms used in this Preferred Securities
Guarantee but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) terms defined in the Trust Agreement as at the date of
execution of this Preferred Securities Guarantee have the same meaning when used
in this Preferred Securities Guarantee;
(c) a term defined anywhere in this Preferred Securities
Guarantee has the same meaning throughout;
(d) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred Securities Guarantee
as modified, supplemented or amended from time to time;
(e) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this Preferred Securities
Guarantee, unless otherwise specified;
2
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Preferred Securities Guarantee, unless otherwise
defined in this Preferred Securities Guarantee or unless the context otherwise
requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a day on which federal
or state banking institutions in New York, New York are authorized or required
by law, executive order or regulation to close or a day on which the Corporate
Trust Office of the Preferred Guarantee Trustee is closed for business.
"Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Preferred Securities Guarantee is
located at Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department.
"Covered Person" means any Holder or beneficial owner of
Preferred Securities.
"Debentures" means the ____% Subordinated Debentures due June
30, 2027, of the Debenture Issuer held by the Property Trustee of the Trust.
"Debenture Issuer" means the Guarantor.
"Event of Default" means a default by the Guarantor on any of
its payment or
3
other obligations under this Preferred Securities Guarantee.
"Guarantor" means People's Bancshares, Inc., a Massachusetts
corporation.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by the Trust: (i) any accrued and unpaid
Distributions that are required to be paid on such Preferred Securities, to the
extent the Trust shall have funds available therefor, (ii) the redemption price,
including all accrued and unpaid Distributions to the date of redemption (the
"Redemption Price"), to the extent the Trust has funds available therefor, with
respect to any Preferred Securities called for redemption by the Trust, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Trust (other than in connection with the distribution of Debentures to the
Holders in exchange for Preferred Securities as provided in the Trust
Agreement), the lesser of (a) the aggregate of the Liquidation Amount and all
accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Trust shall have funds available therefor (the
"Liquidation Distribution"), and (b) the amount of assets of the Trust remaining
available for distribution to Holders in liquidation of the Trust.
"Holder" shall mean any holder, as registered on the books and
records of the Trust, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee,
any Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of _____________,
1997, among the
4
Debenture Issuer and State Street Bank and Trust Company, as trustee, and any
indenture supplemental thereto pursuant to which Subordinated Debentures of the
Debenture Issuer are to be issued to the Property Trustee of the Trust.
"Liquidation Distribution" has the meaning provided therefor
in the definition of Guarantee Payments.
"Majority in Liquidation Amount of the Preferred Securities"
means the holders of more than 50% of the Liquidation Amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all of the Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two authorized officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
5
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 Guarantee Trustee" means State Street Bank and
Trust Company, until a Successor Preferred Guarantee Trustee has been appointed
and has accepted such appointment pursuant to the terms of this Preferred
Securities Guarantee and thereafter means each such Successor Preferred
Guarantee Trustee.
"Redemption Price" has the meaning provided therefor in the
definition of Guarantee Payments.
"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, any officer within the Corporate Trust Office of the
Preferred Guarantee Trustee, including any vice- president, any assistant
vice-president, any assistant secretary, the treasurer, any assistant treasurer
or other officer of the Corporate Trust Office of the Preferred Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, as in
6
force at the date of which this instrument was executed; provided, however, that
in the event the Trust Indenture Act of 1939, as amended, is amended after such
date, "Trust Indenture Act" means, to the extent required by any such amendment,
the Trust Indenture Act of 1939, as so amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION.
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions.
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2. LISTS OF HOLDERS OF SECURITIES.
(a) In the event the Preferred Guarantee Trustee is not also
the Securities Registrar, the Guarantor shall provide the Preferred Guarantee
Trustee with a list, in such form as the Preferred Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the Preferred
Securities (the "List of Holders") as of such date, (i) within 1 Business Day
after January 1 and June 30 of each year, and (ii) at any other time within 30
days of receipt by the Guarantor of a written request for a List of Holders as
of a date no more than 15 days before such List of Holders is given to the
Preferred Guarantee Trustee; provided, that the Guarantor shall not be obligated
to provide such List of Holders at any time the List of Holders
7
does not differ from the most recent List of Holders given to the Preferred
Guarantee Trustee by the Guarantor. The Preferred Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3. REPORTS BY THE PREFERRED GUARANTEE TRUSTEE.
On or before July 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 2.4. PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE.
The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) 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 Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Preferred Securities Guarantee 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
8
be given in the form of an Officers' Certificate.
SECTION 2.6. EVENTS OF DEFAULT; WAIVER.
The Holders of a Majority in Liquidation Amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, 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
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7. EVENT OF DEFAULT; NOTICE.
(a) The Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of all
Events of Default actually known to a Responsible Officer of the Preferred
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice; provided, that the Preferred Guarantee Trustee shall be protected
in withholding such notice if and so long as a Responsible Officer of the
Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Preferred Guarantee Trustee
shall have received written notice, or of which a Responsible Officer of the
Preferred Guarantee Trustee charged with the administration of the Trust
Agreement shall have obtained actual knowledge.
SECTION 2.8. CONFLICTING INTERESTS.
9
The Trust Agreement shall be deemed to be specifically
described in this Preferred Securities Guarantee for the purposes of clause (i)
of the first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1. POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the Preferred Guarantee Trustee has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee
for the benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of
any Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and
10
no implied covenants shall be read into this Preferred Securities Guarantee
against the Preferred Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Preferred Securities Guarantee, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall
be construed to relieve the Preferred Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Preferred Securities Guarantee, and the
Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into this
Preferred Securities Guarantee against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred 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 Preferred Guarantee
Trustee and conforming to the requirements of this Preferred
Securities Guarantee; but in the
11
case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to
the Preferred Guarantee Trustee, the Preferred Guarantee
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of
the Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii) the Preferred 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 Preferred Guarantee Trustee, or exercising any trust
or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred 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 Preferred Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Preferred Securities
Guarantee or indemnity, reasonably satisfactory to the Preferred
Guarantee Trustee, against such risk or liability is not reasonably
assured to it.
SECTION 3.2. CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE.
12
(a) Subject to the provisions of Section 3.1:
(i) the Preferred Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently evidenced by
an Officers' Certificate;
(iii) whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Preferred 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,
shall be promptly delivered by the Guarantor;
(iv) the Preferred Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof);
(v) the Preferred Guarantee Trustee may consult with counsel,
and the written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion. Such counsel
may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Preferred Guarantee Trustee shall
have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any
13
court of competent jurisdiction;
(vi) the Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request
or direction, including such reasonable advances as may be requested by
the Preferred Guarantee Trustee; provided that, nothing contained in
this Section 3.2(a)(vi) shall be taken to relieve the Preferred
Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Preferred Securities Guarantee;
(vii) the Preferred 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
Preferred Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit;
(viii) the Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Preferred Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
14
(ix) any action taken by the Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee Trustee or its
agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the authority
of the Preferred Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Preferred Securities
Guarantee, both of which shall be conclusively evidenced by the
Preferred Guarantee Trustee's or its agent's taking such action;
(x) whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
Liquidation Amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in conclusively
relying on or acting in accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall
be deemed to impose any duty or obligation on the Preferred 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 Preferred 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 Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.
The Recitals contained in this Guarantee shall be taken as the
statements of the
15
Guarantor, and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Guarantee Trustee makes no
representation as to the validity or sufficiency of this Preferred Securities
Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1. PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Preferred Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000, and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii),
the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease
to be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
16
(c) If the Preferred Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred 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 PREFERRED
GUARANTEE TRUSTEE.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall
hold office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor Preferred Guarantee Trustee
and delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee
17
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all
amounts accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1. GUARANTEE.
The Guarantor irrevocably unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Trust), as and when due, regardless of any defense,
right of set-off of counterclaim that the Trust may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Trust to pay such amounts to the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND.
The Guarantor hereby waives notice of acceptance of this
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Trust or any other Person before
18
proceeding against the Guarantor, protest notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED.
The obligations, covenants, agreements and duties of the
Guarantor under this Preferred Securities Guarantee shall in no way be affected
or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Trust of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities to
be performed or observed by the Trust;
(b) the extension of time for the payment by the Trust of all
or any portion of the Distributions, 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 (other than an extension of
time for payment of Distributions, Redemption Price, Liquidation Distribution or
other sum payable that results from the extension of any interest payment period
on the Debentures or any extension of the maturity date of the Debentures
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the 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,
19
arrangement, composition or readjustment of debt of, or other similar
proceedings affecting, the Trust or any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) any failure or omission to receive any regulatory approval
or consent required in connection with the Preferred Securities (or the common
equity securities issued by the Trust), including the failure to receive any
approval of the Board of Governors of the Federal Reserve System required for
the redemption of the Preferred Securities;
(g) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstance .
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4. RIGHTS OF HOLDERS.
(a) The Holders of a Majority in Liquidation Amount of the
Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred Guarantee
Trustee in respect of this Preferred Securities Guarantee or exercising any
trust or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee.
20
(b) Any Holder of Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce its rights under this
Preferred Securities Guarantee, without first instituting a legal proceeding
against the Trust, the Preferred Guarantee Trustee or any other Person.
SECTION 5.5. GUARANTEE OF PAYMENT.
This Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6. SUBROGATION.
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Preferred Securities against the Trust in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7. INDEPENDENT OBLIGATIONS.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of
21
this Preferred Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (h), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1. LIMITATION ON TRANSACTIONS.
So long as any Preferred Securities remain outstanding, if
there shall have occurred an Event of Default under this Preferred Securities
Guarantee, an Event of Default under the Trust Agreement or during an Extended
Interest Payment Period (as defined in the Indenture), then a) the Guarantor
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock and (b) the Guarantor shall not make any payment of
interest or principal on or repay, repurchase or redeem any debt securities
issued by the Guarantor which rank pari passu with or junior to the Debentures
other than payments under this Preferred Securities Guarantee and (c) the
Guarantor shall not redeem, purchase or acquire less than all of the Outstanding
Debentures or any of the Preferred Securities.
SECTION 6.2. RANKING.
This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, (ii) pari passu
with the most senior preferred securities or preference stock now or hereafter
issued by the Guarantor and with any guarantee now or hereafter entered into by
the Guarantor in respect of any preferred securities or preference stock of any
Affiliate of the Guarantor, and (iii) senior to the Guarantor's common stock.
22
ARTICLE VII
TERMINATION
SECTION 7.1. TERMINATION.
This Preferred Securities Guarantee shall terminate upon (i)
full payment of the redemption Price of all Preferred Securities, (ii) upon full
payment of the amounts payable in accordance with the Trust Agreement upon
liquidation of the Trust, or (iii) upon distribution of the Debentures to the
Holders of the Preferred Securities. Notwithstanding the foregoing, this
Preferred Securities Guarantee shall continue to be effective or shall be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith
23
upon the records of the Guarantor and upon such information, opinions, reports
or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.
SECTION 8.2. INDEMNIFICATION.
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. SUCCESSORS AND ASSIGNS.
All guarantees and agreements contained in this Preferred
Securities Guarantee 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.
24
SECTION 9.2. AMENDMENTS.
Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in Liquidation Amount of
the Preferred Securities. The provisions of Article VI of the Trust Agreement
with respect to meetings of Holders of the Preferred Securities apply to the
giving of such approval.
SECTION 9.3. NOTICES.
All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by registered or certified mail, as
follows:
(a) If given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth below (or such other
address as the Preferred Guarantee Trustee may give notice of to the Holders of
the Preferred Securities):
State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Preferred Securities):
25
People's Bancshares, Inc.
545 Pleasant Street
New Bedford, Massachusetts 02740
Attention: Chief Financial Officer
(c) If given to any Holder of Preferred Securities, at the
address set forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4. BENEFIT.
This Preferred Securities Guarantee is solely for the benefit
of the Holders of the Preferred Securities and, subject to Section 3.1(a), is
not separately transferable from the Preferred Securities.
SECTION 9.5. GOVERNING LAW.
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS.
26
This Preferred Securities Guarantee is executed as of the day
and year first above written.
PEOPLE'S BANCSHARES, INC.
as Guarantor
By
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Preferred Guarantee Trustee
By
Name:
Title:
27
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
Number 333-____ (dated June 6, 1997 on Form S-2), of People's Bancshares, Inc.
of our report dated January 24, 1997 on the financial statements of People's
Bancshares, Inc. appearing in the Annual Report on Form 10-K of People's
Bancshares, Inc. for the year ended December 31, 1996. We also consent to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
WOLF & COMPANY, P.C.
/s/ Wolf & Company, P.C.
Boston, Massachusetts
June 6, 1997
EXHIBIT 25.1
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) __
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
---------------------
PEOPLE'S BANCSHARES, INC.
(Exact name of obligor as specified in its charter)
MASSACHUSETTS 04-1716220
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
545 PLEASANT STREET
NEW BEDFORD, MASSACHUSETTS 02740
(Address of principal executive offices) (Zip Code)
--------------------
% SUBORDINATED DEBENTURES
(Title of indenture securities)
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Boston Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with
the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee
to commence business was necessary or issued is on file with
the Securities and Exchange Commission as Exhibit 2 to
Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-17940)
and is incorporated herein by reference thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe, Inc.
(File No. 22-17940) and is incorporated herein by reference
thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4
to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Eastern
Edison Company (File No. 33-37823) and is incorporated herein
by reference thereto.
1
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is annexed hereto as
Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 3rd day of June, 1997.
STATE STREET BANK AND TRUST COMPANY
By: /S/ PAUL D. ALLEN
-------------------------------
PAUL D. ALLEN
VICE PRESIDENT
2
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by PEOPLE'S
BANCSHARES, INC. of its % SUBORDINATED DEBENTURES, we hereby consent that
reports of examination by Federal, State, Territorial or District authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /S/ PAUL D. ALLEN
-------------------------------
PAUL D. ALLEN
VICE PRESIDENT
DATED: JUNE 3, 1997
3
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business March 31, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin 1,665,142
Interest-bearing balances .............................. 8,193,292
Securities ....................................................... 10,238,113
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary ..................... 5,853,144
Loans and lease financing receivables:
Loans and leases, net of unearned income 4,936,454
Allowance for loan and lease losses ....... 70,307
Allocated transfer risk reserve .......... 0
Loans and leases, net of unearned income and allowances 4,866,147
Assets held in trading accounts ................................. 957,478
Premises and fixed assets ........................................ 380,117
Other real estate owned .......................................... 884
Investments in unconsolidated subsidiaries ....................... 25,835
Customers' liability to this bank on acceptances outstanding .... 45,548
Intangible assets ................................................ 158,080
Other assets ..................................................... 1,066,957
----------
Total assets ..................................................... 33,450,737
==========
LIABILITIES
Deposits:
In domestic offices ...................................... 8,270,845
Noninterest-bearing .............. .............. 6,318,360
Interest-bearing ................. .............. 1,952,485
In foreign offices and Edge subsidiary ................... 12,760,086
Noninterest-bearing .............. .............. 53,052
Interest-bearing ................. .............. 12,707,034
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary ...................... 8,216,641
Demand notes issued to the U.S. Treasury and Trading Liabilities .. 926,821
Other borrowed money ............................................. 671,164
Subordinated notes and debentures ................................. 0
Bank's liability on acceptances executed and outstanding .......... 46,137
Other liabilities ................................................. 745,529
Total liabilities ................................................. 31,637,223
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ..................... 0
Common stock ...................................................... 29,931
Surplus ........................................................... 360,717
Undivided profits and capital reserves/Net unrealized holding
gains (losses) .................................................. 1,426,881
Cumulative foreign currency translation adjustments ............... (4,015)
Total equity capital .............................................. 1,813,514
----------
Total liabilities and equity capital ............................. 33,450,737
==========
</TABLE>
4
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
5
EXHIBIT 25.2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
---------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) __
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
---------------------
PEOPLE'S BANCSHARES CAPITAL TRUST
(Exact name of obligor as specified in its charter)
DELAWARE XX-XXXXXXX
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
545 PLEASANT STREET
NEW BEDFORD, MASSACHUSETTS 02740
(Address of principal executive offices) (Zip Code)
--------------------
PREFERRED SECURITIES
(Title of indenture securities)
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Boston Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange Commission as Exhibit 1
to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE
ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee to commence
business was necessary or issued is on file with the Securities and Exchange
Commission as Exhibit 2 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration Statement of
Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference
thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS SPECIFIED
IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and Exchange Commission as
Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and Qualification
of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc.
(File No. 22-17940) and is incorporated herein by reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4 to the Statement
of Eligibility and Qualification of Trustee (Form T-1) filed with the
Registration Statement of Eastern Edison Company (File No. 33-37823) and is
incorporated herein by reference thereto.
1
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 3rd day of June, 1997.
STATE STREET BANK AND TRUST COMPANY
By: /S/ PAUL D. ALLEN
------------------------
PAUL D. ALLEN
VICE PRESIDENT
2
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by PEOPLE'S
BANCSHARES CAPITAL TRUST of its PREFERRED SECURITIES, we hereby consent that
reports of examination by Federal, State, Territorial or District authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /S/ PAUL D. ALLEN
--------------------------------
PAUL D. ALLEN
VICE PRESIDENT
DATED: JUNE 3, 1997
3
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business March 31, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
Thousands of
Dollars
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin 1,665,142
Interest-bearing balances 8,193,292
Securities 10,238,113
Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and its
Edge subsidiary 5,853,144
Loans and lease financing receivables:
Loans and leases, net of unearned income 4,936,454
Allowance for loan and lease losses 70,307
Allocated transfer risk reserve 0
Loans and leases, net of unearned income and allowances 4,866,147
Assets held in trading accounts 957,478
Premises and fixed assets 380,117
Other real estate owned 884
Investments in unconsolidated subsidiaries 25,835
Customers' liability to this bank on acceptances outstanding 45,548
Intangible assets 158,080
Other assets 1,066,957
---------
Total assets 33,450,737
===========
LIABILITIES
Deposits:
In domestic offices 8,270,845
Noninterest-bearing 6,318,360
Interest-bearing 1,952,485
In foreign offices and Edge subsidiary 12,760,086
Noninterest-bearing 53,052
Interest-bearing 12,707,034
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary 8,216,641
Demand notes issued to the U.S. Treasury and Trading Liabilities 926,821
Other borrowed money 671,164
Subordinated notes and debentures 0
Bank's liability on acceptances executed and outstanding 46,137
Other liabilities 745,529
Total liabilities 31,637,223
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock 29,931
Surplus 360,717
Undivided profits and capital reserves/Net unrealized holding
gains (losses) 1,426,881
Cumulative foreign currency translation adjustments (4,015)
Total equity capital 1,813,514
---------
Total liabilities and equity capital 33,450,737
==========
4
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
5
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) __
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
---------------------
PEOPLE'S BANCSHARES, INC.
(Exact name of obligor as specified in its charter)
MASSACHUSETTS 04-1716220
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
545 PLEASANT STREET
NEW BEDFORD, MASSACHUSETTS 02740
(Address of principal executive offices) (Zip Code)
--------------------
GUARANTEE
(Title of indenture securities)
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Boston Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange Commission as Exhibit 1
to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee to commence
business was necessary or issued is on file with the Securities and Exchange
Commission as Exhibit 2 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration Statement of
Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference
thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS SPECIFIED
IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and Exchange Commission as
Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and Qualification
of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc.
(File No. 22-17940) and is incorporated herein by reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4 to the Statement
of Eligibility and Qualification of Trustee (Form T-1) filed with the
Registration Statement of Eastern Edison Company (File No. 33-37823) and is
incorporated herein by reference thereto.
1
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 3rd day of June, 1997.
STATE STREET BANK AND TRUST COMPANY
By: /S/ PAUL D. ALLEN
--------------------------------
PAUL D. ALLEN
VICE PRESIDENT
2
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by PEOPLE'S
BANCSHARES, INC. of its Guarantee, we hereby consent that reports of examination
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /S/ PAUL D. ALLEN
--------------------------------
PAUL D. ALLEN
VICE PRESIDENT
DATED: JUNE 3, 1997
3
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business March 31, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
Thousands of
Dollars
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin 1,665,142
Interest-bearing balances 8,193,292
Securities 10,238,113
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary 5,853,144
Loans and lease financing receivables:
Loans and leases, net of unearned income 4,936,454
Allowance for loan and lease losses 70,307
Allocated transfer risk reserve 0
Loans and leases, net of unearned income and allowances 4,866,147
Assets held in trading accounts 957,478
Premises and fixed assets 380,117
Other real estate owned 884
Investments in unconsolidated subsidiaries 25,835
Customers' liability to this bank on acceptances outstanding 45,548
Intangible assets 158,080
Other assets 1,066,957
---------
Total assets 33,450,737
==========
LIABILITIES
Deposits:
In domestic offices 8,270,845
Noninterest-bearing 6,318,360
Interest-bearing 1,952,485
In foreign offices and Edge subsidiary 12,760,086
Noninterest-bearing 53,052
Interest-bearing 12,707,034
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary 8,216,641
Demand notes issued to the U.S. Treasury and Trading Liabilities 926,821
Other borrowed money 671,164
Subordinated notes and debenture 0
Bank's liability on acceptances executed and outstanding 46,137
Other liabilities 745,529
Total liabilities 31,637,223
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock 29,931
Surplus 360,717
Undivided profits and capital reserves/Net unrealized holding
gains (losses) 1,426,881
Cumulative foreign currency translation adjustments (4,015)
Total equity capital 1,813,514
---------
Total liabilities and equity capital 33,450,737
==========
4
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
5
