As filed with the Securities and Exchange Commission on May 9, 1997
Registration Nos. 333-26453-01
333-26453
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
GCB CAPITAL TRUST
GREATER COMMUNITY BANCORP
(Exact Name of Registrants as Specified in their Charters)
Delaware Requested
New Jersey 6035 22-2545165
- ------------------------------ --------------------------- --------------------
(States or Other Jurisdictions (Primary Standard Industry (I.R.S. Employer
of Incorporation Classification Code Number) Identification Nos.)
or Organization)
55 Union Boulevard, Totowa, New Jersey 07512
(201) 942-1111
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrants' Principal Executive Offices)
Mr. John L. Soldoveri
Chief Executive Officer
Greater Community Bancorp
55 Union Boulevard, Totowa, New Jersey 07512
(201) 942-1111
---------------------------------------------------------
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Please send copies of all communications to:
John J. Spidi, Esq. Steven L. Kaplan, Esq.
MALIZIA, SPIDI, SLOANE & FISCH, P.C. ARNOLD & PORTER
1301 K. Street, N.W., Suite 700 East 555 Twelfth Street, N.W.
Washington, D.C. 20005 Washington, D.C. 20004
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box [ ]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this form, check the following box [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.[ ]
The prospectus contained in this Registration Statement will be used in
connection with the offering of the following securities: (1)______% Preferred
Securities of GCB Capital Trust; (2)______% Junior Subordinated Debentures of
Greater Community Bancorp; and (3) a Guarantee of Greater Community Bancorp of
certain obligations under the Preferred Securities.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 8^, 1997
PROSPECTUS
[LOGO]
$20,000,000
GCB Capital Trust
% Preferred Securities
(Liquidation Amount $25 per Preferred Security)
fully and unconditionally guaranteed, as described herein, by
Greater Community Bancorp
The Preferred Securities offered hereby represent preferred undivided
beneficial interests in the assets of GCB Capital Trust, a statutory business
trust created under the laws of the State of Delaware (the "Issuer Trust").
Greater Community Bancorp (the "Company") will initially be the holder of all of
the beneficial interests represented by common securities of the Issuer Trust
(the "Common Securities" and, together with the Preferred Securities, the "Trust
Securities"). (Continued on next page)
----------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 11 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO 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 INSURER OR GOVERNMENT AGENCY.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=======================================================================================================
Underwriting Proceeds to
Price to Public(1) Discount (2) Issuer Trust(3)(4)
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<S> <C> <C> <C>
Per Preferred Security............ $25.00 (4) $25.00
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Total(5).......................... $20,000,000 (4) $20,000,000
=======================================================================================================
</TABLE>
(1) Plus accrued Distributions, if any, from ^, 1997.
(2) The Company and the Issuer Trust have each agreed to indemnify the
Underwriters against certain liabilities under the Securities Act of
1933. See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at
^ $ .
(4) In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures,
the Company has agreed to pay to the Underwriters, as compensation for]
arranging the investment therein of such proceeds, ^ $ per
Preferred Security (or ^ $ million in the aggregate). See
"Underwriting."
(5) The Company has granted the Underwriters an option, exercisable within
30 days after the date of this Prospectus, to purchase up to an
additional $3,000,000 aggregate liquidation amount of the Preferred
Securities on the same terms as set forth above, solely to cover
over-allotments, if any. If such over-allotment option is exercised in
full, the total Price to Public and Proceeds to Issuer Trust will be
$23,000,000 and $23,000,000, respectively. 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 and to withdraw, cancel or modify the offer
without notice. It is expected that delivery of the Preferred Securities will be
made in book-entry form through the book-entry facilities of The Depository
Trust Company on or about ^, 1997, against payment therefor in immediately
available funds.
ADVEST, INC.
The date of this Prospectus is ^, 1997
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
(cover page continued)
The Issuer Trust exists for the sole purpose of issuing the Trust Securities and
investing the proceeds thereof in ^% Junior Subordinated Deferrable
Interest Debentures (the "Junior Subordinated Debentures," and together with the
Trust Securities, the "Securities") to be issued by the Company. The Junior
Subordinated Debentures will mature on ^, 2027 (the "Stated Maturity").
The Preferred Securities will have a preference under certain circumstances over
the Common Securities with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise. See "Description of Preferred Securities
- -- Subordination of Common Securities."
The Preferred Securities will be represented by one or more global
securities registered in the name of a nominee of The Depository Trust Company,
as depositary ("DTC"). Beneficial interests in the global securities will be
shown on, and transfer thereof will be effected only through, records maintained
by DTC and its participants. Except as described under "Description of Preferred
Securities," Preferred Securities in definitive form will not be issued and
owners of beneficial interests in the global securities will not be considered
holders of the Preferred Securities. Application will be made to include the
Preferred Securities in Nasdaq's National Market. Settlement for the Preferred
Securities will be made in immediately available funds. The Preferred Securities
will trade in DTC's Same-Day Funds Settlement System, and secondary market
trading activity for the Preferred Securities will therefore settle in
immediately available funds.
Holders of the Preferred Securities will be entitled to receive
preferential cumulative cash distributions accumulating from ^, 1997, and
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year commencing ^, 1997, at the annual rate of ^% of the Liquidation
Amount of $25 per Preferred Security ("Distributions"). The Company has the
right to defer payment of interest on the Junior Subordinated Debentures at any
time or from time to time for a period not exceeding 20 consecutive quarterly
periods with respect to each deferral period (each, an "Extension Period"),
provided that no Extension Period may extend beyond the Stated Maturity of the
Junior Subordinated Debentures. No interest shall be due and payable during any
Extension Period, except at the end thereof. 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 Junior 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 the Company's capital
stock or with respect to debt securities of the Company that rank pari passu in
all respects with or junior to the Junior Subordinated Debentures. During an
Extension Period, interest on the Junior Subordinated Debentures will continue
to accrue (and the amount of Distributions to which holders of the Preferred
Securities are entitled will accumulate) at the rate of ^% per annum, compounded
quarterly, and holders of Preferred Securities will be required to accrue
interest income for United States federal income tax purposes. See "Description
of Junior Subordinated Debentures -- Option to Extend Interest Payment Period"
and "Certain Federal Income Tax Consequences -- Interest Income and Original
Issue Discount."
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture (each as defined
herein), taken together, fully, irrevocably and unconditionally guaranteed all
the Issuer Trust's obligations under the Preferred Securities as described
below. See "Relationship Among the Preferred Securities, the Junior 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 Issuer Trust, as described herein (the
"Guarantee"). See "Description of Guarantee." If the Company does not make
payments on the Junior Subordinated Debentures held by the Issuer Trust, the
Issuer Trust may have insufficient funds to pay Distributions on the Preferred
Securities. The Guarantee does not cover payment of Distributions when the
Issuer 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 to enforce payment of such Distributions to such
holder. See "Description of Junior Subordinated Debentures -- Enforcement of
Certain Rights by Holders of Preferred Securities." The obligations of the
Company under the Guarantee and the Preferred Securities are subordinate and
2
<PAGE>
junior in right of payment to all Senior Indebtedness (as defined in
"Description of Junior Subordinated Debentures -- Subordination") of the
Company.
The Preferred Securities are subject to mandatory redemption (i) in
whole, but not in part, upon repayment of the Junior Subordinated Debentures at
Stated Maturity or, at the option of the Company, their earlier redemption in
whole upon the occurrence of a Tax Event, an Investment Company Event or a
Capital Treatment Event (each as defined herein) and (ii) in whole or in part at
any time on or after ^, 2002 contemporaneously with the optional redemption by
the Company of the Junior Subordinated Debentures in whole or in part. The
Junior Subordinated Debentures are redeemable prior to maturity at the option of
the Company (i) on or after ^, 2002, in whole at any time or in part from time
to time, or (ii) in whole, but not in part, at any time within 90 days following
the occurrence and continuation of a Tax Event, Investment Company Event or
Capital Treatment Event, in each case at a redemption price set forth herein,
which includes the accrued and unpaid interest on the Junior Subordinated
Debentures so redeemed to the date fixed for redemption. The ability of the
Company to exercise its rights to redeem the Junior Subordinated Debentures or
to cause the redemption of the Preferred Securities prior to the Stated Maturity
may be subject to prior regulatory approval by the Board of Governors of the
Federal Reserve System (the "Federal Reserve"), if then required under
applicable Federal Reserve capital guidelines or policies. See "Description of
Junior Subordinated Debentures -- Redemption" and "Description of Preferred
Securities -- Liquidation Distribution Upon Dissolution."
The holders of the outstanding Common Securities have the right at any
time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust. The ability
of the Company, as holder of the Common Securities, to dissolve the Issuer Trust
may be subject to prior regulatory approval of the Federal Reserve, if then
required under applicable Federal Reserve capital guidelines or policies. See
"Description of Preferred Securities -- Liquidation Distribution Upon
Dissolution."
In the event of the dissolution of the Issuer Trust, after satisfaction
of liabilities to creditors of the Issuer Trust as provided by applicable law,
the holders of the Preferred Securities will be entitled to receive a
Liquidation Amount of $25 per Preferred Security plus accumulated and unpaid
Distributions thereon to the date of payment, subject to certain exceptions,
which may be in the form of a distribution of such amount in Junior Subordinated
Debentures. See "Description of Preferred Securities -- Liquidation Distribution
Upon Dissolution."
The Junior Subordinated Debentures are unsecured and subordinated to all
Senior Indebtedness of the Company. See "Description of Junior Subordinated
Debentures -- Subordination."
Prospective purchasers must carefully consider the information set forth
in "Certain ERISA Considerations."
THE JUNIOR SUBORDINATED DEBENTURES ARE DIRECT AND UNSECURED OBLIGATIONS
OF THE COMPANY, DO NOT EVIDENCE DEPOSITS AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
3
<PAGE>
MAP
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
PREFERRED SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTING SHARES OF THE
PREFERRED SECURITIES AND BIDDING FOR AND PURCHASING SUCH SHARES 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.
4
<PAGE>
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto appearing
elsewhere in this Prospectus. Unless otherwise indicated, all information in
this Prospectus is based on the assumption that the Underwriters (as defined
herein) will not exercise their over-allotment option.
THE COMPANY
The Company, a New Jersey corporation, is a bank holding company
headquartered in Totowa, New Jersey with two banking subsidiaries, Great Falls
Bank ("GFB"), and Bergen Commercial Bank ("BCB", and together with GFB, the
"Bank Subsidiaries"). At March 31, 1997, the Company had total assets of $267.1
million, total deposits of $223.2 million and total shareholders' equity of
$21.8 million. The Bank Subsidiaries' deposits are federally insured by the
Federal Deposit Insurance Corporation ("FDIC") primarily through the Bank
Insurance Fund ("BIF") with a small portion of deposits insured through the
Savings Association Insurance Fund ("SAIF"). The Company's principal business is
to serve as a holding company for the Bank Subsidiaries.
The Company was incorporated in 1984. GFB received its charter from the
New Jersey Department of Banking (the "Department") in 1985 and commenced
operations as a commercial bank in January 1986. During 1995, the Company
acquired all of the outstanding stock of BCB solely in exchange for the
Company's common stock, and acquired Family First Federal Savings Bank of
Clifton, New Jersey ("Family First"), which was merged into GFB. In July 1996,
the Company changed its name from Great Falls Bancorp to its present name.
The Company's operating strategy is to combine quality personal service,
convenient office locations and technology to offer a variety of loan and
deposit products tailored to fit the needs of its customers. The Company and the
Bank Subsidiaries emphasize personalized ^ service and local decision-making in
their banking businesses. Each of the Bank Subsidiaries has its own management
team and sets individual performance targets consistent with overall Company
goals. This structure allows the senior management of each bank subsidiary to
focus their efforts on understanding their customers and meeting the specific
needs of the markets they serve. In addition, it is the Company's strategy to
expand its operations in northern New Jersey through internal growth and
strategic acquisitions.
As of March 31, 1997, the Bank Subsidiaries provided community banking
services through eight branches located in northern New Jersey. The Bank
Subsidiaries offer a wide variety of consumer and commercial lending and deposit
services. The loans offered by the Bank Subsidiaries include short and medium
term loans, loans secured by residential and non-residential real estate
properties, revolving lines of credit, mortgage loans and installment loans. The
Bank Subsidiaries also offer deposit and personal banking services including
checking, regular savings, money market deposits, term certificate accounts and
individual retirement accounts. Through Greater Community Financial, L.L.C., the
Company offers securities brokerage and investment advisory services. The
Company considers its primary market area to be Passaic and Bergen counties in
northern New Jersey^ which comprises a diverse base of business and retail
customers.
The executive office of the Company is located at 55 Union Boulevard,
Totowa, New Jersey 07512 and its telephone number is (201) 942-1111.
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5
<PAGE>
<TABLE>
<CAPTION>
Financial Summary
At or For the
Three Months
Ended
March 31, At or for Year Ended December 31,
--------- ---------------------------------
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
(Dollars in thousands^)
<S> <C> <C> <C> <C> <C> <C>
Net income.................... $ 665 $ 2,337 $ 2,072 $ 1,486 $ 1,301 $ 1,034
Total assets.................. 267,097 256,506 253,045 168,303 150,632 139,883
Loans receivable (net)........ ^ 141,036 134,587 129,107 94,550 81,920 80,604
Shareholders' equity.......... 21,819 21,061 19,595 14,961 14,156 12,927
Return on average assets..... ^ 1.02% 0.93% 0.93% 0.91% 0.90% 0.84%
Return on average equity...... ^ 12.43% 11.69% 11.99% 10.19% 9.66% 8.43%
Net interest margin........... ^ 4.84% 4.95% 5.24% 5.02% 4.70% 5.18%
</TABLE>
GCB CAPITAL TRUST
The Issuer Trust is a statutory business trust formed under
Delaware law pursuant to (i) a trust agreement, dated as of April 29, 1997,
executed by the Company, as Depositor, and Bankers Trust (Delaware), as Delaware
Trustee, and (ii) the filing of a Certificate of Trust with the Delaware
Secretary of State on April 29, 1997. Such initial trust agreement will be
amended and restated in its entirety (as so amended and restated, the "Trust
Agreement"), as of the date the Preferred Securities are initially issued. Two
individuals will be selected by the holder of the Common Securities to act as
administrators with respect to the Issuer Trust (the "Administrators"). The
Company, while holder of the Common Securities, intends to select two
individuals who are employees or officers of or affiliated with the Company to
serve as Administrators. The Issuer Trust's business and affairs are conducted
by its Property Trustee, Delaware Trustee, and two Administrators. The Issuer
Trust exists for the exclusive purposes of (i) issuing and selling the Preferred
Securities and Common Securities, (ii) using the proceeds from the sale of
Preferred Securities and Common Securities to acquire the Junior Subordinated
Debentures issued by the Company and (iii) engaging in only those other
activities necessary, advisable or incidental thereto (such as registering the
transfer of the Preferred Securities). Accordingly, the Junior Subordinated
Debentures will be the sole assets of the Issuer Trust and payments under the
Junior Subordinated Debentures will be the sole revenue of the Issuer Trust. All
of the Common Securities will be owned by the Company. The Common Securities
will rank pari passu, and payments will be made thereon pro rata, with the
Preferred Securities, except that upon the occurrence and during the continuance
of an Event of Default under the Trust Agreement resulting from an Event of
Default under the Indenture, 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. The Company will acquire Common Securities representing an
aggregate liquidation amount equal to 3% of the total capital of the Issuer
Trust. The Issuer Trust has a term of 31 years, but may terminate earlier as
provided in the Trust Agreement. The principal executive office of the Issuer
Trust is 55 Union Boulevard, Totowa, New Jersey 07512, and its telephone number
is (201) 942-1111.
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6
<PAGE>
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THE OFFERING
<TABLE>
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<S> <C>
Securities Offered.................... The $20,000,000 aggregate liquidation amount of Preferred
Securities offered hereby represents preferred undivided
beneficial interests in the Issuer Trust's assets, which will
consist solely of the Junior Subordinated Debentures. The Trust
has granted the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an
additional $3,000,000 aggregate liquidation amount of Preferred
Securities at the offering price, solely to cover over-allotments,
if any.
Offering Price........................ ^ $25 per Preferred Security (Liquidation Amount $25), plus
accumulated Distributions, if any, from ^, 1997.
Distributions......................... The distributions payable on each Preferred Security will be
fixed at a rate per annum of ^% of the stated liquidation
amount per Preferred Security, will be cumulative, will accrue
from ^, 1997, the date of 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 ^, 1997. See "Description of Preferred
Securities -- Distributions."
Junior Subordinated Debentures........ The Issuer Trust will invest the proceeds from the issuance of
the Preferred Securities and Common Securities in an equivalent
amount of ^% Junior Subordinated Debentures of the
Company. The Junior Subordinated Debentures will mature on
^, 2027. The Junior Subordinated Debentures will rank
subordinate and junior in right of payment to all Senior
Indebtedness of the Company. In addition, the Company's
obligations under the Junior Subordinated Debentures will be
structurally subordinated to all existing and future
liabilities and obligations of its subsidiaries.
Guarantee............................. Under the terms of the 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 Issuer Trust described herein.
The Company and the Issuer Trust believe that the obligations of
the Company under the Guarantee, the Trust Agreement, the
Junior Subordinated Debentures and the Junior Subordinated
Indenture taken together, fully, irrevocably and unconditionally
guarantee all of the Issuer Trust's obligations relating to 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 Indebtedness. See
"Description of Guarantee."
</TABLE>
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7
<PAGE>
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<TABLE>
<CAPTION>
<S> <C>
Right to Defer Interest............... The Company has the right, at any time, to defer payments of
interest on the Junior Subordinated Debentures for a period not
exceeding 20 consecutive quarters; provided that no Extension
Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. As a consequence of the Company's
extension of the interest payment period, quarterly Distributions
on the Preferred Securities will be deferred (though such
Distribution would continue to accrue with interest thereon
compounded quarterly, since interest will continue to accrue and
compound on the Junior 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 Junior 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 Junior Subordinated
Debentures -- Option to Extend Interest Payment Period."
Should an Extension Period occur, Preferred Security holders
will continue to include interest income (and de minimis original
issue discount, if any) for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences --
Interest Income and Original Issue Discount.
Redemption............................ The Preferred Securities are subject to mandatory redemption (i)
in whole, but not in part, at the Stated Maturity upon repayment
of the Junior Subordinated Debentures, (ii) in whole, but not in
part, contemporaneously with the optional redemption at any
time by the Company of the Junior Subordinated Debentures
upon the occurrence and continuation of a Tax Event,
Investment Company Event or Capital Treatment Event and (iii)
in whole or in part at any time on or after ^, 2002,
contemporaneously with the optional redemption by the
Company of the Junior Subordinated Debentures in whole or in
part, in each case at the applicable Redemption Price. See
"Description of Preferred Securities -- Redemption."
Liquidation of the Issuer Trust....... The Company, as holder of the Common Securities, has the
right at any time to dissolve the Issuer Trust and cause the
Junior Subordinated Debentures to be distributed to holders of
Preferred Securities in liquidation of the Issuer 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 Preferred Securities -- Liquidation Distribution Upon
Dissolution."
</TABLE>
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8
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Voting Rights......................... Generally, the holders of the Preferred Securities will not have
any voting rights. See "Description of Preferred Securities --
Voting Rights; Amendment of Trust Agreement" and "Risk
Factors -- Limited Voting Rights."
Use of Proceeds....................... The proceeds from the sale of the Preferred Securities offered
hereby will be used by the Issuer Trust to purchase the Junior
Subordinated Debentures issued by the Company. The proceeds
received by the Company from the sale of the Junior
Subordinated Debentures will be used for general corporate
purposes which may include branch acquisitions and/or
acquisitions of other financial institutions. In addition, a portion
of the proceeds may be contributed through investments in or
advances to the Bank Subsidiaries. The Trust Securities will
qualify as Tier 1 or core capital of the Company, subject to the
25% Capital Limitation (as defined herein), under the risk-based
capital guidelines of the Federal Reserve. The portion of the
Trust Securities that exceeds the 25% Capital Limitation will
qualify as Tier 2 or supplementary capital of the Company. See
"Use of Proceeds."
ERISA Considerations.................. Prospective purchasers should consider the information set forth
under "Certain ERISA Considerations."
Nasdaq National Market Symbol......... Application has been made to have the Preferred Securities
approved for quotation on the Nasdaq National Market under the
symbol "GFLSP".
RISK FACTORS
Prospective investors should carefully consider the matters set forth
under "Risk Factors," beginning on page 11.
</TABLE>
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9
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following summary information regarding the Company should be read in
conjunction with the consolidated financial statements of the Company and notes
beginning on page F-1. Consolidated historical financial and other data
regarding the Company at or for the three months ended March 31, 1997 and 1996,
have been prepared by the Company without audit and may not be indicative of
results on an annualized basis or any other period. In the opinion of
management, all adjustments (consisting only of normal recurring accruals) that
are necessary for a fair presentation for such periods or dates have been made.
<TABLE>
<CAPTION>
At or For the
Three Months
Ended March 31, At or for Year Ended December 31,
--------------- ----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(Dollars in thousands, except per share amounts ^)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Results of Operations
Interest income ............................. $ 4,764 $ 4,523 $ 18,693 $ 17,433 $ 11,402 $ 9,335 $^ 9,254
Net interest income ......................... 2,958 2,754 11,539 10,883 7,768 6,333 5,941
Provision for possible loan losses .......... 115 90 440 414 172 478 952
Net interest income after provision
for loan losses ........................... 2,843 2,664 11,099 10,469 7,596 5,855 4,989
Other income ................................ 449 746 1,929 2,177 855 1,338 1,023
Other expenses .............................. 2,323 2,650 9,463 9,400 6,125 5,088 4,437
Net income .................................. 665 482 2,337 2,072 1,486 1,301 1,034
Per Share Data
Net income .................................. 0.28 0.23 0.97 1.04 0.89 0.79 0.63
Book value .................................. ^ 11.27 11.51 11.13 ^ 10.32 9.33 8.90 9.02
Selected Balance Sheet Data
Total assets ................................ 267,097 241,190 256,506 253,045 168,303 150,632 139,883
Investment securities ....................... 94,891 87,331 89,679 83,986 58,961 43,468 26,054
Loans receivable (net) ...................... ^141,036 125,639 134,587 129,107 94,550 81,920 80,604
Total deposits .............................. 223,229 210,060 223,242 222,766 144,289 129,852 125,141
Borrowings and securities sold under
agreements to repurchase .................. 13,623 3,655 ^ 4,159 ^ 2,756 ^ 2,700 ^ 750 703
^ Redeemable subordinated debentures ........ 4,891 ^ 4,979 4,988 4,976 4,963 4,950 --
Shareholders' equity ........................ ^ 21,819 19,684 21,061 19,595 14,961 14,156 12,927
Performance Ratios
Return on average assets .................... 1.02% 0.81% 0.93% 0.93% 0.91% 0.90% 0.84%
Return on average equity .................... 12.43% 13.20% 11.69% 11.99% 10.19% 9.66% 8.43%
Net interest margin ......................... ^ 4.84% 5.09% 4.95% 5.24% 5.02% 4.70% 5.18%
Asset Quality Ratios
Non-performing loans to total gross loans.... 1.64% 2.00% ^ 1.28% 1.47% 2.09% 3.01% 2.36%
Non-performing assets to total loans
and other real estate owned ................ 3.45% 4.69% ^ 3.21% 3.84% 3.29% 4.66% 6.58%
Net charge-offs to average total gross loans. ^--% 0.05% 0.16% 0.79% 0.13% 0.85% 0.14%
Total allowance for loan losses to
total non-performing loans ................ ^112.24% 92.15% ^144.40% 120.27% 90.07% 70.25% 102.56%
Capital Ratios
Equity to assets ............................ ^ 8.17% 8.16% 8.21% 7.74% 8.89% 9.40% 9.24%
Tier 1 risk-based capital ratio ............. 12.51% 13.27% 7.97% 7.27% 9.06% 8.33% 15.70%
Total risk-based capital ratio .............. ^16.71% 18.13% 16.89% 16.77% 19.30% 26.44% 16.96%
Leverage ratio .............................. ^ 7.93% 7.72% 8.12% 8.28% 8.34% 8.69% 9.84%
Ratios of Earnings to Fixed Charges(1)
^ Excluding interest on deposits ............ ^ 4.34x 4.67x 4.77x 5.05x 5.13x 20.49x 12.25x
Including interest on deposits .............. 1.56x 1.42x 1.50x 1.48x 1.63x 1.68x 1.47x
</TABLE>
- ---------------------
(1) The consolidated ratio of earnings to fixed charges has been computed by
dividing income before income taxes, cumulative effect of changes in
accounting principles and fixed charges by fixed charges. Fixed charges
represent all interest expense (ratios are presented both excluding and
including interest on deposits). There were no amortization of notes and
debentures expense nor any portion of net rental expense which was deemed to
be equivalent to interest on debt. Interest expense (other than on deposits)
includes interest on notes, federal funds purchased and securities sold
under agreements to repurchase, and other funds borrowed.
- --------------------------------------------------------------------------------
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RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
Preferred Securities offered by this Prospectus. Certain statements in this
Prospectus and documents incorporated herein by reference are forward-looking
and are identified by the use of forward-looking words or phrases such as
"intended," "will be positioned," "expects," is or are "expected,"
"anticipates," and "anticipated." These forward-looking statements are based on
the Company's current expectations. To the extent any of the information
contained in this Prospectus constitutes a "forward-looking statement" as
defined in Section 27A(i)(1) of the Securities Act, the risk factors set forth
below are cautionary statements identifying important factors that could cause
actual results to differ materially from those in the forward-looking statement.
RISK FACTORS RELATING TO THE OFFERING
Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures
The obligations of the Company under the Guarantee issued by the Company
for the benefit of the holders of Preferred Securities and under the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
Senior Indebtedness. At March 31, 1997, the Senior Indebtedness of the Company
aggregated approximately $4.9 million. None of the Junior Subordinated
Indenture, the Guarantee or the Trust Agreement places any limitation on the
amount of secured or unsecured debt, including Senior Indebtedness, that may be
incurred by the Company. See "Description of Guarantee --Status of the
Guarantee" and "Description of Junior Subordinated Debentures -- Subordination."
The ability of the Issuer Trust to pay amounts due on the Preferred
Securities is solely dependent upon the Company's making payments on the Junior
Subordinated Debentures as and when required.
Option to Extend Interest Payment Period; Tax Consequences
So long as no Event of Default (as defined in the Junior Subordinated
Indenture) has occurred and is continuing with respect to the Junior
Subordinated Debentures (a "Debenture Event of Default"), the Company has the
right under the Junior Subordinated Indenture to defer the payment of interest
on the Junior Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarterly periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. See "Description of Junior
Subordinated Debentures -- Debenture Events of Default." As a consequence of any
such deferral, quarterly Distributions on the Preferred Securities by the Issuer
Trust will be deferred during any such Extension Period. Distributions to which
holders of the Preferred Securities are entitled will accumulate additional
Distributions thereon during any Extension Period at the rate of ^% per annum,
compounded quarterly from the relevant payment date for such Distributions,
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period. Additional Distributions payable
for each full Distribution period will be computed by dividing the rate per
annum by four. The term "Distribution" as used herein shall include any such
additional Distributions. During any such Extension Period, the Company may not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock or (ii) make any payment of principal of or interest or premium,
if any, on or repay, repurchase or redeem any debt securities of the Company
that rank pari passu in all respects with or junior in interest to the Junior
Subordinated Debentures (other than (a) repurchases, redemptions
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<PAGE>
or other acquisitions of shares of capital stock of the Company in connection
with any employment contract, benefit plan or other similar arrangement with or
for the benefit of any one or more employees, officers, directors or
consultants, in connection with a dividend reinvestment or stockholder stock
purchase plan or in connection with the issuance of capital stock of the Company
(or securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the applicable
Extension Period, (b) as a result of an exchange or conversion of any class or
series of the Company's capital stock (or any capital stock of a subsidiary of
the Company) for any class or series of the Company's capital stock or of any
class or series of the Company's indebtedness for any class or series of the
Company's capital stock, (c) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholder's rights plan, or
the issuance of rights, stock or other property under any stockholder's rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Company may further defer the payment of interest,
provided that no Extension Period may exceed 20 consecutive quarterly periods or
extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon
the termination of any Extension Period and the payment of all 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 conditions. No
interest shall be due and payable during an Extension Period, except at the end
thereof. The Company must give the Issuer Trustees notice of its election to
begin an Extension Period at least one Business Day prior to the earlier of (i)
the date the Distributions on the Preferred Securities would have been payable
but for the election to begin such Extension Period and (ii) the date the
Property Trustee is required to give notice to holders of the Preferred
Securities of the record date or the date such Distributions are payable, but in
any event not less than one Business Day prior to such record date. The Property
Trustee will give notice of the Company's election to begin a new Extension
Period to the holders of the Preferred Securities. 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 Preferred Securities
- --Distributions" and "Description of Junior Subordinated Debentures -- Option to
Extend Interest Payment Period."
Should an Extension Period occur, a holder of Preferred Securities will
continue to accrue income (in the form of original issue discount ("OID")) for
United States federal income tax purposes in respect of its pro rata share of
the Junior Subordinated Debentures held by the Issuer Trust, which will include
a holder's pro rata share of both the stated interest and de minimis OID, if
any, on the Junior Subordinated Debentures. As a result, a holder of Preferred
Securities will include such OID 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 Issuer Trust if the holder disposes of the
Preferred Securities prior to the record date for the payment of Distributions.
See "Certain Federal Income Tax Consequences -- Interest Income and Original
Issue Discount" and "-- Sales of Preferred Securities."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Preferred Securities is likely to
be affected. A holder that disposes of his, her or its Preferred Securities
during an Extension Period, therefore, might not receive the same return on his,
her or its investment as a holder that continues to
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<PAGE>
hold its Preferred Securities. In addition, as a result of the existence of the
Company's right to defer interest payments, the market price of the Preferred
Securities (which represent preferred undivided beneficial interests in the
assets of the Issuer Trust) may be more volatile than the market prices of other
securities on which original issue discount or interest accrues that are not
subject to such deferrals.
Tax Event, Investment Company Event or Capital Treatment Event Redemption
Upon the occurrence and during the continuation of a Tax Event,
Investment Company Event or Capital Treatment Event, the Company has the right
to redeem the Junior Subordinated Debentures in whole, but not in part, at any
time within 90 days following the occurrence of such Tax Event, Investment
Company Event or Capital Treatment Event and thereby cause a mandatory
redemption of the Preferred Securities. Any such redemption shall be at a price
equal to the liquidation amount of the Preferred Securities, together with
accumulated Distributions to but excluding the date fixed for redemption. The
ability of the Company to exercise its rights to redeem the Junior Subordinated
Debentures prior to the stated maturity may be subject to prior regulatory
approval by the Federal Reserve, if then required under applicable Federal
Reserve capital guidelines or policies. See "Description of Junior Subordinated
Debentures -- Redemption" and "Description of Preferred Securities --
Liquidation Distribution Upon Dissolution."
A "Tax Event" means the receipt by the Issuer Trust of an opinion of
counsel to the Company experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Preferred Securities, there is more than an insubstantial
risk that (i) the Issuer Trust is, or will be within 90 days of the delivery of
such opinion, subject to United States federal income tax with respect to income
received or accrued on the Junior Subordinated Debentures, (ii) interest payable
by the Company on the Junior Subordinated Debentures is not, or within 90 days
of the delivery 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 Issuer
Trust is, or will be within 90 days of the delivery of the opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
See "-- Possible Tax Law Changes Affecting the Preferred Securities" and
"Certain Federal Income Tax Consequences -- Possible Tax Law Changes" 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 ^, 2002.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), which change or prospective change becomes
effective or would become effective, as the case may be, on or after the date of
the issuance of the Preferred Securities.
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<PAGE>
A "Capital Treatment Event" means the reasonable determination by the
Company that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the
Preferred Securities, there is more than an insubstantial risk that the Company
will not be entitled to treat an amount equal to the Liquidation Amount of the
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof) except
as otherwise restricted under the 25% Capital Limitation (as defined herein),
for purposes of the risk-based capital adequacy guidelines of the Federal
Reserve, as then in effect and applicable to the Company.
Exchange of Preferred Securities for Junior Subordinated Debentures
The holders of all the outstanding Common Securities have the right at
any time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust. The ability
of the Company, as holder of the Common Securities, to dissolve the Issuer Trust
may be subject to prior regulatory approval of the Federal Reserve, if then
required under applicable Federal Reserve capital guidelines or policies. See
"Description of Preferred Securities -- Liquidation Distribution Upon
Dissolution."
Under current United States federal income tax law and interpretations
and assuming, as expected, that the Issuer Trust will not be taxable as a
corporation, a distribution of the Junior Subordinated Debentures upon a
liquidation of the Issuer Trust will not be a taxable event to holders of the
Preferred Securities. However, if a Tax Event were to occur that would cause the
Issuer Trust to be subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures, a distribution
of the Junior Subordinated Debentures by the Issuer Trust would be a taxable
event to the Issuer Trust and the holders of the Preferred Securities. See
"Certain Federal Income Tax Consequences -- Distribution of Junior Subordinated
Debentures to Securityholders."
Rights Under the Guarantee
Bankers Trust Company will act as the trustee under the Guarantee and
will hold the Guarantee for the benefit of the holders of the Preferred
Securities. Bankers Trust Company will also act as Debenture Trustee for the
Junior Subordinated Debentures and as Property Trustee under the Trust
Agreement. Bankers Trust (Delaware) will act as Delaware Trustee under the Trust
Agreement. The Guarantee guarantees to the holders of the Preferred Securities
the following payments, to the extent not paid by or on behalf of the Issuer
Trust: (i) any accumulated and unpaid Distributions required to be paid on the
Preferred Securities, to the extent that the Issuer Trust has funds on hand
available therefor at the payment date, (ii) the Redemption Price with respect
to any Preferred Securities called for redemption, to the extent that the Issuer
Trust has funds on hand available therefor at such time, and (iii) upon a
voluntary or involuntary dissolution, winding up or liquidation of the Issuer
Trust (unless the Junior Subordinated Debentures are distributed to holders of
the Preferred Securities), the lesser of (a) the aggregate of the Liquidation
Amount and all accumulated and unpaid Distributions to the date of payment, to
the extent that the Issuer Trust has funds on hand available therefor at such
time, and (b) the amount of assets of the Issuer Trust remaining available for
distribution to holders of the Preferred Securities on liquidation of the Issuer
Trust. The Guarantee is subordinated as described under "-- Ranking of
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<PAGE>
Subordinated Obligations Under the Guarantee and the Junior Subordinated
Debentures" and "Description of Guarantee -- Status of the Guarantee." The
holders of not less than a majority in aggregate Liquidation Amount of the
outstanding Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust 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 Issuer Trust, the Guarantee Trustee or any other
person or entity.
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Issuer Trust may lack funds for
the payment of Distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of the Preferred Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, if a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the Junior 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 any amounts payable in respect of such Junior
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 Junior Subordinated 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 Junior
Subordinated Debentures or assert directly any other rights in respect of the
Junior Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Preferred Securities,"
"-- Debenture Events of Default" and "Description of Guarantee." The Trust
Agreement provides that each holder of Preferred Securities by acceptance
thereof agrees to the provisions of the Guarantee and the Junior Subordinated
Indenture.
Limited Voting Rights
Holders of Preferred Securities will have limited voting rights relating
generally to the modification of the Preferred Securities and the Guarantee and
the exercise of the Issuer Trust's rights as holder of Junior Subordinated
Debentures. Holders of Preferred Securities will not be entitled to appoint,
remove or replace the Property Trustee or the Delaware Trustee except upon the
occurrence of certain events specified in the Trust Agreement. The Property
Trustee and the holders of all the Common Securities may, subject to certain
conditions, amend the Trust Agreement without the consent of holders of
Preferred Securities to cure any ambiguity or make other provisions not
inconsistent with the Trust Agreement or to ensure that the Issuer Trust (i)
will not be taxable as a corporation for United States federal income tax
purposes, or (ii) will not be required to register as an "investment company"
under the Investment Company Act. See "Description of Preferred Securities --
Voting Rights; Amendment of Trust Agreement" and "-- Removal of Issuer Trustees;
Appointment of Successors."
Absence of Market
The Preferred Securities are a new issue of securities with no
established trading market. Application has been made to list the Preferred
Securities in the Nasdaq National Market, but one of the requirements for
listing and continued listing is the presence of two market makers for the
Preferred
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<PAGE>
Securities. The Company and the Issuer Trust have been advised by Advest, Inc.
that it intends to make a market in the Preferred Securities. However, Advest,
Inc. is not obligated to do so and such market making may be interrupted or
discontinued at any time without notice at the sole discretion of Advest, Inc.
Moreover, there can be no assurance of a second market maker for the Preferred
Securities. Accordingly, no assurance can be given as to the development or
liquidity of any market for the Preferred Securities.
Market Prices
There can be no assurance as to the market prices for Preferred
Securities, or the market prices for Junior Subordinated Debentures that may be
distributed in exchange for Preferred Securities if a liquidation of the Issuer
Trust occurs. Accordingly, the Preferred Securities or the Junior Subordinated
Debentures that a holder of Preferred Securities may receive on liquidation of
the Issuer Trust 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 Junior Subordinated Debentures on termination of the
Issuer Trust, prospective purchasers of Preferred Securities are also making an
investment decision with regard to the Junior Subordinated Debentures and should
carefully review all the information regarding the Junior Subordinated
Debentures contained herein. See "Description of Junior Subordinated
Debentures."
Possible Tax Law Changes Affecting the Preferred Securities
On February 6, 1997, President Clinton released his budget proposals for
fiscal year 1998. One of the revenue provisions of those proposals would
generally deny interest deductions for interest on an instrument issued by a
corporation that has a maximum term of more than 15 years and that is not shown
as indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. If enacted as
proposed by the President, this provision would be effective for instruments
issued on or after the date of first action by a Congressional committee with
respect to the proposal. It is not clear from the President's proposals as to
what constitutes Congressional "committee action" with respect to this proposal.
If the provision were to apply to the Junior Subordinated Debentures, the
Company would be unable to deduct interest on the Junior Subordinated
Debentures. There can be no assurance, however, that future legislative
proposals or final legislation will not affect the ability of the Company to
deduct interest on the Junior Subordinated Debentures. Such a change could give
rise to a Tax Event, which may permit the Company to cause a redemption of the
Preferred Securities before ^, 2002. See "Description of Junior Subordinated
Debentures -- Redemption" and "Description of Preferred Securities --
Redemption." Seeunior also "Certain Federal Income Tax Consequences -- Possible
Tax Law Changes." Under current law, the Company will be able to deduct interest
on the Junior Subordinated Debentures.
RISK FACTORS RELATING TO THE COMPANY
Status of the Company as a Bank Holding Company
The Company is a legal entity separate and distinct from the Bank
Subsidiaries, although the principal source of the Company's cash revenues is
dividends from the Bank Subsidiaries. The ability of the Company to pay the
interest on, and principal of, the Junior Subordinated Debentures will be
significantly dependent on the ability of the Bank Subsidiaries to pay dividends
to the Company and the
16
<PAGE>
ability of the Company to realize a return on its investments in amounts
sufficient to service the Company's debt obligations. Payment of dividends by
the Bank Subsidiaries is restricted by various legal and regulatory limitations.
No dividend may be paid, unless, following the payment of such dividend, the
capital stock of the bank will be unimpaired, and the bank will either have a
surplus of not less than 50% of its capital stock, or the payment of the
dividend will not reduce the surplus of the bank.
The right of the Company to participate in the assets of any subsidiary
upon the latter's liquidation, reorganization or otherwise (and thus the ability
of the holders of Preferred Securities to benefit indirectly from any such
distribution) will be subject to the claims of the subsidiaries' creditors,
which will take priority except to the extent that the Company may itself be a
creditor with a recognized claim. As of March 31, 1997, the Company's
subsidiaries had indebtedness and other liabilities of approximately $240.4
million.
The Bank Subsidiaries are also subject to restrictions under federal law
which limit the transfer of funds by them to the Company, whether in the form of
loans, extensions of credit, investments, asset purchases or otherwise. Such
transfers by either Bank Subsidiary to the Company or any nonbank subsidiary of
the Company are limited in amount to 10% of the bank's capital and surplus and,
with respect to the Company and all its nonbank subsidiaries, to an aggregate of
20% of the bank's capital and surplus. Furthermore, such loans and extensions of
credit are required to be secured in specified amounts. Federal law also
prohibits banks from purchasing "low-quality" assets from affiliates.
Competition
The banking business is highly competitive. In its primary market area,
the Bank Subsidiaries compete with other commercial banks, savings and loan
associations, credit unions, finance companies, mutual funds, insurance
companies, and brokerage and investment banking firms operating locally and
elsewhere. The Bank Subsidiaries' primary competitors have substantially greater
resources and lending limits than the Bank Subsidiaries and may offer certain
services, such as trust services, that the Bank Subsidiaries do not provide at
this time. The profitability of the Company depends upon the Bank Subsidiaries'
ability to compete in their primary market area. See "Business of the Company --
Competition."
Loan Portfolio Considerations
During the past three years, the Company has experienced significant
growth in its loan portfolio. Loans increased to ^ $144.0 million at March 31,
1997, from $96.7 million at December 31, 1994. Commercial real estate loans
increased by 48% or $20.2 million at March 31, 1997, as compared to December 31,
1994, and comprised 43% of total loans as of March 31, 1997. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Loan
Portfolio." The nature of commercial real estate loans is such that they may
present more credit risk to the Company than other types of loans such as home
equity or residential real estate loans. Further, these loans are concentrated
in Passaic and Bergen Counties in northern New Jersey. As a result, a decline in
the general economic conditions of northern New Jersey could have a material
adverse effect on the Company's financial condition and results of operations
taken as a whole. See "Business of the Company -- Lending Activities --
Commercial Real Estate Loans."
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<PAGE>
Growth and Acquisition Strategies
The Company has pursued and intends to continue to pursue an internal
growth strategy, the success of which will depend primarily on generating an
increasing level of loans and deposits at acceptable risk levels and terms
without significant increases in noninterest expenses. There can be no assurance
that the Company will be successful in implementing its internal growth
strategy. In addition, the Company has grown and may seek to grow by acquiring
other financial institutions. Any acquisitions will be subject to regulatory
approval, and there can be no assurance that the Company will obtain such
approvals. Although the Company does not have any signed contracts, letters of
intent or agreements in principle, the Company routinely reviews acquisition
opportunities. The Company may not be successful in identifying further
acquisition candidates, integrating acquired institutions or preventing deposit
erosion at acquired institutions. Competition for acquisitions in the Company's
market area is highly competitive, and the Company may not be able to acquire
other institutions on attractive terms. Furthermore, the success of the growth
strategy of the Company will depend on maintaining sufficient regulatory capital
levels and on economic conditions.
Market Value of Investments
A significant portion of the Company's securities investment portfolio
has been designated as available-for-sale pursuant to Statement of Financial
Accounting Standards No. 115 ("SFAS 115") relating to accounting for
investments. SFAS 115 requires that unrealized gains and losses in the estimated
value of the available-for-sale portfolio be "marked to market" and reflected as
a separate item in shareholders' equity (net of tax). At March 31, 1997, the
Company maintained approximately 21.2% of its assets in securities
available-for-sale. Shareholders' equity will continue to reflect the unrealized
gains and losses (net of tax) of these investments. There can be no assurance
that the market value of the Company's investment portfolio will not decline,
causing a corresponding decline in shareholders' equity.
Management believes that several factors will affect the market values
of the Company's investment portfolio. These include, but are not limited to,
changes in interest rates or expectations of changes, the degree of volatility
in the securities markets, inflation rates or expectations of inflation and the
slope of the interest rate yield curve. (The yield curve refers to the
differences between longer-term and shorter-term interest rates. A positively
sloped yield curve means shorter-term rates are lower than longer-term rates.)
Also, the passage of time will affect the market values of the securities, in
that the closer they are to maturing, the closer the market price should be to
par value. In addition to the foregoing, there are other factors that impact
specific categories of the portfolio differently.
Allowance for Loan Losses
The inability of borrowers to repay loans can erode the earnings and
capital of banks. Like all banks, the Company maintains an allowance for loan
losses to provide for loan defaults and nonperformance. The allowance is based
on prior experience with loan losses, as well as an evaluation of the risks in
the current portfolio, and is maintained at a level considered adequate by
management to absorb anticipated losses. The amount of future losses is
susceptible to changes in economic, operating and other conditions, including
changes in interest rates, that may be beyond management's control, and such
losses may exceed current estimates. At March 31, 1997, the Company had
nonperforming loans of $2.4 million and an allowance for loan losses of $2.7
million or 1.8% of total loans and 112% of nonperforming loans. There can be no
assurance that the Company's allowance for loan losses will be adequate to cover
actual losses. Future provisions for loan losses could materially and adversely
affect
18
<PAGE>
results of operations of the Company. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
Economic Conditions and Impact of Interest Rates
Results of operations for financial institutions, including the Company,
may be materially and adversely affected by changes in prevailing economic
conditions, including declines in real estate values, rapid changes in interest
rates and the monetary and fiscal policies of the federal government. The
profitability of the Company is in part a function of the spread between the
interest rates earned on assets and the interest rates paid on deposits and
other interest-bearing liabilities (net interest income), including advances
from the Federal Home Loan Bank of New York ("FHLB"). Interest rate risk arises
from mismatches (i.e., the interest sensitivity gap) between the dollar amount
of repricing or maturing assets and liabilities, and is measured in terms of the
ratio of the interest rate sensitivity gap to total assets. More assets
repricing or maturing than liabilities over a given time period is considered
asset-sensitive and is reflected as a positive gap, and more liabilities
repricing or maturing than assets over a given time period is considered
liability-sensitive and is reflected as negative gap. An asset-sensitive
position (i.e., a positive gap) will generally enhance earnings in a rising
interest rate environment and will negatively impact earnings in a falling
interest rate environment, while a liability-sensitive position (i.e., a
negative gap) will generally enhance earnings in a falling interest rate
environment and negatively impact earnings in a rising interest rate
environment. Fluctuations in interest rates are not predictable or controllable.
The Company has attempted to structure its asset and liability management
strategies to mitigate the impact on net interest income of changes in market
interest rates. However, there can be no assurance that the Company will be able
to manage interest rate risk so as to avoid significant adverse effects in net
interest income. At March 31, 1997, the Company had a one year cumulative
negative gap of 2.12%. This negative one year gap position may, as noted above,
have a negative impact on earnings in a rising interest rate environment. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition -- Interest Rate Sensitivity."
Supervision and Regulation
Bank holding companies and banks operate in a highly regulated
environment and are subject to the supervision and examination by several
federal and state regulatory agencies. The Company is subject to the Bank
Holding Company Act of 1956, as amended ("BHCA") and to regulation and
supervision by the Federal Reserve, and the Bank Subsidiaries are subject to
regulation and supervision by the Department and the FDIC. The Bank Subsidiaries
are also members of the FHLB and are subject to regulation thereby. Federal and
state banking laws and regulations govern matters ranging from the regulation of
certain debt obligations, changes in the control of bank holding companies, and
the maintenance of adequate capital to the general business operations and
financial condition of the Bank Subsidiaries, including permissible types,
amounts and terms of loans and investments, the amount of reserves against
deposits, restrictions on dividends, establishment of branch offices, and the
maximum rate of interest that may be charged by law. The Federal Reserve, the
FDIC, and the Department also possess cease and desist powers over bank holding
companies and banks, to prevent or remedy unsafe or unsound practices or
violations of law. These and other restrictions limit the manner in which the
Company and the Bank Subsidiaries may conduct their business and obtain
financing. Furthermore, the commercial banking business is affected not only by
general economic conditions, but also by the monetary policies of the Federal
Reserve. These monetary policies have had and are expected to continue to have
significant effects on the operating results of commercial banks. Changes in
monetary or legislative policies may affect the ability of the Bank Subsidiaries
to attract deposits and make loans. See "Supervision and Regulation."
19
<PAGE>
GCB CAPITAL TRUST
The Issuer Trust is a statutory business trust created under Delaware
law pursuant to the filing of a Certificate of Trust with the Delaware Secretary
of State on April 29, 1997. The Issuer Trust will be governed by the Trust
Agreement among the Company, as Depositor, Bankers Trust (Delaware), as Delaware
Trustee, and Bankers Trust Company, as Property Trustee (together with the
Delaware Trustee, the "Issuer Trustees"). Two individuals will be selected by
the holder of the Common Securities to act as administrators with respect to the
Issuer Trust (the "Administrators"). The Company, while holder of the Common
Securities, intends to select two individuals who are employees or officers of
or affiliated with the Company to serve as the Administrators. See "Description
of Preferred Securities --Miscellaneous." The Issuer Trust exists for the
exclusive purposes of (i) issuing and selling the Trust Securities, (ii) using
the proceeds from the sale of the Trust Securities to acquire the Junior
Subordinated Debentures and (iii) engaging in only those other activities
necessary, convenient or incidental thereto (such as registering the transfer of
the Trust Securities). Accordingly, the Junior Subordinated Debentures will be
the sole assets of the Issuer Trust, and payments under the Junior Subordinated
Debentures will be the sole source of revenue of the Issuer Trust.
All the Common Securities will initially be owned by the Company. 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 continuation of a Debenture Event of Default arising as a result of any
failure by the Company to pay any amounts in respect of the Junior Subordinated
Debentures when due, the rights of the 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 Preferred Securities -- Subordination of Common
Securities." The Company will acquire Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of the Issuer Trust. The
Issuer Trust has a term of 31 years, but may terminate earlier as provided in
the Trust Agreement. The address of the Delaware Trustee is Bankers Trust
(Delaware), 1001 Jefferson Street, Wilmington, Delaware 19801, telephone number
(302) 576-3301. The address of the Property Trustee, the Guarantee Trustee and
the Debenture Trustee is Bankers Trust Company, Four Albany Street, 4th Floor,
New York, New York 10006, telephone number (212) 250-2500.
USE OF PROCEEDS
All the proceeds to the Issuer Trust from the sale of the Preferred
Securities will be invested by the Issuer Trust in the Junior Subordinated
Debentures. The proceeds from the sale of the Preferred Securities are expected
to qualify as Tier 1 or core capital with respect to the Company under the risk-
based capital guidelines established by the Federal Reserve, however capital
received from the proceeds of the sale of the Preferred Securities cannot
constitute more than 25% of the total Tier 1 capital of the Company (the "25%
Capital Limitation"). Amounts in excess of the 25% Capital Limitation will
constitute Tier 2, or supplementary capital, of the Company. The net proceeds to
be received by the Company from the sale of the Junior Subordinated Debentures
will be used for general corporate purposes which may include branch
acquisitions and/or acquisitions of other financial institutions. In addition, a
portion of the proceeds may be used to make contributions through investments in
or advances to the Bank Subsidiaries. Pending any such use, the net proceeds may
be invested in short-to-medium-term obligations. The precise amounts and timing
of the application of proceeds will depend upon the funding requirements of the
Company and its subsidiaries and the availability of other funds.
20
<PAGE>
CAPITALIZATION
The following table sets forth (i) the consolidated capitalization of
the Company at March 31, 1997, (ii) the consolidated capitalization of the
Company giving effect to the issuance of the Preferred Securities hereby offered
by GCB Capital Trust and application by the Company of the net proceeds from the
corresponding sale of the Junior Subordinated Debentures to GCB Capital Trust as
if the sale of the Preferred Securities had been consummated on March 31, 1997,
and assuming the Underwriters' over-allotment was not exercised, and (iii) the
actual and pro forma capital ratios of the Company.
<TABLE>
<CAPTION>
(Unaudited)
As Adjusted
For the Sale of
Actual Preferred Securities
------ --------------------
(Dollars in Thousands)
<S> <C> <C>
Redeemable Subordinated Debentures (1)........... $ 4,891 $ 4,891
------ -------
Guaranteed preferred beneficial interests in the
Company's subordinated debt (2).................... -- 20,000
SHAREHOLDERS' EQUITY:
Preferred stock no par value, 1,000,000 shares
authorized, none issued............................ -- --
Common stock $1 par value - 10,000,000 shares
authorized; 1,891,733 outstanding.................. 1,886 1,886
Additional paid-in-capital....................... 17,653 17,653
Unrealized holding gains on securities available
for sale, net of income taxes.................. 558 558
Retained earnings................................ ^ 1,722 1,722
-------- ------
Total shareholders' equity................... 21,819 21,819
------ ------
Total capitalization............................. $26,710 $46,710
====== ======
COMPANY CAPITAL RATIOS(3):
Equity to total assets........................... ^ 8.17% 7.60%
Tier 1 risk-based capital ratio(4)............... 12.51 16.28
Total risk-based capital ratio................... ^ 16.71 28.11
Leverage ratio .................................. ^ 7.93 9.82
</TABLE>
- ------------------------
(1) The Company issued $5 million of 8.5% Redeemable Subordinated Debentures
("Debentures") due November 1, 1998, interest payable quarterly. In
addition to the Debentures, the Company issued Cancellable Mandatory
Stock Purchase Contracts ("Equity Contracts") requiring the purchase of
$5 million in common stock at a price of $9.77 (as adjusted for stock
dividends) per share no later than November 1, 1997, and permitting the
purchase of common stock in that amount prior to that date. The purchase
price under the Equity Contracts can be paid by the surrender of the
Debentures with a principal amount equal to the amount of the common
stock to be purchased. The Debentures are redeemable and the Equity
Contracts are cancellable at the election of the Company upon 60 days
written notice.
(2) Preferred Securities representing beneficial interests in an aggregate
principal amount of $20,000,000 of the ^% Junior Subordinated Debentures
of the Company. The Junior Subordinated Debentures will mature on ^,
2027.
(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 limit the
amount of cumulative preferred stock which can be included in Tier 1
capital to 25% of total Tier 1 capital.
21
<PAGE>
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Issuer Trust
will be included in the consolidated financial statements of the Company. The
Preferred Securities will be included in the consolidated balance sheets of the
Company and appropriate disclosures about the Preferred Securities, the
Guarantee and the Junior Subordinated Debentures will be included in the notes
to the consolidated financial statements of the Company. For financial reporting
purposes, Distributions on the Preferred Securities will be recorded in the
consolidated statements of income of the Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This section presents a review of the Company's consolidated financial
condition and results of operations. Data is presented for both the Company and
its subsidiaries unless otherwise noted.
In addition to historical information, this discussion and analysis
contains forward-looking statements. The forward-looking statements contained
herein are subject to certain risks and uncertainties that could cause actual
results to differ materially from those projected in the forward-looking
statements. Important factors that might cause such a difference include, but
are not limited to, those discussed in this section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date hereof. The
Company undertakes no obligation to publicly revise or update these
forward-looking statements to reflect events and circumstances that arise after
the date hereof.
Acquisitions
During 1995, the Company completed certain transactions which were
significant to its business, operations and structure. On April 7, 1995, the
Company acquired Family First which was merged into GFB. In connection with the
Family First acquisition, GFB added two full-service banking offices. The
acquisition was accounted for as a purchase transaction and accordingly GFB
recorded all assets and liabilities of Family First on its books at the
acquisition date. The Company acquired $26.3 million in loans and $49.8 million
in deposits pursuant to the Family First acquisition. The purchase price
exceeded the fair market value of net assets acquired by approximately $734,000,
which was recorded as goodwill and is being amortized over a period of six
years. Income and expense are recorded in the Company's results since the
acquisition date and prior periods have not been restated. In addition, in July
1995 GFB opened a de novo full-service banking office in Totowa, New Jersey.
As of December 31, 1995, the Company acquired BCB through a stock for
stock exchange which was accounted for as a pooling-of-interests. Due to the
pooling-of-interest accounting treatment, financial results for periods prior to
1995 have been restated to include BCB. The acquisition of BCB added four
full-service banking offices. At December 31, 1995, BCB had total assets of
$76.9 million and total deposits of $68.8 million.
Results of Operations: Three Months ended March 31, 1997 and 1996
The Company earned net income of $665,000 or $0.28 per share for the
three months ended March 31, 1997, compared to $482,000 or $0.23 per share for
the same period in 1996.
22
<PAGE>
Interest income increased by $241,000 or 5% for the three months ended
March 31, 1997, relative to the comparable period in 1996. The increase is
attributable primarily to the increase in average income-yielding assets.
^
Total interest expense increased by $37,000 during the first three
months of 1997, relative to the first three months of 1996, due primarily to the
increase in interest expense incurred as a result of the increase in federal
funds borrowing.
The provision for possible loan losses for the three months ended March
31, 1997, was $115,000 compared to $90,000 during the first three months of the
prior year.
Other income decreased by $297,000 or 40% in the first quarter of 1997
compared to the same period in 1996. The decrease in other income is a direct
result of reduction in fee income from the merchant credit card services which
were discontinued by BCB.
Total other expenses decreased by $327,000 during the first three months
of 1997, compared to the same period in 1996, resulting mainly from management's
efforts to consolidate various operational functions of the Bank Subsidiaries.
Results of Operations: Fiscal Years Ended December 31, 1996, 1995 and 1994
The Company earned $2.3 million or $0.97 per share in 1996 compared to
$2.1 million or $1.04 per share in 1995, and $1.5 million or $.89 per share in
1994. The earnings reported are after $111,000, $191,000 and $110,000 of
amortization expense of intangible assets on a pre-tax basis, for the years
ended December 31, 1996, 1995 and 1994, respectively. In 1996, the Company's
earnings improved 13% over 1995. In 1995, the Company's earnings, improved 39%
over 1994. Net interest income increased by $656,000, or 6%, in 1996 compared to
1995, and $3.1 million or 40% in 1995 compared to 1994. Total other expenses
showed a moderate increase of $63,000 in 1996 over 1995 and increased by $3.3
million or 54% in 1995 over 1994. The increase in net interest income in 1996 is
attributable to the growth of the Company. The increases in both net interest
income and other expenses in 1995 over 1994 are primarily attributable to the
acquisition of Family First and in part to the growth of the Company. The
provision for possible loan losses increased by $26,000 in 1996 compared to
1995, and increased by $242,000 in 1995 compared to 1994, primarily as a result
of the increase in the loan portfolio resulting from the acquisition of Family
First and in part to internal growth. The Company's annual interest expense
increased by $604,000 in 1996 compared to 1995, primarily due to an increase in
average interest-bearing liabilities. In 1995 the annual interest expense
increased by $2.9 million compared to 1994, primarily due to the increase in
average deposits which resulted from the Family First acquisition completed by
the Company during 1995.
During 1996, the Company's earnings, through its Bank Subsidiaries, were
adversely affected by a legislative action taken by the United States Government
to sign into law the Deposit Insurance Funds Act of 1996 to recapitalize the
SAIF. Under the act, the FDIC levied a special assessment on SAIF-assessable
deposits held as of March 31, 1995. In its acquisition of Family First in 1995,
the Company had acquired SAIF-assessable deposits which were subject to this
special assessment. In the third quarter of 1996, the Company recorded $249,000
before income taxes as its portion of the assessment. Excluding this assessment,
the Company's earnings would have been $2.5 million or $1.03 per share for the
year ended December 31, 1996.
23
<PAGE>
Average Balances and Net Interest Income
Net interest income, the primary source of the Company's results of
operations, is the difference between interest, dividends and fees earned on
loans and other earning assets, and interest paid on interest-bearing
liabilities. Earning assets include loans to businesses and individuals,
investment securities, interest-bearing deposits with banks and federal funds
sold in the interbank market. Interest- bearing liabilities include primarily
interest-bearing demand, savings and time deposits. Net interest income is
determined by (i) the difference between the yields earned on earning assets and
rates paid on interest-bearing liabilities ("interest rate spread") and (ii) the
relative amounts of earning assets and interest-bearing liabilities. The
Company's interest rate spread is affected by regulatory, economic and
competitive factors that influence interest rates, loan demand and deposit flows
and general levels of non-performing assets.
The following table sets forth the Company's consolidated average
balances of assets, liabilities and shareholders' equity as well as the amount
of interest expense on related items, and the Company's average yield for the
three months ended March 31, 1997, and the years ended December 31, 1996, 1995
and 1994. The yields are shown on a fully taxable basis and assume a 34% tax
rate.
24
<PAGE>
Average Balance Sheet, Interest Income and Expense, and Average Interest Rates
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
---------------------------------- ----------------------------------------
Average Interest Average Average Interest Average
Balance Earned/Paid Yield/Rate Balance Earned/Paid Yield/Rate
------- ----------- ---------- -------- ----------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Earning Assets:
Investment securities.......................... $ 93,417 $ 1,435 6.23% $ 87,604 $ 5,569 6.36%
Due from banks--interest-bearing............. 4,614 67 5.89% 2,947 138 4.67%
Federal funds sold........................... 5,781 62 4.35% 7,468 365 4.89%
Loans 1...................................... 140,797 3,200 9.22% 135,161 12,621 9.34%
--------- -------- ---- -------- ------- -----
Total earning assets............... 244,609 4,764 7.90% 233,180 18,693 8.02%
Less: Allowance for possible loan losses...... 2,584 -- 2,393 --
Unearned income - loans............. 296 -- 317 --
All other assets............................. 20,103 -- 21,433 --
--------- -------- -------- -------
Total assets....................... $261,832 $ 4,764 $251,903 $18,693
======= ======== ======== =======
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing Liabilities:
Savings and interest-bearing accounts........ $ 81,443 $ 456 2.27% $ 81,112 $ 1,799 2.22%
Time deposits................................ 82,406 1,093 5.38% 86,277 4,605 5.34%
Federal funds and short-term borrowings...... 12,626 148 4.75% 6,062 312 5.15%
Long-term borrowings......................... 4,974 109 8.89% 4,982 438 8.79%
-------- -------- ---- -------- ------- -----
Total interest-bearing
liabilities........................ 181,449 1,806 4.04% 178,433 7,154 4.01%
Demand deposits................................ 55,566 -- 50,243 --
Other liabilities.............................. 3,418 -- 3,240 --
Shareholders' equity........................... 21,399 -- 19,987 --
-------- -------- -------- -------
Total liabilities and
shareholders'equity................ $261,832 $ 1,806 $251,903 $ 7,154
======== ======== ======== =======
NET INTEREST INCOME
(fully taxable basis).......................... $ 2,958 $11,539
======== =======
NET INTEREST MARGIN
(fully taxable basis).......................... ^ 4.84% 4.95%
==== =====
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
---------------------------------- ------------------------------------
Average Interest Average
Balance Earned/Paid Yield/Rate Balance Earned/Paid Yield/Rate
-------- ----------- ---------- ------- ----------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Earning Assets:
Investment securities.......................... $ 74,751 $ 4,790 6.41% $ 52,813 $2,693 5.10%
Due from banks--interest-bearing............. 1,271 54 4.23% 3,884 158 4.07%
Federal funds sold........................... 11,178 658 5.89% 4,991 143 2.87%
Loans 1...................................... 120,379 11,931 9.91% 92,978 8,408 9.04%
-------- -------- ----- ------- ------- -----
Total earning assets............... 207,579 17,433 8.40% 154,666 11,402 7.37%
Less: Allowance for possible loan losses...... 2,427 -- 1,777 --
Unearned income - loans............. 335 -- 262 --
All other assets............................. 17,368 -- 10,546 --
-------- -------- ------- -------
Total assets....................... $222,185 $17,433 $163,173 $11,402
======== ======= ======== =======
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing Liabilities:
Savings and interest-bearing accounts........ $ 74,207 $ 1,890 2.55% $63,409 $ 1,388 2.19%
Time deposits................................ 75,505 4,037 5.35% 45,458 1,755 3.86%
Federal funds and short-term borrowings...... 2,934 185 6.31% 1,122 53 4.72%
Long-term borrowings......................... 4,969 438 8.82% 4,958 438 8.83%
-------- -------- ----- -------- ------- -----
Total interest-bearing
liabilities........................ 157,615 6,550 4.16% 114,947 3,634 3.16%
Demand deposits................................ 44,335 -- 32,446 --
Other liabilities.............................. 2,948 -- 1,200 --
Shareholders' equity........................... 17,287 -- 14,580 --
------ -------- -------- -------
Total liabilities and
shareholders'equity................ $222,185 $6,550 $163,173 $ 3,634
======== ======== ======== =======
NET INTEREST INCOME
(fully taxable basis).......................... $10,883 $ 7,768
======= ======
NET INTEREST MARGIN
(fully taxable basis).......................... 5.24% 5.02%
==== =====
</TABLE>
1 Average balance includes non-performing loans.
25
<PAGE>
Net Interest Income
In 1996, interest income increased by $1.2 million or 7% compared to
1995. Interest and fee income on loans during 1996 increased by $690,000, or 6%
over the comparable period in 1995 as a result of an increase of 12% in average
total loans. The average yield on loans decreased to 9.34% in 1996 compared to
9.91% in 1995. Income earned on securities during 1996 increased by $779,000 or
16% compared to the same period in 1995. The increase was primarily due to a 17%
increase in average investments for the year ended December 31, 1996 over 1995.
The average yield on securities was 6.36% for the year ended December 31, 1996
compared to 6.41% for the same period in the prior year, a moderate decline due
to general market conditions. Interest income on federal funds sold and deposits
with banks during 1996 decreased by $209,000 or 29% compared to the same period
in the prior year as a result of a $2.0 million, or 16%, decrease in average
federal funds sold and deposits with banks.
In 1995, interest income of $17.4 million represented a $6.0 million or
53% increase over $11.4 million reported for 1994. Interest and fee income on
loans during 1995 increased by $3.5 million or 42% over 1994. This increase was
due to an increase of 29% in average total loans and an increase in the average
yield on loans to 9.91% in 1995 compared to 9.04% in 1994. Income earned on
securities during 1995 increased by $2.1 million or 78% compared to the same
period in 1994. This increase was primarily due to a 42% increase in average
investments for the year ended December 31, 1995 over 1994. In addition, the
average yield on securities increased to 6.41% for the year ended December 31,
1995, compared to 5.10% for the prior year. Interest income on federal funds
sold and deposits with banks increased from 1994 to 1995 by $411,000 or 137% as
a result of a $3.6 million, or 40%, increase in average federal funds sold and
deposits with banks. All such increases are primarily attributable to the
acquisitions which occurred during 1995 and the overall growth of the Company.
Interest expense for the year ended December 31, 1996, increased by
$604,000 or 9% from the level of interest expense for 1995. $477,000 of the
total increase in interest expense is related to the increase in interest
expense on deposits from 1996 to 1995 and the remaining $127,000 is related to
the increase in interest expense on short- and long-term borrowings. The
increase in total interest expense is related to the increase in average
interest-bearing liabilities of $20.8 million or 13% due to the overall growth
of the Company.
Interest expense for the year ended December 31, 1995, increased by $2.9
million or 80% from the level of interest expense for 1994. $2.8 million of the
total increase in interest expense is related to the increase in interest
expense on deposits from 1995 to 1994. The increase in total interest expense is
related to the increase in average interest-bearing liabilities of $42.7 million
or 37% due to the acquisitions which occurred in 1995 and the overall growth of
the Company.
The Company's net interest margin, which measures net interest income as
a percentage of average earning assets, was 4.95%, 5.24% and 5.02% for the years
ended December 31, 1996, 1995 and 1994, respectively.
Rate/Volume Analysis
The following table sets forth the changes in interest income and
expenses as they relate to changes in volume and rate for the twelve-month
periods ended December 31, 1996, 1995 and 1994. Because of numerous simultaneous
balance and rate changes during the periods indicated, it is difficult to
allocate the changes precisely between balances and rates. For purposes of this
table, changes which
26
<PAGE>
are not due solely to changes in balances or rates are allocated between such
categories based on the average percentage changes in average balances and
average rates.
<TABLE>
<CAPTION>
Full Year 1996 Full Year 1995 Full Year 1994
Compared to Full Year 1995 Compared to Full Year 1994 Compared to Full Year 1993
Increase (Decrease) Increase (Decrease) Increase (Decrease)
--------------------------- ---------------------------- ------------------------------
Volume Rate Net Volume Rate Net Volume Rate Net
------ ---- --- ------ ---- --- ------ ---- ---
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Earned On:
Loans .................. $ 1,378 $ (688) $ 690 $ 2,991 $ 532 $ 3,523 $ 986 $ 335 $ 1,321
Investment securities .. 819 (40) 779 1,347 750 2,097 791 169 960
Other earning assets ... (103) (106) (209) 268 143 411 (301) 87 (214)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total earning assets . $ 2,094 $ (834) $ 1,260 $ 4,606 $ 1,425 $ 6,031 $ 1,476 $ 591 $ 2,067
======= ======= ======= ======= ======= ======= ======= ======= =======
Interest Paid On:
Savings & money market . $ 158 $ (249) $ (91) $ 262 $ 240 $ 502 $ 108 $ (213) $ (105)
Time deposits .......... 575 (7) 568 1,507 775 2,282 215 71 286
Borrowings ............. 213 (86) 127 133 (1) 132 430 21 451
------- ------- ------- ------- ------- ------- ------- ------- -------
Total interest-bearing
Liabilities ........ $ 946 $ (342) $ 604 $ 1,902 $ 1,014 $ 2,916 $ 753 ($ 121) $ 632
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
Provision for Possible Loan Losses
The Company recorded a provision for possible loan losses of $440,000 in
1996 compared with $414,000 in 1995 and $172,000 in 1994. The increase in the
provision for possible loan losses in 1995 was attributable to an increase in
the size of the loan portfolio due to the acquisitions in 1995 and internal loan
growth. Management of each bank subsidiary regularly performs an analysis to
identify the inherent risk of loss in its loan portfolio. This analysis includes
evaluation of concentrations of credit, past loss experience, current economic
conditions, amount and composition of the loan portfolio (including loans being
specifically monitored by management), estimated fair value of underlying
collateral, loan commitments outstanding, delinquencies, and other factors.
The Bank Subsidiaries will continue to monitor their allowance for
possible loan losses and make future adjustments to the allowance through the
provision for possible loan losses as economic conditions dictate. Although the
Bank Subsidiaries maintain their allowance for possible loan losses at a level
that they consider to be adequate to provide for the inherent risk of loss in
their loan portfolio, there can be no assurance that future losses will not
exceed estimated amounts or that additional provisions for possible loan losses
will not be required in future periods. In addition, the Bank Subsidiaries'
determination as to the amount of their allowance for possible loan losses is
subject to review by the FDIC and the Department, as part of their examination
process, which may result in the establishment of an additional allowance based
upon the judgment of the FDIC or the Department, after a review of the
information available at the time of their examination.
Other Income
Total other income for the year ended December 31, 1996, was $1.9
million, a decrease of $248,000 or 11% compared to 1995. The $248,000 net
decrease was the result of significant fluctuations within the major components
of Other Income. Although service charges on deposit accounts increased by
$307,000, fees on merchant credit card processing and other commissions and fees
decreased by $385,000 and $142,000, respectively. The majority of increase in
service charges on deposit accounts is attributable to the increase in
deposit-related services during 1996. The primary reason for the decrease
27
<PAGE>
in merchant credit card processing fees is due to the discontinuation of such
services offered by BCB. Realized gain or loss on sale of securities
available-for-sale during 1996 decreased by $158,000 while all other income
increased by $130,000 when compared to 1995.
Total other income for the year ended December 31, 1995 was $2.2
million, an increase of $1.3 million or 155% compared to 1994. The $1.3 million
net increase was the result of significant fluctuations in the major components
of Other Income. More specifically, fee on merchant credit card processing
increased by $502,000 and service charges on deposits increased by $352,000.
Realized loss or gain on sale of investment securities available-for-sale during
1995 increased by $293,000 compared to 1994. The majority of such increases are
attributable to the increase in deposit-related services during 1995.
Other Expenses
Total other expenses increased by $63,000 for the year ended December
31, 1996 over 1995. The $63,000 net increase was a result of significant
fluctuations within the components of Other Expenses. More specifically,
salaries and employee benefits increased by $444,000 or 12%. The increase in
salaries and employee benefits is attributable to general salary increases
coupled with increases in employee benefits expense. Occupancy and equipment
expense, which includes the costs of leasing office and branch space, expenses
associated with maintaining these facilities and depreciation of fixed assets,
increased by $540,000 or 38% primarily due to the addition of office space and
equipment.
Regulatory, professional and other fees, and computer services decreased
by $85,000 or 11% and $141,000 or 36%, respectively, from 1995. The primary
reason for such decreases is the reduction in expenses associated with the 1995
acquisitions. The $432,000 or 70% decrease in merchant credit card expense is a
result of discontinuation of merchant processing activity by BCB. All other
operating expenses decreased by $347,000 or 24% due in part to management's
efforts to reduce such expenses. Included in all other operating expenses is the
amortization expense of intangible assets which declined by $80,000 in 1996
compared to 1995 as a result of fully written-off intangible assets relative to
the formation of GFB in 1986. Office expenses increased moderately while other
real estate operating expense decreased moderately in 1996 when compared to
1995.
FDIC insurance assessment totaled $340,000 for the year ended December
31, 1996, an increase of $78,000 over 1995. The increase is a direct result of a
legislation enacted to recapitalize the SAIF. The FDIC levied a special
assessment on SAIF-assessable deposits held as of March 31, 1995. In its
acquisition of Family First in 1995, the Company acquired SAIF-assessable
deposits which were subject to this special assessment. In the third quarter of
1996, the Company recorded $249,000 as its portion of this assessment. Excluding
this special assessment, the FDIC insurance assessment would have decreased for
1996 compared to 1995. The legislation is expected to reduce the future annual
deposit insurance costs for SAIF deposits. The Company anticipates that such
reductions, which are to become effective in 1997, will equal the $249,000
charge in approximately 3 years.
Total other expenses increased by $3.3 million or 54% for the year ended
December 31, 1995 over 1994. Of this increase, $955,000 was attributable to
increases in salaries and benefits. The increase in salaries and employee
benefits is attributable to the acquisition of Family First, hiring of
additional employees and general increases in employee benefits. Occupancy and
equipment expense, which includes the costs of leasing office and branch space,
expenses associated with maintaining these facilities and depreciation of fixed
assets, increased by $499,000 primarily due to the addition of office space and
equipment.
28
<PAGE>
Regulatory, professional and other fees, computer services and office
expenses during 1995 increased by $170,000, $138,000 and $123,000 respectively,
compared to 1994. Other real estate expenses and merchant credit card expenses
increased by $259,000 and $562,000, respectively, compared to 1994. Such
increases were primarily due to the acquisitions in 1995 and in part due to the
Company's overall growth. FDIC insurance assessment for 1995 decreased by
$98,000 due to a decline in FDIC assessment rate when compared to 1994.
All other operating expenses for 1995 increased by $667,000 when
compared to 1994. The majority of such increase is directly related to the
acquisition of Family First. Included in all other expenses is amortization
expense totaling $191,000 and $110,000 for the years 1995 and 1994,
respectively. The final amortization of the intangible assets related to the
1986 acquisition was $110,000 in 1995. In December 1993, the Company incurred
costs of $106,000 relative to the sale of debentures and equity contracts. These
costs are being amortized over 4 years commencing in 1994 at an annual expense
of $26,000. In addition, the acquisition of Family First early in the second
quarter of 1995 resulted in an increase in the amortization expense of $70,000
in 1995. The Company expects amortized expenses relating to the acquisition of
Family First to be $108,000 per year for the next six years.
Income Taxes
The Company recorded income tax provisions of $1.3 million, $1.2 million
and $840,000 for the years ended December 31, 1996, 1995 and 1994, respectively.
The increases in income tax provision are attributable to increased earnings for
those three years.
Financial Condition
At March 31, 1997, the Company's total assets were $267.1 million, an
increase of $10.6 million or 4% over the amount reported at December 31, 1996.
Cash and cash equivalents decreased by $690,000 or 4% from December 31, 1996,
which decrease was primarily used to purchase investment securities and fund
loan demand. Investment securities increased by $5.2 million or 6% and gross
loans increased by $6.4 million or 5% from December 31, 1996. The majority of
increases in assets at March 31, 1997, were funded primarily by federal funds
purchased.
At December 31, 1996, the Company's total assets were $256.5 million, an
increase of $3.5 million or 1.3%, over the amount reported at December 31, 1995.
Federal funds sold decreased by $11.3 million. Substantially all of such
decrease was offset by increases in both investment securities and gross loans
of $5.7 million and $5.7 million, respectively. Interest bearing due from banks
increased by $3.3 million primarily due to additional investing in such assets
when compared to the amount reported at December 31, 1995. Cash and non-interest
bearing due from banks increased by $523,000.
29
<PAGE>
Investment Securities
Investment securities totaled $94.9 million at March 31, 1997, an
increase of $5.2 million or 6% as of December 31, 1996. Investment securities at
December 31, 1996, constituted an increase of $5.7 million or 7% over the amount
reported at December 31, 1995. The increase at March 31, 1997, occurred mainly
in mortgage-backed securities. The following table presents the composition of
the securities portfolio along with the book and market values of those
components at March 31, 1997, and December 31, 1996 and 1995.
<TABLE>
<CAPTION>
March 31, December 31,
---------------------------- -----------------------------------------------------------
1997 1996 1995
---------------------------- ---------------------------- ------------------------------
Fair Fair Fair
Amortized Cost Market Value Amortized Cost Market Value Amortized Cost Market Value
-------------- ------------ -------------- ------------ -------------- ------------
(Dollars in Thousands)
Available-for-sale
U.S. Treasury securities and U.S. Government
<S> <C> <C> <C> <C> <C> <C>
agencies.............................. $38,794 $38,768 $36,673 $36,861 $36,812 $37,805
State & political subdivisions......... 906 906 1,006 1,006 - -
Other debt and equity securities....... 6,323 7,250 6,192 6,407 2,524 2,507
Mortgage-backed securities............. 9,797 9,823 7,879 7,977 7,577 7,523
------- ------- -------- -------- --------- --------
Total available-for-sale.......... $55,820 $56,747 $51,750 $52,251 $46,913 $47,835
------ ------ ------ ------ ------ ------
Held-to-maturity
U.S. Treasury securities and U.S. Government
agencies ............................ $18,253 $17,749 $18,996 $18,602 $32,774 $32,679
State and political subdivisions....... 393 388 393 390 613 615
Mortgage-backed securities............. 19,498 19,289 18,039 17,978 2,764 2,767
------- ------- ------- ------- ------- -------
Total held-to-maturity............ $38,144 $37,426 $37,428 $36,970 $36,151 $36,061
------ ------ ------ ------ ------ ------
Total securities........ $93,964 $94,173 $89,178 $89,221 $83,064 $83,896
====== ====== ====== ====== ====== ======
</TABLE>
30
<PAGE>
Of the total at March 31, 1997, ^ 60% of the investment securities are
in U.S. Government obligations, ^ 31% in U.S. Government agency obligations and
mortgage-backed securities, with the balance in municipal and other equity
securities.
Under the requirements of SFAS No. 115, effective January 1, 1994, the
Company segregated its investment portfolio into held-to-maturity and
available-for-sale. At March 31, 1997, based on the fair market value of its
available-for-sale portfolio, the Company recorded the difference between the
unamortized cost and the fair market value as an unrealized gain in the amount
of $558,000, net of taxes, as a component of shareholders' equity. This was an
increase of $251,000 from the $307,000 recorded at December 31, 1996.
During 1996, the Company realized net gains of $51,000. The gains were
realized through the sale of $5.5 million of securities from its
available-for-sale portfolio. Included in shareholders' equity at December 31,
1996, is an unrealized holding net gain on available-for-sale securities, net of
income taxes, in the amount of $307,000. The Company has no securities held for
trading purposes.
31
<PAGE>
The following table provides information concerning the
available-for-sale and held-to-maturity portions of the Company's investment
securities portfolio at March 31, 1997:
<TABLE>
<CAPTION>
March 31, 1997
------------------------------------------------------------------------------------------------
Due One to Due Five to Due Ten
Due within One Year Five Years Ten Years Years and Over Total
------------------- ------------------ ----------------- ------------------------ -----
Fair Fair Fair Fair Fair
Amortized Market Amortized Market Amortized Market Amortized Market Amortized Market
Cost Value Cost Value Cost Value Cost Value Cost Value
------ ------- ------ ------- --------- ------- ------ ------ ------ ------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-sale:
U.S. Treasury & Government
securities....................... $13,237 $13,254 $23,824 $23,810 $ 1,408 $ 1,394 $ 325 $ 310 $38,794 $38,768
State and political subdivisions .. 906 906 -- -- -- -- -- -- 906 906
Other debt and equity securities .. 6,323 7,250 -- -- -- -- -- -- 6,323 7,250
Mortgage-backed securities ........ 605 614 4,847 4,861 2,265 2,269 2,080 2,079 9,797 9,823
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total available-for-sale ....... 21,071 22,024 26,671 28,671 3,673 3,663 2,405 2,389 55,820 56,747
Held-to-maturity:
U.S. Treasury & Government
securities....................... 3,448 3,456 12,624 12,442 1,181 1,201 1,000 650 18,253 17,749
State and political subdivisions .. 76 75 127 126 190 187 -- -- 393 388
Mortgage-backed securities ........ 245 243 7,940 7,868 8,045 7,944 3,268 3,234 19,498 19,289
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total held-to-maturity ......... 3,769 3,774 20,691 20,436 9,416 9,332 4,268 3,684 38,144 37,426
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total securities ........... $24,840 $25,798 $49,362 $49,107 $13,089 $12,994 $ 6,613 $ 6,273 $93,964 $94,173
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
32
<PAGE>
Maturity Schedule - Securities
The following table shows the average yields, book values and fair
market value of the Company's investment securities by maturity for the three
months ended March 31, 1997, and the years ended December 31, 1996 and 1995.
<TABLE>
<CAPTION>
March 31, December 31,
----------------------------------- -------------------------------------------------------------------
1997 1996 1995
----------------------------------- -------------------------------------------------------------------
Average Amortized Fair Market Average Amortized Fair Market Average Amortized Fair Market
Yield Cost Value Yield Cost Value Yield Cost Value
------- ---------- ---------- -------- --------- ----------- -------- --------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-sale
Due 0-1 Years.............. 6.65% $ 14,143 $ 14,160 6.29% $11,602 $11,656 6.10% $16,531 $ 16,716
Due 1-5 Years.............. 6.60% 23,824 23,810 6.94% 24,360 24,487 6.32% 23,750 24,529
Due 5-10 Years............. 7.44% 1,408 1,394 7.72% 1,393 1,403 6.32% 4,209 4,184
Due 10 Years and Over...... 7.59% 325 310 9.09% 324 321 N/A - -
Mortgage-backed and equity
securities............... N/A 16,120 17,073 N/A 14,071 14,384 N/A 2,423 2,406
------- ------- -------- -------- -------- --------
Total available-for-sale $ 55,820 $ 56,747 $ 51,750 $ 52,251 $ 46,913 $ 47,835
------- ------- ------- ------- ------- -------
Held-to-maturity
Due 0-1 Years.............. 5.42% $ 3,524 $ 3,531 5.34% $ 3,198 $ 3,198 4.99% $ 12,472 $12,562
Due 1-5 Years.............. 5.82% 12,751 12,568 5.94% 13,822 13,748 5.49% 19,404 19,481
Due 5-10 Years............. 6.52% 1,371 1,388 6.54% 1,369 1,407 5.39% 4,275 4,018
Due 10 Years and Over...... 6.02% 1,000 650 5.94% 1,000 640 N/A - -
Mortgage-backed securities. N/A 19,498 19,289 6.27% 18,039 17,977 N/A - -
------- ------- ------- ------- -------- --------
Total held-to-maturity... $ 38,144 $ 37,426 $ 37,428 $ 36,970 36,151 36,061
------- ------- ------- ------- -------- --------
Total investment
securities............. $ 93,964 $ 94,173 $ 89,178 $ 89,221 $ 83,064 $ 83,896
======= ======= ======= ======= ======= =======
</TABLE>
33
<PAGE>
Loan Portfolio
The Company's gross loan portfolio at March 31, 1997, totaled $144.0
million, an increase of $6.6 million or 5%, compared to the amount reported at
December 31, 1996. This increase is primarily due to increased loan demand at
the Bank Subsidiaries. The increased demand is primarily the result of
consolidation in the market area, which has left many small to mid-size
businesses underserved. The Company's gross loan portfolio at December 31, 1996,
totaled $137.4 million, an increase of $5.7 million or 4%, as compared to the
amount reported at December 31, 1995. This increase was again primarily due to
increased loan demand. The Company's gross loan portfolio increased $35.1
million to $131.7 million at December 31, 1995, from $96.7 million at December
31, 1994. This increase was primarily due to the acquisition of $26.3 million of
gross loans in connection with the Family First acquisition, as well as
increased loan demand. The following table summarizes the components of the loan
portfolio as of March 31, 1997, and December 31, 1996, 1995 and 1994.
<TABLE>
<CAPTION>
March 31, December 31,
--------- ----------------------
1997 1996 1995 1994
------ -------- -------- ------
(In Thousands)
<S> <C> <C> <C> <C>
Loans secured by one- to four-family
residential properties................... $ 45,975 $ 43,100 $ 43,328 $26,925
Loans secured by nonresidential properties. 62,061 58,106 51,133 41,891
Loans to individuals....................... 10,073 9,997 8,661 6,688
Loans to depository institutions........... -- - 4,600 600
Commercial loans........................... 13,367 14,106 14,823 10,320
Construction loans......................... 5,557 5,534 4,292 4,754
Other loans................................ 6,959 6,567 4,905 5,486
-------- -------- -------- --------
Total gross loans..................... $143,992 $137,410 $131,742 $ 96,664
======= ======= ======== =======
</TABLE>
34
<PAGE>
The following tables set forth the contractual maturity and interest
rate sensitivity of components of the loan portfolio at December 31, 1996 and
1995. Demand loans, having no stated schedule of repayment and no stated
maturity, and overdrafts are reported as due in one year or less.
<TABLE>
<CAPTION>
December 31, 1996
------------------------------------------
Within 1 - 5 Over 5
1 year Years Years Total
------ ------- -------- -------
(In Thousands)
<S> <C> <C> <C> <C>
Loans with predetermined interest rates:
Commercial ........................... $ 7,360 $ 13,578 $ 1,028 $ 21,966
Real estate construction ............. 1,343 -- -- 1,343
Real estate mortgage ................. 7,919 35,879 7,949 51,747
Consumer ............................. 1,855 5,811 2,234 9,900
-------- -------- -------- --------
18,477 55,268 11,211 84,956
Loans with floating interest rates:
Commercial ........................... 29,876 -- -- 29,876
Lease financing ...................... 3,785 -- -- 3,785
Real estate mortgage ................. 12,648 3,508 -- 16,156
Consumer ............................. 2,637 -- -- 2,637
-------- -------- -------- --------
48,946 3,508 -- 52,454
-------- -------- -------- --------
Total loans ............... $ 67,423 $ 58,776 $ 11,211 $137,410
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
------------------------------------------
Within 1 - 5 Over 5
1 year Years Years Total
-------- --------- -------- -------
(In Thousands)
<S> <C> <C> <C> <C>
Loans with predetermined interest rates:
Commercial ............................ $ 13,707 $ 20,299 $ 2,174 $ 36,180
Real estate construction ............. 4,000 -- -- 4,000
Real estate mortgage ................. 2,038 19,180 7,016 28,234
Consumer ............................. 4,414 2,716 722 7,852
-------- -------- -------- --------
24,159 42,195 9,912 76,266
Loans with floating interest rates:
Commercial ........................... 29,850 -- -- 29,850
Loans to depository institutions ..... 600 -- -- 600
Real estate construction ............. 3,848 -- -- 3,848
Lease financing ...................... -- 902 -- --
Real estate mortgages ................ 13,243 -- -- 14,145
Consumer ............................. 7,033 -- -- 7,033
-------- -------- -------- --------
54,574 902 -- 55,476
-------- -------- -------- --------
Total loans ............. $ 78,733 $ 43,097 $ 9,912 $131,742
======== ======== ======== ========
</TABLE>
At the dates indicated in the foregoing loan tables, no loans were
concentrated within a single industry or group of related industries and the
Company had no foreign loans.
35
<PAGE>
Asset Quality
Various degrees of risk are associated with substantially all investing
activities. The lending function, however, carries the greatest risk of loss.
The senior lending officers of BCB and GFB are charged with monitoring asset
quality, establishing credit policies and procedures and seeking consistent
application of these procedures. Non-performing assets include loans past due,
nonaccrual, renegotiated and other real estate. Since lending is concentrated
within the local market area, non-performing loans were also made primarily to
customers operating in the area. The degree of risk inherent in all lending
activities is influenced heavily by general economic conditions in the immediate
market area. Among the factors which tend to affect portfolio risks are changes
in local or regional real estate values, income levels and energy prices. These
factors, coupled with high unemployment levels and tax rates, as well as
governmental actions and weakened market conditions which reduce the demand for
credit among qualified borrowers, are also important determinants of the risk
inherent in lending.
Past Due, Non-accruing and Renegotiated Loans. It is the Company's
policy to review monthly all loans which are past due as to principal or
interest. The accrual of interest income on loans is discontinued when it is
determined that such loans are either doubtful of collection or are involved in
a protracted collection process. The current year's uncollected interest is
reversed on such non-accrual loans. Management has also restructured the terms
of certain loans to accommodate changes in the financial condition of borrowers.
A typical concession would be a reduction in the currently payable interest rate
to one which is lower than the current market rate for new debt with similar
risks; interest foregone would be deferred until maturity. The following table
summarizes the composition of the Company's non-performing assets and related
asset quality ratios as of the dates indicated.
<TABLE>
<CAPTION>
March 31, December 31,
--------- ---------------------------
1997 1996 1995 1994
------ ------- -------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Non-accruing loans ....................... $1,536 $ 1,033 $1,422 $1,499
Renegotiated loans ........................ 825 ^ 726 517 526
------ -------- ------ ------
Total non-performing loans ........... $2,361 1,033 1,939 2,025
Loans past due 90 days and accruing ....... 1,009 876 1,125 10
Other real estate ......................... 1,650 1,834 2,070 1,184
------ -------- ------ ------
Total non-performing assets .......... $5,020 ^ $4,469 $5,134 $3,219
====== ======== ====== ======
Non-performing loans to total gross loans . 1.64% ^ 1.28% 1.47% 2.09%
Non-performing assets to total gross loans
and other real estate owned ............. 3.45% ^ 3.21% 3.84% 3.29%
Non-performing assets to total assets ..... 1.88% ^ 1.74% 2.03% 1.91%
Allowance for loan losses to non-performing
loans .................................... 112.24% ^144.40% 120.27% 90.07%
</TABLE>
The net increase in non-accruing loans of $503,000 for the three months
ended March 31, 1997, when compared to December 31, 1996, was primarily due to
the addition of one loan in the amount of $566,000. The loan is guaranteed by
the Small Business Administration for up to 75% of its value and is further
collateralized by a first mortgage. Renegotiated loans increased by $99,000 for
the same period, primarily due to a reclassification of a non-accrual loan.
36
<PAGE>
The ^ $180,000 or ^ 4% decrease in non-performing assets at December 31,
1996 compared to December 31, 1995, is primarily the result of an improved loan
portfolio coupled with the management's effort to collect on the loans and make
them current. If the non-accruing loans in 1996 had continued to pay interest,
interest income during 1996 would have increased by $286,000. If non-accruing
loans in 1995 had continued to pay interest, interest income during 1995 would
have increased by $135,000.
Potential Problem Loans. As part of the loan review process, management
routinely identifies performing loans where there is a doubt as to whether the
borrowers will comply with the original loan repayment terms and thus allocates
specific reserves against them. At March 31, 1997, and December 31, 1996, such
loans totaled $6.9 million and $6.5 million, respectively, with an allowance of
$1.1 million and $1.0 million, respectively, specifically allocated to them.
Foreign Loans. The Company has no foreign loans or any other foreign
exposure.
Allowance for Possible Loan Losses
At December 31, 1996, the allowance for possible loan losses was $2.5
million as compared to $2.3 million at December 31, 1995. The allowance for
possible loan losses is increased periodically through charges to earnings in
the form of a provision for possible loan losses. Loans that are deemed
uncollectible are charged against the allowance and any recoveries of such loans
are credited to it. It is management's belief that, although charge-offs may
occur in the future, there are adequate reserves allotted. The level of the
allowance is based on the ongoing evaluation by management of the respective
Bank Subsidiaries of potential losses in the loan portfolio. Such evaluation
includes consideration of the current financial status and credit standing of
borrowers, prior loss experiences, results of periodic regulatory examinations,
comments and recommendations of the Company's independent accountants, and
management's judgment as to prevailing and anticipated real estate values and
other economic conditions in the Bank Subsidiaries' market areas. Since future
events that may affect these financial conditions are unpredictable, there is
uncertainty as to the final outcome of the Bank Subsidiaries' loans and
non-performing assets.
37
<PAGE>
The following table represents transactions affecting the allowance for
possible loan losses for the three months ended March 31, 1997, and the years
ended December 31, 1996, 1995 and 1994.
<TABLE>
<CAPTION>
March 31, December 31,
--------- -------------------------------
1997 1996 1995 1994
------ ------ ------ -----
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Balance--beginning of period ............................... $ 2,540 $ 2,332 $ 1,824 $ 1,771
Charge-offs:
Commercial, financial and agricultural .................... (18) (21) (589) (164)
Real estate - mortgage .................................... - (281) (364) (57)
Installment loans to individuals .......................... (1) (63) (82) (43)
Credit cards and related plans ............................ (7) - - -
------- ------- ------- -------
^(26) (365) (1,035) (264)
------- ------- ------- -------
Recoveries:
Commercial, financial and agricultural .................... 18 124 87 100
Real Estate - mortgage .................................... - 9 - -
Installment loans to individuals .......................... 3 9 3 45
------- ------- ------- -------
^ 21 142 90 145
------- ------- ------- -------
Net charge-offs ............................................. (5) (223) (945) (119)
Provision for possible loan losses .......................... 115 440 414 172
Adjustment (allowance for loan losses acquired
from Family First) ......................................... - (9) 1,039 -
------- ------- ------- -------
Balance--end of period ...................................... $ 2,650 $ 2,540 $ 2,332 $ 1,824
======= ======= ======= =======
Ratio of net charge-offs during the period to
average loans outstanding during the period ................ ^-% .16% .79% .13%
</TABLE>
38
<PAGE>
Allocation of the Allowance for Possible Loan Losses
The following table sets forth the allocation of the allowance for loan
losses by loan category amounts, the percent of loans in each category to total
loans in the allowance, and the percent of loans in each category to total
loans, at each of the dates indicated.
<TABLE>
<CAPTION>
At March 31,
---------------------------------
1997
---------------------------------
% of Loans
% of to Total
Amount Allowance Loans
------ --------- ------------
Balance at
end of period
allocable to:
<S> <C> <C> <C>
Commercial......... $ 945 36% 52%
Real estate--
construction..... 337 12 4
Real estate--
mortgage......... 464 18 32
Installment loans
to individuals... 729 27 12
Unallocated
reserves......... 175 7 -
------- ------ -------
Total allowance
for possible
loan losses.... $2,650 100% 100%
====== ===== =====
</TABLE>
<TABLE>
<CAPTION>
At December 31,
-----------------------------------------------------------------------------------------------------
1996 1995 1994
------------------------------- ----------------------------- ---------------------------------
% of Loans % of Loans
% of to Total % of to Total % of to Total
Amount Allowance Loans Amount Allowance Loans Amount Allowance Loans
------ --------- ------------ ------ --------- ------------ ------ ---------- -----------
(Dollars in Thousands)
Balance at
end of period
allocable to:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial......... $ $859 34% 53% $1,256 54% 53% $ 876 48% 54%
Real estate--
construction..... - - 4 - - 3 - - 5
Real estate--
mortgage......... 670 26 31 662 28 33 457 25 27
Installment loans
to individuals... 206 8 12 296 13 11 215 12 14
Unallocated
reserves......... 805 32 - 118 5 - 276 15 -
-------- ------ ------- -------- ----- ------ -------- ------ -----
Total allowance
for possible
loan losses.... $ $2,540 100% 100% $2,332 100% 100% $1,824 100% 100%
====== ===== ===== ====== ===== ===== ====== ===== =====
</TABLE>
39
<PAGE>
Other Real Estate
As of March 31, 1997, and December 31, 1996, other real estate totaled
$1.7 million and $1.8 million, respectively, a decrease of ^ $184,000 or ^ 10%
and $236,000 or 11%, respectively, compared to December 31, 1995^. The $1.7
million includes collateral acquired through foreclosure of loans, stated at the
lower of the loan value or fair market value less estimated costs to sell.
Management is actively seeking repayment through sale of the underlying
collateral.
40
<PAGE>
Deposits
As of March 31, 1997, and December 31, 1996, total deposits were $223.2
million, a moderate increase over the amount reported at December 31, 1995.
The following table summarizes the average yield/rate of the components
of average deposit liabilities for the three months ended March 31, 1997 and for
the years ended December 31, 1996, 1995 and 1994.
<TABLE>
<CAPTION>
March 31, At December 31,
-------------------- ----------------------------------------------------------------------------
Average Average Average Average
1997 Yield/Rate 1996 Yield/Rate 1995 Yield/Rate 1994 Yield/Rate
---- ---------- ------ ---------- ------ ----------- ------ -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Demand ....................... $ 55,566 - $ 50,243 - $ 44,335 - $ 32,446 -
Savings and interest-bearing . 81,443 ^ 2.27% 81,112 2.22% 74,207 2.55% 63,409 2.19%
Time ......................... 82,406 ^ 5.38% 86,277 5.34% 75,505 5.35% 46,548 3.86%
------ ------ ------ ------
$219,415 $217,632 $194,047 $142,403
======== ======== ======== ========
</TABLE>
41
<PAGE>
Listed below is a summary of time certificates of deposit $100,000 and
over categorized by time remaining to maturity at March 31, 1997, and December
31, 1996 and 1995.
At March 31, At December 31,
---------------- ----------------------
1997 1996 1995
---------------- ----------- --------
(In thousands)
Three months or less................ $ 16,417 $ 15,057 $ 16,633
Over three months through twelve months 7,738 8,974 7,977
Over twelve months.................. 1,255 1,153 1,486
-------- -------- --------
$ 25,410 $ 25,184 $ 26,096
======= ======= =======
Subordinated Debentures and Equity Contracts
In December 1993, the Company raised $5 million by issuing Redeemable
Subordinated Debentures ("Debentures") (unsecured debt obligation of the
Company) due November 1, 1998, at an interest rate of 8.5% payable quarterly. In
addition, the Company issued Cancellable Mandatory Stock Purchase Contracts
("Equity Contracts") to purchase $5 million of the Company's common stock at a
predetermined price of $9.77 (as adjusted for stock dividends) per share to be
exercised no later than November 1, 1997. 511,770 shares of the Company's common
stock were reserved for future issuance pursuant to the outstanding Equity
Contracts.
Interest Rate Sensitivity
The following table summarizes, as of March 31, 1997, the repricing of
earning assets and interest-bearing liabilities in accordance with their
contractual terms in given time periods.
<TABLE>
<CAPTION>
Due between Due between
Due within 91 Days and One Year and Due after Non-Interest
90 Days One Year Five Years Five Years Bearing Total
----------- ------------- -------------- ------------ ------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
Investment securities....................... $ 14,255 $ 22,095 $ 55,865 $ 2,676 $ -- $ 94,891
Federal funds sold and deposits with banks.. 5,946 1,563 -- -- -- 7,509
Total loans................................. 54,018 19,395 59,754 6,245 4,580 143,992
Non-earning assets.......................... -- -- -- -- 20,705 20,705
------- ------- ------- ------- ------- -------
Total assets...................... $74,219 $ 43,053 $115,619 $ 8,921 $ 25,285 $267,097
====== ======= ======= ======= ======= =======
Liabilities and Shareholders' Equity
Deposits.................................... $ 52,546 $49,866 $51,290 $ 9,712 $59,815 $223,229
Other liabilities........................... 15,623 4,891 -- -- 1,535 22,049
Shareholders' equity........................ -- -- -- -- 21,819 21,819
------- ------- ------- ------- ------- -------
Total liabilities and shareholders
equity.......................... $ 68,169 $ 54,757 $ 51,290 $ 9,712 $ 83,169 $267,097
====== ======= ======= ======= ======= =======
Interest rate sensitivity gap................. $ 6,050 $(11,704) $ 64,329 $ (791) $(57,884)
Interest rate sensitivity gap as a percentage
of total assets............................ 2.27% -4.38% 24.08% -0.30% -21.67%
Cumulative interest rate sensitivity gap...... $ 6,050 $ (5,654) $ 58,675 $ 57,884
Cumulative interest rate sensitivity gap
as a percentage of total assets............. 2.27% -2.12% 21.97% 21.67%
</TABLE>
42
<PAGE>
Banks ^ are concerned with the extent to which they are able to match
maturities of interest-earning assets and interest-bearing liabilities. Such
matching is facilitated by examining the extent to which such assets and
liabilities are interest-rate sensitive and by monitoring an institution's
interest rate sensitivity gap. An asset or liability is considered to be
interest-rate sensitive if it will mature or reprice within a specific time
period. The interest rate sensitivity gap is defined as the excess of
interest-earning assets maturing or repricing within a specific time period over
interest-bearing liabilities maturing or repricing within that time period. On a
monthly basis, the Bank Subsidiaries monitor their gap, primarily their
six-month and one-year maturities and work to maintain their gap within a range
10% to (25)%.
The Company currently has a negative position with respect to its
exposure to interest rate risk. The Asset/Liability Management Committees of the
Bank Subsidiaries' respective Boards of Directors meet quarterly to discuss the
bank's interest rate risk. The Company uses simulation models to measure the
impact of potential changes in interest rates on the net interest income,
balance sheet mix and the spread relationship between market rates and bank
products. As described below, sudden changes ^ in interest rates should not have
a material impact to the Bank ^ Subsidiaries' results of operations. Should the
Bank Subsidiaries experience a positive or negative mismatch in excess of the
approved range, they have a number of remedial options. They have the ability to
reposition their investment portfolio to include securities with more
advantageous repricing and/or maturity characteristics. They can attract
variable- or fixed-rate loan products as appropriate. They can also price
deposit products to attract deposits with maturity characteristics that can
lower their exposure to interest rate risk.
At March 31, 1997, total interest-bearing liabilities maturing or
repricing within one year exceeded total interest-earning assets maturing or
repricing during the same time period by $11.7 million, representing a negative
cumulative one-year gap ratio of 2.12%. As a result, the yield on
interest-earning assets of the Bank Subsidiaries should adjust to changes in
interest rates at a slower rate than the cost of the Bank Subsidiaries'
interest-bearing liabilities.
Liquidity
The Company actively manages its liquidity under the direction of the
Bank's Asset/Liability Management Committee. During the last two years the
Company has been highly liquid and its liquid funds are more than sufficient to
meet future loan demand or the possible outflow of deposits in addition to being
able to adapt to changing interest rate conditions. Management expects that this
high liquidity trend will continue until such time as overall economic
conditions improve and loan demand rises.
At March 31, 1997, sources of liquidity include $22.1 million in cash
and cash equivalents, and $56.7 million in investment securities
available-for-sale. Secondary sources of liquidity include $38.1 million in
securities held-to-maturity. Sources of liquidity at December 31, 1996, totaled
$112.5 million or 44% of total assets, consisting of investment securities of
$89.7 million and $22.8 million in cash and cash equivalents and
interest-bearing due from banks. By comparison, total liquidity sources were
$114.2 million or 45% of total assets at December 31, 1995, consisting of
investment securities in the amount of $84.0 million and cash and cash
equivalents and interest-bearing due from banks in the amount of $30.2 million.
Certificates of Deposit scheduled to mature during the fiscal year
ending December 31, 1997 total $72.7 million. The Company may renew these
certificates, attract new replacement deposits or replace such funds with
borrowings. Management believes, based on past experience, that the Company will
retain much of the deposits or replace them with new deposits.
43
<PAGE>
Capital Resources
The Company's primary regulator, the Federal Reserve (which regulates
bank holding companies), has issued guidelines classifying and defining bank
holding company capital into the following components: (1) Tier 1 Capital, which
includes tangible shareholders' equity for common stock and certain qualifying
perpetual preferred stock, and (2) Tier 2 Capital, which includes a portion of
the allowance for possible loan losses, certain qualifying long-term debt and
preferred stock that does not qualify as Tier 1 Capital. The risk-based capital
guidelines require financial institutions to maintain specific defined credit
risk factors (risk-adjusted assets). As of March 31, 1997, the minimum Tier 1
and the combined Tier 1 and Tier 2 capital ratios required by the Federal
Reserve Board were 4% and 8%, respectively.
In addition to the risk-based capital guidelines discussed above, the
Federal Reserve requires that a bank holding company which meets that
regulator's highest performance and operating standards maintain a minimum
leverage ratio (Tier 1 capital as a percentage of tangible assets) of 3%. Those
bank holding companies anticipating significant growth are expected to maintain
a leverage ratio above the minimum ratio. Minimum leverage ratios for each
entity will be evaluated through the ongoing regulatory examination process.
Regulations have also been issued by the Bank Subsidiaries' primary regulator,
the FDIC, establishing similar risk-based and leverage capital ratios which
apply to each bank as a separate entity. See "Supervision and Regulation -- Bank
Regulation -- Regulatory Capital Requirements."
44
<PAGE>
The following table presents the risk-based and leverage capital ratios
for GFB, BCB and the Company, respectively, as of March 31, 1997, and December
31, 1996.
<TABLE>
<CAPTION>
Well
Capitalized
Great Falls Bergen Commercial Greater Community (Under FDIC
Bank Bank Bancorp requirements)
------------------------------ --------------------------------- ----------------------
March 31, December 31, March 31, December 31, March 31, December 31,
------------- --------------- -------------- -------------- -------------------------
1997 1996 1997 1996 1997 1996
------------- --------------- -------------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tier 1 and Tier 2...... ^ 12.27% 13.21% ^ 14.55% 14.17% ^ 16.71% 16.89% 10.00%
Tier 1 ^ Risk-Based
Capital Ratio......... ^ 11.01% 11.95% 13.30% ^ 12.96% 12.51% ^ 12.90% 6.00%
Tier 1 Leverage Ratio... ^ 6.63% 6.78% 8.81% 9.32% ^ 7.93% 8.12% 5.00%
</TABLE>
45
<PAGE>
Impact of Inflation and Changing Prices
The Company's consolidated financial statements and notes thereto
presented elsewhere herein have been prepared in accordance with generally
accepted accounting principles, which require the measurement of financial
position and operating results in terms of historical dollars without
considering the changes in the relative purchasing power of money over time due
to inflation. The impact of inflation is reflected in the increased cost of the
Company's operations. Unlike most industrial companies, nearly all of the
Company's assets and liabilities are monetary in nature. As a result, interest
rates have a greater impact on the Company's performance than do the effects of
general levels of inflation. Interest rates do not necessarily move in the same
direction or to the same extent as the prices of goods and services.
Impact of Recent Accounting Standards
The FASB has issued Statement of Financial Accounting Standards No. 128,
Earnings Per Share, which is effective for financial statements issued after
December 15, 1997. Early adoption of the new standard is not permitted. The new
standard eliminates primary and fully diluted earnings per share and requires
presentation of basic and diluted earnings per share together with disclosure of
how the per share amounts were computed. Basic earnings per share excludes
dilution and is computed by dividing income available to common shareholders by
the weighted-average common shares outstanding for the period. Diluted earnings
per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised and converted into common
stock or resulted in the issuance of common stock that then shared in the
earnings of the entity. The adoption of this new standard is not expected to
have a material impact on the disclosure of earnings per share in the financial
statements. The effect of adopting this new standard has not been determined.
BUSINESS OF THE COMPANY
The Company is organized as a business corporation under the laws of the
State of New Jersey and registered as a bank holding company with the Federal
Reserve under the BHCA. The Company's only substantive business activity is the
ownership and operation of GFB and BCB.
Bank Subsidiaries
Great Falls Bank. GFB conducts a general commercial and retail banking
business encompassing a wide range of traditional deposits and lending
functions. GFB offers a broad variety of lending services, including commercial
and residential real estate loans, short and medium term loans, revolving credit
arrangements, lines of credit, and consumer installment loans. In the depository
area, GFB offers a broad variety of deposit accounts, including consumer and
commercial checking accounts and NOW accounts. GFB also offers other customary
banking services.
Bergen Commercial Bank. BCB was incorporated in New Jersey in 1987 and
commenced its banking operations in February 1988. BCB concentrates its
operations in commercial lending and loan origination secured by real estate
generally involving nonresidential properties, primarily servicing Bergen
County, New Jersey. In addition to its main office at Two Sears Drive in
Paramus, New Jersey, BCB has two branch offices in Hasbrouck Heights and
Wood-Ridge, New Jersey. BCB also offers other customary banking services.
46
<PAGE>
Market Area
The Bank Subsidiaries are community-oriented financial institutions,
offering a wide variety of financial services to meet the needs of the
communities they serve. The Bank Subsidiaries conduct their business through 8
branch offices located in the northern New Jersey counties of Passaic and Bergen
("primary market area"). The Bank Subsidiaries' deposit gathering base and
lending area are concentrated in the communities surrounding their offices.
The Bank Subsidiaries conduct their businesses through eight branch
offices located in the northern New Jersey counties of Bergen and Passaic. The
Bank Subsidiaries' deposit-gathering and lending markets are concentrated in
these counties. Bergen county, one of the most affluent communities in New
Jersey, due to its close proximity to New York City, functions as a home to
commuters working in New Jersey suburban areas around New York. Average
household and per capita incomes in 1996 were $75,711 and $28,768, respectively,
well above the average for New Jersey of $63,174 and $23,416. In addition,
Bergen county has a growing and well-diversified base of service companies and
small businesses that are part of the Company's target market. Passaic, which is
^ west of Bergen county, also serves as a home to commuters working in New
Jersey suburban areas around New York.
Lending Activities
General. The principal lending activity of the Bank Subsidiaries is the
origination of commercial real estate loans, commercial business and industrial
loans, home equity loans and, to a much lesser extent, residential mortgage
loans and installment loans. Most loans are originated in the Company's primary
market area. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" for a description of the Bank Subsidiaries' loan
portfolio.
Commercial and Industrial Loans. The Bank Subsidiaries originate several
types of commercial and industrial loans. Included as commercial loans are
short- and long-term business loans, lines of credit, and real estate
construction loans. The primary focus of the Bank Subsidiaries is the
origination of commercial loans secured by real estate. The majority of the Bank
Subsidiaries' customers for these loans are small- to medium-sized businesses
located in northern New Jersey.
Commercial Real Estate Loans. Loans secured by commercial properties
generally involve a greater degree of risk than residential mortgage loans and
carry larger loan balances. This increased credit risk is a result of several
factors, including the concentration of principal in a limited number of loans
and borrowers, the effects of general economic conditions on income-producing
properties and the increased difficulty of evaluating and monitoring these types
of loans. A significant portion of the Bank Subsidiaries' commercial real
estate, commercial and industrial loan portfolios include a balloon payment
feature. A number of factors may affect a borrower's ability to make or
refinance a balloon payment, including, without limitation, the financial
condition of the borrower at the time, the prevailing local economic conditions,
and the prevailing interest rate environment. There can be no assurance that
borrowers will be able to make or refinance balloon payments when due.
Furthermore, the repayment of loans secured by commercial real estate is
typically dependent upon the successful operation of the related real estate or
commercial project. If the cash flow from the project is reduced, the borrower's
ability to repay the loan may be impaired. This cash flow shortage may result in
the failure to make loan payments. In such cases, the Company may be compelled
to modify the terms of the loan. In addition, the nature of these loans is such
that they are generally less predictable and more difficult to evaluate and
monitor. As a result, repayment of these loans may be
47
<PAGE>
subject, to a greater degree than residential loans, to adverse conditions in
the real estate market or economy.
Home Equity Lines and Loans. The Bank Subsidiaries originate home equity
loans secured by first or second mortgages on homes being purchased or owned by
the borrower. Home equity loans are either consumer revolving lines of credit or
single advance loans with a specified repayment plan. The interest rate charged
on the line of credit loans is usually a floating rate related to the prime
lending rate. A home equity line is typically originated as a fifteen-year note
that allows the borrower to draw upon the approved line of credit during the
same period as the note. Home equity loans are usually amortized over a 5-, 10-,
or 15-year basis. The Bank Subsidiaries generally require a loan-to-value ratio
of 75% or less which is inclusive of all preceding mortgages.
Residential Real Estate Loans. The Bank Subsidiaries generate
residential mortgages for sale to outside loan correspondents. These loans are
originated using the correspondents' underwriting standards, rates and terms.
Prior to closing, the Bank usually has commitments for the purchase of loans, at
a premium and without recourse, in the secondary market. Secondary market sales
are generally scheduled to close shortly after the origination of the loan.
The majority of the Bank Subsidiaries's residential mortgage loans
consist of loans secured by owner-occupied, single-family residences. The ^ Bank
Subsidiaries' mortgage loan portfolio consists of both fixed-rate and
adjustable-rate loans secured by various types of collateral as discussed below.
Management expects to continue offering mortgage loans at market interest rates,
with substantially the same terms and conditions as it currently offers.
The Bank Subsidiaries' residential mortgage loans customarily include
due-on-sale clauses, which are provisions giving the institution the right to
declare a loan immediately due and payable in the event, among other things,
that the borrower sells or otherwise disposes of the real property serving as
security for the loan. Due-on-sale clauses are an important means of adjusting
rates on fixed-rate mortgages. The Bank Subsidiaries usually exercise their
right under these clauses.
Installment Loans. The Bank Subsidiaries originate installment, or
consumer loans secured by a variety of collateral, such as new and used
automobiles. A limited number of unsecured installment loans are made.
Loan Solicitation and Processing. Loan originations are derived from a
number of sources such as loan officers, customers, borrowers and referrals from
real estate brokers, accountants and attorneys.
Upon receipt of a loan application, a credit report is ordered and
reviewed to verify specific information relating to the loan applicant's
creditworthiness. For residential mortgage loans, written verifications of
employment and deposit balances are requested. The Bank Subsidiaries may require
that an appraisal of the real estate intended to secure the proposed loan is
undertaken by a certified independent appraiser approved by the Bank
Subsidiaries and licensed by the State. After all the required information is
obtained, the Bank Subsidiaries then make their credit decisions. Depending on
the type, collateral and amount of the credit request, various levels of
approval may be necessary.
Each subsidiary bank has a loan committee which has the authority to
approve loans up to certain levels. Below such levels, loans may be approved by
various officers of the bank. Credit requests greater than loan committee limits
must be approved by the Bank Subsidiaries' respective boards of directors.
48
<PAGE>
Title insurance policies are usually required on all first mortgage
loans. Hazard insurance coverage is required on all properties securing loans
made by the Bank Subsidiaries. Flood insurance is also required, when
applicable.
Loan applicants are normally notified of the credit decision by letter.
If the loan is approved, the loan commitment specifies the terms and conditions
of the proposed loan including the amount, interest rate, amortization term, a
brief description of the required collateral, and the required insurance
coverage. The borrower must provide proof of fire, flood (if applicable) and
casualty insurance on the property serving as collateral, which insurance must
be maintained during the full term of the loan. Generally, title insurance
endorsed to the Bank Subsidiaries is required on all first mortgage loans.
Loan Commitments. When a commercial loan is approved, the Bank
Subsidiaries issue a written commitment to the loan applicant. The commitment
indicates the loan amount, term and interest rate and is valid for approximately
60 days. Approximately 90% of the Bank Subsidiaries' commitments are accepted or
rejected by the customer before the expiration of the commitment. At March 31,
1997, the Bank Subsidiaries had approximately ^ $34.5 million in ^ loan
commitments outstanding, as opposed to approximately ^ $22.1 million as of
December 31, 1996.
Credit Card Portfolio. The Bank Subsidiaries originate secured and
unsecured credit cards for their own portfolio. Cards are available to residents
of New Jersey only, and are approved according to strict debt-to-income
standards. The overall credit card portfolio is considered modest in relation to
other consumer loans.
Credit Risk, Credit Administration and Loan Review. Credit risk
represents the possibility that a customer or counterparty may not perform in
accordance with contractual terms. The Bank Subsidiaries incur credit risk
whenever they extend credit to, or enter into other transactions with, their
customers. The risks associated with extensions of credit include general risk,
which is inherent in the lending business, and risk specific to individual
borrowers. The senior lending officers of the Bank Subsidiaries are responsible
for the overall management of the Bank Subsidiaries' credit risk and the
development, application and enforcement of uniform credit policies and
procedures, the principal purpose of which is to minimize such risk. One
objective of credit administration is to identify and, to the extent feasible,
diversify extensions of credit. Loan review and other loan monitoring practices
provide a means for the Bank Subsidiaries' management to ascertain whether
proper credit, underwriting and loan documentation policies, procedures and
practices are being followed by the Bank Subsidiaries' loan officers and are
being applied uniformly. Within the last year, the Bank Subsidiaries have taken
a number of steps to enhance their credit administration and loan review
functions in an effort to better manage their credit risk. While the Bank
Subsidiaries continue to review these and other related functional areas, there
can be no assurance that the steps the Bank Subsidiaries' have taken to date
will be sufficient to enable them to identify, measure, monitor and control all
credit risk.
Investment Securities Activities
General. The investment policy of each of the Bank Subsidiaries is
established by senior management and approved by the Board of Directors. It is
based on asset and liability management goals and is designed to provide a
portfolio of investments that optimize interest income and provides acceptable
limits of safety and liquidity. The Bank Subsidiaries' investment goals are to
invest available funds in instruments that meet specific requirements of the
Bank Subsidiaries' asset and liability management goals. The investment
activities of the Bank Subsidiaries consist primarily of investments in federal
funds, securities issued or guaranteed by the United States Government or its
agencies, states and political
49
<PAGE>
subdivisions and corporate bonds. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for a description of the Bank
Subsidiaries' investment portfolio.
Sources of Funds
General. Deposits are the major source of the Bank Subsidiaries' funds
for lending and other investment purposes. In addition to deposits, the Bank
Subsidiaries derive funds from the amortization, prepayment or sale of loans,
maturities or sale of investment securities and operations. Scheduled loan
principal repayments are a relatively stable source of funds, while deposit
inflows and outflows and loan prepayments are significantly influenced by
general interest rates and market conditions. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" for a description of
the Bank Subsidiaries' sources of funds.
Deposits. Consumer and commercial deposits are attracted principally
from within the primary market area through the offering of a broad selection of
deposit instruments including checking, regular savings, money market deposits,
term certificate accounts and individual retirement accounts. Deposit account
terms vary according to the minimum balance required, the time periods the funds
must remain on deposit and the interest rate, among other factors. The Bank
Subsidiaries regularly evaluate the internal cost of funds, survey rates offered
by competing institutions, review their cash flow requirements for lending and
liquidity and execute rate changes when deemed appropriate. From time to time,
the Bank Subsidiaries have offered promotional interest rates on certain
certificates of deposit in response to interest rates offered by other financial
institutions in the Bank Subsidiaries' primary market area, as well as in
response to general increases in overall market rates for certificates of
deposit. There can be no assurances that the Bank Subsidiaries will be able to
retain such deposits at maturity at non-promotional interest rates. The Bank
Subsidiaries do not obtain funds through brokers, nor do they solicit funds
outside the State of New Jersey.
Competition
The Company, through the Bank Subsidiaries, competes with other New
Jersey commercial banks, savings banks, savings and loan associations, finance
companies, insurance companies, and credit unions. A substantial number of
offices of competing financial institutions are located within the Bank
Subsidiaries' respective market areas. The past trend toward consolidation of
the banking industry has continued in New Jersey in recent years. This trend may
make it more difficult for smaller banks such as the Bank Subsidiaries to
compete with large, national and regional banking institutions. Several of the
Bank Subsidiaries' competitors are affiliated with major banking and financial
institutions which are substantially larger and have far greater financial
resources than the Bank Subsidiaries.
Competitive factors between financial institutions can be classified
into two categories: competitive rates and competitive service. Rate competition
is intense, especially in the area of time deposits. The Bank Subsidiaries
compete with larger institutions with respect to the rates of interest they
offer. From a service standpoint, the Bank Subsidiaries' competitors, by virtue
of their superior financial resources, have substantially greater lending limits
than the Bank Subsidiaries are able to provide. Such competitors also perform
certain functions for their customers, such as trust and international services,
which the Bank Subsidiaries do not provide.
Properties
The Company does not own or lease any land, buildings or equipment. GFB
leases its main office banking facility and certain other office space at 55
Union Boulevard, Totowa, New Jersey. Such
50
<PAGE>
main office leased space is owned by a general partnership of which the
Company's chairman and vice chairman are both partners. GFB also leases space
for its four other branches in Totowa, Little Falls and Clifton, New Jersey. BCB
leases its main office as well as its two branch offices.
Personnel
At December 31, 1996, the Company had 98 full-time and 12 part-time
employees. The employees of the Company and its subsidiaries are not represented
by any collective bargaining unit. Relations between management and employees
are considered good.
Legal Proceedings
The Company and its subsidiaries are from time to time parties to
various legal actions arising out of the normal course of business. Management
believes that there is no proceeding threatened or pending against the Company,
which, if determined adversely, would have a material effect on the business,
financial position or results of operations of the Company.
51
<PAGE>
MANAGEMENT
Directors and Executive Officers
The Board of Directors of the Company is currently composed of ten
members, each of whom serves for a term of three years. Executive officers are
elected annually by the Board of Directors and serve at the Board's discretion.
The following table sets forth information with respect to the directors
and executive officers of the Company.
<TABLE>
<CAPTION>
Current
Term as
Director/Executive Director Director
Officer Age (1) Position Since Expires
<S> <C> <C> <C> <C>
John L. Soldoveri (2)(4) 73 Chairman, Chief Executive Officer 1985 1999
Anthony M. Bruno, Jr.(3)(4) 42 Vice-Chairman 1995 1998
George E. Irwin(2) 53 Director, President & Chief 1987 1998
Operating Officer
C. Mark Campbell(3)(4) 46 Director & Executive Vice President 1995 1999
Naqi A. Naqvi 40 Treasurer N/A N/A
Alfred R. Urbano(2) 50 Director 1986 1998
Joseph A. Lobosco(2) 62 Director 1990 1999
Charles J. Volpe(3) 59 Director 1995 1999
M. A. Bramante(2) 64 Director 1985 2000
Robert J. Conklin(2) 58 Director 1985 2000
William T. Ferguson(2) 54 Director 1985 2000
</TABLE>
- --------------------
(1) At March 1, 1997.
(2) Indicates membership on the Board of Directors of Great Falls Bank.
(3) Indicates membership on the Board of Directors of Bergen Commercial Bank.
(4) Mr. Bruno is a nephew of Mr. Soldoveri and is Mr. Campbell's brother-in-law.
Biographical Information
Directors and Executive Officers of the Company. The principal
occupation of each director and executive officer of the Company is set forth
below.
John L. Soldoveri is the Chairman of the Board of Directors and Chief
Executive Officer of the Company. He was appointed to the latter position at the
end of 1995, having acted as the Company's President from 1985 until the end of
1995. Mr. Soldoveri has been a founding director of both the Company and Great
Falls Bank since 1985. Mr. Soldoveri was President of Soldoveri Agency and
52
<PAGE>
Rhodes Agency Inc., real estate brokerage and insurance agency firms, for many
years until 1991. He has served as Vice President of both companies since 1991.
Mr. Soldoveri has been the controlling partner in Anjo Realty since 1980 and is
an active investor in real estate, directly and through various entities.
Anthony M. Bruno, Jr. was appointed as a director and Vice Chairman of
the Board of Directors of the Company at the end of 1995 in connection with the
Company's acquisition of Bergen Commercial Bank. Mr. Bruno has been Chairman of
the Board of Bergen Commercial Bank since 1987. Prior thereto, Mr. Bruno was a
founding director of the Company and Great Falls Bank in 1985, positions from
which he resigned in 1987 when Bergen Commercial Bank was formed. Mr. Bruno is a
senior partner of Bruno, DiBello & Co., L.L.C., certified public accountants.
Mr. Bruno is a minority partner in Anjo Realty, which invests in real estate.
George E. Irwin was appointed as the President and Chief Operating
Officer of the Company at the end of 1995. Prior thereto, Mr. Irwin had served
since 1987 as the Company's Vice President. He has also been the President and
Chief Executive Officer of Great Falls Bank since 1987. During 1986, Mr. Irwin
was Great Falls Bank's Executive Vice President, Treasurer, and Senior Loan
Officer. He has been a director of both the Company and Great Falls Bank since
1987.
C. Mark Campbell was appointed as a director and Executive Vice
President of the Company at the end of 1995 in connection with the Company's
acquisition of Bergen Commercial Bank. He has acted as President, Chief
Executive Officer and director of Bergen Commercial Bank since 1987.
Naqi A. Naqvi has been the Company's Treasurer since 1988, and Vice
President and Treasurer of Great Falls Bank since 1987.
Alfred R. Urbano has been the President of Rubicon Realty Corp., a real
estate investment firm, since 1980. He is active in the real estate business as
an investor and a manager, directly and through various entities. Mr. Urbano has
served as a director of both the Company and Great Falls Bank since 1986.
Joseph A. Lobosco retired at the end of 1994 as the Senior Partner of
Joseph Lobosco & Sons, an insurance agency, of which he had been a partner since
1961. He has served as a director of both the Company and Great Falls Bank since
1990.
Charles J. Volpe was appointed as a director of the Company at the end
of 1995 in connection with the Company's acquisition of Bergen Commercial Bank.
Mr. Volpe is the chief executive officer and principal of J. P. Patti Company
(roofing). He has been a director of Bergen Commercial Bank since 1987.
Marino A. Bramante, an orthodontist, has been the President of M. A.
Bramante, D.D.S., P.A. since 1960. He has served as a founding director of both
the Company and Great Falls Bank since 1985.
Robert J. Conklin has been the President of The Conklin Corporation,
which is engaged in construction and engineering, since 1960. He is also
President of an electronics firm, Crystal Accel. He has been a founding director
of both the Company and Great Falls Bank since 1985.
William T. Ferguson has been the Vice President of Ted Car Inc., an auto
wholesaler, since 1977. He has served as a founding director of both the Company
and Great Falls Bank since 1985.
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SUPERVISION AND REGULATION
Introduction
Bank holding companies and banks are extensively regulated under both
federal and state law. The following information describes certain aspects of
that regulation applicable to the Company and the Bank Subsidiaries, and does
not purport to be complete. The discussion is qualified in its entirety by
reference to all particular statutory or regulatory provisions.
The Company is a legal entity separate and distinct from the Bank
Subsidiaries. Accordingly, the right of the Company, and consequently the right
of creditors and shareholders of the Company, to participate in any distribution
of the assets or earnings of the Bank Subsidiaries is necessarily subject to the
prior claims of creditors of the Bank Subsidiaries, except to the extent that
claims of the Company in its capacity as creditor may be recognized. The
principal source of the Company's revenue and cash flow is dividends from the
Bank Subsidiaries. There are, however, legal limitations on the extent to which
a subsidiary bank can finance or otherwise supply funds to its parent holding
company.
The Company
General. As a registered holding company, the Company is regulated under
the BHCA and is subject to supervision and regular inspection by the Federal
Reserve. The BHCA requires, among other things, the prior approval of the
Federal Reserve in any case where the Company proposes to (i) acquire all or
substantially all of the assets of any bank, (ii) acquire direct or indirect
ownership or control of more than 5 percent of the voting shares of any bank, or
(iii) merge or consolidate with any other bank holding company.
Acquisitions/Permissible Business Activities. The BHCA currently permits
bank holding companies from any state to acquire banks and bank holding
companies located in any other state, subject to certain conditions, including
certain nationwide- and state-imposed concentration limits. Effective June 1,
1997, the Bank Subsidiaries will have the ability, subject to certain
restrictions, including state opt-out provisions, to acquire by acquisition or
merger branches outside its home state. States may affirmatively opt-in to
permit these transactions earlier, which New Jersey, among other states, has
done. The establishment of new interstate branches also will be possible in
those states with laws that expressly permit it. Interstate branches will be
subject to certain laws of the states in which they are located. Competition may
increase further as banks branch across state lines and enter new markets.
Under the BHCA, the Company is prohibited, with certain exceptions, from
acquiring direct or indirect ownership or control of more than 5 percent of any
class of voting shares of any nonbanking corporation. Further, the Company may
not engage in any business other than managing and controlling banks or
furnishing certain specified services to subsidiaries, and may not acquire
voting control of nonbanking corporations except those corporations engaged in
businesses or furnishing services that the Federal Reserve deems to be closely
related to banking.
Source of Strength Policy. Under Federal Reserve policy, a bank holding
company is expected to serve as a source of financial strength to each of its
subsidiary banks and to commit resources to support each such bank. Consistent
with its "source of strength" policy for subsidiary banks, the Federal Reserve
has stated that, as a matter of prudent banking, a bank holding company
generally should not maintain a rate of cash dividends unless its net income
available to common shareholders has been
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sufficient to fund fully the dividends, and the prospective rate of earnings
retention appears to be consistent with the corporation's capital needs, asset
quality and overall financial condition.
Bank Regulation
As state-chartered banks which are not members of the Federal Reserve,
the Bank Subsidiaries are subject to the primary federal supervision of the FDIC
under the Federal Deposit Insurance Act (the "FDIA"). Prior approval of the FDIC
is required for the Bank Subsidiaries to establish or relocate a branch office
or to engage in any merger, consolidation or significant purchase or sale of
assets. The Bank Subsidiaries are also subject to regulation and supervision by
the Department. In addition, the Bank Subsidiaries are subject to numerous
federal and state laws and regulations which set forth specific restrictions and
procedural requirements with respect to the establishment of branches,
investments, interest rates on loans, credit practices, the disclosure of credit
terms and discrimination in credit transactions.
The FDIC and the Department regularly examine the operations of the
respective Bank Subsidiaries and their condition, including but not limited to
capital adequacy, reserves, loans, investments and management practices. These
examinations are for the protection of the Bank Subsidiaries' depositors and the
BIF and the SAIF and not the Bank Subsidiaries' stockholder. In addition, the
Bank Subsidiaries are required to furnish quarterly and annual reports to the
FDIC. The FDIC's enforcement authority includes the power to remove officers and
directors and the authority to issue orders to prevent a bank from engaging in
unsafe or unsound practices or violating laws or regulations governing its
business.
The FDIC has adopted regulations regarding the capital adequacy of banks
subject to its primary supervision, which require such banks to maintain
specified minimum ratios of capital to total assets and capital to risk-weighted
assets. See "--Regulatory Capital Requirements."
Statewide branching is permitted in New Jersey. Branch approvals are
subject to statutory standards relating to safety and soundness, competition,
public convenience and CRA performance.
Bank Dividends. New Jersey law permits the Bank Subsidiaries to declare
dividends only if, after payment thereof, their capital would be unimpaired and
their remaining surplus would equal at least 50 percent of their capital. Under
the FDIA, the Bank Subsidiaries are prohibited from declaring or paying
dividends or making any other capital distribution if, after that distribution,
they would fail to meet their regulatory capital requirements. At March 31,
1997, the Bank Subsidiaries met their regulatory capital requirements. The FDIC
also has authority to prohibit the payment of dividends by a bank when it
determines such payment to be an unsafe and unsound banking practice. The FDIC
may prohibit bank holding companies of banks which are deemed to be
"significantly undercapitalized" under the FDIA or which fail to properly submit
and implement capital restoration plans required thereby from paying dividends
or making other capital distributions without the permission of the FDIC.
Restrictions Upon Intercompany Transactions. The Bank Subsidiaries are
subject to restrictions imposed by federal law on extensions of credit to, and
certain other transactions with, the Company and other affiliates. Such
restrictions prevent the Company and such other affiliates from borrowing from
the Bank Subsidiaries unless the loans are secured by specified collateral, and
require such transactions to have terms comparable to terms of arms-length
transactions with third persons. Such secured loans and other transactions by
each of the Bank Subsidiaries' are generally limited in amount as to the Company
and as to any other affiliate to 10% of the Bank Subsidiaries' capital and
surplus and
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as to the Company and all other affiliates to an aggregate of 20% of the Bank
Subsidiaries' capital and surplus. These regulations and restrictions may limit
the Company's ability to obtain funds from the Bank Subsidiaries for its cash
needs, including funds for acquisitions and for payment of dividends, interest
and operating expenses.
Deposit Insurance. Since the Bank Subsidiaries are FDIC member
institutions, their respective deposits are currently insured to a maximum of
$100,000 per depositor through the BIF, administered by the FDIC, and the Bank
Subsidiaries are required to pay semi-annual deposit insurance premium
assessments to the FDIC.
The amount of FDIC assessments paid by individual insured depository
institutions is based on their relative risk as measured by regulatory capital
ratios and certain other factors.
During 1996, the President of the United States enacted legislation
which contains the Deposit Insurance Funds Act of 1996 to recapitalize the SAIF.
Under this legislation, the FDIC has levied a special assessment on
SAIF-assessable deposits held as of March 31, 1995. In its acquisition of Family
First in 1995, the Company acquired SAIF-assessable deposits which were subject
to this special assessment.
In addition, the Deposit Insurance Funds Act of 1996 authorized the
Financing Corporation ("FICO") to levy assessments on BIF-assessable deposits
and stipulated that the rate must equal one-fifth the FICO assessment rate that
is applied to deposits assessable by the SAIF. The rates established for GFB and
BCB for 1997 through 1999 are 0.065% and 0.013%, respectively.
Enforcement Powers. The bank regulatory agencies have broad discretion
to issue cease and desist orders if they determine that the Company or its Bank
Subsidiaries are engaging in "unsafe or unsound banking practices." In addition,
the federal bank regulatory authorities are empowered to impose substantial
civil money penalties for violations of certain federal banking statutes and
regulations, violation of a fiduciary duty, or violation of a final or temporary
cease and desist order, among other things. Financial institutions, and
directors, officers, employees, controlling shareholders, agents, consultants,
attorneys, accountants, appraisers and others associated with a depository
institution are subject to the imposition of fines, penalties, and other
enforcement actions based upon the conduct of their relationships with the
institution.
Under the FDIA, the FDIC may be appointed as a conservator or receiver
for a depository institution based upon a number of events and circumstances,
including: (i) consent by the board of directors of the institution; (ii)
cessation of the institution's status as an insured depository institution;
(iii) the institution is undercapitalized and has no reasonable prospect of
becoming adequately capitalized when required to do so, fails to submit an
acceptable capital plan or materially fails to implement an acceptable capital
plan; (iv) the institution is critically undercapitalized or otherwise has
substantially insufficient capital; (v) appointment of a conservator or receiver
by a state banking authority, such as the Department; (vii) the institution's
assets are less than its obligations to its creditors and others; (viii)
substantial dissipation in the institution's assets or earnings due to violation
of any statute or regulation or unsafe or unsound practice; (ix) a willful
violation of a cease and desist order that has become final; (x) an inability of
the institution to pay its obligations or meet its depositors' demands in the
normal course of business; or (xi) any concealment of the institution's books,
records or assets or refusal to submit to examination.
Under the FDIA, the FDIC as a conservator or receiver of a depository
institution has express authority to repudiate contracts with such institution
which it determines to be burdensome or if such
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repudiation will promote the orderly administration of the institution's
affairs. Certain "qualified financial contracts", defined to include securities
contracts, commodity contracts, forward contracts, repurchase agreements, and
swap agreements, generally are excluded from the repudiation powers of the FDIC.
The FDIC is also given authority to enforce contracts made by a depository
institution notwithstanding any contractual provision providing for termination,
default, acceleration, or exercise of rights upon, or solely by reason of,
insolvency or the appointment of a conservator or receiver. Insured depository
institutions also are prohibited from entering into contracts for goods,
products or services which would adversely affect the safety and soundness of
the institutions.
Regulatory Capital Requirements. The Federal Reserve and the FDIC have
established guidelines with respect to the maintenance of appropriate levels of
capital by bank holding companies and state-chartered banks that are not members
of the Federal Reserve System ("state non-member banks"), respectively. The
regulations impose two sets of capital adequacy requirements: minimum leverage
rules, which require bank holding companies and banks to maintain a specified
minimum ratio of capital to total assets, and risk-based capital rules, which
require the maintenance of specified minimum ratios of capital to
"risk-weighted" assets.
The regulations of the Federal Reserve and the FDIC require bank holding
companies and state non-member banks, respectively, to maintain a minimum
leverage ratio of "Tier 1 capital" (as defined in the risk-based capital
guidelines discussed in the following paragraphs) to total assets of 3.0%.
Although setting a minimum 3.0% leverage ratio, the capital regulations state
that only the strongest bank holding companies and banks, with composite
examination ratings of 1 under the rating system used by the federal bank
regulators, would be permitted to operate at or near such minimum level of
capital. All other bank holding companies and banks are expected to maintain a
leverage ratio of at least 1% to 2% above the minimum ratio, depending on the
assessment of an individual organization's capital adequacy by its primary
regulator. Any bank or bank holding company experiencing or anticipating
significant growth would be expected to maintain capital well above the minimum
levels. In addition, the Federal Reserve has indicated that whenever
appropriate, and in particular when a bank holding company is undertaking
expansion, seeking to engage in new activities or otherwise facing unusual or
abnormal risks, it will consider, on a case-by-case basis, the level of an
organization's ratio of tangible Tier 1 capital (after deducting all
intangibles) to total assets in making an overall assessment of capital.
The risk-based capital rules of the Federal Reserve and the FDIC require
bank holding companies and state non-member banks to maintain minimum regulatory
capital levels based upon a weighting of their assets and off-balance sheet
obligations according to risk. The risk-based capital rules have two basic
components: a Tier 1 or core capital requirement and a Tier 2 or supplementary
capital requirement. Tier 1 capital consists primarily of common stockholders'
equity, certain perpetual preferred stock (which must be noncumulative with
respect to banks), and minority interests in the equity accounts of consolidated
subsidiaries; less most intangible assets, primarily goodwill. Tier 2 capital
elements include, subject to certain limitations, the allowance for losses on
loans and leases; perpetual preferred stock that does not qualify for Tier 1 and
long-term preferred stock with an original maturity of at least 20 years from
issuance; hybrid capital instruments, including perpetual debt and mandatory
convertible securities; and subordinated debt and intermediate-term preferred
stock.
The risk-based capital regulations require all banks and bank holding
companies to maintain a minimum ratio of total capital to total risk-weighted
assets of 8%, with at least 4% as core capital. For the purpose of calculating
these ratios, (i) supplementary capital is limited to no more than 100% of core
capital, and (ii) the aggregate amount of certain types of supplementary capital
is limited. In addition,
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the risk-based capital regulations limit the allowance for loan losses which may
be included as capital to 1.25% of total risk-weighted assets.
FDICIA also required the federal banking regulators to classify insured
depository institutions by capital levels and to take various prompt corrective
actions to resolve the problems of any institution that fails to satisfy the
capital standards. The FDIC has issued final regulations establishing these
capital levels and otherwise implementing FDICIA's prompt corrective action
provisions. Under FDICIA and these regulations, all institutions, regardless of
their capital levels, are restricted from making any capital distribution or
paying any management fees that would cause the institution to fail to satisfy
the minimum levels for any of its capital requirements.
Under the FDIC's prompt corrective action regulation, a
"well-capitalized" bank is one that is not subject to any regulatory order or
directive to meet any specific capital level and that has or exceeds the
following capital levels: a total risk-based capital ratio of 10%, a Tier 1
risk-based capital ratio of 6%, and a leverage ratio of 5%. An "adequately
capitalized" bank is one that does not qualify as "well- capitalized" but meets
or exceeds the following capital requirements: a total risk-based capital ratio
of 8%, a Tier 1 risk-based capital ratio of 4%, and a leverage ratio of either
(i) 4% or (ii) 3% if the bank has the highest composite examination rating. A
bank not meeting these criteria will be treated as "undercapitalized,"
"significantly undercapitalized," or "critically undercapitalized" depending on
the extent to which to which the bank's capital levels are below these
standards. A bank that falls within any of the three "undercapitalized"
categories established by the prompt corrective action regulation will be: (i)
subject to increased monitoring by the appropriate federal banking regulator;
(ii) required to submit an acceptable capital restoration plan within 45 days;
(iii) subject to asset growth limits; and (iv) required to obtain prior
regulatory approval for acquisitions, branching and new lines of businesses. The
capital restoration plan must include a guarantee by the institution's holding
company that the institution will comply with the plan until it has been
adequately capitalized on average for four consecutive quarters, under which the
holding company would be liable up to the lesser of 5% of the institution's
total assets or the amount necessary to bring the institution into capital
compliance as of the date it failed to comply with its capital restoration plan.
A significantly undercapitalized institution, as well as any undercapitalized
institution that did not submit an acceptable capital restoration plan, will be
subject to regulatory demands for recapitalization, broader application of
restrictions on transactions with affiliates, limitations on interest rates paid
on deposits, asset growth and other activities, possible replacement of
directors and officers, and restrictions on capital distributions by any bank
holding company controlling the institution. Any company controlling the
institution may be required to divest its interest in the institution. The
senior executive officers of a significantly undercapitalized institution may
not receive bonuses or increases in compensation without prior approval. A
critically undercapitalized institution is prohibited from making payments of
principal or interest on its subordinated debt, except with respect to debt as
approved by the FDIC or, until July 15, 1996, with respect to subordinated debt
outstanding on July 15, 1991 and not extended or otherwise renegotiated after
July 15, 1991. If an institution's ratio of tangible capital to total assets
falls below a level established by the appropriate federal banking regulator,
which may not be less than 2%, nor more than 65% of the minimum tangible capital
level otherwise required (the "critical capital level"), the institution will be
subject to conservatorship or receivership within 90 days unless periodic
determinations are made that forbearance from such action would better protect
the deposit insurance fund. Unless appropriate findings and certifications are
made by the appropriate federal bank regulatory agencies, a critically
undercapitalized institution must be placed in receivership if it remains
critically undercapitalized on average during the calendar quarter beginning 270
days after the date it became critically undercapitalized.
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Effect of Government Monetary Policies; Possible Further Legislation
The earnings of the Company, through the Bank Subsidiaries, are and will
be affected by domestic and international economic conditions and the monetary
and fiscal policies of the United States and foreign governments and their
agencies.
The Federal Reserve's monetary policies have had, and will probably
continue to have, an important impact on the operating results of commercial
banks through its power to implement national monetary policy in order, among
other things, to curb inflation or combat a recession. The Federal Reserve has a
major effect upon the levels of bank loans, investments and deposits through its
open market operations in United States Government securities and through its
regulation of, among other things, the discount rate on borrowings of banks and
the imposition of non-earning reserve requirements against member bank deposits.
It is not possible to predict the nature and impact of future changes in
monetary and fiscal policies.
From time to time, proposals are made in the United States Congress, the
New Jersey Legislature, and various bank regulatory authorities which would
alter the powers of, and place restrictions on, different types of banking
organizations. It is impossible to predict whether any of these proposals will
be adopted and any impact of such adoption on the business of the Company the
Bank Subsidiaries.
The Bank Subsidiaries are also subject to various Federal and State laws
such as usury laws and consumer protection laws.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for the Issuer Trust, the
Issuer Trustees on behalf of the Issuer Trust will issue the Preferred
Securities and the Common Securities. The Preferred Securities will represent
preferred undivided beneficial interests in the assets of the Issuer Trust and
the holders thereof will be entitled to a preference in certain circumstances
with respect to Distributions and amounts payable on redemption or liquidation
over the Common Securities, as well as other benefits as described in the Trust
Agreement. This summary of certain provisions of the Preferred Securities and
the Trust Agreement does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the Trust
Agreement, including the definitions therein of certain terms. Wherever
particular defined terms of the Trust Agreement are referred to herein, such
defined terms are incorporated herein by reference. A copy of the form of the
Trust Agreement is available upon request from the Issuer Trustees.
General
The Preferred Securities will be limited to $20,000,000 aggregate
Liquidation Amount outstanding (which amount may be increased by up to
$3,000,000 aggregate liquidation amount of referred Securities for exercise of
the Underwriters' over-allotment option). See "Underwriting." 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." The Junior Subordinated Debentures will be registered in the name
of the Issuer Trust and held by the Property Trustee in trust for the benefit of
the holders of the Preferred Securities and Common Securities. The Guarantee
will be a guarantee on a subordinated basis with respect to the Preferred
Securities but will not guarantee
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payment of Distributions or amounts payable on redemption or liquidation of such
Preferred Securities when the Issuer Trust does not have funds on hand available
to make such payments. See "Description of Guarantee."
Distributions
The Preferred Securities represent preferred undivided beneficial
interests in the assets of the Issuer Trust, and Distributions on each Preferred
Security will be payable at the annual rate of ^% of the stated Liquidation
Amount of $25, payable quarterly in arrears on March 31, June 30, September 30
and December 31 of each year (each a "Distribution Date"), to the holders of the
Preferred Securities at the close of business on 15th day of March, June,
September and December (whether or not a Business Day (as defined below)) next
preceding the relevant Distribution Date. Distributions on the Preferred
Securities will be cumulative. Distributions will accumulate from ^, 1997. The
first Distribution Date for the Preferred Securities will be ^, 1997. The amount
of Distributions payable for any period less than a full Distribution period
will be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period. Distributions payable for
each full Distribution period will be computed by dividing the rate per annum by
four. If 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 (without any
additional Distributions 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.
So long as no Debenture Event of Default has occurred and is continuing,
the Company has the right under the Junior Subordinated Indenture to defer the
payment of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 20 consecutive quarterly periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. As a
consequence of any such deferral, quarterly Distributions on the Preferred
Securities by the Issuer Trust will be deferred during any such Extension
Period. 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,
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period. Additional Distributions payable
for each full Distribution period will be computed by dividing the rate per
annum by four. The term "Distributions" as used herein shall include any such
additional Distributions. During any such Extension Period, the Company may not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock or (ii) make any payment of principal of or interest or premium,
if any, on or repay, repurchase or redeem any debt securities of the Company
that rank pari passu in all respects with or junior in interest to the Junior
Subordinated Debentures (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of an exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or series
of the Company's indebtedness for any class or series of the Company's capital
stock, (c) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (d) any
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declaration of a dividend in connection with any stockholder's rights plan, or
the issuance of rights, stock or other property under any stockholder's rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Company may further defer the payment of interest,
provided that no Extension Period may exceed 20 consecutive quarterly periods or
extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon
the termination of any such Extension Period and the payment of all amounts then
due, the Company may elect to begin a new Extension Period. No interest shall be
due and payable during an Extension Period, except at the end thereof. The
Company must give the Issuer Trustees notice of its election of such Extension
Period at least one Business Day prior to the earlier of (i) the date the
Distributions on the Preferred Securities would have been payable but for the
election to begin such Extension Period and (ii) the date the Property Trustee
is required to give notice to holders of the Preferred Securities of the record
date or the date such Distributions are payable, but in any event not less than
one Business Day prior to such record date. The Property Trustee will give
notice of the Company's election to begin a new Extension Period to the holders
of the Preferred Securities. 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 Junior Subordinated Debentures -- Option To Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences -- Interest Income
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 Junior
Subordinated Debentures.
The revenue of the Issuer Trust available for distribution to holders of
the Preferred Securities will be limited to payments under the Junior
Subordinated Debentures in which the Issuer Trust will invest the proceeds from
the issuance and sale of the Preferred Securities. See "Description of Junior
Subordinated Debentures." If the Company does not make payments on the Junior
Subordinated Debentures, the Issuer Trust may not have funds available to pay
Distributions or other amounts payable on the Preferred Securities. The payment
of Distributions and other amounts payable on the Preferred Securities (if and
to the extent the Issuer Trust has funds legally available for and cash
sufficient to make such payments) is guaranteed by the Company on a limited
basis as set forth herein under "Description of Guarantee."
Redemption
Upon the repayment or redemption, in whole or in part, of the Junior
Subordinated Debentures, whether at maturity or upon earlier redemption as
provided in the Junior Subordinated Indenture, the proceeds from such repayment
or redemption shall be applied by the Property Trustee to redeem a Like Amount
(as defined below) of the Preferred 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 Preferred Securities plus accumulated
but unpaid Distributions thereon to the date of redemption (the "Redemption
Date") and the related amount of the premium, if any, paid by the Company upon
the concurrent redemption of such Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Redemption." If less than all
the Junior Subordinated Debentures are to be repaid or redeemed on a Redemption
Date, then the proceeds from such repayment or redemption shall be allocated to
the redemption pro rata of the Preferred Securities and the Common Securities.
The amount of premium, if any, paid by the Company upon the redemption of all or
any part of the Junior Subordinated
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Debentures to be repaid or redeemed on a Redemption Date shall be allocated to
the redemption pro rata of the Preferred Securities and the Common Securities.
The Company has the right to redeem the Junior Subordinated Debentures (i)
on or after ^, 2002, in whole at any time or in part from time to time, or (ii)
in whole, but not in part, at any time within 90 days following the occurrence
and during the continuation of a Tax Event, Investment Company Event or Capital
Treatment Event (each as defined below), in each case subject to possible
regulatory approval. See "-- Liquidation Distribution Upon Dissolution." A
redemption of the Junior Subordinated Debentures would cause a mandatory
redemption of a Like Amount of the Preferred Securities and Common Securities at
the Redemption Price.
"25% Capital Limitation" means the limitation imposed by the Federal
Reserve that the proceeds of certain qualifying securities like the Trust
Securities will qualify as Tier 1 capital of the issuer up to an amount not to
exceed 25% of the Issuer's Tier 1 capital, or any subsequent limitation adopted
by the Federal Reserve.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in the State of New Jersey or the City of New
York are authorized or required by law or executive order to remain closed, or
(c) a day on which the Property Trustee's Corporate Trust Office or the
Corporate Trust Office of the Debenture Trustee is closed for business.
"Like Amount" means (i) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount (as defined below)
equal to that portion of the principal amount of Junior Subordinated Debentures
to be contemporaneously redeemed in accordance with the Junior Subordinated
Indenture, allocated to the Common Securities and to the Preferred Securities
based upon the relative Liquidation Amounts of such classes and (ii) with
respect to a distribution of Junior Subordinated Debentures to holders of Trust
Securities in connection with a dissolution or liquidation of the Issuer Trust,
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the holder to whom such Junior
Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Tax Event" means the receipt by the Issuer Trust of an opinion of
counsel to the Company experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Preferred Securities, there is more than an insubstantial
risk that (i) the Issuer Trust is, or will be within 90 days of the delivery of
such opinion, subject to United States federal income tax with respect to income
received or accrued on the Junior Subordinated Debentures, (ii) interest payable
by the Company on the Junior Subordinated Debentures is not, or within 90 days
of the delivery 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
Issuer Trust is, or will be within 90 days of the delivery of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
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application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act, which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Preferred Securities.
"Capital Treatment Event" means the reasonable determination by the
Company that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the
Preferred Securities, there is more than an insubstantial risk that the Company
will not be entitled to treat an amount equal to the Liquidation Amount of the
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof),
except as otherwise restricted under the 25% Capital Limitation, for purposes of
the risk-based capital adequacy guidelines of the Federal Reserve, as then in
effect and applicable to the Company.
If a Tax Event described in clause (i) or (iii) of the definition of Tax
Event above has occurred and is continuing and the Issuer Trust is the holder of
all the Junior Subordinated Debentures, the Company will pay Additional Sums (as
defined below), if any, on the Junior Subordinated Debentures.
"Additional Sums" means the additional amounts as may be necessary in
order that the amount of Distributions then due and payable by the Issuer Trust
on the outstanding Preferred Securities and Common Securities of the Issuer
Trust will not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject as a result of
a Tax Event.
Redemption Procedures
Preferred Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated Debentures. Redemptions of the Preferred
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds on hand
available for the payment of such Redemption Price. See also "-- Subordination
of Common Securities."
If the Issuer Trust gives a notice of redemption in respect of the
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are available, in the case of Preferred Securities
held in book-entry form, the Property Trustee will deposit irrevocably with DTC
funds sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Preferred Securities. With respect to Preferred Securities not
held in book-entry form, the Property Trustee, to the extent funds are
available, will irrevocably deposit with the paying agent for the Preferred
Securities funds sufficient to pay the applicable Redemption Price and will give
such paying agent irrevocable instructions and authority to pay the Redemption
Price to the holders thereof upon surrender of their certificates evidencing the
Preferred Securities. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date for any Preferred Securities called for redemption
shall be payable to the holders of the Preferred 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 the holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
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Securities to receive the Redemption Price, but without interest on such
Redemption Price, and such Preferred Securities will cease to be outstanding. If
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 (without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption Price in
respect of Preferred Securities called for redemption is improperly withheld or
refused and not paid either by the Issuer Trust or by the Company pursuant to
the Guarantee as described under "Description of Guarantee," Distributions on
such Preferred Securities will continue to accumulate at the then applicable
rate, from the Redemption Date originally established by the Issuer Trust for
such Preferred Securities to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities laws), the Company or its affiliates may at any time and from
time to time purchase outstanding Preferred Securities by tender, in the open
market or by private agreement, and may resell such securities.
If less than all the Preferred Securities and Common Securities are to
be redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Preferred Securities and Common Securities to be redeemed shall be allocated pro
rata to the Preferred Securities and the Common Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed shall be selected on a pro rata basis not more than 60
days prior to the Redemption Date by the Property Trustee from the outstanding
Preferred Securities not previously called for redemption, or if the Preferred
Securities are then held in the form of a Global Preferred Security (as defined
below), in accordance with DTC's customary procedures. The Property Trustee
shall promptly notify the securities registrar for the Trust 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 shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each registered holder of Preferred
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Company defaults in payment of the
Redemption Price on the Junior Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on the Junior Subordinated
Debentures or portions thereof (and, unless payment of the Redemption Price in
respect of the Preferred Securities is withheld or refused and not paid either
by the Issuer Trust or the Company pursuant to the Guarantee, Distributions will
cease to accumulate on the Preferred Securities or portions thereof) called for
redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, and the
Liquidation Distribution in respect of, the Preferred Securities and Common
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of such Preferred Securities and Common Securities. However, if on any
Distribution Date or Redemption Date a Debenture Event of Default has occurred
and is continuing as a result of any failure by the Company to pay any amounts
in respect of the Junior Subordinated Debentures when due, no payment of any
Distribution on, or Redemption Price of, or Liquidation
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Distribution in respect of, any of the Common Securities, and no other payment
on account of the redemption, liquidation or other acquisition of such Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all the outstanding Preferred Securities for all
Distribution periods terminating on or prior thereto, or in the case of payment
of the Redemption Price the full amount of such Redemption Price on all the
outstanding Preferred Securities then called for redemption, shall have been
made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or
Redemption Price of, the Preferred Securities then due and payable.
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holders 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 effects of all such Events of Default with respect
to such Preferred Securities have been cured, waived or otherwise eliminated.
See "-- Events of Default; Notice" and "Description of Junior Subordinated
Debentures -- Debenture Events of Default." Until all such Events of Default
under the Trust Agreement with respect to the Preferred Securities have been so
cured, waived or otherwise eliminated, the Property Trustee will act solely on
behalf of the holders of the Preferred Securities and not on behalf of the
holders 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 amount payable on the Preferred Securities in the event of any
liquidation of the Issuer Trust is $25 per Preferred Security plus accumulated
and unpaid Distributions, subject to certain exceptions, which may be in the
form of a distribution of such amount in Junior Subordinated Debentures.
The holders of all the outstanding Common Securities have the right at
any time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust.
The Federal Reserve's risk-based capital guidelines currently provide
that redemptions of permanent equity or other capital instruments before stated
maturity could have a significant impact on a bank holding company's overall
capital structure and that any organization considering such a redemption should
consult with the Federal Reserve before redeeming any equity or capital
instrument prior to maturity if such redemption could have a material effect on
the level or composition of the organization's capital base (unless the equity
or capital instrument were redeemed with the proceeds of, or replaced by, a like
amount of a similar or higher quality capital instrument and the Federal Reserve
considers the organization's capital position to be fully adequate after the
redemption).
In the event the Company, while a holder of Common Securities, dissolves
the Issuer Trust prior to the stated maturity of the Preferred Securities and
the dissolution of the Issuer Trust is deemed to constitute the redemption of
capital instruments by the Federal Reserve under its risk-based capital
guidelines or policies, the dissolution of the Issuer Trust by the Company may
be subject to the prior approval of the Federal Reserve. Moreover, any changes
in applicable law or changes in the Federal Reserve's risk-based capital
guidelines or policies could impose a requirement on the Company that it obtain
the prior approval of the Federal Reserve to dissolve the Issuer Trust.
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Pursuant to the Trust Agreement, the Issuer Trust will automatically
dissolve upon expiration of its term or, if earlier, will dissolve on the first
to occur of: (i) certain events of bankruptcy, dissolution or liquidation of the
Company or the holder of the Common Securities, (ii) the distribution of a Like
Amount of the Junior Subordinated Debentures to the holders of the Trust
Securities, if the holders of Common Securities have given written direction to
the Property Trustee to dissolve the Issuer Trust (which direction, subject to
the foregoing restrictions, is optional and wholly within the discretion of the
holders of Common Securities), (iii) the repayment of all the Preferred
Securities in connection with the redemption of all the Trust Securities as
described under "-- Redemption" and (iv) the entry of an order for the
dissolution of the Issuer Trust by a court of competent jurisdiction.
If dissolution of the Issuer Trust occurs as described in clause (i),
(ii) or (iv) above, the Issuer Trust will be liquidated by the Property Trustee
as expeditiously as the Property Trustee determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Issuer Trust
as provided by applicable law, to the holders of such Trust Securities a Like
Amount of the Junior Subordinated Debentures, unless such distribution is not
practical, in which event such holders will be entitled to receive out of the
assets of the Issuer Trust available for distribution to holders, after
satisfaction of liabilities to creditors of the Issuer Trust as provided by
applicable law, an amount equal to, in the case of holders of Preferred
Securities, the aggregate of the Liquidation Amount plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Issuer Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Issuer Trust on its Preferred Securities shall be paid on a pro rata basis. The
holders of the Common Securities will be entitled to receive distributions upon
any such liquidation pro rata with the holders of the Preferred Securities,
except that if a Debenture Event of Default has occurred and is continuing as a
result of any failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Preferred Securities shall have a priority
over the Common Securities. See "-- Subordination of Common Securities."
After the liquidation date fixed for any distribution of Junior
Subordinated Debentures (i) the Preferred Securities will no longer be deemed to
be outstanding, (ii) DTC or its nominee, as the registered holder of Preferred
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Preferred Securities held by DTC or its nominee and
(iii) any certificates representing the Preferred Securities not held by DTC or
its nominee will be deemed to represent the Junior Subordinated Debentures
having a principal amount equal to the stated Liquidation Amount of the
Preferred Securities and bearing accrued and unpaid interest in an amount equal
to the accumulated and unpaid Distributions on the Preferred Securities until
such certificates are presented to the security registrar for the Trust
Securities for transfer or reissuance.
If the Company does not redeem the Junior Subordinated Debentures prior
to maturity and the Issuer Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Preferred Securities, the
Preferred Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures and the distribution of the Liquidation Distribution to
the holders of the Preferred Securities.
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution and liquidation of the Issuer
Trust were to occur. Accordingly, the Preferred Securities that an investor may
purchase, or the Junior Subordinated Debentures that the investor may receive on
dissolution and
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liquidation of the Issuer Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby.
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 it is
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description of
Junior Subordinated Debentures -- Debenture Events of Default"); or
(ii) default by the Issuer Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a period of 30
days; or
(iii) default by the Issuer 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 Issuer Trustees in the Trust Agreement (other
than a covenant or warranty a default in the performance of which or the breach
of which is dealt with in clause (ii) or (iii) above), and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Issuer Trustees and the Company 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 if a successor Property Trustee has not been
appointed within 90 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 Trust Securities and the
Administrators, unless such Event of Default has been cured or waived. The
Company, as Depositor, and the Administrators 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 as a
result of any failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Preferred Securities will have a
preference over the Common Securities with respect to payments of any amounts in
respect of the Preferred Securities as described above. See "-- Subordination of
Common Securities," "-- Liquidation Distribution Upon Dissolution" and
"Description of Junior Subordinated Debentures --Debenture Events of Default."
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Removal of Issuer Trustees; Appointment of Successors
The holders of at least a majority in aggregate Liquidation Amount of
the outstanding Preferred Securities may remove an Issuer Trustee for cause or,
if a Debenture Event of Default has occurred and is continuing, with or without
cause. If an Issuer Trustee is removed by the holders of the outstanding
Preferred Securities, the successor may be appointed by the holders of at least
25% in Liquidation Amount of Preferred Securities. If an Issuer Trustee resigns,
such Trustee will appoint its successor. If an Issuer Trustee fails to appoint a
successor, the holders of at least 25% in Liquidation Amount of the outstanding
Preferred Securities may appoint a successor. If a successor has not been
appointed by the holders, any holder of Preferred Securities or Common
Securities or the other Issuer Trustee may petition a court in the State of
Delaware to appoint a successor. Any Delaware Trustee must meet the applicable
requirements of Delaware law. Any Property Trustee must be a national or
state-chartered bank, and at the time of appointment have securities rated in
one of the three highest rating categories by a nationally recognized
statistical rating organization and have capital and surplus of at least
$50,000,000. No resignation or removal of an Issuer Trustee and no appointment
of a successor trustee shall be effective until the acceptance of appointment by
the successor trustee in accordance with the provisions of the Trust Agreement.
Merger or Consolidation of Issuer Trustees
Any entity into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Issuer
Trustee is a party, or any entity succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Trust Agreement, provided such entity is otherwise
qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Issuer Trust
The Issuer Trust may not merge with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust may, at the request
of the holders of the Common Securities and with the consent of the holders of
at least a majority in aggregate Liquidation Amount of the outstanding Preferred
Securities, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to a trust organized as such under the laws of any State, so long as (i) such
successor entity either (a) expressly assumes all the obligations of the Issuer
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 have the same priority as the Preferred Securities with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) a
trustee of such successor entity, possessing the same powers and duties as the
Property Trustee, is appointed to hold the Junior Subordinated Debentures, (iii)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, if then rated, (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) such successor entity has
a purpose substantially identical to that of the Issuer Trust, (vi) prior to
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease, the Issuer Trust has received an opinion from independent counsel
experienced in such matters to the effect that (a) such merger, consolidation,
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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 Issuer Trust nor such successor entity will be
required to register as an investment company under the Investment Company Act,
and (vii) the Company or any permitted successor or assignee owns all the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, the Issuer Trust may not,
except with the consent of holders of 100% in aggregate Liquidation Amount of
the Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Issuer Trust or the successor entity to be taxable as a corporation for United
States federal income tax purposes.
Voting Rights; Amendment of Trust Agreement
Except as provided above and under "-- Removal of Issuer Trustees;
Appointment of Successors" and "Description of Guarantee -- Amendments and
Assignment" and as otherwise required by law 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 holders of a
majority of the Common Securities and the Property Trustee, without the consent
of the holders of the Preferred Securities, (i) to cure any ambiguity, correct
or supplement any provisions in the Trust Agreement that may be inconsistent
with any other provision, or to make any other provisions with respect to
matters or questions arising under the Trust Agreement, provided that any such
amendment does not adversely affect in any material respect the interests of any
holder of Trust Securities, or (ii) to modify, eliminate or add to any
provisions of the Trust Agreement to such extent as may be necessary to ensure
that the Issuer Trust will not be taxable as a corporation for United States
federal income tax purposes at any time that any Trust Securities are
outstanding or to ensure that the Issuer Trust will not be required to register
as an "investment company" under the Investment Company Act, and any amendments
of the Trust Agreement will become effective when notice of such amendment is
given to the holders of Trust Securities. The Trust Agreement may be amended by
the holders of a majority of the Common Securities and the Property Trustee with
(i) the consent of holders representing not less than a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities and (ii) receipt by
the Issuer Trustees of an opinion of counsel to the effect that such amendment
or the exercise of any power granted to the Issuer Trustees in accordance with
such amendment will not affect the Issuer Trust's not being taxable as a
corporation for United States federal income tax purposes or the Issuer Trust's
exemption from status as an "investment company" under the Investment Company
Act, except that, without the consent of each holder of Trust Securities
affected thereby, the Trust Agreement may not be amended to (i) change the
amount or timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Issuer
Trust, the Property Trustee will not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Property Trustee with respect to the
Junior Subordinated Debentures, (ii) waive any past default that is waivable
under Section 5.13 of
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the Junior Subordinated Indenture, (iii) exercise any right to rescind or annul
a declaration that the Junior Subordinated Debentures shall be due and payable
or (iv) consent to any amendment, modification or termination of the Junior
Subordinated Indenture or the Junior Subordinated Debentures, where such consent
shall be required, without, in each case, obtaining the prior approval of the
holders of at least a majority in aggregate Liquidation Amount of the
outstanding Preferred Securities, except that, if a consent under the Junior
Subordinated Indenture would require the consent of each holder of Junior
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 Property Trustee may not revoke any action previously authorized
or approved by a vote of the holders of the Preferred Securities except by
subsequent vote of the holders of the Preferred Securities. The Property Trustee
will notify each holder of Preferred Securities of any notice of default with
respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of the holders of the Preferred Securities, before taking
any of the foregoing actions, the Property Trustee will obtain an opinion of
counsel experienced in such matters to the effect that the Issuer Trust will not
be 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 which action by written consent of such holders is to be taken, to
be given to each registered holder 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 to redeem and cancel Preferred Securities in accordance with the Trust
Agreement.
Notwithstanding 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 Issuer Trustees or any
affiliate of the Company or any Issuer Trustees, will, for purposes of such vote
or consent, be treated as if they were not outstanding.
Expenses and Taxes
In the Indenture, the Company, as borrower, has agreed to pay all debts
and other obligations (other than with respect to the Preferred Securities) and
all costs and expenses of the Issuer Trust (including costs and expenses
relating to the organization of the Issuer Trust, the fees and expenses of the
Issuer Trustees and the costs and expenses relating to the operation of the
Issuer Trust) and to pay any and all taxes and all costs and expenses with
respect thereto (other than United States withholding taxes) to which the Issuer
Trust might become subject. The foregoing obligations of the Company under the
Indenture are for the benefit of, and shall be enforceable by, any person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice thereof. Any such
Creditor may enforce such obligations of the Company directly against the
Company, and the Company has irrevocably waived any right or remedy to require
that any such Creditor take any action against the Issuer Trust or any other
person before proceeding against the Company. The Company has also agreed in the
Indenture to execute such additional agreements as may be necessary or desirable
to give full effect to the foregoing. Book Entry, Delivery and Form
The Preferred Securities will be issued in the form of one or more fully
registered global securities which will be deposited with, or on behalf of, DTC
and registered in the name of DTC's
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nominee. Unless and until it is exchangeable in whole or in part for the
Preferred Securities in definitive form, a global security may not be
transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC or by DTC or any such nominee to a successor of
such Depository or a nominee of such successor.
Ownership of beneficial interests in a global security will be limited
to persons that have accounts with DTC or its nominee ("Participants") or
persons that may hold interests through Participants. The Company expects that,
upon the issuance of a global security, DTC will credit, on its book-entry
registration and transfer system, the Participants' accounts with their
respective principal amounts of the Preferred Securities represented by such
global security. Ownership of beneficial interests in such global security will
be shown on, and the transfer of such ownership interests will be effected only
through, records maintained by DTC (with respect to interests of Participants)
and on the records of Participants (with respect to interests of Persons held
through Participants). Beneficial owners will not receive written confirmation
from DTC of their purchase, but are expected to receive written confirmations
from the Participants through which the beneficial owner entered into the
transaction. Transfers of ownership interests will be accomplished by entries on
the books of Participants acting on behalf of the beneficial owners.
So long as DTC, or its nominee, is the registered owner of a global
security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Preferred Securities represented by such global security
for all purposes under the Junior Subordinated Indenture. Except as provided
below, owners of beneficial interests in a global security will not be entitled
to receive physical delivery of the Preferred Securities in definitive form and
will not be considered the owners or holders thereof under the Junior
Subordinated Indenture. Accordingly, each person owning a beneficial interest in
such a global security must rely on the procedures of DTC and, if such person is
not a Participant, on the procedures of the Participant through which such
person owns its interest, to exercise any rights of a holder of Preferred
Securities under the Junior Subordinated Indenture. The Company understands
that, under DTC's existing practices, in the event that the Company requests any
action of holders, or an owner of a beneficial interest in such a global
security desires to take any action which a holder is entitled to take under the
Junior Subordinated Indenture, DTC would authorize the Participants holding the
relevant beneficial interests to take such action, and such Participants would
authorize beneficial owners owning through such Participants to take such action
or would otherwise act upon the instructions of beneficial owners owning through
them. Redemption notices will also be sent to DTC. If less than all of the
Preferred Securities are being redeemed, the Company understands that it is
DTC's existing practice to determine by lot the amount of the interest of each
Participant to be redeemed.
Distributions on the Preferred Securities registered in the name of DTC
or its nominee will be made to DTC or its nominee, as the case may be, as the
registered owner of the global security representing such Preferred Securities.
None of the Company, the Issuer Trustees, the Administrators, any Paying Agent
or any other agent of the Company or the Issuer Trustees will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global
security for such Preferred Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Disbursements of Distributions to Participants shall be the responsibility of
DTC. DTC's practice is to credit Participants' accounts on a payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on the payable date. Payments
by Participants to beneficial owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such
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Participant and not of DTC, the Company, the Issuer Trustees, the Paying Agent
or any other agent of the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time.
DTC may discontinue providing its services as securities depository with
respect to the Preferred Securities at any time by giving reasonable notice to
the Company or the Issuer Trustees. If DTC notifies the Company that it is
unwilling to continue as such, or if it is unable to continue or ceases to be a
clearing agency registered under the Exchange Act and a successor depository is
not appointed by the Company within ninety days after receiving such notice or
becoming aware that DTC is no longer so registered, the Company will issue the
Preferred Securities in definitive form upon registration of transfer of, or in
exchange for, such global security. In addition, the Company may at any time and
in its sole discretion determine not to have the Preferred Securities
represented by one or more global securities and, in such event, will issue
Preferred Securities in definitive form in exchange for all of the global
securities representing such Preferred Securities.
DTC has advised the Company and the Issuer Trust as follows: DTC is a
limited purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its Participants and to facilitate the clearance and
settlement of securities transactions between Participants through electronic
book entry changes to accounts of its Participants, thereby eliminating the need
for physical movement of certificates. Participants include securities brokers
and dealers (such as the Underwriter), banks, trust companies and clearing
corporations and may include certain other organizations. Certain of such
Participants (or their representatives), together with other entities, own DTC.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through, or maintain a custodial
relationship with a Participant, either directly or indirectly.
Same-Day Settlement and Payment
Settlement for the Preferred Securities will be made by the Underwriters
in immediately available funds.
Secondary trading in Preferred Securities of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Preferred
Securities will trade in DTC's Same-Day Funds Settlement System, and secondary
market trading activity in the Preferred Securities will therefore be required
by DTC to settle in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the Preferred Securities.
Payment and Paying Agency
Payments in respect of the Preferred Securities will be made to DTC,
which will credit the relevant accounts at DTC on the applicable Distribution
Dates or, if the Preferred Securities are not held by DTC, such payments will be
made by check mailed to the address of the holder entitled thereto as such
address appears on the securities register for the Trust Securities. The paying
agent (the "Paying Agent") will initially be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrators. The Paying Agent will be permitted to resign as Paying Agent
upon 30 days' written notice to the Property Trustee and the Administrators. If
the Property Trustee is no longer the Paying Agent, the Property Trustee will
appoint a successor (which must be a bank or trust company reasonably acceptable
to the Administrators) to act as Paying Agent.
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Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of the Issuer Trust, but upon payment of any tax
or other governmental charges that may be imposed in connection with any
transfer or exchange. The Issuer Trust will not be required to register or cause
to be registered the transfer of the Preferred Securities after the Preferred
Securities have been called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance
of an Event of Default, undertakes to perform only such duties as are
specifically set forth in the Trust Agreement and, after such Event of Default,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Agreement at the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
For information concerning the relationships between Bankers Trust
Company, the Property Trustee, and the Company, see "Description of Junior
Subordinated Debentures -- Information Concerning the Debenture Trustee."
Miscellaneous
The Administrators and the Property Trustee are authorized and directed
to conduct the affairs of and to operate the Issuer Trust in such a way that the
Issuer Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or taxable as a corporation for
United States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. In this connection, the Property Trustee and the
holders of Common Securities are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of the Issuer Trust or the Trust
Agreement, that the Property Trustee and the holders of Common Securities
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar
rights.
The Issuer Trust may not borrow money, issue debt or mortgage or pledge
any of its assets.
Governing Law
The Trust Agreement will be governed by and construed in accordance with
the laws of the State of Delaware.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under the Junior
Subordinated Indenture, under which Bankers Trust Company is acting as Debenture
Trustee. This summary of certain terms and provisions of the Junior Subordinated
Debentures and the Junior Subordinated Indenture does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Junior Subordinated Indenture, including the definitions
therein of certain terms. Whenever particular defined terms of the Junior
Subordinated Indenture (as amended or supplemented from time to time) are
referred to herein, such defined terms are incorporated herein by reference. A
copy of the form of Junior Subordinated Indenture is available from the
Debenture Trustee upon request.
General
Concurrently with the issuance of the Preferred Securities, the Issuer
Trust will invest the proceeds thereof, together with the consideration paid by
the Company for the Common Securities, in the Junior Subordinated Debentures
issued by the Company. The Junior Subordinated Debentures will bear interest,
accruing from ^, 1997, 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 yearnt (each, an "Interest Payment Date"), commencing ^, 1997, to the
person in whose name each Junior Subordinated Debenture is registered at the
close of business on the 15th day of March, June, September or December (whether
or not a Business Day) next preceding such Interest Payment Date. It is
anticipated that, until the liquidation, if any, of the Issuer Trust, each
Junior Subordinated Debenture will be registered in the name of the Issuer Trust
and held by the Property Trustee in trust for the benefit of the holders of the
Trust Securities. The amount of interest payable for any period less than a full
interest period will be computed on the basis of a 360-day year of twelve 30-day
months and the actual days elapsed in a partial month in such period. The amount
of interest payable for any full interest period will be computed by dividing
the rate per annum by four. If any date on which interest is payable on the
Junior Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (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 ^%, compounded quarterly and computed
on the basis of a 360-day year of twelve 30-day months and the actual days
elapsed in a partial month in such period. The amount of additional interest
payable for any full interest period will be computed by dividing the rate per
annum by four. 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 Sums (as defined below), as applicable.
The Junior Subordinated Debentures will mature on ^ , 2027.
The Junior Subordinated Debentures will be unsecured and will rank
junior and be subordinate in right of payment to all Senior Indebtedness of the
Company. The Junior Subordinated Debentures will not be subject to a sinking
fund. The Junior Subordinated Indenture does not limit the incurrence or
issuance of other secured or unsecured debt by the Company, including Senior
Indebtedness, whether under the Junior Subordinated Indenture or any existing or
other indenture that the Company may enter into in the future or otherwise. See
"-- Subordination."
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Option to Extend Interest Payment Period
So long as no Debenture Event of Default has occurred and is continuing,
the Company has the right at any time during the term of the Junior Subordinated
Debentures to defer the payment of interest at any time or from time to time for
a period not exceeding 20 consecutive quarterly periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. During any such Extension Period
the Company shall have the right to make partial payments of interest on any
interest payment date. At the end of such Extension Period, the Company must pay
all interest then accrued and unpaid (together with interest thereon at the
annual rate of ^%, compounded quarterly and computed on the basis of a 360-day
year of twelve 30-day months and the actual days elapsed in a partial month in
such period, to the extent permitted by applicable law). The amount of
additional interest payable for any full interest period will be computed by
dividing the rate per annum by four. During an Extension Period, interest will
continue to accrue and holders of Junior Subordinated Debentures (or holders of
Preferred Securities while outstanding) will be required to accrue interest
income for United States federal income tax purposes. See "Certain Federal
Income Tax Consequences -- Interest Income and Original Issue Discount."
During any such Extension Period, the Company may not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Junior Subordinated Debentures
(other than (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Company in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of the
Company's indebtedness for any class or series of the Company's capital stock,
(c) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholder's rights plan, or the issuance of rights, stock
or other property under any stockholders rights plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock). Prior to the termination of any such Extension Period, the Company
may further defer the payment of interest, provided that no Extension Period may
exceed 20 consecutive quarterly periods or extend beyond the Stated Maturity of
the Junior 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 conditions. No interest shall be due
and payable during an Extension Period, except at the end thereof. The Company
must give the Issuer Trustees notice of its election of such Extension Period at
least one Business Day prior to the earlier of (i) the date the Distributions on
the Preferred Securities would have been payable but for the election to begin
such Extension Period and (ii) the date the Property Trustee is required to give
notice to holders of the Preferred Securities of the record date or the date
such Distributions are payable, but in any event not less than one Business Day
prior to such record date. The Property Trustee will give notice of the
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Company's election to begin a new Extension Period to the holders of the
Preferred Securities. There is no limitation on the number of times that the
Company may elect to begin an Extension Period.
Redemption
The Junior Subordinated Debentures are redeemable prior to maturity at
the option of the Company (i) on or after ^, 2002, in whole at any time or in
part from time to time, or (ii) in whole, but not in part, at any time within 90
days following the occurrence and during the continuation of a Tax Event,
Investment Company Event or Capital Treatment Event (each as defined under
"Description of Preferred Securities -- Redemption"), in each case at the
redemption price described below. The proceeds of any such redemption will be
used by the Issuer Trust to redeem the Preferred Securities.
The Federal Reserve's risk-based capital guidelines, which are subject
to change, currently provide that redemptions of permanent equity or other
capital instruments before stated maturity could have a significant impact on a
bank holding company's overall capital structure and that any organization
considering such a redemption should consult with the Federal Reserve before
redeeming any equity or capital instrument prior to maturity if such redemption
could have a material effect on the level or composition of the organization's
capital base (unless the equity or capital instrument were redeemed with the
proceeds of, or replaced by, a like amount of a similar or higher quality
capital instrument and the Federal Reserve considers the organization's capital
position to be fully adequate after the redemption).
The redemption of the Junior Subordinated Debentures by the Company
prior to their Stated Maturity would constitute the redemption of capital
instruments under the Federal Reserve's current risk-based capital guidelines
and may be subject to the prior approval of the Federal Reserve. The redemption
of the Junior Subordinated Debentures also could be subject to the additional
prior approval of the Federal Reserve under its current risk-based capital
guidelines.
The redemption price for Junior Subordinated Debentures is the
outstanding principal amount of the Junior Subordinated Debentures plus accrued
interest (including any Additional Interest or any Additional Sums) thereon to
but excluding the date fixed for redemption.
Additional Sums
The Company has covenanted in the Junior Subordinated Indenture that, if
and for so long as (i) the Issuer Trust is the holder of all Junior Subordinated
Debentures and (ii) the Issuer Trust is required to pay any additional taxes,
duties or other governmental charges as a result of a Tax Event, the Company
will pay as additional sums on the Junior Subordinated Debentures such amounts
as may be required so that the Distributions payable by the Issuer Trust will
not be reduced as a result of any such additional taxes, duties or other
governmental charges. See "Description of Preferred Securities --Redemption."
Registration, Denomination and Transfer
The Junior Subordinated Debentures will initially be registered in the
name of the Issuer Trust. If the Junior Subordinated Debentures are distributed
to holders of Preferred Securities, it is anticipated that the depositary
arrangements for the Junior Subordinated Debentures will be substantially
identical to those in effect for the Preferred Securities. See "Description of
Preferred Securities -- Book Entry, Delivery and Form."
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Although DTC has agreed to the procedures described above, it is under
no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days of receipt of notice from DTC to such effect, the
Company will cause the Junior Subordinated Debentures to be issued in definitive
form.
Payments on Junior Subordinated Debentures represented by a global
security will be made to Cede & Co., the nominee for DTC, as the registered
holder of the Junior Subordinated Debentures, as described under "Description of
Preferred Securities -- Book Entry, Delivery and Form." If Junior Subordinated
Debentures are issued in certificated form, principal and interest will be
payable, the transfer of the Junior Subordinated Debentures will be registrable,
and Junior Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures of other authorized denominations of a like aggregate principal
amount, at the corporate trust office of the Debenture Trustee in New York, New
York or at the offices of any Paying Agent or transfer agent appointed by the
Company, provided that payment of interest may be made at the option of the
Company by check mailed to the address of the persons entitled thereto. However,
a holder of $1 million or more in aggregate principal amount of Junior
Subordinated Debentures may receive payments of interest (other than interest
payable at the Stated Maturity) by wire transfer of immediately available funds
upon written request to the Debenture Trustee not later than 15 calendar days
prior to the date on which the interest is payable.
Junior Subordinated Debentures will be exchangeable for other Junior
Subordinated Debentures of like tenor, of any authorized denominations, and of a
like aggregate principal amount.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the securities registrar appointed under the
Junior Subordinated Debenture or at the office of any transfer agent designated
by the Company for such purpose without service charge and upon payment of any
taxes and other governmental charges as described in the Junior Subordinated
Indenture. The Company will appoint the Debenture Trustee as securities
registrar under the Junior Subordinated Indenture. The Company may at any time
designate additional transfer agents with respect to the Junior Subordinated
Debentures.
In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of the Junior
Subordinated Debentures to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
Any monies deposited with the Debenture Trustee or any paying agent, or
then held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
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Restrictions on Certain Payments; Certain Covenants of the Company
The Company has covenanted that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Junior Subordinated Debentures
(other than (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Company in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period or other event
referred to below, (b) as a result of an exchange or conversion of any class or
series of the Company's capital stock (or any capital stock of a subsidiary of
the Company) for any class or series of the Company's capital stock or of any
class or series of the Company's indebtedness for any class or series of the
Company's capital stock, (c) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholder's rights plan, or
the issuance of rights, stock or other property under any stockholder's rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock), if at such time (i) there has
occurred any event (a) of which the Company has actual knowledge that with the
giving of notice or the lapse of time, or both, would constitute a Debenture
Event of Default and (b) that the Company has not taken reasonable steps to
cure, (ii) if the Junior Subordinated Debentures are held by the Issuer Trust,
the Company is in default with respect to its payment of any obligations under
the Guarantee or (iii) the Company has given notice of its election of an
Extension Period as provided in the Junior Subordinated Indenture and has not
rescinded such notice, or such Extension Period, or any extension thereof, is
continuing.
The Company has covenanted in the Junior Subordinated Indenture (i) to
continue to hold, directly or indirectly, 100% of the Common Securities,
provided that certain successors that are permitted pursuant to the Junior
Subordinated Indenture may succeed to the Company's ownership of the Common
Securities, (ii) as holder of the Common Securities, not to voluntarily
terminate, windup or liquidate the Issuer Trust, other than (a) in connection
with a distribution of Junior Subordinated Debentures to the holders of the
Preferred Securities in liquidation of the Issuer 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 Issuer Trust to continue not to
be taxable as a corporation for United States federal income tax purposes.
Modification of Junior Subordinated Indenture
From time to time, the Company and the Debenture Trustee may, without
the consent of any of the holders of the outstanding Junior Subordinated
Debentures, amend, waive or supplement the provisions of the Junior Subordinated
Indenture to: (1) evidence succession of another corporation or association to
the Company and the assumption by such person of the obligations of the Company
under the Junior Subordinated Debentures, (2) add further covenants,
restrictions or conditions for the protection of holders of the Junior
Subordinated Debentures, (3) cure ambiguities or correct the Junior
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Subordinated Debentures in the case of defects or inconsistencies in the
provisions thereof, so long as any such cure or correction does not adversely
affect the interest of the holders of the Junior Subordinated Debentures in any
material respect, (4) change the terms of the Junior Subordinated Debentures to
facilitate the issuance of the Junior Subordinated Debentures in certificated or
other definitive form, (5) evidence or provide for the appointment of a
successor Debenture Trustee, or (6) qualify, or maintain the qualification of,
the Junior Subordinated Indentures under the Trust Indenture Act. The Junior
Subordinated 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 Junior Subordinated Debentures, to modify the Junior
Subordinated Indenture in a manner affecting the rights of the holders of the
Junior Subordinated Debentures, except that no such modification may, without
the consent of the holder of each outstanding Junior Subordinated Debenture so
affected, (i) change the Stated Maturity of the Junior Subordinated Debentures,
or reduce the principal amount thereof, the rate of interest thereon or any
premium payable upon the redemption thereof, or change the place of payment
where, or the currency in which, any such amount is payable or impair the right
to institute suit for the enforcement of any Junior Subordinated Debenture or
(ii) reduce the percentage of principal amount of Junior Subordinated
Debentures, the holders of which are required to consent to any such
modification of the Junior Subordinated Indenture. Furthermore, so long as any
of the Preferred Securities remain outstanding, no such modification may be made
that adversely affects the holders of such Preferred Securities in any material
respect, and no termination of the Junior Subordinated Indenture may occur, and
no waiver of any Debenture Event of Default or compliance with any covenant
under the Junior Subordinated Indenture may be effective, without the prior
consent of the holders of at least a majority of the aggregate Liquidation
Amount of the outstanding Preferred Securities unless and until the principal of
(and premium, if any, on) the Junior Subordinated Debentures and all accrued and
unpaid interest thereon have been paid in full and certain other conditions are
satisfied.
Debenture Events of Default
The Junior Subordinated Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Debentures
that has occurred and is continuing constitutes an "Event of Default" with
respect to the Junior Subordinated Debentures:
(i) failure to pay any interest on the Junior 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 of or premium, if any, on the Junior
Subordinated Debentures when due whether at maturity, upon
redemption, by declaration of acceleration or otherwise; or
(iii)failure to observe or perform in any material respect certain
other covenants contained in the Junior Subordinated Indenture
for 90 days after written notice to the Company from the
Debenture Trustee or the holders of at least 25% in aggregate
outstanding principal amount of the outstanding Junior
Subordinated Debentures; or
(iv) the Company consents to the appointment of a receiver or other
similar official in any liquidation, insolvency or similar
proceeding with respect to the Company or all or substantially
all its property.
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For purposes of the Trust Agreement and this Prospectus, each such Event
of Default under the Junior Subordinated Debenture is referred to as a
"Debenture Event of Default." As described in "Description of Preferred
Securities -- Events of Default; Notice," the occurrence of a Debenture Event of
Default will also constitute an Event of Default in respect of the Trust
Securities.
The holders of at least a majority in aggregate principal amount of
outstanding Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25% in
aggregate principal amount of outstanding Junior Subordinated Debentures may
declare the principal due and payable immediately upon a Debenture Event of
Default, and, should the Debenture Trustee or such holders of Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the outstanding Preferred Securities
shall have such right. The holders of a majority in aggregate principal amount
of outstanding Junior Subordinated Debentures may annul such declaration and
waive the default if all defaults (other than the non-payment of the principal
of Junior Subordinated Debentures which has become due solely by such
acceleration) have been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee. Should the holders of Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate Liquidation Amount of the outstanding
Preferred Securities shall have such right.
The holders of at least a majority in aggregate principal amount of the
outstanding Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal (or premium, if any) or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default in respect of a covenant
or provision which under the Junior Subordinated Indenture cannot be modified or
amended without the consent of the holder of each outstanding Junior
Subordinated Debenture affected thereby. See "-- Modification of Junior
Subordinated Indenture." 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
Junior Subordinated Indenture.
If a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on the
Junior Subordinated Debentures, and any other amounts payable under the Junior
Subordinated Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to the Junior Subordinated Debentures.
Enforcement of Certain Rights by Holders of 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 any amounts payable
in respect of the Junior Subordinated Debentures on the date such amounts are
otherwise payable, a registered holder of Preferred Securities may institute a
Direct Action against the Company for enforcement of payment to such holder of
an amount equal to the amount payable in respect of Junior Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Preferred Securities held by such holder. The Company may not amend the
Junior Subordinated Indenture to remove the foregoing right to bring a Direct
Action without the prior written consent of the holders of all the Preferred
Securities. The Company will have the right under the Junior Subordinated
Indenture to set-off any payment made to such holder of Preferred Securities by
the Company in connection with a Direct Action.
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The holders of the Preferred Securities are not able to exercise
directly any remedies available to the holders of the Junior Subordinated
Debentures except under the circumstances described in the preceding paragraph.
See "Description of Preferred Securities -- Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Junior Subordinated Indenture provides that the Company may not
consolidate with or merge into any other Person or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, and no Person
may consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless (i) if
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
the Company's obligations in respect of the Junior Subordinated Debentures; (ii)
immediately after giving effect thereto, no Debenture Event of Default, and no
event which, after notice or lapse of time or both, would constitute a Debenture
Event of Default, has occurred and is continuing; and (iii) certain other
conditions as prescribed in the Junior Subordinated Indenture are satisfied.
The provisions of the Junior Subordinated Indenture do not afford
holders of the Junior Subordinated Debentures protection in the event of a
highly leveraged or other transaction involving the Company that may adversely
affect holders of the Junior Subordinated Debentures.
Satisfaction and Discharge
The Junior Subordinated Indenture provides that when, among other
things, all Junior Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation (i) have become due and payable, (ii) will
become due and payable at the Stated Maturity within one year, and the Company
deposits or causes to be deposited with the Debenture Trustee funds, in trust,
for the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously delivered to
the Debenture Trustee for cancellation, for the principal (and premium, if any)
and interest to the date of the deposit or to the Stated Maturity, as the case
may be, then the Junior Subordinated Indenture will cease to be of further
effect (except as to the Company's obligations to pay all other sums due
pursuant to the Junior Subordinated Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Company will be
deemed to have satisfied and discharged the Junior Subordinated Indenture.
Subordination
The Junior Subordinated Debentures will be subordinate and junior in
right of payment, to the extent set forth in the Junior Subordinated Indenture,
to all Senior Indebtedness (as defined below) of the Company. If the Company
defaults in the payment of any principal, premium, if any, or interest, if any,
or any other amount payable on any Senior Indebtedness when the same becomes due
and payable, whether at maturity or at a date fixed for redemption or by
declaration of acceleration or otherwise, then, unless and until such default
has been cured or waived or has ceased to exist or all Senior Indebtedness has
been paid, no direct or indirect payment (in cash, property, securities, by
setoff or otherwise) may be made or agreed to be made on the Junior Subordinated
Debentures, or in respect of any redemption, repayment, retirement, purchase or
other acquisition of any of the Junior Subordinated Debentures.
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As used herein, "Senior Indebtedness" means, whether recourse is to all
or a portion of the assets of the Company and whether or not contingent, (i)
every obligation of the Company for money borrowed; (ii) every obligation of the
Company evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of the Company with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company; (iv) every obligation of the Company issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of the Company; (vi) every
obligation of the Company for claims (as defined in Section 101(4) of the United
States Bankruptcy Code of 1978, as amended) in respect of derivative products
such as interest and foreign exchange rate contracts, commodity contracts and
similar arrangements; and (vii) every obligation of the type referred to in
clauses (i) through (vi) of another person and all dividends of another person
the payment of which, in either case, the Company has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise; without
limiting the generality of the foregoing, Senior Indebtedness shall include the
Debentures. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Subordinated Debentures and Equity Contracts." Senior
Indebtedness shall not include (i) any obligations which, by their terms, are
expressly stated to rank pari passu in right of payment with, or to not be
superior in right of payment to, the Junior Subordinated Debentures, (ii) any
Senior Indebtedness of the Company which when incurred and without respect to
any election under Section 1111(b) of the United States Bankruptcy Code of 1978,
as amended, was without recourse to the Company, (iii) any indebtedness of the
Company to any of its subsidiaries, (iv) indebtedness to any executive officer
or director of the Company, or (v) any indebtedness in respect of debt
securities issued to any trust, or a trustee of such trust, partnership or other
entity affiliated with the Company that is a financing entity of the Company in
connection with the issuance of such financing entity of securities that are
similar to the Preferred Securities.
In the event of (i) certain events of bankruptcy, dissolution or
liquidation of the Company or the holder of the Common Securities, (ii) any
proceeding for the liquidation, dissolution or other winding up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (iii) any assignment by the Company for the benefit of creditors or
(iv) any other marshalling of the assets of the Company, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made on account of the
Junior Subordinated Debentures. In such event, any payment or distribution on
account of the Junior Subordinated Debentures, whether in cash, securities or
other property, that would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Junior Subordinated Debentures will be
paid or delivered directly to the holders of Senior Indebtedness in accordance
with the priorities then existing among such holders until all Senior
Indebtedness (including any interest thereon accruing after the commencement of
any such proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Company ranking
on a parity with the Junior Subordinated Debentures, will be entitled to be paid
from the remaining assets of the Company the amounts at the time due and owing
on the Junior Subordinated Debentures and such other obligations before any
payment or other distribution, whether in cash, property or otherwise, will be
made on account of any capital stock or obligations of the Company ranking
junior to the Junior Subordinated Debentures and such other obligations. If any
payment or distribution on account of the Junior Subordinated Debentures of any
character or any security, whether in cash, securities or other property is
received by any holder of any Junior
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Subordinated Debentures in contravention of any of the terms hereof and before
all the Senior Indebtedness has been paid in full, such payment or distribution
or security will be received in trust for the benefit of, and must be paid over
or delivered and transferred to, the holders of the Senior Indebtedness at the
time outstanding in accordance with the priorities then existing among such
holders for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all such Senior Indebtedness in full. By
reason of such subordination, in the event of the insolvency of the Company,
holders of Senior Indebtedness may receive more, ratably, and holders of the
Junior Subordinated Debentures may receive less, ratably, than the other
creditors of the Company. Such subordination will not prevent the occurrence of
any Event of Default in respect of the Junior Subordinated Debentures.
The Junior Subordinated Indenture places no limitation on the amount of
additional Senior Indebtedness that may be incurred by the Company. The Company
expects from time to time to incur additional indebtedness constituting Senior
Indebtedness.
Information Concerning the Debenture Trustee
The Debenture Trustee, other than during the occurrence and continuance
of a default by the Company in performance of its obligations under the Junior
Subordinated Debenture, is under no obligation to exercise any of the powers
vested in it by the Junior Subordinated Indenture at the request of any holder
of Junior Subordinated Debentures, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities that 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.
Bankers Trust Company, the Debenture Trustee, may serve from time to
time as trustee under other indentures or trust agreements with the Company or
its subsidiaries relating to other issues of their securities. In addition, the
Company and certain of its affiliates may have other banking relationships with
Bankers Trust Company and its affiliates.
Governing Law
The Junior Subordinated Indenture and the Junior Subordinated Debentures
will be governed by and construed in accordance with the laws of the State of
New York.
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Company concurrently
with the issuance of Preferred Securities by the Issuer Trust for the benefit of
the holders from time to time of the Preferred Securities. Bankers Trust Company
will act as Guarantee Trustee under the Guarantee. This summary of certain
provisions of the Guarantee does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all the provisions of the
Guarantee, including the definitions therein of certain terms. A copy of the
form of Guarantee is available upon request from the Guarantee Trustee. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Preferred Securities.
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General
The Company will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth in the Guarantee and described herein, 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 Issuer 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 Issuer Trust (the "Guarantee Payments"),
will be subject to the Guarantee: (i) any accumulated and unpaid Distributions
required to be paid on such Preferred Securities, to the extent that the Issuer
Trust has funds on hand available therefor at such time, (ii) the Redemption
Price with respect to any Preferred Securities called for redemption, to the
extent that the Issuer Trust has funds on hand available therefor at such time,
and (iii) upon a voluntary or involuntary dissolution, of the Issuer Trust
(unless the Junior Subordinated Debentures are distributed to holders of the
Preferred Securities), the lesser of (a) the aggregate of the Liquidation Amount
and all accumulated and unpaid Distributions to the date of payment, to the
extent that the Issuer Trust has funds on hand available therefor at such time,
and (b) the amount of assets of the Issuer Trust remaining available for
distribution to holders of the Preferred Securities on liquidation of the Issuer
Trust. The Company's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of the
Preferred Securities or by causing the Issuer Trust to pay such amounts to such
holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis
of the Issuer Trust's obligations under the Preferred Securities, but will apply
only to the extent that the Issuer Trust has funds sufficient to make such
payments, and is not a guarantee of collection.
If the Company does not make payments on the Junior Subordinated
Debentures held by the Issuer Trust, the Issuer Trust will not be able to pay
any amounts payable in respect of the Preferred Securities and will not have
funds legally available therefor. The Guarantee will rank subordinate and junior
in right of payment to all Senior Indebtedness of the Company. See "-- Status of
the Guarantee." The Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, including Senior Indebtedness, whether
under the Junior Subordinated Indenture, any other indenture that the Company
may enter into in the future or otherwise.
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture, taken together,
fully, irrevocably and unconditionally guaranteed all the Issuer Trust's
obligations under the Preferred Securities on a subordinated basis. No single
document standing alone or operating in conjunction with fewer than all the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations in respect of the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Junior Subordinated Debentures and the Guarantee."
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Indebtedness
of the Company in the same manner as the Junior Subordinated Debentures.
The Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Guarantor to enforce its rights under the
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Guarantee without first instituting a legal proceeding against any other person
or entity). The Guarantee will be held by the Guarantee Trustee for the benefit
of the holders of the Preferred Securities. The Guarantee will not be discharged
except by payment of the Guarantee Payments in full to the extent not paid by
the Issuer Trust or distribution to the holders of the Preferred Securities of
the Junior Subordinated Debentures.
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. The manner of obtaining any such
approval will be as set forth under "Description of Preferred Securities --
Voting Rights; Amendment of Trust Agreement." All guarantees and agreements
contained in the Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall 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, or to
perform any non-payment obligation if such non-payment default remains
unremedied for 30 days. The holders of not less than a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under the
Guarantee.
Any registered 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 Issuer Trust,
the Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
Information Concerning 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 the occurrence of an event of default with respect to the Guarantee, must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, the
Guarantee Trustee is under no obligation to exercise any of the powers vested in
it by the Guarantee at the request of any holder of the Preferred Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
For information concerning the relationship between Bankers Trust
Company, as Guarantee Trustee, and the Company, see "Description of Junior
Subordinated Debentures -- Information Concerning the Debenture Trustee."
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Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the Preferred Securities, upon full
payment of the amounts payable with respect to the Preferred Securities upon
liquidation of the Issuer Trust or upon distribution of Junior 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 the Preferred Securities or the Guarantee.
Governing Law
The Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Preferred
Securities (to the extent the Issuer Trust has funds available for such payment)
are irrevocably guaranteed, on a subordinated basis, by the Company as and to
the extent set forth under "Description of Guarantee." Taken together, the
Company's obligations under the Junior Subordinated Debentures, the Junior
Subordinated Indenture, the Trust Agreement and the Guarantee provide, in the
aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations in respect of the
Preferred Securities. If and to the extent that the Company does not make
payments on the Junior Subordinated Debentures, the Issuer Trust will not have
sufficient funds to pay Distributions or other amounts due on the Preferred
Securities. The Guarantee does not cover payment of amounts payable with respect
to the Preferred Securities when the Issuer Trust does not have sufficient funds
to pay such amounts. In such event, the remedy of a holder of the Preferred
Securities is to institute a legal proceeding directly against the Company for
enforcement of payment of the Company's obligations under Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of the
Preferred Securities held by such holder.
The obligations of the Company under the Junior Subordinated Debentures
and the Guarantee are subordinate and junior in right of payment to all Senior
Indebtedness.
Sufficiency of Payments
As long as payments are made when due on the Junior Subordinated
Debentures, such payments will be sufficient to cover Distributions and other
payments distributable on the Preferred Securities, primarily because (i) the
aggregate principal amount of the Junior Subordinated Debentures will be equal
to the sum of the aggregate stated Liquidation Amount of the Preferred
Securities and Common Securities; (ii) the interest rate and interest and other
payment dates on the Junior Subordinated Debentures will match the Distribution
rate, Distribution Dates and other payment dates for the Preferred
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Securities; (iii) the Company will pay for any and all costs, expenses and
liabilities of the Issuer Trust except the Issuer Trust's obligations to holders
of the Trust Securities; and (iv) the Trust Agreement further provides that the
Issuer Trust will not engage in any activity that is not consistent with the
limited purposes of the Issuer Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Company has the right to set-off any payment it is otherwise
required to make thereunder against and to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee.
Enforcement Rights of Holders of 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 Issuer
Trust or any other person or entity. See "Description of Guarantee."
A default or event of default under any Senior Indebtedness of the
Company would not constitute a default or Event of Default in respect of the
Preferred Securities. However, in the event of payment defaults under, or
acceleration of, Senior Indebtedness of the Company, the subordination
provisions of the Junior Subordinated Indenture provide that no payments may be
made in respect of the Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. See "Description of Junior Subordinated Debentures
- --Subordination."
Limited Purpose of Issuer Trust
The Preferred Securities represent preferred undivided beneficial
interests in the assets of the Issuer Trust, and the Issuer Trust exists for the
sole purpose of issuing its Preferred Securities and Common Securities and
investing the proceeds thereof in Junior Subordinated Debentures. A principal
difference between the rights of a holder of a Preferred Security and a holder
of a Junior Subordinated Debenture is that a holder of a Junior Subordinated
Debenture is entitled to receive from the Company payments on Junior
Subordinated Debentures held, while a holder of Preferred Securities is entitled
to receive Distributions or other amounts distributable with respect to the
Preferred Securities from the Issuer Trust (or from the Company under the
Guarantee) only if and to the extent the Issuer Trust has funds available for
the payment of such Distributions.
Rights Upon Dissolution
Upon any voluntary or involuntary dissolution of the Issuer Trust, other
than any such dissolution involving the distribution of the Junior Subordinated
Debentures, after satisfaction of liabilities to creditors of the Issuer Trust
as required by applicable law, the holders of the Preferred Securities will be
entitled to receive, out of assets held by the Issuer Trust, the Liquidation
Distribution in cash. See "Description of Preferred Securities -- Liquidation
Distribution Upon Dissolution." Upon any voluntary or involuntary liquidation or
bankruptcy of the Company, the Issuer Trust, as registered holder of the Junior
Subordinated Debentures, would be a subordinated creditor of the Company,
subordinated and junior in right of payment to all Senior Indebtedness as set
forth in the Junior Subordinated Indenture, but entitled to receive payment in
full of all amounts payable with respect to the Junior Subordinated Debentures
before any stockholders of the Company receive payments or distributions. Since
the Company is the guarantor under the Guarantee and has agreed under the Junior
Subordinated Indenture
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to pay for all costs, expenses and liabilities of the Issuer Trust (other than
the Issuer Trust's obligations to the holders of the Trust Securities), the
positions of a holder of the Preferred Securities and a holder of such Junior
Subordinated Debentures relative to other creditors and to stockholders 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
In the opinion of Malizia, Spidi, Sloane & Fisch, P.C., Washington,
D.C., in its capacity as special tax counsel to the Company ("Tax Counsel"), the
following discussion summarizes the material United States federal income tax
consequences of the purchase, ownership and disposition of the Preferred
Securities.
This summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury regulations thereunder, and administrative and judicial
interpretations thereof, each as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. The authorities on which this summary
is based are subject to various interpretations, and the opinions of Tax Counsel
are not binding on the Internal Revenue Service (the "IRS") or the courts,
either of which could take a contrary position. Moreover, no rulings have been
or will be sought from the IRS with respect to the transactions described
herein. Accordingly, there can be no assurance that the IRS will not challenge
the opinions expressed herein or that a court would not sustain such a
challenge.
Except as otherwise stated, this summary deals only with the Preferred
Securities held as a capital asset by a holder who or which (i) purchased the
Preferred Securities upon original issuance (an "Initial Holder") at their
original offering price and (ii) is a US Holder (as defined below). This summary
does not address all the tax consequences that may be relevant to a US Holder,
nor does it address the tax consequences, except as stated below, to holders
that are not US Holders ("Non-US Holders") or to holders that may be subject to
special tax treatment (such as banks, thrift institutions, real estate
investment trusts, regulated investment companies, insurance companies, brokers
and dealers in securities or currencies, other financial institutions,
tax-exempt organizations, persons holding the Preferred Securities as a position
in a "straddle," or as part of a "synthetic security," "hedging," as part of a
"conversion" or other integrated investment, persons having a functional
currency other than the U.S. Dollar and certain United States expatriates).
Further, this summary does not address (a) the income tax consequences to
shareholders in, or partners or beneficiaries of, a holder of the Preferred
Securities, (b) the United States federal alternative minimum tax consequences
of the purchase, ownership or disposition of the Preferred Securities, or (c)
any state, local or foreign tax consequences of the purchase, ownership and
disposition of Preferred Securities.
A "US Holder" is a holder of the Preferred Securities who or which is
(i) a citizen or individual resident (or is treated as a citizen or individual
resident) of the United States for income tax purposes, (ii) a corporation or
partnership created or organized (or treated as created or organized for income
tax purposes) in or under the laws of the United States or any political
subdivision thereof, (iii) an estate the income of which is includible in its
gross income for United States federal income tax purposes without regard to its
source, or (iv) a trust if (a) a court within the United States is able to
exercise primary supervision over the administration of the trust and (b) one or
more United States trustees have the authority to control all substantial
decisions of the trust.
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HOLDERS SHOULD CONSULT THEIR OWN 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.
US Holders
Characterization of the Issuer Trust. In connection with the issuance of
the Preferred Securities, Tax Counsel will render its opinion generally to
effect that, under then current law and based on the representations, facts and
assumptions set forth in this Prospectus, and assuming full compliance with the
terms of the Trust Agreement (and other relevant documents), and based on
certain assumptions and qualifications referenced in the opinion, the Issuer
Trust will be characterized for United States federal income tax purposes as a
grantor trust and will not be characterized as an association taxable as a
corporation. Accordingly, for United States federal income tax purposes, each
holder of the Preferred Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debentures owned by the Issuer
Trust, and each US Holder will be required to include all income or gain
recognized for United States federal income tax purposes with respect to its
allocable share of the Junior Subordinated Debentures on its own income tax
return.
Characterization of the Junior Subordinated Debentures. The Company and
the Issuer Trust will agree to treat the Junior Subordinated Debentures as
indebtedness for all United States federal income tax purposes. In connection
with the issuance of the Junior Subordinated Debentures, Tax Counsel will render
its opinion generally to the effect that, under then current law and based on
the representations, facts and assumptions set forth in this Prospectus, and
assuming full compliance with the terms of the Junior Subordinated Indenture
(and other relevant documents) and based on certain assumptions and
qualifications referenced in the opinion, the Junior Subordinated Debentures
will be characterized for United States federal income tax purposes as debt of
the Company.
Interest Income and Original Issue Discount. Under the terms of the
Junior Subordinated Debentures, the Company has the ability to defer payments of
interest from time to time by extending the interest payment period for a period
not exceeding 10 consecutive semi-annual periods, but not beyond the maturity of
the Junior Subordinated Debentures. Treasury regulations under Section 1273 of
the Code provide that debt instruments like the Junior Subordinated Debentures
will not be considered issued with original issue discount ("OID") by reason of
the Company's ability to defer payments of interest if the likelihood of such
deferral is "remote."
The Company has concluded, and this discussion assumes, that, as of the
date of this Prospectus, the likelihood of deferring payments of interest under
the terms of the Junior Subordinated Debentures is "remote" within the meaning
of the applicable Treasury regulations, in part because exercising that option
would prevent the Company from declaring dividends on its stock and would
prevent the Company from making any payments with respect to debt securities
that rank pari passu with or junior to the Junior Subordinated Debentures.
Therefore, the Junior Subordinated Debentures should not be treated as issued
with OID by reason of the Company's deferral option. Rather, stated interest on
the Junior Subordinated Debentures will generally be taxable to a US Holder as
ordinary income when paid or accrued in accordance with that holder's method of
accounting for income tax purposes. It should be noted, however, that these
Treasury regulations have not yet been interpreted in any rulings or any other
published authorities of the IRS. Accordingly, it is possible that the IRS could
take a position contrary to the interpretation described herein.
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<PAGE>
In the event the Company exercises its option to defer payments of
interest, the Junior Subordinated Debentures would be treated as redeemed and
reissued for OID purposes and the sum of the remaining interest payments (and
any de minimis OID) on the Junior Subordinated Debentures would thereafter be
treated as OID, which would accrue, and be includible in a US Holder's taxable
income, on an economic accrual basis (regardless of the US Holder's method of
accounting for income tax purposes) over the remaining term of the Junior
Subordinated Debentures (including any period of interest deferral), without
regard to the timing of payments under the Junior Subordinated Debentures.
(Subsequent distributions of interest on the Junior Subordinated Debentures
generally would not be taxable.) The amount of OID that would accrue in any
period would generally equal the amount of interest that accrued on the Junior
Subordinated Debentures in that period at the stated interest rate.
Consequently, during any period of interest deferral, US Holders will include
OID in gross income in advance of the receipt of cash, and a US Holder which
disposes of a Preferred Security prior to the record date for payment of
distributions on the Junior Subordinated Debentures following that period will
be subject to income tax on OID accrued through the date of disposition (and not
previously included in income), but will not receive cash from the Issuer Trust
with respect to the OID.
If the possibility of the Company's exercise of its option to defer
payments of interest is not remote, the Junior Subordinated Debentures would be
treated as initially issued with OID in an amount equal to the aggregate stated
interest (plus any de minimum OID) over the term of the Junior Subordinated
Debentures. That OID would generally be includible in a US Holder's taxable
income, over the term of the Junior Subordinated Debentures, on an economic
accrual basis.
Characterization of Income. Because the income underlying the Preferred
Securities will not be characterized as dividends for income tax purposes,
corporate holders of the Preferred Securities will not be entitled to a
dividends-received deduction for any income recognized with respect to the
Preferred Securities.
Market Discount and Bond Premium. Holders of the Preferred Securities
other than Initial Holders may be considered to have acquired their undivided
interests in the Junior Subordinated Debentures with market discount or
acquisition premium (as each phrase is defined for United States federal income
tax purposes).
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of
the Issuer Trust. Under certain circumstances described herein (See "Description
of the Preferred Securities--Liquidation Distribution Upon Dissolution"), the
Issuer Trust may distribute the Junior Subordinated Debentures to holders in
exchange for the Preferred Securities and in liquidation of the Issuer Trust.
Except as discussed below, such a distribution would not be a taxable event for
United States federal income tax purposes, and each US Holder would have an
aggregate adjusted basis in its Junior Subordinated Debentures for United States
federal income tax purposes equal to such holder's aggregate adjusted basis in
its Preferred Securities. For United States federal income tax purposes, a US
Holder's holding period in the Junior Subordinated Debentures received in such a
liquidation of the Issuer Trust would include the period during which the
Preferred Securities were held by the holder. If, however, the relevant event is
a Tax Event which results in the Issuer Trust being treated as an association
taxable as a corporation, the distribution would likely constitute a taxable
event to US Holders of the Preferred Securities for United States federal income
tax purposes.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Such a redemption would be taxable for United States
federal income tax purposes, and a US Holder would recognize gain or loss as if
it had sold the Preferred Securities for cash. See "--Sales of Preferred
Securities" below.
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Sales of Preferred Securities. A US Holder that sells Preferred
Securities will recognize gain or loss equal to the difference between its
adjusted basis in the Preferred Securities and the amount realized on the sale
of such Preferred Securities. A US Holder's adjusted basis in the Preferred
Securities generally will be its initial purchase price, increased by OID
previously included (or currently includible) in such holder's gross income to
the date of disposition, and decreased by payments received on the Preferred
Securities (other than any interest received with respect to the period prior to
the effective date of the Company's first exercise of its option to defer
payments of interest). Any such gain or loss generally will be capital gain or
loss, and generally will be a long-term capital gain or loss if the Preferred
Securities have been held for more than one year prior to the date of
disposition.
A holder who disposes of his Preferred Securities between record dates
for payments of distributions thereon will be required to include accrued but
unpaid interest (or OID) on the Junior Subordinated Debentures through the date
of disposition in its taxable income for United States federal income tax
purposes (notwithstanding that the holder may receive a separate payment from
the purchaser with respect to accrued interest), and to deduct that amount from
the sales proceeds received (including the separate payment, if any, with
respect to accrued interest) for the Preferred Securities (or as to OID only, to
add such amount to such holder's adjusted tax basis in its Preferred
Securities). To the extent the selling price is less than the holder's adjusted
tax basis (which will include accrued but unpaid OID, if any), a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes.
Proposed Tax Law Changes
On February 6, 1997, President Clinton released his budget proposals for
fiscal year 1998. One of the tax proposals therein (the "Tax Proposal") would
generally deny corporate issuers a deduction for interest related to certain
debt obligations that have a maximum term in excess of 15 years and are not
shown as indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder of some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. As currently
drafted, the Tax Proposal would be effective generally for instruments issued on
or after the date of first Congressional committee action. Although it is not
clear from the President's proposals as to what constitutes Congressional
"committee action" with respect to the Tax Proposal, it appears that, as
drafted, the Tax Proposal would not apply retroactively to the Junior
Subordinated Debentures. However, the Company and the Issuer Trust have been
advised by Tax Counsel that, if the Tax Proposal (or similar legislation) is
enacted into law with retroactive effect with respect to the Junior Subordinated
Debentures, the Company would not be entitled to a deduction with respect to the
interest payable on the Junior Subordinated Debentures. There can be no
assurance that the Tax Proposal, if enacted, will not apply retroactively to the
Junior Subordinated Debentures 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 Junior Subordinated Debentures. Accordingly, there
can be no assurance that a Tax Event will not occur. See "Description of
Preferred Securities -- Redemption."
Non-US Holders
The following discussion applies to a Non-US Holder.
Payments to a holder of a Preferred Security which is a Non-US Holder
will generally not be subject to withholding of income tax, provided that (a)
the beneficial owner of the Preferred Security does not (directly or indirectly,
actually or constructively) own 10% or more of the total combined voting
91
<PAGE>
power of all classes of stock of the Company entitled to vote, (b) the
beneficial owner of the Preferred Security is not a controlled foreign
corporation that is related to the Company through stock ownership, and (c)
either (i) the beneficial owner of the Preferred Securities certifies to the
Issuer Trust or its agent, under penalties of perjury, that it is a Non-US
Holder and provides its name and address, or (ii) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Preferred Security in such capacity, certifies to
the Issuer Trust or its agent, under penalties of perjury, that such a statement
has been received from the beneficial owner by it or by another Financial
Institution between it and the beneficial owner in the chain of ownership, and
furnishes the Issuer Trust or its agent with a copy thereof.
As discussed above (see "--Proposed Tax Law Changes"), changes in
legislation affecting the income tax consequences of the Junior Subordinated
Debentures are possible, and could adversely affect the ability of the Company
to deduct the interest payable on the Junior Subordinated Debentures. Moreover,
any such legislation could adversely affect Non-US Holders by characterizing
income derived from the Junior Subordinated Debentures as dividends, generally
subject to a 30% income tax (on a withholding basis) when paid to a Non-US
Holder, rather than as interest which, as discussed above, is generally exempt
from income tax in the hands of a Non-US Holder.
A Non-US Holder of a Preferred Security will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of a Preferred Security.
A Non-US Holder which holds the Preferred Securities in connection with
the active conduct of a United States trade or business will be subject to
income tax on all income and gains recognized with respect to its proportionate
share of the Junior Subordinated Debentures.
Information Reporting
In general, information reporting requirements will apply to payments
made on, and proceeds from the sale of, the Preferred Securities held by a
noncorporate US Holder within the United States. In addition, payments made on,
and payments of the proceeds from the sale of, the Preferred Securities to or
through the United States office of a broker are subject to information
reporting unless the holder thereof certifies as to its Non-United States status
or otherwise establishes an exemption from information reporting and backup
withholding. See "--Backup Withholding." Taxable income on the Preferred
Securities for a calendar year should be reported to US Holders on Forms 1099 by
the following January 31st.
Backup Withholding
Payments made on, and proceeds from the sale of, the Preferred
Securities may be subject to a "backup" withholding tax of 31% unless the holder
complies with certain identification or exemption requirements. Any amounts so
withheld will be allowed as a credit against the holder's income tax liability,
or refunded, provided the required information is provided to the IRS.
The preceding discussion is only a summary and does not address the
consequences to a particular holder of the purchase, ownership and disposition
of the Preferred Securities. Potential holders of the Preferred Securities are
urged to contact their own tax advisors to determine their particular tax
consequences.
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<PAGE>
CERTAIN ERISA CONSIDERATIONS
The Company and certain affiliates of the Company may each be considered
a "party in interest" within the meaning of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or a "disqualified person" within the
meaning of Section 4975 of the Code with respect to many employee benefit plans
("Plans") that are subject to ERISA. The purchase of the Preferred Securities by
a Plan that is subject to the fiduciary responsibility provisions of ERISA or
the prohibited transaction provisions of Section 4975(e)(1) of the Code and with
respect to which the Company, or any affiliate of the Company is a service
provider (or otherwise is a party in interest or a disqualified person) may
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Code, unless the Preferred Securities are acquired pursuant to and in
accordance with an applicable exemption. Any pension or other employee benefit
plan proposing to acquire any Preferred Securities should consult with its
counsel.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement") dated ^, 1997, among the Company, the Issuer Trust and
the underwriters named therein (the "Underwriters"), the Issuer Trust has agreed
to sell to the Underwriters, and the Underwriters have severally agreed to
purchase from the Issuer Trust, the following respective aggregate Liquidation
Amount of Preferred Securities at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus:
Liquidation Amount of
---------------------
Underwriter: Preferred Securities:
- ------------ ---------------------
Advest, Inc....................................
-----------
Total.......................................... $20,000,000
==========
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the Preferred Securities offered hereby if any
of such Preferred Securities are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose 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 concession not in excess
of ^ $ per Preferred Security to certain other dealers. After the public
offering, the offering price and other selling terms may be changed by the
Underwriters.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus, to purchase up to an
additional $3,000,000 aggregate Liquidation Amount of the Preferred Securities
at the public offering price plus accrued Distributions, if any, from ^,
1997. To the extent that the Underwriter exercises such option, the Company will
be obligated, pursuant to the option, to sell such Preferred Securities to the
Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the Preferred Securities
offered hereby. If purchased, the Underwriters will offer such additional
Preferred Securities
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<PAGE>
on the same terms as those on which the $20,000,000 aggregate Liquidation Amount
of the Preferred Securities are being offered.
In connection with 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 Issuer Trust. In such a
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.
In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued by
the Company, the Underwriting Agreement provides that the Company will pay as
compensation for the Underwriter's arranging the investment therein of such
proceeds an amount of ^ $ per Preferred Security (or ^ $ million ^($ million if
the over-allotment option is exercised in full) in the aggregate) and an
advisory fee equal to ^ $25,000 for the account of the Underwriters.
Because the National Association of Securities Dealers, Inc. ("NASD") is
expected to view the Preferred Securities as interests in a direct participation
program, the offering of the Preferred Securities is being made in compliance
with the applicable provisions of Rule 2810 of the NASD's Conduct Rules.
The Preferred Securities are a new issue of securities with no
established trading market. The Company and the Issuer Trust have been advised
by the Underwriters that they intend to make a market in the Preferred
Securities. However, the Underwriters are not obligated to do so and such market
making may be interrupted or discontinued at any time without notice at the sole
discretion of each of the Underwriters. Application has been made by the Company
to list the Preferred Securities in the Nasdaq National Market, but one of the
requirements for listing and continuing listing is the presence of two market
makers for the Preferred Securities, and the presence of a second market maker
cannot be assured. Accordingly, no assurance can be given as to the development
or liquidity of any market for the Preferred Securities.
The Company and the Issuer Trust have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.
The Underwriters may in the future perform various services to the
Company, including investment banking services, for which it has or may receive
customary fees for such services.
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<PAGE>
VALIDITY OF SECURITIES
The validity of the Guarantee and the Junior Subordinated Debentures and
certain tax matters will be passed upon for the Company by Malizia, Spidi,
Sloane & Fisch, P.C., Washington, D.C., counsel to the Company. Certain legal
matters will be passed upon and for the Underwriters by Arnold & Porter,
Washington, D.C., and New York, New York. Certain matters of Delaware law
relating to the validity of the Preferred Securities, the enforceability of the
Trust Agreement and the creation of the Issuer Trust will be passed upon by
Richards, Layton & Finger, special Delaware counsel to the Company and the
Issuer Trust. Malizia, Spidi, Sloane & Fisch, P.C. and Arnold & Porter will rely
as to certain matters of Delaware law on the opinion of Richards, Layton &
Finger.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996, and for the year ended December 31, 1996, included in this Prospectus have
been audited by Grant Thornton LLP, independent certified public accountants, as
stated in their report appearing in this Prospectus, or in the Registration
Statement of which this Prospectus forms a part, and have been included in
reliance upon such report of Grant Thornton, LLP given upon their authority as
experts in accounting and auditing.
The consolidated financial statements of the Company as of December 31,
1995 and for the years ended December 31, 1995 and 1994, included in this
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto and have been
included herein in reliance upon the authority of said firm as experts in giving
said report.
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 can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material
also may be accessed electronically by means of the Commission's home page on
the Internet at http://www.sec.gov. This Prospectus does not contain all the
information set forth in the Registration Statement and exhibits thereto, which
the Company has filed with the Commission under the Securities Act and to which
reference is hereby made.
No separate financial statements of the Issuer Trust have been included
or incorporated by reference herein. The Company and the Issuer Trust do not
consider that such financial statements would be material to holders of the
Preferred Securities because the Issuer Trust is a newly formed special purpose
entity, has no operating history or independent operations and is not engaged in
and does not propose to engage in any activity other than holding as trust
assets the Junior Subordinated Debentures and issuing the Trust Securities. See
"GCB Capital Trust," "Description of Preferred Securities," "Description of
Junior Subordinated Debentures" and "Description of Guarantee." In addition, the
Company does not expect that the Issuer Trust will be filing reports under the
Exchange Act with the Commission.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1996, and the Form 10-Q for the period ended March 31, 1997, previously filed by
the Company with the Commission pursuant to Section 13 of the Exchange Act.
Any statement contained herein, or in any document all or a portion of
which is incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the foregoing documents
incorporated herein by reference (other than certain exhibits to such
documents). Written requests should be directed to the Office of the Secretary,
Greater Community Bancorp, 55 Union Boulevard, Totowa, New Jersey 07512.
Telephone requests may be directed to (201) 942-1111.
96
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Consolidated Balance as of March 31, 1997 (unaudited), and as of December 31, 1996 and 1995.. F-1
Consolidated Statements of Income for the three months ended March 31, 1997 and
1996 (unaudited) and for each of the years in the three year period ended
December 31, 1996............................................................................ F-2
Consolidated Statements of Changes in Shareholders' Equity for the three months
ended March 31, 1997 (unaudited) and each of the years in the three year period ended
December 31, 1996............................................................................ F-3
Consolidated Statements of Cash Flows for the three months ended March 31, 1997
and 1996 (unaudited) and for each of the years in the three year period
ended December 31, 1996...................................................................... F-4
Notes to Consolidated Financial Statements................................................... F-5
Reports ^ of Independent Certified Public Accountants........................................ F-29
</TABLE>
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
---------- -----------------------
ASSETS 1997 1996 1995
---------- -------- -----------
(Unaudited)
<S> <C> <C> <C>
CASH AND DUE FROM BANKS - Non-interest-bearing ......................................... $ 14,554 $ 11,994 $ 11,471
FEDERAL FUNDS SOLD ..................................................................... 3,050 6,300 17,575
--------- --------- ---------
Total cash and cash equivalents .................................... 17,604 18,294 29,046
DUE FROM BANKS - Interest-bearing ...................................................... 4,459 4,481 1,148
INVESTMENT SECURITIES - Available-for-sale ............................................. 56,747 52,251 47,835
INVESTMENT SECURITIES - Held-to-maturity (aggregate fair values of $37,426 at
March 31, 1997, and $36,970 and $36,061 at December 31, 1996 and 1995,
respectively) ...................................................................... 38,144 37,428 36,151
--------- --------- ---------
94,891 89,679 83,986
LOANS .................................................................................. 143,992 137,410 131,742
Allowance for possible loan losses ................................................... (2,650) (2,540) (2,332)
Unearned income ...................................................................... (306) (283) (303)
--------- --------- ---------
Net loans .......................................................... 141,036 134,587 129,107
PREMISES AND EQUIPMENT, net ............................................................ 3,050 3,203 3,082
OTHER REAL ESTATE ...................................................................... 1,650 1,834 2,070
ACCRUED INTEREST RECEIVABLE ............................................................ 1,879 1,906 1,977
INTANGIBLE AND OTHER ASSETS ............................................................ 2,528 2,522 2,629
--------- --------- ---------
TOTAL ASSETS ....................................................... $ 267,097 $ 256,506 $ 253,045
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Non-interest-bearing ................................................................ $ 58,625 $ 59,588 $ 46,332
Interest-bearing .................................................................... 56,922 55,882 59,141
Savings ............................................................................. 27,077 25,918 26,030
Time (includes deposits $100 and over of $25,410 at March 31, 1997, and $25,184 and
$26,096 at December 31, 1996 and 1995, respectively) ............................. 80,605 81,854 91,263
--------- --------- ---------
Total deposits ..................................................... 223,229 223,242 222,766
ACCRUED INTEREST PAYABLE ............................................................... 1,720 1,466 1,626
OTHER LIABILITIES ...................................................................... 1,815 1,590 1,326
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE ......................................... 4,623 4,159 2,756
FEDERAL FUNDS PURCHASED ................................................................ 9,000 -- --
REDEEMABLE SUBORDINATED DEBENTURES ..................................................... 4,891 4,988 4,976
--------- --------- ---------
Total liabilities .................................................. 245,278 235,445 233,450
--------- --------- ---------
SHAREHOLDERS' EQUITY:
Preferred stock, without par value: 1,000,000 shares authorized, none outstanding..... -- -- --
Common stock, par value $1 per share: 10,000,000 shares authorized, 1,886,198 at
March 31, 1997, 1,891,733 and 1,709,451 shares outstanding at December 31, 1996
and 1995, respectively ............................................................. 1,886 1,892 1,709
Additional paid-in capital ........................................................... 17,653 17,841 15,231
Retained earnings .................................................................... 1,722 1,209 2,102
Net unrealized holding gains on investment securities available-for-sale ............. 558 307 553
Treasury stock (-0- at March 31, 1997, and 12,596 and -0- shares at December 31,
1996 and 1995, respectively, at cost) .............................................. -- (188) --
--------- --------- ---------
Total shareholders' equity ................................................ 21,819 21,061 19,595
--------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............................................. $ 267,097 $ 256,506 $ 253,045
========= ========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-1
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Years Ended
March 31, December 31,
-------------------- -----------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
INTEREST INCOME:
Loans, including fees .......................... $ 3,200 $ 3,028 $ 12,621 $ 11,931 $ 8,408
Investment securities .......................... 1,435 1,354 5,569 4,790 2,693
Federal funds sold and deposits with banks ..... 129 141 503 712 301
-------- -------- -------- -------- --------
Total interest income .......... 4,764 4,523 18,693 17,433 11,402
-------- -------- -------- -------- --------
INTEREST EXPENSE:
Deposits ...................................... 1,549 1,616 6,404 5,927 3,143
Short-term borrowings ......................... 148 153 312 185 53
Long-term borrowings .......................... 109 -- 438 438 438
-------- -------- -------- -------- --------
Total interest expense ......... 1,806 1,769 7,154 6,550 3,634
-------- -------- -------- -------- --------
NET INTEREST INCOME ................................ 2,958 2,754 11,539 10,883 7,768
PROVISION FOR POSSIBLE LOAN LOSSES ................. 115 90 440 414 172
-------- -------- -------- -------- --------
Net interest income after provision
for losses ............................. 2,843 2,664 11,099 10,469 7,596
-------- -------- -------- -------- --------
OTHER INCOME
Service charges on deposit accounts ........... 337 271 1,174 867 515
Credit card fee income ........................ 7 -- 182 567 65
Other commission and fees ..................... 13 10 48 190 136
Gain (loss) on sale of securities ............. 10 -- 51 209 (84)
All other income .............................. 82 465 474 344 223
-------- -------- -------- -------- --------
Total other income ............. 449 746 1,929 2,177 855
OTHER EXPENSES:
Salaries and employee benefits ................ 1,120 1,100 4,144 3,700 2,745
Occupancy and equipment ....................... 487 530 1,958 1,418 919
Regulatory, professional and other fees ....... 184 204 696 781 611
FDIC insurance assessment ..................... 13 41 340 262 360
Computer services ............................. 34 27 249 390 252
Office expenses ............................... 144 117 510 494 371
Other real estate operating and loan expenses40 42 304 314 55
Merchant credit card expenses ................. 2 94 184 616 54
All other operating expenses .................. 299 495 1,078 1,425 758
-------- -------- -------- -------- --------
Total other expenses ........... 2,323 2,650 9,463 9,400 6,125
-------- -------- -------- -------- --------
Income before income taxes
and minority interest ........ 969 760 3,565 3,246 2,326
PROVISION FOR INCOME TAXES ......................... 370 278 1,312 1,174 840
-------- -------- -------- -------- --------
Income before minority interest ............ 599 482 2,253 2,072 1,486
-------- -------- -------- -------- --------
MINORITY INTEREST .................................. 66 -- 84 -- --
-------- -------- -------- -------- --------
NET INCOME ......................................... $ 665 $ 482 $ 2,337 $ 2,072 $ 1,486
======== ======== ======== ======== ========
Weighted average shares outstanding ............. ^ 2,299 ^ 2,095 ^ 2,111 ^ 2,065 ^ 1,664
======== ======== ======== ======== ========
Net income per share ............................ $ 0.28 $ 0.23 $ 0.97 $ 1.04 $ 0.89
======== ======== ======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-2
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Three Months Ended March 31, 1997 (Unaudited) and For the Years Ended
December 31, 1996, 1995 and 1994 (In thousands, except per share amounts)
<TABLE>
<CAPTION>
Net Unrealized
Common Holding
------------------- Gain(Loss)
Additional on Securities Total
Paid-in Retained Available- Treasury Shareholders'
Shares Par Value Capital Earnings -for-Sale Stock Equity
------ --------- ------- -------- --------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1994 ..................... $1,359 $ 1,359 $ 11,354 $ 1,443 $ -- $ -- $ 14,156
Net income for the year ended .............. -- -- -- 1,486 -- -- 1,486
10% stock dividend ......................... 72 72 766 (841) -- -- (3)
Cash dividend .............................. -- -- -- (245) -- -- (245)
Exercise of stock options .................. 12 12 89 -- -- -- 101
Change in net unrealized holding loss on
securities available-for-sale ............ -- -- -- -- (534) -- (534)
------ -------- -------- -------- -------- -------- --------
BALANCE, December 31, 1994 ................... 1,443 1,443 12,209 1,843 (534) -- 14,961
Net income for the year ended .............. -- -- -- 2,072 -- -- 2,072
Stock issued in connection with acquisition
of Family First Federal Savings Bank.... 157 157 1,645 -- -- -- 1,802
10% stock dividend ......................... 100 100 1,293 (1,398) -- -- (5)
Exercise of stock options .................. 9 9 84 -- -- -- 93
Cash dividend .............................. -- -- -- (415) -- -- (415)
Change in net unrealized holding gains on
securities available-for-sale ......... -- -- -- -- 1,087 -- 1,087
------ -------- -------- -------- -------- -------- --------
BALANCE, December 31, 1995 ................... 1,709 1,709 15,231 2,102 553 -- 19,595
Net income for the year ended .............. -- -- -- 2,337 -- -- 2,337
10% stock dividend ......................... 171 171 2,520 (2,697) -- -- (6)
Exercise of stock options .................. 12 12 90 -- -- -- 102
Cash dividend .............................. -- -- -- (533) -- -- (533)
Change in net unrealized holding loss on
securities available-for-sale ......... -- -- -- -- (246) -- (246)
Purchase of treasury stock ................. -- -- -- -- -- (188) (188)
------ -------- -------- -------- -------- -------- --------
BALANCE, December 31, 1996 ................... $1,892 $ 1,892 $ 17,841 $ 1,209 $ 307 ($ 188) $ 21,061
Net income for the three months ended
March 31, 1997 (unaudited) ............... -- -- -- 665 -- -- 665
Exercise of stock options .................. 6 6 45 -- -- -- 51
Exercise of equity contracts ............... 10 10 89 -- -- -- 99
Cash dividends ............................. -- -- -- (152) -- -- (152)
Change in net unrealized holding gain
on securities available-for-sale ......... -- -- -- -- 251 -- 251
Purchase of treasury stock ................. -- -- -- -- -- (156) (156)
Retirement of treasury stock ............... (22) (22) (322) -- -- 344 --
------ -------- -------- -------- -------- -------- --------
BALANCE, March 31, 1997 (unaudited) .......... $1,886 $ 1,886 $ 17,653 $ 1,722 $ 558 $ -- $ 21,819
====== ======== ======== ======== ======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-3
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
For the Three Months Ended For the Years Ended
March 31, December 31,
-------------------------- ----------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................ $ 665 $ 482 $2,337 $ 2,072 $ 1,486
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization................... 251 302 1,056 626 449
Accretion of discount on securities, net........ (37) (77) (241) (69) (19)
Accretion of discount on debentures............. 3 - 12 13 13
Realization of discount on securities sold...... - - 3 21 22
Loss (gain) on sale of securities, net.......... (10) - (51) (209) 84
Provision for possible loan losses.............. 115 90 440 375 172
Deferred income tax provision (benefit)......... (82) (57) (267) 135 (65)
(Increase) decrease in accrued interest receivable 27 (135) 71 (481) (533)
(Increase) decrease in other assets............. 44 (41) 107 (1,998) (170)
Increase (decrease) in accrued interest and
other liabilities............................. ^561 ^(83) 104 1,560 466
----- ------ ------ ----------- --------
Net cash provided by operating
acctivities................. 537 481 3,571 2,045 1,905
----- ------ ----- ----------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Available-for-sale securities -
Purchases..................................... (8,985) (1,903) (18,962) (18,670) (24,694)
Sales......................................... ^ 1,963 2,278 5,472 16,619 13,061
Maturities.................................... ^ 4,154 - 9,004 2,550 -
Held-to-maturity securities -
Purchases..................................... (2,058) (6,718) (23,089) (10,225) (13,367)
Maturities.................................... - 2,689 21,812 1,415 8,569
Net decrease in interest-bearing deposits with banks 22 (737) (3,333) 1,220 5,710
Net (increase) decrease in loans................. (6,564) 3,378 (5,920) (4,668) (10,062)
Capital expenditures............................ (71) (110) (824) (1,994) (779)
Decrease in other real estate................... 184 - 236 280 453
-------- -------- --------- ---------- ----------
Net cash used in investing
activities................... (11,355) (1,123) (15,604) (13,473) (21,109)
------- ------- -------- -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposit accounts................ (13) (12,706) 476 28,668 14,437
Increase in securities sold under agreement to
repurchases................................... 464 899 1,403 57 1,950
Increase in federal funds purchased............. 9,000 - - - -
Dividends paid.................................. (152) (119) (533) (415) (245)
Proceeds from exercise of stock options......... 51 - 102 93 101
Purchases of treasury stock..................... ^(155) - (188) - -
Conversion of redeemable subordinated debentures ^(97) - - - -
Cash acquired from purchase business combination - - - 4,045 -
Other, net...................................... ^ 30 33 21 (26) (3)
--------- ------- ---------- --------- ----------
Net cash provided by
financing activities...... ^ 9,128 (11,893) 1,281 32,422 16,240
--------- ------- ---------- ----------- -------
Net increase (decrease)
in cash and cash
equivalents............... (690) ^(12,535) (10,752) 20,994 (2,964)
CASH AND CASH EQUIVALENTS, beginning of period .... 18,294 29,046 29,046 8,052 11,016
------ ------ ------ -------- ------
CASH AND CASH EQUIVALENTS, end of period........... $ 17,604 $16,511 $18,294 $29,046 $ 8,052
======== ====== ======= ======= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements
F-4
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
The Company, through its subsidiary banks, Great Falls Bank (GFB) and
Bergen Commercial Bank (BCB) (collectively the "Bank Subsidiaries"), offers a
broad range of lending, depository and related financial services to individual
consumers, business and governmental units primarily through eight full service
offices located in Bergen and Passaic counties, New Jersey. Great Falls
Investment Company, Inc. is a wholly-owned subsidiary of GFB, and BCB Investment
Company, Inc. is a wholly-owned subsidiary of BCB. The primary business of these
subsidiaries is to own and manage the investment portfolios of their respective
parent banks. In 1996, the Company changed its name to Greater Community Bancorp
from Great Falls Bancorp to reflect the expanded embraced range of businesses
under its umbrella.
In October 1996, the Company formed Greater Community Financial, L.L.C.
("Greater Community Financial"), a New Jersey limited liability company located
in Clifton, New Jersey. The Company is a registered broker-dealer. At December
31, 1996, Greater Community Financial had assets of $313,000 and member capital
of $311,000.
The Bank Subsidiaries compete with other banking and financial
institutions in their primary market communities, including financial
institutions with resources substantially greater than their own. Commercial
banks, savings banks, savings and loan associations, credit unions, and money
market funds actively compete for deposits and for types of loans. Such
institutions, as well as consumer finance and insurance companies, may be
considered competitors with respect to one or more of the services they render.
The Company and the Bank Subsidiaries are subject to regulations of
certain state and federal agencies and, accordingly, they are periodically
examined by those regulatory authorities. As a consequence of the extensive
regulation of commercial banking activities, the Bank Subsidiaries' businesses
are particularly susceptible to being affected by state and federal legislation
and regulations.
Basis of financial presentation
- -------------------------------
The accounting and reporting policies of the Company and its
subsidiaries conform with generally accepted accounting principles and
predominant practices within the banking industry. All significant intercompany
accounts and transactions have been eliminated. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements. These estimates and assumptions also
affect reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The consolidated financial statements as of March 31, 1997, and the
three months ended March 31, 1997 and 1996, are unaudited. In the opinion of
management, all adjustments (consisting only of
F-5
<PAGE>
normal recurring accruals) necessary for a fair presentation of the financial
position and results of operations have been included. The results of operations
for the three months ended March 31, 1997 and 1996, are not necessarily
indicative of the results that may be attained for an entire fiscal year.
Financial instruments
- ---------------------
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 107, "Disclosures about Fair Value of
Financial Instruments," which requires all entities to disclose the estimated
fair value of their assets and liabilities considered to be financial
instruments. Financial instruments requiring disclosure consist primarily of
investment securities, loans and deposits.
INVESTMENT SECURITIES
The Company adopted SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," on January 1, 1994. Investment securities which the
Company has the ability and intent to hold to maturity are classified as
held-to-maturity and are stated at cost, adjusted for premium amortization and
discount accretion. Securities which are held for indefinite periods of time
which management intends to use as part of its asset/liability strategy, or that
may be sold in response to changes in interest rates, changes in prepayment
risk, increased capital requirements or other similar factors, are classified as
available-for-sale and are carried at fair market value. Net unrealized gains
and losses for such securities, net of income tax effect, are charged/credited
directly to shareholders' equity. The Company does not engage in securities
trading. Securities transactions are accounted for on a trade date basis. Gains
or losses on disposition of investment securities are based on the net proceeds
and the adjusted carrying amount of the securities sold using the specific
identification method.
LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
Loans are stated at the amount of unpaid principal and are net of
unearned discount, unearned loan fees, and an allowance for loan losses. The
allowance for loan losses is established through a provision for possible loan
losses charged to expense. Loans are charged against the allowance for loan
losses when management believes that the collectibility of the principal is
unlikely. The allowance for possible loan losses is maintained at a level
considered by management to be adequate to provide for potential loan losses
inherent in the loan portfolio at the reporting date. The level of the allowance
is based on management's evaluation of potential losses in the loan portfolio
after consideration of prevailing and anticipated economic conditions, including
estimates and appraisals, among other items, known or anticipated at each
reporting date. Credit reviews of the loan portfolio, designed to identify
potential charges to the allowance, are made on a periodic basis during the year
by management.
Interest income on loans is credited to operations based upon the
principal amount outstanding. The net amounts of loan origination fees, direct
loan origination costs and loan commitment fees are deferred and recognized over
the lives of the related loans as adjustments of yield. When management believes
there is sufficient doubt as to the ultimate collectibility of interest on any
loan, the accrual of applicable interest is discontinued. A loan is generally
classified as non-accrual when principal and interest has consistently been in
default for a period of 90 days or more or because of a deterioration in the
financial condition of the borrower, and payment in full of principal or
interest is not expected. Loans past due 90 days or more and still accruing
interest are loans that are generally well-secured and expected to be restored
to a current status in the near future.
F-6
<PAGE>
The Company adopted SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan," as amended by SFAS No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures," on January 1, 1995.
This standard requires that certain impaired loans be measured based on the
present value of expected future cash flows discounted at the loan's effective
interest rates, except that as a practical expedient, a creditor may measure
impairment based on a loan's observable market price, or the fair value of the
collateral if the loan is collateral dependent. Regardless of the measurement
method, a creditor must measure impairment based on the fair value of the
collateral when the creditor determines that foreclosure is probable. The
Company had previously measured the allowance for credit losses using methods
similar to those prescribed in this standard. As a result, no additional
allowance for loan losses was required on January 1, 1995 when SFAS No. 114, as
amended by SFAS No. 118 was adopted.
On January 1, 1996, the Company adopted SFAS No. 122, "Accounting for
Mortgage Servicing Rights," which requires that a mortgage banking enterprise
recognize as a separate asset rights to service mortgage loans for others,
however those servicing rights are acquired. In circumstances where mortgage
loans are originated, separate asset rights to service mortgage loans are only
recorded when the enterprise intends to sell such loans. The adoption of SFAS
No. 122 did not have a material impact on the Company's consolidated financial
position or results of operations.
The FASB issued SFAS No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," as amended by SFAS No.
127, which provides accounting guidance on transfers of financial assets,
servicing of financial assets and extinguishment of liabilities. This statement
is effective for transfers of financial assets, servicing of financial assets
and extinguishments of liabilities occurring after December 31, 1996. Adoption
of this new statement is not expected to have a material impact on the Company's
consolidated financial position or results of operations.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation
and amortization. Depreciation is computed primarily on the straight-line method
over the estimated useful lives of the assets. Leasehold improvements are
amortized over the term of the lease or estimated useful life, whichever is
shorter.
On January 1, 1996, the Company adopted SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
which provides guidance on when to recognize and how to measure impairment
losses of long-lived assets and certain identifiable intangibles and how to
value long-lived assets to be disposed of. The adoption of SFAS No. 121 had no
material effect on the Company's consolidated financial position or results of
operations.
OTHER REAL ESTATE
Other real estate owned, representing property acquired through
foreclosure, is carried at the lower of the principal balance of the secured
loan or the fair value less estimated disposal costs, of the acquired property.
F-7
<PAGE>
INTANGIBLE ASSETS
Intangible assets represent the excess of the cost over the fair value
of net assets of acquired businesses. Intangible assets at December 31, 1996 and
1995, were approximately $566,000 and $676,000, respectively and are being
charged to operations on a straight line basis over a seven-year period which
coincides with the average life of the assets acquired. The amortization charged
to income was $111,000, $191,000 and $110,000 for the years ended December 31,
1996, 1995 and 1994, respectively.
MORTGAGES HELD FOR SALE
Mortgages held for sale are recorded at cost which approximate market.
Gains or losses on such sales are recognized at the time of sale in an amount
equal to the present value of the difference between the effective interest rate
to the Bank Subsidiaries and the net yield to the investor, excluding normal
future loan servicing fees, over the estimated remaining lives of the loans
sold, adjusted for prepayments. Included in loans in the accompanying
consolidated financial statements are $0 and $228,000 of loans held for sale at
December 31, 1996 and 1995, respectively.
FEDERAL INCOME TAXES
The Company accounts for income taxes under the liability method. Under
the liability method, deferred tax assets and liabilities are determined based
on the difference between the financial statement and tax bases of assets and
liabilities as measured by the enacted tax rates which will be in effect when
these differences reverse. Deferred tax expense is the result of changes in
deferred tax assets and liabilities. The principal types of accounts resulting
in differences between assets and liabilities for financial statement and tax
return purposes are the allowance for possible losses on loans, interest on
non-accrual loans and acquired net operating loss carryforwards. The Company and
its subsidiaries file a consolidated Federal income tax return.
DIVIDEND RESTRICTIONS
New Jersey state law permits the payment of dividends from subsidiary
banks to their parent company(ies) provided there is no impairment of the
subsidiary's capital accounts and provided the subsidiary bank maintains a
surplus of not less than 50% of its capital stock, or, provided payment of the
dividend will not reduce the subsidiary's surplus. As of March 31, 1997 and
December 31, 1996 and 1995, GFB had $6.5 million, $6.5 million and $5.9 million
and BCB had $1.5 million, $1.6 million and $1.4 million of funds available for
the payment of dividends to their parent Company, respectively.
STATEMENTS OF CASH FLOWS
Cash and cash equivalents are defined as cash on hand,
non-interest-bearing amounts due from banks and Federal funds sold. Generally,
Federal funds are sold for a one-day period. Cash paid for income taxes was
$991,000, $1.0 million and $744,000 for the years ended December 31, 1996, 1995,
and 1994, respectively. Cash paid for interest was $7.3 million, $5.6 million
and $3.3 million for the years ended December 31, 1996, 1995, and 1994,
respectively.
F-8
<PAGE>
Advertising Costs
The Company expenses advertising costs as incurred. Advertising expenses
for the years ended December 31, 1996, 1995, and 1994 were approximately
$143,000, $106,000, and $188,000, respectively.
Stock Options
The Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation," on January 1, 1996, which contains a fair value-based method for
valuing stock-based compensation that entities may use, which measures
compensation cost at the grant date based on the fair value of the award.
Compensation is then recognized over the service period, which is usually the
vesting period. Alternatively, the standard permits entities to continue
accounting for employee stock options and similar equity instruments under
Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued
to Employees." Entities that continue to account for stock options using APB
Opinion No. 25 are required to make pro forma disclosures of net income and
earnings per share, as if the fair value-based method of accounting defined in
SFAS No. 123 had been applied. The Company's stock option plans are accounted
for under APB Opinion No. 25.
NET INCOME PER SHARE
Net income per share is computed based on the weighted average number of
common and common equivalent shares outstanding during each year. All weighted
average actual share or per share information in the financial statements has
been adjusted retroactively for the effect of stock dividends. The effect of
outstanding dilutive options and equity contracts was considered in the
computation.
The previously reported net income per share has been corrected to
reflect the dilutive effect of certain common stock equivalents. As a result,
the previously reported net income per share of $1.11 has been changed to $.97.
RECLASSIFICATIONS
Certain reclassifications have been made in the 1995 and 1994 financial
statements to conform to the classifications used in 1996.
F-9
<PAGE>
NOTE 2 ACQUISITIONS
On December 31, 1995, the Company acquired BCB by an exchange of stock.
Each share of BCB common stock outstanding was exchanged for 1.7 shares of the
Company's common stock, resulting in the issuance of 629,298 shares. The
acquisition was accounted for as a pooling of interest basis and all prior
periods have been restated to reflect the combination as follows:
1995 1994
---- ----
Net interest income........................... $ 7,110 $ 4,554
BCB........................................... 3,773 3,214
------ -----
$10,883 $ 7,768
====== ======
Net income.................................... $ 1,533 $ 966
BCB........................................... 539 520
------ ------
$ 2,072 $1,486
====== =====
On April 7, 1995, the Company completed the acquisition of Family First
Federal Savings Bank ("Family First") of Clifton, New Jersey. Under the terms of
the agreement, the Company issued 172,310 shares of its common stock at a cost
of $1.8 million in exchange for the common stock of Family First. The merger was
accounted for using the purchase method of accounting. The purchase price
exceeded the fair market value of net assets acquired by approximately $734,000,
which is reflected as goodwill, included in intangible and other assets in the
accompanying consolidated balance sheet. The unamortized balance at December 31,
1996 and 1995 was $566,000 and $675,000, respectively.
The pro forma results of operations, assuming Family First had been
acquired as of January 1, 1994, are as follows:
1995 1994
---- ----
Net interest income........................ $11,372 $9,905
Net income................................. 2,079 1,102
F-10
<PAGE>
NOTE 3 SECURITIES
The amortized cost, unrealized gains and losses, and estimated market
value of the Company's investment securities available-for-sale and
held-to-maturity are as follows:
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
-----------------------------------------------
1997
-----------------------------------------------
Gross Gross Fair
Amortized Unrealized Unrealized Market
Cost Gain Losses Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Available-for-sale
U.S. Treasury securities and
U.S. Government agencies..... ^ $38,794 $ 83^ $ (109)^ $38,768
State and political
subdivisions................. 906 - - 906
Other debt and equity
securities................... 6,323 927 - 7,250
Mortgage-backed securities...... 9,797 ^ 52 (26) 9,823
------- --------- --------- ------
$55,820 $ ^ 1,062 $ ^ (135) $56,747
====== ========= ========= ======
</TABLE>
<TABLE>
<CAPTION>
Held-to-maturity
<S> <C> <C> <C> <C> <C>
U.S. Treasury securities and
U.S. Government agencies..... $18,253 $ ^58 ^ $(562) $17,749
State and political
subdivisions................. 393 - (5) 388
Mortgage-backed securities...... 19,498 - (209) ^ 9,289
------ -------- ------- --------
$38,144 $ ^ 58 $ ^(776) $37,426
====== ========= ======== ======
</TABLE>
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------------------------------------------------------
1996 1995
--------------------------------------------- -----------------------------------------------
Gross Gross Fair Gross Gross Fair
Amortized Unrealized Unrealized Market Amortized Unrealized Unrealized Market
Cost Gain Losses Value Cost Gain Losses Value
--------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-sale
U.S. Treasury securities and
U.S. Government agencies..... $36,673 $ 213 $ (25) $36,861 $36,812 $1,001 $ ( 8) $37,805
State and political
subdivisions................. 1,006 - - 1,006 - - - -
Other debt and equity
securities................... 6,192 215 - 6,407 2,524 - (17) 2,507
Mortgage-backed securities...... 7,879 98 - 7,977 7,577 19 (73) 7,523
------ ----- ------ ------ ------ ------ ------- ------
$51,750 $ 526 $ (25) $52,251 $46,913 $1,020 $ (98) $47,835
====== ==== ====== ====== ====== ===== ==== ======
Held-to-maturity
U.S. Treasury securities and
U.S. Government agencies..... $18,996 $ 135 $ (529) $18,602 $32,774 $ 325 $(420) $32,679
State and political
subdivisions................. 393 - (3) 390 613 2 - 615
Mortgage-backed securities...... 18,039 19 (80) 17,978 2,764 7 (4) 2,767
------ ----- ------ ------ ------ ----- ----- ------
$37,428 $ 154 $ (612) $36,970 $36,151 $ 334 $(424) $36,061
====== ==== ==== ====== ====== ===== ==== ======
</TABLE>
F-11
<PAGE>
In the fourth quarter of 1995, concurrent with the adoption of its
implementation guide on SFAS No. 115, the FASB allowed a one-time reassessment
of the classifications of all securities currently held. Any reclassifications
would be accounted for at fair value in accordance with SFAS No. 115 and any
reclassifications from the held-to-maturity portfolio that resulted from this
one-time reassessment would not call into question the intent of the Company to
hold other debt securities to maturity in the future. The Company used the
opportunity under this one-time reassessment to reclassify $6.2 million in U.S.
Treasury securities from held-to-maturity to available-for-sale. In connection
with this reclassification, gross unrealized gains of $30,000 and gross
unrealized losses of $12,000 were recorded on available-for-sale securities.
The amortized cost and estimated market value of securities at March 31,
1997, and December 31, 1996, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because issuers and borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
------------------------------- ------------------------
Amortized Fair Market Amortized Fair Market
Cost Value Cost Value
---- ----- ---- -----
<S> <C> <C> <C> <C>
Available-for-sale
Due in one year or less............. $14,143 $14,160 $ 11,602 $ 11,656
Due after one year through five years 23,824 23,810 24,360 24,487
Due after five years through ten years 1,408 1,394 1,393 1,403
Due after ten years................. 325 310 324 321
Mortgage-backed and equity securities 16,120 17,073 14,071 14,384
------ ------ -------- -------
$55,820 $56,747 $ 51,750 $ 52,251
====== ====== ======= =======
Held-to-maturity
Due in one year or less............. $ 3,524 $ 3,531 $ 3,198 $ 3,198
Due after one year through five years 12,751 12,568 13,822 13,748
Due after five years through ten years 1,371 1,388 1,369 1,407
Due after ten years................. 1,000 650 1,000 640
Mortgage-backed securities.......... 19,498 19,289 18,039 17,977
------ ------ ------- -------
$38,144 $37,426 $ 37,428 $ 36,970
====== ====== ======= =======
</TABLE>
Proceeds from sales of available-for-sale securities during the three
months ended March 31, 1997 and 1996, was $2.0 million and $2.3 million,
respectively, and for the years ended December 31, 1996, 1995 and 1994 were $5.5
million, and $16.6 million, and $13.1 million, respectively. Gross gains of
$10,000 and $-0- were realized for the three months ended March 31, 1997 and
1996, respectively, and gross gains of $51,000 and $209,000 were realized on
these sales for the years ended December 31, 1996
F-12
<PAGE>
and 1995, respectively. Gross losses of $84,000 were realized on these sales for
the year ended December 31, 1994.
Securities with a carrying value of $13.7 million and $17.6 million at
December 31, 1996, and 1995, respectively, were pledged to secure public
deposits and repurchase agreements and for other purposes required by law.
NOTE 4 LOANS
Major classifications of Loans are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
-------------- -------------------------------
1997 1996 1995
-------------- --------------- --------------
(Unaudited)
<S> <C> <C> <C>
Loans secured by one-to four-family residential properties $ 45,975 $ 43,100 $ 43,328
Loans secured by nonresidential properties.......... 62,061 58,106 51,133
Loans to individuals................................ 10,073 9,997 8,661
Loans to depository institutions.................... - - 4,600
Commercial loans.................................... 13,367 14,106 14,823
Construction loans.................................. 5,557 5,534 4,292
Other loans......................................... 6,959 6,567 4,905
------- ------- -------
$143,992 $137,410 $131,742
======= ======= =======
</TABLE>
The following table presents information related to loans which are on a
non-accrual basis, loans which have been renegotiated to provide a reduction or
deferral of interest or principal for reasons related to the debtor's financial
difficulties and loans contractually past due ninety days or more as to interest
or principal payments.
<TABLE>
<CAPTION>
March 31, December 31,
--------------- --------------------------------
1997 1996 1995
--------------- -------------- ---------------
(Unaudited)
<S> <C> <C> <C>
Nonaccrual loans................................ $1,536 $1,033 $1,422
Renegotiated loans.............................. 825 ^ 726 517
------ ------- -----
Total non-performing loans.................... $ 2,361 ^ $1,759 $1,939
========= ===== =====
Loans 90 days or more past due and still accruing $ 1,009 $ 876 $1,125
========= ===== =====
Gross interest income which would have
been recorded under original terms........... $ 31 $ 286 $ 135
========= ===== =====
</TABLE>
F-13
<PAGE>
The balance of impaired loans was ^ $1.2 million at March 31, 1997, and was
$711,000 and $1.5 million at December 31, 1996 and 1995, respectively. The Bank
Subsidiaries have identified a loan as impaired when it is probable that
interest and principal will not be collected according to the contractual terms
of the loan agreements. The allowance for credit loss associated with impaired
loans was ^ $346,000 at March 31, 1997, and $316,000 and $588,000 at December
31, 1996 and 1995, respectively. The average recorded investment in impaired
loans was $1.7 million at March 31, 1997, and $1.1 million and $1.5 million at
December 31, 1996 and 1995, respectively. The income recognized on impaired
loans during the three months ended March 31, 1997 and 1996, was $11,000 and
$56,000, respectively, and for the years ended December 31, 1996 and 1995, was
$0 and $59,000, respectively. The Bank Subsidiaries' policy for interest income
recognition on impaired loans is to recognize income on restructured loans under
the accrual method. The Bank Subsidiaries recognize income on non-accrual loans
under the cash basis when the loans are both current and the collateral on the
loan is sufficient to cover the outstanding obligation to the Bank Subsidiaries.
If these factors do not exist the Banks, will not recognize income.
The Bank Subsidiaries extended credit to various directors, executive
officers and their associates. These extensions are made in the ordinary course
of business and on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
others. At December 31, 1996, loans outstanding to these related parties
amounted to $6.6 million. An analysis of activity in loans to related parties at
December 31, 1996, resulted in new loans of $3.2 million and repayments of $1.5
million. All such loans are current as to principal and interest payments at
December 31, 1996.
NOTE 5 ALLOWANCE FOR POSSIBLE LOAN LOSSES
An analysis of the allowance for possible loan losses is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year ended December 31,
------------------------ -------------------------------------------------
1997 1996 1996 1995 1994
----------- ---------- -------------- -------------- ----------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Balance at beginning of year..... $2,540 $2,332 $ 2,332 $ 1,824 $1,771
Acquired businesses.............. _ _ (9) 1,039 -
Provision charged to operations.. 115 90 440 414 172
Charge-offs..................... ^(26) (76) (365) (1,035) (264)
Recoveries....................... ^ 21 15 142 90 145
--------- ----- ------ ------- ------
Balance at end of year........... $ 2,650 $2,361 $ 2,540 $ 2,332 $1,824
======= ===== ====== ====== =====
</TABLE>
F-14
<PAGE>
NOTE 6 PREMISES AND EQUIPMENT
Premises and equipment consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
-------------- --------------------------------
Estimated
Useful Lives 1997 1996 1995
------------ -------------- -------------- ---------------
(Unaudited)
<S> <C> <C> <C> <C>
Land............................ $ 124 $ 124 $ 124
Buildings and improvements...... 5 to 20 years 481 481 1,489
Furniture, fixtures and equipment 3 to 10 years 3,394 3,327 2,937
Leasehold improvements.......... 3 to 40 years 1,987 1,982 403
---------- ------ -----
5,986 5,914 4,953
Less accumulated depreciation and
amortization.................... 2,936 2,711 1,871
------ ------ ------
$3,050 $ 3,203 $ 3,082
===== ====== ======
</TABLE>
NOTE 7 DEPOSITS
At December 31, 1996, the schedule of maturities of Certificates of
Deposit is as follows:
<TABLE>
<CAPTION>
<C> <C>
1997.................................................................... $72,666
1998.................................................................... 5,582
1999.................................................................... 2,230
2000.................................................................... 988
2001 and thereafter..................................................... 388
-------
$81,854
=======
</TABLE>
NOTE 8 DEBT
Federal Home Loan Bank Advances
The Company has a line of credit for $15.9 million with the Federal Home
Loan Bank (FHLB) which is collateralized by FHLB stock. Borrowings under this
arrangement have an interest rate that fluctuates based on market conditions and
customer demand. As of December 31, 1996 and 1995, there were no outstanding
balances.
F-15
<PAGE>
Redeemable Subordinated Debentures And Cancellable Mandatory Stock Purchase
Contracts
The Company issued $5.0 million of 8.5% Redeemable Subordinated
Debentures ("Debentures") due November 1, 1998, interest payable quarterly. In
addition to the Debentures, the Company issued Cancellable Mandatory Stock
Purchase Contracts ("Equity Contracts") requiring the purchase of $5.0 million
in common stock at a price of $9.77 (as adjusted for stock dividends) per share
no later than November 1, 1997, and permitting the purchase of common stock in
that amount prior to that date. The purchase price under the Equity Contracts
can be paid by the surrender of the Debentures with a principal amount equal to
the amount of the common stock to be purchased. The Debentures are redeemable
and the Equity Contracts are cancellable at the election of the Company upon 60
days written notice. At December 31, 1996, 511,770 shares of common stock were
reserved for future issuance pursuant to the outstanding Equity Contracts.
NOTE 9 INCOME TAXES
The provision for income taxes was as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
------------------------ -------------------------------------------------
1997 1996 1996 1995 1994
---------- ----------- -------------- -------------- ---------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Federal
Current................... $ 394 $ 308 $1,452 $ 872 $796
Deferred.................. (82) (57) (267) 135 (65)
State........................ 58 27 127 167 109
----- ----- ----- ----- ---
$ 370 $ 278 $1,312 $1,174 $840
===== ==== ===== ===== ===
</TABLE>
F-16
<PAGE>
The reconciliation of the tax computed at the statutory federal rate was
as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
---------------------- -------------------------------------
1997 1996 1996 1995 1994
---------- ---------- ---------- ---------- ------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Tax at statutory rate................... $329 $258 $1,241 $1,104 $791
Increase (reduction) in tax resulting from:
Tax-exempt income.................... (10) (11) (22) (24) (8)
Amortization of intangible assets.... 9 10 37 51 24
State income tax, net of federal benefit 38 30 84 110 72
Acquisition expenses................. - - - 58 -
Utilization of capital loss carryforward - - - (99) -
Other................................... 4 (9) (28) (26) (39)
----- ------ ------ ------- -----
Provision for income taxes........... $370 $278 $1,312 $1,174 $840
=== === ===== ===== ===
</TABLE>
The net deferred tax asset consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
--------------- ---------------------------------
1997 1996 1995
--------------- --------------- ----------------
(Unaudited)
<S> <C> <C> <C>
Allowance for possible losses on loans and other real estate $ 705 $ 604 $ 407
Interest income on non-accrual loans...................... 251 237 181
Depreciation and amortization............................. 70 76 (10)
Acquired net operating loss carryforward.................. 262 272 374
Difference between book and tax basis of assets acquired. 348 370 346
Unrealized holding gain loss on investment securities
available-for-sale...................................... (395) (194) (194)
Other..................................................... (92) (97) (103)
------ ------ ------
Total net deferred tax asset (included in other assets) $ 1,149 $1,268 $1,001
====== ===== =====
</TABLE>
At March 31, 1997, the Company had a net operating loss carryforward for
federal income tax purposes of approximately $0.8 million. This net operating
loss carryforward originated from pre-acquisition losses at Family First.
Subject to certain yearly limitations, the Company can utilize the
F-17
<PAGE>
pre-acquisition net operating loss carryforward to offset future consolidated
taxable income. The net operating loss carryforwards, if unused, would expire in
the years 2008 to 2010.
NOTE 10 SHAREHOLDERS' EQUITY
On July 31, 1996, the Company paid a 10% stock dividend on its common
stock to shareholders of record on July 15, 1996.
In April 1996, the Company amended its articles of incorporation whereby
the number of authorized shares of its common stock was increased from 4,000,000
shares to 10,000,000 shares.
On July 31, 1995, the Company paid a 10% stock dividend on its common
stock to shareholders of record on July 15, 1995.
On July 31, 1994, the Company paid a 10% stock dividend on its common
stock to shareholders of record on July 15, 1994.
NOTE 11 STOCK OPTIONS
The Company adopted a non-statutory stock option plan in 1988 (the "1988
Plan") that also allows for the granting to employees of options to acquire up
to a maximum of 111,304 shares (after adjustments for stock dividends) of the
Company's common stock. The exercise price of any options granted under the 1988
Plan will not be less than 100% of the fair market value per share of the
Company's common stock on the date such options are granted. Options granted may
have terms of not more than 10 years from the respective dates of grant and
outstanding options are exercisable over various periods following the
respective dates of grant.
The Company adopted a non-statutory stock option plan in 1993 (the "1993
Plan") authorizing the granting of options to purchase shares of the Company's
common stock to individuals who were then directors of GFB. All options
authorized by the 1993 Plan were granted during 1993 and no further options are
available for grant under that plan. At December 31, 1996, options to purchase a
total of 3,663 shares were outstanding and expired on December 31, 1996.
The Company adopted a non-statutory stock option plan in 1994 (the "1995
Plan") allowing for the Company's Board of Directors to grant, to the
individuals who were directors of GFB at that time, options to purchase a total
of 32,670 shares of the Company's common stock. At December 31, 1996, options to
purchase a total of 30,250 shares were outstanding and will expire if not
exercised by December 31, 1997.
The Company adopted two additional stock option plans in 1996. The 1996
Employee Stock Option Plan (the "1996 Employee Plan") provides for the granting
of incentive stock options, nonqualified stock options and stock appreciation
rights to employees of the Company and its subsidiaries. Effective with the
approval of the 1996 Employee Plan, the 1988 Plan was terminated. A total of
220,000 shares are authorized to be granted under the 1996 Employee Plan. During
1996, options to acquire 112,200 shares were granted under this plan. The 1996
Stock Option Plan for Non-employee Directors (the "1996 Directors Plan")
provides for the granting of nonqualified stock options to non-employee
directors of the
F-18
<PAGE>
corporation's bank subsidiaries. A total of 104,500 shares are authorized to be
granted under the 1996 Directors Plan. During 1996, options to acquire 104,500
shares were granted under this plan.
Had compensation cost for the plan been determined based on the fair
value of the options at the grant dates consistent with the method of (SFAS
123), the Company's net income and earnings per share would have been reduced to
the pro forma amounts indicated below.
<TABLE>
<CAPTION>
1996 1995
-------------- -------------
<S> <C> <C> <C>
Net income.................................. As reported $2,337 $2,072
Pro forma $2,300 $2,068
Primary earnings per share................. As reported $ .97 $1.04
Proforma $ .95 $1.04
</TABLE>
These pro forma amounts may not be representative of future disclosures
because they do not take into effect pro forma compensation expense related to
grants before 1995.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes options-pricing model with the following
weighted-average assumptions used for grants in 1996 and 1995, respectively:
dividend yield of 2.2 % for both years; expected volatility of 35% and 34%;
risk-free interest rates of 6.35% and 7.89% percent; and expected lives of 10
years for both years.
F-19
<PAGE>
A summary of the status of the Company's option plans as of December 31,
1996, 1995, and 1994 and the changes during the years ending on those dates is
represented below:
<TABLE>
<CAPTION>
1996 1995 1994
------------------------ ------------------------- ----------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price Shares
------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C>
Outstanding, beginning of year.. 97,071 $ 8.95 77,878 $ 8.39 75,237
Granted......................... 216,700 16.90 32,670 10.33 24,079
Exercised....................... (10,632) 8.86 (12,355) 8.76 (15,717)
Terminated...................... (924) 10.33 (1,122) 7.06 (5,721)
-------- ----- ------ ----- ------
Outstanding, end of year........ 302,215 $13.71 97,071 $ 8.95 77,878
======= ===== ====== ===== ======
Options exercisable at year-end. 32,954 36,866
======== ======
Weighted average fair value of
options granted during the year $ 7.53 $ 5.18
===== =====
</TABLE>
The following information applies to options outstanding at December 31,
1996:
Number outstanding.................................... 302,215
Range of exercise prices.............................. $6.83 - $17.125
Weighted average exercise price...................... $13.71
Weighted average remaining contractual life........... 8.63 years
NOTE 12 EMPLOYEE BENEFIT PLAN
The Company has a 401(k) savings plan covering substantially all
employees. Under the plan, the Company matches 50% of employee contributions for
all participants with less than five years employment, not to exceed 2% of their
salary, and 75% of employee contributions for all participants with five or more
years of employment, not to exceed 3% of their salary. Contributions made by the
Company were approximately $139,000, $142,000 and $91,000 for the years ended
December 31, 1996, 1995, and 1994, respectively.
F-20
<PAGE>
NOTE 13 COMMITMENTS AND CONTINGENCIES
LEASE OBLIGATIONS
The Company and its subsidiaries lease banking facilities and other
office space under operating leases which expire at various dates through 2007,
containing certain renewal options. Rent expenses charged to operations
approximated $621,000, $530,000 and $195,000, for the years ended December 31,
1996, 1995 and 1994, respectively. Included in these amounts is $146,000 per
year which is paid to a general partnership that includes two directors of the
Company.
As of December 31, 1996, future minimum annual rental payments under
these leases are as follows:
1997........................................................ $ 578
1998........................................................ 579
1999........................................................ 579
2000........................................................ 560
2001........................................................ 571
Thereafter.................................................. 2,539
-------
Total................................................... $ 5,406
-------
F-21
<PAGE>
LITIGATION
The Company and its subsidiaries may, in the ordinary course of
business, become a party to litigation involving collection matters, contract
claims and other legal proceedings relating to the conduct of their business. In
management's judgment, the consolidated financial position of the Company will
not be affected materially by the final outcome of any present legal proceedings
or other contingent liabilities and commitments.
NOTE 14 - FINANCIAL INSTRUMENTS WITH
OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK
The Bank Subsidiaries are parties to financial instruments with
off-balance-sheet risk in the normal course of business to meet the financing
needs of their customers and to reduce their own exposure to fluctuations in
interest rates. These financial instruments include commitments to extend credit
and standby letters of credit. Such financial instruments are recorded in the
financial statements when they become payable. Those instruments involve, to
varying degrees, elements of credit and interest rate risks in excess of the
amount recognized in the consolidated balance sheets. The contract or notional
amounts of those instruments reflect the extent of involvement the Bank
Subsidiaries have in particular classes of financial instruments.
The Bank Subsidiaries' exposure to credit loss in the event of
non-performance by the other party to the financial instrument for commitments
to extend credit and standby letters of credit is represented by the contractual
or notional amount of those instruments. The Bank Subsidiaries use the same
credit policies in making commitments and conditional obligations as they do for
on-balance-sheet instruments.
Unless noted otherwise, the Bank Subsidiaries do not require collateral
or other security to support financial instruments with credit risk. The
approximate contract amounts are as follows:
<TABLE>
<CAPTION>
December 31,
---------------
1996 1995
---- ----
Financial instruments whose contract amounts represent credit risk
<S> <C> <C>
Commitments to extend credit.................................. ^ $22,100 $22,652
Standby letters of credit and financial guarantees written... 1,144 1,908
</TABLE>
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank Subsidiaries evaluate each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Bank Subsidiaries upon extension of credit,
is based on management's credit evaluation.
F-22
<PAGE>
Standby letters of credit are conditional commitments issued by the Bank
Subsidiaries to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support public and private borrowing
arrangements. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to customers.
The Bank Subsidiaries hold residential or commercial real estate, accounts
receivable, inventory and equipment as collateral supporting those commitments
for which collateral is deemed necessary. The extent of collateral held for
those commitments at December 31, 1996 varies up to 100%.
The Bank Subsidiaries grant various commercial and consumer loans,
primarily within the State of New Jersey. Although the Bank Subsidiaries have
diversified loan portfolios, a substantial portion of the ability of their
borrowers to honor their loan payment obligations in a timely fashion is
dependent on the success of the real estate industry. The distribution of
commitments to extend credit approximates the distribution of loans outstanding.
Commercial and standby letters of credit were granted primarily to commercial
borrowers.
NOTE 15 FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107 requires disclosure of the estimated fair value of an
entity's assets and liabilities considered to be financial instruments. For the
Company, as for most financial institutions, the majority of its assets and
liabilities are considered financial instruments as defined in SFAS No. 107.
However, many such instruments lack an available trading market, as
characterized by a willing buyer and seller engaging in an exchange transaction.
Also, it is the Company's general practice and intent to hold its financial
instruments to maturity and not to engage in trading or sales activities, except
for certain loans. Therefore, the Company had to use significant estimations and
present value calculations to prepare this disclosure.
Changes in the assumptions or methodologies used to estimate fair values
may materially affect the estimated amounts. Also, management is concerned that
there may not be reasonable comparability between institutions due to the wide
range of permitted assumptions and methodologies in the absence of active
markets. This lack of uniformity gives rise to a high degree of subjectivity in
estimating financial instrument fair values.
Estimated fair values have been determined by the Company using the best
available data and an estimation methodology suitable for each category of
financial instruments. The estimation methodologies used, the estimated fair
values, and recorded book balances at December 31, 1996 and 1995 are outlined
below.
For cash and due from banks, the recorded book values of $18.3 million
and $29.0 million at December 31, 1996 and 1995, respectively, approximate fair
values. For interest-bearing deposits with banks, the recorded book values of
$4.5 million and $1.1 million at December 31, 1996 and 1995, respectively,
approximate fair values. The estimated fair values of investment securities are
based on quoted market prices, if available. Estimated fair values are based on
quoted market prices of comparable instruments if quoted market prices are not
available.
The net loan portfolio at December 31, 1996 and 1995, has been valued
using a present value discounted cash flow where market prices were not
available. The discount rate used in these calculations is the estimated current
market rate adjusted for credit risk. The carrying value of accrued interest
approximates fair value.
F-23
<PAGE>
<TABLE>
<CAPTION>
1996 1995
-------------------- --------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
------ ---------- ------- -----------
<S> <C> <C> <C> <C>
Investment securities available-for-sale.... $ 52,251 $52,251 $ 47,835 $ 47,835
Investment securities held-to-maturity..... 37,428 36,970 36,151 36,061
Loans....................................... 137,127 137,257 132,440 132,563
</TABLE>
The estimated fair values of demand deposits (i.e., interest (NOW) and
non-interest bearing demand accounts, savings and certain types of money market
accounts) are, by definition, equal to the amount payable on demand at the
reporting date (i.e., their carrying amounts). The carrying amounts of variable
rate accounts and certificates of deposit approximate their fair values at the
reporting date. The carrying amount of accrued interest payable approximates its
fair value.
<TABLE>
<CAPTION>
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Time deposits................................... $81,854 $82,540 $ 91,263 $ 91,648
Securities sold under agreements to repurchase.. 4,159 4,159 2,756 2,759
</TABLE>
The fair values of the redeemable subordinated debentures totaling $5.0
million and $5.0 million are estimated to approximate their recorded book
balances at December 31, 1996 and 1995, respectively.
There was no material difference between the notional amount and the
estimated fair value of off-balance-sheet items which totaled approximately
$12.6 million and $24.6 million at December 31, 1996 and 1995, respectively, and
primarily comprise unfunded loan commitments which are generally priced at
market at the time of funding.
NOTE 16 REGULATORY MATTERS AND CAPITAL REQUIREMENTS
The Company and the Bank Subsidiaries are subject to various regulatory
capital requirements administered by the federal banking agencies including the
Federal Reserve. Failure to meet minimum capital requirements can initiate
certain mandatory and possible additional discretionary actions by regulators
that, if undertaken, could have a material effect on the Company's financial
statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Company and the Bank Subsidiaries must meet
specific capital guidelines that involve quantitative measures of their assets,
liabilities, and certain off-balance-sheet items as calculated under regular
accounting practices.
F-24
<PAGE>
The capital amounts and classifications are also subject to qualitative
judgements by the regulators about components, risk weightings and other
factors.
Quantitative measures established by regulations to ensure capital
adequacy require the Bank Subsidiaries and the Company to maintain minimum
amounts and ratios of total and Tier 1 capital to risk weighted assets. As of
December 31, 1996, management believes that the Company and the Bank
Subsidiaries meet all capital adequacy requirements to which they are subject.
As of December 31, 1996, the Company and the Bank Subsidiaries met all
regulatory requirements for classification as "well-capitalized" institutions.
To be categorized as well capitalized, the Company and Bank Subsidiaries must
maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios
as set forth in the table. There are no conditions or events which have occurred
that management believes have changed the institution's category.
F-25
<PAGE>
The Bank Subsidiaries and the Company had the following capital ratios:
<TABLE>
<CAPTION>
Bergen Greater Well Capitalized
Great Falls Bank Commercial Bank Community Bancorp FDIC requirements)
---------------- --------------- --------------------------- -------------------
March 31, December 31, March 31, December 31, March 31, December 31,
----------- -------------- ---------- ---------------- ----------- --------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
----------- ------ ------- ---------- ---------------- -------- --------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tier 1 and Tier 2..... ^ 12.27% 13.21% 14.71% ^ 14.55% 14.17% 13.68% ^ 16.71% 16.89% 16.77% 10.00%
Tier 1 Core Capital Ratio ^ 11.01% 6.83% 6.79% 13.30% 9.04% 12.66% 12.51% 7.97% 7.27% 6.00%
Tier 1 Leverage Ratio.. ^ 6.63% 6.78% 7.90% 8.81% 9.32% 9.11% ^ 7.93% 8.12% 8.28% 5.00%
</TABLE>
F-26
<PAGE>
NOTE 17 CONDENSED FINANCIAL
INFORMATION - PARENT COMPANY ONLY
The condensed financial information of Greater Community Bancorp is as
follows:
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
--------------------------
1996 1995
---------- -------------
ASSETS:
<S> <C> <C>
Cash and due from banks - non-interest-bearing.............. $ 627 $ 632
Investment securities available-for-sale.................... 5,766 4,800
Accrued interest receivable................................. 29 63
Investment in subsidiaries.................................. 19,844 19,168
Other assets................................................ 92 178
--------- ---------
Total assets....................................... $ 26,358 $24,841
======= ======
LIABILITIES AND SHAREHOLDERS' EQUITY:
Redeemable subordinated debentures.......................... $ 4,988 $ 4,976
Other liabilities........................................... 309 270
Shareholders' equity........................................ 21,061 19,595
--------- ---------
Total liabilities and shareholders' equity......... $ 26,358 $24,841
========== =========
</TABLE>
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
1996 1995 1994
---------- --------- -----------
<S> <C> <C> <C>
Income
Equity in undistributed income of Bank Subsidiaries........... $ 712 $2,069 $1,646
Dividends from Bank Subsidiaries.............................. 1,858 - -
Interest income................................................ 234 342 244
Non-interest income............................................ (9) 291 -
------ ------ ------
2,795 2,702 1,890
Other expenses................................................. 656 735 528
------ ------ ------
Income before income taxes................................ 2,139 1,967 1,362
Income tax benefit............................................. 198 105 124
------- ------- ------
Net income.............................................. $ 2,337 $2,072 $ 1,486
===== ===== ======
</TABLE>
F-27
<PAGE>
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
December 31,
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ...................................................................... $ 2,337 $ 2,072 $ 1,486
Adjustments to reconcile net income to cash
(used in) provided by operating activities:
Discount accretion ............................................................ 25 22 22
(Gain) loss on sale of investment securities available-for-sale................ (9) (291) 13
(Increase) decrease in other assets .......................................... 87 169 (252)
(Increase) decrease in accrued interest payable ............................... 34 3 (56)
(Decrease) increase in other liabilities ...................................... 39 156 (27)
Equity in undistributed income of subsidiaries ................................ (712) (2,069) (1,646)
------- ------- -------
Net cash provided by (used in) operating activities ............... ^1,801 62 (460)
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment securities, available-for-sale .............. 2,193 509 680
Proceeds from maturities of investment securities, available-for-sale.......... (3,301) - (4,345)
-------- ------- ------
Net cash used in investing activities .............................. (1,108) 509 (3,665)
-------- ------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options ....................................... 102 93 87
Dividends paid ................................................................ (533) (269) (134)
Purchase of treasury stock .................................................... (188) - -
Other, net .................................................................... (79) (30) (23)
------- ------- -------
Net cash provided by financing activities.................. (698) (206) (70)
Net increase (decrease) in cash and cash equivalents....... (5) 365 (4,195)
CASH AND CASH EQUIVALENTS, beginning of year ..................................... 632 267 4,462
------- ------- -------
CASH AND CASH EQUIVALENTS, end of year ........................................... $ 627 $ 632 $ 267
======= ======= =======
</TABLE>
F-28
<PAGE>
NOTE 18 - QUARTERLY
FINANCIAL DATA (UNAUDITED)
The following represents summarized quarterly financial data of the
Company which, in the opinion of management, reflects all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the Company's results of operations.
Three Months Ended
------------------
March 31,
---------
1997
- ----
Interest income............................. $ 4,764
Interest expense............................ 1,806
Net interest income......................... 2,958
Provisions for possible loan losses......... 115
Other income................................ 449
Other expenses.............................. 2,323
Income before income taxes.................. 969
Net income.................................. 665
Per share data
- --------------
Average common shares outstanding........... 2,299
Net income per common share - primary....... .28
<TABLE>
<CAPTION>
Three months ended
------------------
December 31 September 30 June 30 March 31
----------- ------------ --------- --------
1996
----
<S> <C> <C> <C> <C>
Interest income........................... $ 4,789 $ 4,771 $ 4,610 $ 4,523
Interest expense.......................... 1,794 1,844 1,748 1,769
Net interest income....................... 2,995 2,927 ^ 2,862 2,754
Provision for credit losses............... 150 110 90 90
Other operating income.................... 470 465 ^ 248 746
Other operating expenses.................. 2,049 2,560 ^ 2,204 2,650
Income before income taxes................ 1,267 722 ^ 816 760
Net income................................ 856 477 ^ 522 482
Per share data
--------------
Average common shares outstanding......... 2,337 ^ 2,337 2,200 2,095
Net income per common share - primary..... ^.28 .18 .28 .23
1995
- ----
Interest income........................... $ 4,895 $ 4,739 $ ^ 4,497 $ 3,302
Interest expense.......................... 1,931 1,735 ^ 1,738 1,146
Net interest income....................... 2,964 3,004 ^ 2,759 2,156
Provision for credit losses............... 119 134 ^ 96 65
Other operating income.................... 1,034 264 ^ 597 282
Other operating expenses.................. 3,010 2,296 ^ 2,334 1,760
Income before income taxes................ 869 838 ^ 926 613
Net income................................ 733 317 ^ 633 389
Per share data
--------------
Average common shares outstanding......... 2,065 2,054 ^ 2,038 1,679
Net income per common share - primary..... .35 ^.25 .23 .23
</TABLE>
F-29
<PAGE>
Report Of Independent
Certified Public Accountants
To the Board of Directors
and Shareholders of
Greater Community Bancorp
We have audited the accompanying consolidated balance sheet of Greater Community
Bancorp (formally Great Falls Bancorp) and Subsidiaries as of December 31, 1996,
and the related consolidated statements of income, shareholders' equity, and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. We also audited the
adjustments to share and earnings per share data for 1995 and 1994 due to the
10% stock dividend declared in 1996 as discussed in Note 10 and the restatement
of the stock option information in 1995, as discussed in Note 11. In our opinion
such adjustments are appropriate and have been properly applied.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1996 financial statements referred to above present fairly,
in all material respects, the financial position of Greater Community Bancorp
and Subsidiaries as of December 31, 1996, and the results of their operations
and their cash flows for the year then ended, in conformity with generally
accepted accounting principles.
/s/Grant Thornton, LLP
GRANT THORNTON, LLP
Philadelphia, Pennsylvania
January 15, 1997 (except for Note 1, as to which the date is April 29, 1997)
F-30
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Greater Community Bancorp:
We have audited the accompanying consolidated balance sheet of Greater Community
Bancorp (a New Jersey corporation) (formerly Great Falls Bancorp) and subsidiary
as of December 31, 1995, and the related consolidated statements of income,
changes in shareholders' equity and cash flows for each of the two years in the
period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Greater Community Bancorp and
subsidiaries as of December 31, 1995, and the results of their operations and
their cash flows for each of the two years in the period ended December 31, 1995
in conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, effective
January 1, 1994, the Company changed its method of accounting for debt and
equity securities.
/s/Arthur Anderson LLP
ARTHUR ANDERSEN LLP
Roseland, New Jersey
January 16, 1996
F-31
<PAGE>
<TABLE>
<CAPTION>
========================================== ==========================================
<S> <C>
No person has been authorized in connection
with the offering made hereby to give any
information or to make any representation
not contained in this prospectus and, if given
or made, such information or representation
must not be relied upon as having been
authorized by the company or any [Logo]
underwriter. This prospectus does not
constitute an offer to sell or a solicitation of $20,000,000
any offer to buy any of the securities offered
hereby to any person or by anyone in any
jurisdiction in which it is unlawful to make GCB CAPITAL TRUST
such offer or solicitation. Neither the
delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, % Preferred Securities
create any implication that the information (Liquidation Amount $25 per
contained herein is correct as of any date Preferred Security)
subsequent to the date hereof. guaranteed, as described herein, by
TABLE OF CONTENTS
PAGE GREATER COMMUNITY
---- BANCORP
Summary.................................
Selected Consolidated Financial Data....
Risk Factors............................
GCB Capital Trust.......................
Use of Proceeds......................... -------------------
Capitalization.......................... PROSPECTUS
Accounting Treatment.................... -------------------
Management's Discussion and Analysis
of Financial Condition and Results
of Operations.........................
Business of the Company.................
Management.............................. Advest, Inc.
Supervision and Regulation..............
Description of Preferred Securities.....
Description of Junior Subordinated
Debentures............................ , 1997
-------------
Description of Guarantee................
Relationship Among the Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee..........
Certain Federal Income Tax
Consequences..........................
Certain ERISA Considerations............
Underwriting............................
Validity of Securities..................
Experts.................................
Available Information...................
Financial Statements.................... F-
========================================== ==========================================
</TABLE>
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
* Registration Fees............................... $ 6,970
* Legal Services.................................. 110,000
* Printing and Engraving.......................... 25,000
* Nasdaq Listing Fees............................. 9,600
* Accounting Fees................................. 40,000
* Trustee Fees and Expenses....................... 20,000
* Blue Sky Fees and Expenses...................... 5,000
* Miscellaneous................................... 3,430
----------
* TOTAL........................................... $ 220,000
==========
Item 16. Exhibits:
The exhibits filed as part of this Registration Statement are as
follows:
1.1 Form of Underwriting Agreement.
3.1 Restated Articles of Incorporation of Greater Community
Bancorp. **
3.2 Bylaws of Greater Community Bancorp. ***
4.1 Form of Junior Subordinated Indenture.
4.2 Form of Junior Subordinated Debenture Certificate.
4.3 Form of Trust Agreement.*
4.4 Form of Amended and Restated Trust Agreement.
4.5 Form of Preferred Security.
4.6 Form of Guarantee.
5.1 Opinion of Richards, Layton & Finger.
5.2 Opinion of Malizia, Spidi, Sloane, & Fisch, P.C.
8.1 Tax Opinion of Malizia, Spidi, Sloane, & Fisch, P.C.
10.1 Employment Agreement with George E. Irwin.
23.1 Consent of Grant Thornton LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Richards, Layton & Finger (included in
Exhibit 5.1).
23.4 Consent of Malizia, Spidi, Sloane & Fisch, P.C. (included
in Exhibit 5.2).
24.1 Power of Attorney*
25.1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as trustee
under the Junior Subordinated Indenture, the Amended and
Restated Trust Agreement and the Guarantee Agreement
relating to GCB Capital Trust.
27.1 Financial Data Schedule. *
- --------------------------
* Previously filed.
** Incorporated by reference to the Registrant's Form 8-K filed with the
Securities and Exchange Commission on July 8, 1996.
*** Incorporated by reference to the Registrant's Form 8-K filed with the
Securities and Exchange Commission on December 19, 1995.
<PAGE>
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 Totowa, New Jersey, as of May 8, 1997.
GREATER COMMUNITY BANCORP
By: /s/John L. Soldoveri*
--------------------------------------------
John L. Soldoveri
Chief Executive Officer and Chairman
(Duly Authorized Representative)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated as of May 8, 1997.
<TABLE>
<CAPTION>
<S> <C>
/s/John L. Soldoveri* /s/George E. Irwin*
- ----------------------------------------- -------------------------------------------
John L. Soldoveri George E. Irwin
Chief Executive Officer and Chairman President, Chief Operating Officer and Director
(Principal Executive Officer)
/s/Anthony M. Bruno, Jr.* /s/Charles J. Volpe*
- ----------------------------------------- -------------------------------------------
Anthony M. Bruno, Jr. Charles J. Volpe
Vice Chairman and Director Director
/s/M.A. Bramante*
- ----------------------------------------- -------------------------------------------
Alfred R. Urbano M.A. Bramante
Director Director
/s/C. Mark Campbell* /s/Robert J. Conklin*
- ----------------------------------------- -------------------------------------------
C. Mark Campbell Robert J. Conklin
Executive Vice President and Director Director
- ----------------------------------------- -------------------------------------------
Joseph A. Lobosco William T. Ferguson
Director Director
/s/Naqi A. Naqvi*
- -----------------------------------------
Naqi A. Naqvi
Treasurer
(Principal Financial and Accounting Officer)
*By: /s/George E. Irwin
-------------------------------------
George E. Irwin
As Attorney-in-Fact for each of the
persons indicated
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Issuer Trust 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 Totowa, New Jersey, as of May 8, 1997.
GCB CAPITAL TRUST
By: GREATER COMMUNITY BANCORP
as Depositor
By: /s/George E. Irwin
--------------------------------------
George E. Irwin
President and Chief Operating Officer
<PAGE>
As filed with the Securities and Exchange Commission on May 9, 1997
Registration Nos. 333-26453-01
333-26453
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
EXHIBITS TO
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-----------------
GCB CAPITAL TRUST
GREATER COMMUNITY BANCORP
----------------------------------------------------------
(Exact Name of Registrants as Specified in their Charters)
Delaware Requested
New Jersey 6035 22-2545165
- ------------------------------ -------------------------- --------------------
(States or Other Jurisdictions (Primary Standard Industry (I.R.S. Employer
of Incorporation Classification Code Number) Identification Nos.)
or Organization)
55 Union Boulevard, Totowa, New Jersey 07512
(201) 942-1111
---------------------------------------------------------
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrants' Principal Executive Offices)
Mr. John L. Soldoveri
Chief Executive Officer
Greater Community Bancorp
55 Union Boulevard, Totowa, New Jersey 07512
(201) 942-1111
---------------------------------------------------------
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Please send copies of all communications to:
John J. Spidi, Esq. Steven L. Kaplan, Esq.
MALIZIA, SPIDI, SLOANE & FISCH, P.C. ARNOLD & PORTER
1301 K Street, N.W, Suite 700 East 555 Twelfth Street, N.W.
Washington, D.C. 20005 Washington, D.C. 20004
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this registration statement becomes effective.
<PAGE>
INDEX TO EXHIBITS TO FORM S-2
The exhibits filed as part of this Registration Statement are as
follows:
1.1 Form of Underwriting Agreement.
3.1 Restated Articles of Incorporation of Greater Community
Bancorp. **
3.2 Bylaws of Greater Community Bancorp. ***
4.1 Form of Junior Subordinated Indenture.
4.2 Form of Junior Subordinated Debenture Certificate.
4.3 Form of Trust Agreement.*
4.4 Form of Amended and Restated Trust Agreement.
4.5 Form of Preferred Security.
4.6 Form of Guarantee.
5.1 Opinion of Richards, Layton & Finger.
5.2 Opinion of Malizia, Spidi, Sloane, & Fisch, P.C.
8.1 Tax Opinion of Malizia, Spidi, Sloane, & Fisch, P.C.
10.1 Employment Agreement with George E. Irwin.
23.1 Consent of Grant Thornton LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Richards, Layton & Finger (included in
Exhibit 5.1).
23.4 Consent of Malizia, Spidi, Sloane & Fisch, P.C.
(included in Exhibit 5.2).
24.1 Power of Attorney*
25.1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as trustee
under the Junior Subordinated Indenture, the Amended and
Restated Trust Agreement and the Guarantee Agreement
relating to GCB Capital Trust.
27.1 Financial Data Schedule. *
- --------------------
* Previously filed.
** Incorporated by reference to the Registrant's Form 8-K filed with the
Securities and Exchange Commission on July 8, 1996.
*** Incorporated by reference to the Registrant's Form 8-K filed with the
Securities and Exchange Commission on December 19, 1995.
Exhibit 1.1
<PAGE>
$20,000,0000(1)
GCB CAPITAL TRUST
GREATER COMMUNITY BANCORP
_____% Preferred Securities
(Liquidation Amount $25 per Preferred Security)
UNDERWRITING AGREEMENT
----------------------
May ____, 1997
ADVEST, INC.
As Representative of the Several
Underwriters
One Rockefeller Plaza, 20th Floor
New York, New York 10020
Ladies and Gentlemen:
GCB Capital Trust (the "Trust"), a statutory business trust organized
under the Business Trust Act (the "Delaware Act") of the State of Delaware
(Chapter 38, Title 12, of the Delaware Business Code, 12 Del. C. Section 3801 et
seq.), and Greater Community Bancorp, a New Jersey corporation (the "Company"),
as depositor of the Trust and as guarantor, hereby confirms its agreement with
you and the several underwriters, on whose behalf you have been duly authorized
to act as their representative (the "Representative"), as follows:
SECTION 1. Introduction. The Company agrees, upon the terms and
conditions set forth in this Underwriting Agreement (this "Agreement"), to issue
and sell to the several underwriters identified in Schedule A annexed hereto
(the "Underwriters"), who are acting severally and not jointly, an aggregate
liquidation amount of $20,000,000 (the "Firm Securities") of the Trust's ____%
preferred securities (the "Preferred Securities"). The Trust and the Company
also propose to issue and sell to the Underwriters, at the Underwriters' option,
up to an additional $3,000,000 aggregate Liquidation Amount of Preferred
Securities (the "Option Securities") as set forth herein. The term "Preferred
Securities" as used herein, unless indicated otherwise, shall mean the Firm
Securities and the Option Securities.
The Preferred Securities and the Common Securities (as defined
herein) are to be issued pursuant to the terms of an Amended and Restated Trust
Agreement dated as of May ____, 1997 (the "Trust Agreement"), among the Company,
as depositor, and, together with the Trust, the "Offerors," and Bankers Trust
Company ("Trust Company"), a New York banking corporation, as property trustee
("Property Trustee") and Bankers Trust (Delaware) ("Trust Delaware"), a Delaware
banking corporation, as Delaware trustee ("Delaware Trustee") and the holders
from time to time of undivided interests in the assets of the Trust. The
Preferred Securities will be guaranteed by the Company on a subordinated basis
and subject to certain limitations with respect to distributions and payments
upon liquidation, redemption or otherwise (the "Guarantee") pursuant to the
Preferred Securities Guarantee Agreement dated as of May ____, 1997 (the
"Guarantee Agreement"), between the Company and the Trust Company, as Trustee
(the "Guarantee Trustee"). The assets of the Trust will consist of ____% junior
subordinated deferrable
- -------------------------
1 Plus an option to acquire up to an additional $3,000,000
aggregate liquidation amount of Preferred Securities from the Trust
to cover over-allotments.
<PAGE>
interest debentures, due May ____, 2027 (the "Subordinated Debentures") of the
Company which will be issued under an indenture dated as of May ____, 1997 (the
"Indenture"), between the Company and the Trust Company, as Trustee (the
"Indenture Trustee"). Under certain circumstances, the Subordinated Debentures
will be distributable to the holders of undivided beneficial interests in the
assets of the Trust. The entire proceeds from the sale of the Preferred
Securities will be combined with the entire proceeds from the sale by the Trust
to the Company of the Trust's common securities (the "Common Securities"), and
will be used by the Trust to purchase an equivalent amount of the Subordinated
Debentures.
The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-2 (Nos. 333-_________ and
333-_________-01) and a related preliminary prospectus for the registration of
the Preferred Securities, the Guarantee and the Subordinated Debentures under
the Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Offerors have
prepared and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and will
file such additional amendments thereto and such amended prospectuses as may
hereafter be required. The registration statement has been declared effective
under the Securities Act by the Commission. The registration statement as
amended at the time it became effective (including the prospectus and all
information deemed to be a part of the registration statement at the time it
became effective pursuant to Rule 430A(b) of the Securities Act Regulations) is
hereinafter called the "Registration Statement," except that, if the Company
files a post-effective amendment to such registration statement which becomes
effective prior to the Closing Date (as defined below), "Registration Statement"
shall refer to such registration statement as so amended. Each prospectus
included in the registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the Commission
by the Company with the consent of the Underwriters pursuant to Rule 424(a) of
the Securities Act Regulations (including the documents incorporated by
reference therein) is hereinafter called the "Preliminary Prospectus." The term
"Prospectus" means the final prospectus (including the documents incorporated by
reference therein, if any), as first filed with the Commission pursuant to
paragraph (1) or (4) of Rule 424(b) of the Securities Act Regulations. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
SECTION 2. Representations and Warranties. Each of the Offerors
represents and warrants to, and agrees with, each of the Underwriters as
follows:
(a) The Company is duly incorporated and validly existing as a
corporation in good standing under the laws of the State of New Jersey with full
power and authority (corporate and other) to own, lease, and operate its
properties and conduct its business as described in the Prospectus, the Company
is duly registered under the Bank Holding Company Act of 1956, as amended (the
"BHCA"); the Company has no subsidiaries except those described in the
Registration Statement (each a "Subsidiary"); the Company owns, directly or
indirectly, beneficially and of record all of the outstanding capital stock of
each Subsidiary free and clear of any claim, lien, encumbrance or security
interest, except as described in the Prospectus. The Company and each of its
Subsidiaries is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which any of them own or lease
properties, has an office, or in which the business conducted by any of them
make such qualification necessary, except where the failure to so qualify would
not have a material adverse effect on the condition (financial or otherwise),
business, prospects, assets, properties, results of operations, or net worth of
the Company and its Subsidiaries taken as a whole ("Material Adverse Effect");
and no proceeding has been instituted
- 2 -
<PAGE>
in any jurisdiction revoking, limiting or curtailing, or seeking to revoke,
limit or curtail, such power and authority or qualification.
(b) The Preferred Securities have been duly and validly
authorized for issuance and sale to the Underwriters pursuant to this Agreement
and, when executed and authenticated in accordance with the terms of the Trust
Agreement and delivered to the Underwriters against payment of the consideration
set forth herein, will constitute valid and legally binding obligations of the
Trust enforceable in accordance with their terms and entitled to the benefits
provided by the Trust Agreement (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or general equity principles (whether considered in
a proceeding in equity or at law)). The Trust Agreement has been duly authorized
and, when executed by the proper officers of the Trust and delivered by the
Trust, will have been duly executed and delivered by the Trust and will
constitute the valid and legally binding instrument of the Trust, enforceable in
accordance with its terms, (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or general equity principles (whether considered in
a proceeding in equity or at law)). The Subordinated Debentures have been duly
and validly authorized for delivery by the Company and, when duly authenticated
in accordance with the terms of the Indenture and delivered to the Trust against
payment of the consideration set forth herein, will constitute valid and legally
binding obligations of the Company enforceable against the Company in accordance
with their terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, readjustment of debt,
moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or general equity principles (whether considered in
a proceeding in equity or at law)) and entitled to the benefits provided by the
Indenture. The Indenture has been duly authorized and, when executed by the
proper officers of the Company and delivered by the Company, will have been duly
executed and delivered by the Company and will constitute the valid and legally
binding instrument of the Company, enforceable in accordance with its terms,
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, readjustment of debt, moratorium,
fraudulent conveyance or similar laws relating to or affecting creditors' rights
generally or general equity principles (whether considered in a proceeding in
equity or at law)). The Trust Agreement, the Guarantee Agreement, and the
Indenture have been duly qualified under the Trust Indenture Act; and the
Preferred Securities, the Common Securities, the Trust Agreement, the Guarantee
Agreement, the Subordinated Debentures and the Indenture conform in all material
respects to the descriptions thereof contained in the Registration Statement and
the Prospectus.
(c) Neither the Trust nor the Company or any Subsidiary, is,
or with the giving of notice or lapse of time or both will be, in violation or
breach of, or in default under, nor will the execution or delivery of, or the
performance and consummation of the transactions contemplated by this Agreement
(including the offer, sale, or delivery of the Preferred Securities), conflict
with, or result in a violation or breach of, or constitute a default under, any
provision of the organization documents of the Trust or the Articles of
Incorporation, Bylaws (as amended or restated) of the Company, or other
governing documents of the Trust, the Company or any Subsidiary, or of any
provision of any agreement, contract, mortgage, deed of trust, lease, loan
agreement, indenture, note, bond, or other evidence of indebtedness, or other
material agreement or instrument to which the Trust, the Company or any
Subsidiary is a party or by which any of them is bound or to which any of their
properties is subject, nor will the performance by the Offerors of their
obligations hereunder violate any rule, regulation, order, or decree, applicable
to the Trust, the Company or any Subsidiary of any court
- 3 -
<PAGE>
or any regulatory body, administrative agency, or other governmental body having
jurisdiction over the Trust, the Company or any Subsidiary or any of their
respective properties, or any order of any court or governmental agency or
authority entered in any proceeding to which the Trust, the Company or any
Subsidiary was or is now a party or by which it is bound, except those, if any,
described in the Prospectus or which are not material to the Company and the
Trust taken as a whole. No consent, approval, filing, authorization,
registration, qualification, or order, including with or by any bank regulatory
agency, is required for the execution, delivery, and performance of this
Agreement or the consummation of the transactions contemplated by this
Agreement, other than such that have been obtained or made, except for
compliance with the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Blue Sky Laws applicable to the public
offering of the Preferred Securities by the Underwriters, the clearance of such
offering and the underwriting arrangements evidenced hereby with the National
Association of Securities Dealers, Inc. ("NASD"), and the listing of the
Preferred Securities on the Nasdaq Stock Market. This Agreement has been duly
authorized, executed and delivered by the Company and the Trust and constitutes
a valid and binding obligation of the Company and the Trust and is enforceable
against the Company and the Trust in accordance with its terms.
(d) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus complies in all material respects with the requirements of the
Securities Act and the Securities Act Regulations. As of the effective date of
the Registration Statement, and at all times subsequent thereto up to the
Closing Date or any Option Closing Date (as defined below), the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
contained or will contain all material statements that are required to be stated
therein in accordance with the Securities Act and the Securities Act Regulations
and conformed or will conform in all material respects to the requirements of
the Securities Act and the Securities Act Regulations, and neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto included or will include any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
no representation or warranty is made as to information contained in or omitted
from the Registration Statement, the Prospectus or any amendment or supplement
in reliance upon and in conformity with written information furnished to the
Company and the Trust by or on behalf of the Underwriters.
(e) Grant Thornton LLP and Arthur Andersen LLP each of which
has audited, reviewed, and expressed its opinion with respect to certain of the
financial statements and schedules filed with the Commission as a part of the
Registration Statement and included or to be included, as the case may be, in
the Prospectus and in the Registration Statement, and each of whose report is
included in the Prospectus and the Registration Statement are independent
accountants as required by the Securities Act and the Securities Act
Regulations.
(f) The financial statements and schedules and the related
notes thereto included or to be included, as the case may be, in the
Registration Statement, the Preliminary Prospectus, and the Prospectus present
fairly the financial position of the entities purported to be shown thereby as
of the respective dates of such financial statements and schedules, and the
results of operations, changes in equity and cash flows of the entities
purported to be shown thereby for the respective periods covered thereby, all in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved, except as may be disclosed in the Prospectus.
All adjustments necessary for a fair presentation of the results of such periods
have been made. The Company had an outstanding capitalization as set forth under
"Capitalization" in the Prospectus as of the date indicated therein and there
has been no material change therein since such date except
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as disclosed in the Prospectus. The financial, operating, and statistical
information set forth in the Prospectus under captions "Summary," "Selected
Consolidated Financial Data," "Use of Proceeds," "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business of the Company" and "Management" are fairly presented and prepared on
a basis consistent with the audited financial statements of the Company.
(g) There is no litigation or governmental proceeding, action,
or investigation pending or, to the knowledge of the Trust or the Company,
threatened, to which the Trust, the Company or any Subsidiary is or may be a
party or to which property owned or leased by the Company or any Subsidiary is
or may be subject, or related to environmental or discrimination matters, which
is required to be disclosed in the Registration Statement or the Prospectus by
the Securities Act or the Securities Act Regulations and is not so disclosed, or
which questions the validity of this Agreement or any action taken or to be
taken pursuant hereto.
(h) Either the Company or a Subsidiary, as the case may be,
has good and marketable title in fee simple to all items of real property and
good and marketable title to all the personal properties and assets reflected as
owned by the Company or a Subsidiary in the Prospectus (or elsewhere in the
Registration Statement), in each case clear of all liens, mortgages, pledges,
charges, or encumbrances of any kind or nature except those, if any, reflected
in the financial statements described above (or elsewhere in the Registration
Statement) or which are not material to the Company and its Subsidiaries taken
as a whole; all properties held or used by the Company or a Subsidiary under
leases, licenses, franchises or other agreements are held by them under valid,
existing, binding, and enforceable leases, franchises, licenses, or other
agreements with respect to which it is not in default.
(i) Neither the Trust nor the Company or any Subsidiary has
taken or will take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be expected to
constitute, stabilization or manipulation, under the Exchange Act or otherwise,
of the price of the Preferred Securities.
(j) Except as reflected in or contemplated by the Registration
Statement, since the respective dates as of which information is given in the
Registration Statement and prior to the Closing Date and Option Closing Date (as
such terms are hereinafter defined):
(i) neither the Company nor any Subsidiary has or will
have incurred any material liabilities or obligations, direct or contingent, or
entered into any material transaction not in the ordinary course of business
without the prior consent of the Representative;
(ii) neither the Company nor any Subsidiary has or will
have paid or declared any dividend or other distribution with respect to its
capital stock and neither the Company nor any Subsidiary has or will be
delinquent in the payment of principal or interest on any outstanding debt
obligations; and
(iii) there has not been and will not be any change in
the capital stock or any material change in the indebtedness of the Company or
any Subsidiary (except as may result from the closing of the transactions
contemplated by this Agreement), or any adverse change in the condition
(financial or otherwise), or any development involving a prospective adverse
change in their respective businesses (resulting from litigation or otherwise),
prospects, properties, condition (financial or otherwise), net worth, or results
of operations which is material to the Company and its Subsidiaries taken as a
whole.
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(k) There is no contract or other document, transaction, or
relationship required to be described in the Registration Statement, or to be
filed as an exhibit to the Registration Statement, by the Securities Act or by
the Securities Act Regulations that has not been described or filed as required.
(l) All documents delivered or to be delivered by the Offerors
or any of their representatives in connection with the issuance and sale of the
Preferred Securities were on the dates on which they were delivered, or will be
on the dates on which they are to be delivered, true, complete, and correct in
all material respects.
(m) The Company and each Subsidiary have filed all necessary
federal and all state and foreign income and franchise tax returns and paid all
taxes shown as due thereon; and no tax deficiency has been asserted or
threatened against the Company or any Subsidiary that would have a Material
Adverse Effect, except as described in the Prospectus.
(n) Neither the Trust nor the Company or any Subsidiary has,
directly or indirectly, at any time:
(i) made any unlawful contribution to any candidate for
political office, or failed to disclose any contribution in violation of law; or
(ii) made any payment to any federal, state, local, or
foreign government officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof or applicable foreign
jurisdictions.
(o) The Company or a Subsidiary owns or possesses adequate
rights to use all patents, patent applications, trademarks, service marks, trade
names, trademark registrations, servicemark registrations, copyrights, and
licenses necessary for the conduct of the business of the Company and the
Subsidiaries or ownership of their respective properties, and neither the
Company nor any Subsidiary has received notice of conflict with the asserted
rights of others in respect thereof which has not been resolved.
(p) The Company and each Subsidiary have in place and
effective such policies of insurance, with limits of liability in such amounts,
as are normal and prudent in the ordinary scope of business similar to that of
the Company and such Subsidiary in the respective jurisdiction in which they
conduct business.
(q) The Company and each Subsidiary have and hold, and at the
Closing Date or Option Closing Date will have and hold, and are operating in
compliance with, and have fulfilled and performed all of their material
obligations with respect to, all permits, certificates, franchises, grants,
easements, consents, licenses, approvals, charters, registrations,
authorizations, and orders (collectively, "Permits") required under all laws,
rules, and regulations in connection with their respective businesses, and all
of such Permits are in full force and effect; and there is no pending
proceeding, and neither the Company nor any Subsidiary has received notice of
any threatened proceeding, relating to the revocation or modification of any
such Permits. Neither the Company nor any Subsidiary is (by virtue of any
action, omission to act, contract to which it is a party or by which it is
bound, or any occurrence or state of facts whatsoever) in violation of any
applicable federal, state, municipal, or local statutes, laws, ordinances,
rules, regulations and/or orders issued pursuant to foreign, federal, state,
municipal, or local statutes, laws, ordinances, rules, or regulations (including
those relating to any aspect of banking, bank holding companies, environmental
protection, occupational safety and health, and equal employment practices)
heretofore or currently in effect, except such violation that has
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been fully cured or satisfied without recourse or that is not reasonably likely
to have a Material Adverse Effect.
(r) The provisions of any employee pension benefit plan
("Pension Plan") as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), in which the Company or any
Subsidiary is a participating employer are in substantial compliance with ERISA,
and neither the Company nor any Subsidiary is in violation of ERISA. The
Company, each Subsidiary, or the plan sponsor thereof, as the case may be, has
duly and timely filed the reports required to be filed by ERISA in connection
with the maintenance of any Pension Plans in which the Company or any Subsidiary
is a participating employer, and no facts, including any "reportable event" as
defined by ERISA and the regulations thereunder, exist in connection with any
Pension Plan in which the Company or any Subsidiary is a participating employer
which might constitute grounds for the termination of such plan by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate U.S.
District Court of a trustee to administer any such plan. The provisions of any
employee benefit welfare plan, as defined in Section 3(1) of ERISA, in which the
Company or any Subsidiary is a participating employer, are in substantial
compliance with ERISA, and the Company, any Subsidiary, or the plan sponsor
thereof, as the case may be, has duly and timely filed the reports required to
be filed by ERISA in connection with the maintenance of any such plans.
(s) Neither the Company nor the Trust is an open-end
investment company, unit investment trust or face-amount certificate company
that is, or is required to be, registered under Section 8 of the Investment
Company Act of 1940, as amended, or subject to regulation under such Act.
(t) The deposits of Great Falls Bank and Bergen Commercial
Bank are each insured by the Federal Deposit Insurance Corporation ("FDIC") up
to the legal limits.
(u) Neither this Agreement nor any certificate, statement or
other document delivered or to be delivered by the Offerors or any Subsidiary
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
Any certificate signed by any director or officer of the Company or
the Trust, as the case may be, and delivered to the Representative or to counsel
for the Underwriters shall be deemed a representation and warranty of the
Company or the Trust, as the case may be, to the Underwriters as to the matters
covered thereby.
Any certificate delivered by the Company or the Trust, as the case
may be, to their respective counsel for purposes of enabling such counsel to
render an opinion pursuant to Section 8 will also be furnished to the
Representative and counsel for the Underwriters and shall be deemed to be
additional representations and warranties to the Underwriters by the Company and
the Trust as to the matters covered thereby.
SECTION 3. Purchase, Sale and Delivery to Underwriters; Closing. On
the basis of the representations and warranties herein contained and subject to
the terms and conditions herein set forth, the Trust and the Company, as the
case may be, agree that the Trust will issue and sell to the Underwriters, and
each of the Underwriters agrees, severally and not jointly to purchase from the
Trust, the number of Firm Securities set forth opposite the name of such
Underwriter in Schedule A at a purchase price of $25 per Firm Security.
Payment of the purchase price for, and delivery of, the Firm
Securities shall be made at the offices of Arnold & Porter, 555 Twelfth Street,
N.W., Washington, D.C., or at such other place as shall be agreed upon by the
Representative, the Trust and the Company, at 9:00 A.M. Eastern
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Standard Time, on the fourth business day (unless postponed in accordance with
the provisions of Section 14) following the date of this Agreement, or such
other time not later than ten (10) business days after such date as shall be
agreed upon by the Representative, the Trust and the Company (such time and date
of payment and delivery being herein called the "Closing Date").
As compensation (the "Underwriting Commission") for the commitments
of the Underwriters contained in this Section 3, the Company hereby agrees to
pay to the Underwriters an amount equal to ____% of the public offering price of
the Preferred Securities. Such payment will be made on the Closing Date or on
the Option Closing Date (as defined below) with respect to the Option
Securities.
Payment for the Firm Securities shall be made to the Trust by wire
transfer of immediately available funds, against delivery to the Underwriter of
the Firm Securities to be purchased by it. The Firm Securities shall be issued
in the form of one or more fully registered global securities (the "Global
Securities") in book-entry form in such denominations and registered in the name
of the nominee of The Depository Trust Company (the "DTC") or in such names as
the Representative may request in writing at least two business days before the
Closing Date. The Global Securities representing the Firm Securities shall be
made available for examination by the Representative and counsel to the
Underwriters not later than 9:30 a.m. Eastern Standard Time on the last business
day prior to the Closing Date.
In addition, on the basis of the representations, warranties, and
agreements contained herein, but subject to the terms and conditions set forth
herein, the Trust hereby grants to the Underwriters an option to purchase,
severally and not jointly, from the Trust the Option Securities in the same
proportion as the number of Preferred Securities set forth opposite their names
on Schedule A bears to the total number of Firm Securities, at the same purchase
price per Preferred Security to be paid for the Firm Securities, for use solely
in covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Securities. The option granted hereunder may be
exercised at any time (but not more than once) within thirty (30) days after the
date of this Agreement, upon notice by the Representative to the Trust which
sets forth the aggregate liquidation amount of Option Securities as to which the
Underwriters are exercising the option, and the time and place at which the
certificate representing the Option Securities will be delivered. Such time of
delivery may not be earlier than the Closing Date and herein is called the
"Option Closing Date." The Option Closing Date shall be determined by the
Representative, but if at any time other than the Closing Date, shall not be
earlier than three nor later than five full business days after delivery of such
notice to exercise. Certificates for the Option Securities will be made
available for inspection at least 24 hours prior to the Option Closing Date at
the offices of the DTC, or its designated custodian, or at such other location
as specified by the Representative. The manner of payment for a delivery of the
Option Securities shall be the same as for the Firm Securities as specified in
this Section 3.
SECTION 4. Representations and Warranties of the Underwriters. The
Representative, on behalf of the Underwriters, represents and warrants to the
Company that the information set forth (a) in the last paragraph of the cover
page of the Prospectus, (b) on the inside front cover page of the Prospectus
relating to stabilization, and (c) in the third and sixth paragraphs of the
section in the Prospectus entitled "Underwriting" was the only written
information furnished to the Company by and on behalf of any Underwriter
expressly for use in connection with the preparation of the Registration
Statement, and is correct and complete in all material respects and does not
include any 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
not misleading.
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SECTION 5. Offering by the Underwriters. The Trust and the Company
are advised by the Representative that the Underwriters propose to make a public
offering of the Preferred Securities, on the terms and conditions set forth in
the Registration Statement from time to time as and when the Underwriters deem
advisable after the Registration Statement becomes effective. Because the NASD
is expected to view the Preferred Securities as interests in a direct
participation program, the offering of the Preferred Securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.
SECTION 6. Agreements of the Offerors. Each of the Offerors
covenants and agrees with the Underwriter that:
(a) If any information shall have been omitted from the
Registration Statement in reliance upon Rule 430A, the Company, at the earliest
possible time, will furnish the Representative with a copy of the Prospectus to
be filed by the Offerors with the Commission to comply with Rule 424(b) and Rule
430A under the Securities Act, and, will file such Prospectus with the
Commission in compliance with such Rules. Upon compliance with such Rules, the
Company will so advise the Representative promptly. The Company will advise the
Representative and counsel to the Underwriters promptly of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the institution of any proceedings for that purpose, or of any
notification received by the Company of the suspension of qualification of the
Preferred Securities for sale in any jurisdiction or the initiation or
threatening of any proceedings for that purpose, or of any notification received
by the Company of the suspension of qualification of the Preferred Securities
for sale in any jurisdiction or the initiation or threatening of any proceedings
for that purpose. The Company also will advise the Representative and counsel to
the Underwriters promptly of any request of the Commission for amendment or
supplement of the Registration Statement, of any Preliminary Prospectus, or of
the Prospectus, or for additional information, and the Offerors will not file
any amendment or supplement to the Registration Statement (either before or
after it becomes effective), to any Preliminary Prospectus, or to the Prospectus
(including a prospectus filed pursuant to Rule 424(b)) if the Representative has
not been furnished with a copy prior to such filing or if the Representative
reasonably objects to such filing.
(b) For the period during which a Prospectus relating to the
Preferred Securities is required to be delivered under the Securities Act, the
Offerors shall comply with all requirements imposed on them by the Securities
Act, as now and hereafter amended, and by the Securities Act Regulations, as
from time to time in force, so far as is necessary to permit the continuance of
sales or dealings in the Preferred Securities as contemplated by the provisions
hereof and the Prospectus. If any event occurs as a result of which the
Prospectus, including any subsequent amendment or supplement, would include an
untrue statement of a material fact, or would omit 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 if
it becomes necessary at any time to amend the Prospectus, including any
amendment or supplement thereto, to comply with the Securities Act, the Company
promptly will advise the Representative and counsel to the Underwriters thereof
and the Offerors will promptly prepare and file with the Commission an amendment
or supplement that will correct such statement or omission or an amendment that
will effect such compliance; and, if any Underwriter is required to deliver a
prospectus nine (9) months or more after the effective date of the Registration
Statement, the Company, upon request of the Representative but at the expense of
such Underwriter, will prepare promptly such prospectus or prospectuses as may
be necessary to permit compliance with the requirements of Section 10(a)(3) of
the Securities Act.
(c) The Offerors will not, prior to the Option Closing Date or
thirty (30) days after the date of this Agreement, whichever occurs first,
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without the prior consent of the Representative, incur any material liability or
obligation, direct or contingent, or enter into any material transaction, other
than in the ordinary course of business, or any transaction with a related party
which is required to be disclosed in the Prospectus pursuant to Item 404 of
Regulation S-K under the Securities Act, except as contemplated by the
Prospectus.
(d) The Company will make generally available to its security
holders and the Representative an earnings statement of the Company as soon as
practicable, but in no event later than fifteen (15) months after the end of the
Company's current fiscal quarter, covering a period of twelve (12) consecutive
calendar months beginning after the effective date of the Registration
Statement, but beginning not later than four (4) months after such effective
date, which will satisfy the provisions of the last subsection of Section 11(a)
of the Securities Act and Rule 158 promulgated thereunder.
(e) During such period as a prospectus is required by law to
be delivered in connection with sales by an underwriter or dealer, the Company
will furnish to the Representative, at the expense of the Company, copies of the
Registration Statement, the Prospectus, any Preliminary Prospectus, and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as the Representative may reasonably request,
for the purposes contemplated by the Securities Act.
(f) The Offerors will use their best efforts to take or cause
to be taken in cooperation with the Representative and counsel to the
Underwriters all actions required in qualifying or registering the Preferred
Securities for sale under the Blue Sky Laws of such jurisdictions as the
Representative may reasonably designate, provided the Offerors shall not be
required to qualify generally as foreign corporations or as a dealer in
securities or to consent generally to the service of process under the law of
any such state (except with respect to the offering and sale of the Preferred
Securities), and will continue such qualifications or registrations in effect so
long as reasonably requested by the Representative to effect the distribution of
the Preferred Securities (including, without limitation, compliance with all
undertakings given pursuant to such qualifications or registrations). In each
jurisdiction where any of the Preferred Securities shall have been qualified as
provided above, the Offerors will file such reports and statements as may be
required to continue such qualification for a period of not less than one (1)
year from the date of this Agreement.
(g) The Company will furnish to its security holders annual
reports containing financial statements audited by independent public
accountants. During the period ending three (3) years after the date of this
Agreement, (i) as soon as practicable after the end of the fiscal year, the
Company will furnish to the Representative two copies of the annual report of
the Company containing the audited consolidated balance sheet of the Company as
of the close of such fiscal year and corresponding audited consolidated
statements of earnings, stockholders' equity and cash flows for the year then
ended, and (ii) the Company will file promptly and will furnish to the
Representative at or before the filing thereof copies of all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13, 14, or 15 of the Exchange Act.
During such three-year period the Company also will furnish to the
Representative one copy of the following:
(i) as soon as practicable after the filing thereof,
each other report, statement, or other document filed by the Company with the
Company with the Commission;
(ii) as soon as practicable after the filing thereof,
all reports, statements, other documents and financial statements furnished by
the Company to Nasdaq pursuant to requirements of or agreements with Nasdaq; and
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(iii) as soon as available, each report, statement or
other document of the Company mailed to its stockholders.
(h) The Offerors will use their best efforts to satisfy or
cause to be satisfied the conditions to the obligations of the Underwriters in
Section 8 hereof.
(i) The Offerors shall deliver the requisite notice of
issuance to the NASD and shall take all necessary or appropriate action within
its power to maintain the authorization for trading of the Preferred Securities
on the Nasdaq Stock Market for a period of at least thirty-six (36) months after
the date of this Agreement.
(j) The Trust shall comply in all respects with the
undertakings given by the Trust in connection with the qualification or
registration of the Preferred Securities for offering and sale under the Blue
Sky Laws.
(k) The Trust shall apply the proceeds from its sale of the
Preferred Securities, combined with the entire proceeds from the sale by the
Trust to the Company of the Trust's Common Securities, to purchase an equivalent
amount of Subordinated Debentures. All the proceeds to be received by the
Company from the sale of the Subordinated Debentures will be used in the manner
and for the purposes specified under the heading "Use of Proceeds" in the
Prospectus. The Offerors shall file, and will furnish or cause to be furnished
to the Representative and counsel to the Underwriters copies of all reports as
may be required in accordance with Rule 463 under the Securities Act.
(l) Except for the sale of Preferred Securities pursuant to
this Agreement, neither the Company nor any Subsidiary shall, directly or
indirectly, offer, sell, contract to sell, issue, distribute, grant any option,
right, or warrant to purchase or otherwise dispose of any Preferred Securities
or substantially similar securities, in the open market or otherwise, for a
period of one hundred eighty (180) days after the later of the effective date of
the Registration Statement or the date of this Agreement, without the express
prior written consent of the Representative.
SECTION 7. Payment of Expenses and Fees
(a) Whether or not the transactions contemplated hereunder are
consummated, or if this Agreement is terminated for any reason, the Company will
pay or cause to be paid the costs, fees, and expenses incurred in connection
with the offering of the Preferred Securities as follows:
(i) All costs, fees, and expenses incurred in connection
with the performance of the Company and the Trust's obligations hereunder,
including all fees and expenses of the Company and the Trust's accountants and
counsel, all costs and expenses incurred in connection with the preparation,
printing, filing, and distribution (including delivery and shipping costs) of
the Registration Statement, each Preliminary Prospectus, and the Prospectus
(including all amendments and exhibits thereto and the financial statements
therein), and agreements and supplements provided for herein, this Agreement and
other underwriting documents, including various Underwriters' letters, and the
Preliminary and Supplemental Blue Sky Memoranda;
(ii) All filing and registration fees and expenses,
including the legal fees and disbursements of counsel (up to $3,500), incurred
in connection with qualifying or registering all or any part of the Preferred
Securities, the Guarantee and the Subordinated Debentures for offer and sale
under the Blue Sky Laws;
(iii) All fees and expenses of the Offerors' registrar
and transfer agent; all transfer taxes, if any, and all other fees and
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expenses incurred in connection with the sale and delivery of the Preferred
Securities to the Underwriters;
(iv) The filing fees of the NASD and applicable fees
charged by Nasdaq for inclusion of the Preferred Securities for quotation on the
National Market System; and
(v) All other costs and expenses incident to the
performance of the Company's and the Trust's obligations hereunder which are not
otherwise provided for in this Section 7(a).
(b) On the consummation of the offering of the Preferred
Securities, the Company shall pay Advest, Inc. twenty-five thousand dollars
($25,000) as a financial advisory fee.
SECTION 8. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters under this Agreement shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Trust set forth herein as of the Closing Date, and if applicable, as of the
Option Closing Date, as the case may be, to the accuracy of the statements of
the Offerors' directors and officers, to the performance by the Company and the
Trust of their obligations hereunder, and to the following additional
conditions, except to the extent expressly waived in writing by the
Representative:
(a) The Registration Statement and all post-effective
amendments thereto shall have been declared effective by the Commission no later
than 5:30 p.m., eastern time, on the date of this Agreement, or such later time
as shall have been consented to by the Representative, but in any event not
later than 5:30 p.m., eastern time, on the third full business day following the
date hereof; if the Offerors omitted information from the Registration Statement
at the time it became effective in reliance on Rule 430A under the Securities
Act, the Prospectus shall have been filed with the Commission in compliance with
Rule 424(b) and Rule 430A under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto shall have been issued; no proceeding for the issuance of such an order
shall have been initiated or shall be pending or, to the knowledge of the
Offerors or the Representative, threatened or contemplated by the Commission;
and any request of the Commission for additional information (to be included in
the Registration Statement or the Prospectus or otherwise) shall have been
disclosed to the Representative and complied with to the Representative's
satisfaction.
(b) The Preferred Securities, the Guarantee and the
Subordinated Debentures shall have been qualified or registered for sale, or
subject to an available exemption from such qualification or registration, under
the Blue Sky Laws of such jurisdictions as shall have been reasonably specified
by the Representative and the offering contemplated by this Agreement shall have
been cleared by the NASD.
(a) Since the dates as of which information is given in the
Registration Statement:
(i) There shall not have been any material adverse
change, or any development involving a prospective material adverse change, in
the ability of the Company or any Subsidiary to conduct their respective
business (whether by reason of any court, legislative, other governmental
action, order, decree, or otherwise), or in the general affairs, condition
(financial and otherwise) business, prospects, properties, management, financial
position or earnings, results of operations, or net worth of the Company or any
Subsidiary, whether or not arising from transactions in the ordinary course of
business; and
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(ii) Neither the Company nor any Subsidiary shall have
sustained any loss or interference from any labor dispute, strike, fire, flood,
windstorm, accident, or other calamity (whether or not insured) or from any
court or governmental action, order, or decree;
the effect of which on the Company or any Subsidiary, in any such case described
in clause (c)(i) or (ii) above, is in the reasonable opinion of the
Representative so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Preferred
Securities on the terms and in the manner contemplated in the Registration
Statement and the Prospectus.
(d) There shall have been furnished to the Representative on
the Closing Date, except as otherwise expressly provided below:
(i) An opinion of Malizia, Spidi, Sloane & Fisch, P.C.,
counsel to the Company, dated as of the Closing Date and any Option Closing
Date, in form and substance substantially in the form attached hereto as Exhibit
A.
(ii) The favorable opinion, dated the Closing Date, of
White & Case, counsel to the Trust Company and Trust Delaware, substantially in
the form attached hereto as Exhibit B.
(iii) The favorable opinion, dated the Closing Date, of
Richards, Layton & Finger, special Delaware counsel to the Company and the
Trust, substantially to the effect and in the form attached hereto as Exhibit C.
(iv) The favorable opinion, dated the Closing Date, of
Arnold & Porter, counsel to the Underwriters as to such matters as the
Representative shall reasonably request.
In rendering such opinions specified in clause (d)(ii),
(iii) or (iv) above, counsel may rely upon an opinion or opinions, each dated
the Closing Date, of other counsel retained by them or the Company as to laws of
any jurisdiction other than the United States or the State of New York, provided
that (A) such reliance is expressly authorized by each opinion so relied upon
and a copy of each such opinion is delivered to the Representative, and (B)
counsel shall state in their opinion that they believe that they and the
Underwriters are justified in relying thereon. Insofar as such opinions involve
factual matters, such counsel may rely, to the extent such counsel deems proper,
upon certificates of officers of the Company, its subsidiaries and the Trust and
certificates of public officials.
(e) At the time this Agreement is executed and also on the
Closing Date and the Option Closing Date, as the case may be, there shall be
delivered to the Representative letters addressed to the Representative from
Grant Thornton LLP and Arthur Andersen LLP, the Company's independent
accountants, the first letter to be dated the date of this Agreement, the second
letter to be dated the Closing Date, and the third letter to be dated the Option
Closing Date, if any, which shall be in form and substance reasonably
satisfactory to the Representative and shall contain information as of a date
within five days of the date of such letter. There shall not have been any
change set forth in any letter referred to in this subsection (e) that makes it
impracticable or inadvisable in the judgment of the Representative to proceed
with the public offering or purchase of the Preferred Securities as contemplated
hereby.
(f) On the Closing Date, a certificate signed by the Chairman
of the Board, the President, a Vice Chairman of the Board or any Executive or
Senior Vice President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
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<PAGE>
certificate have carefully examined the Registration Statement and this
Agreement and that:
(i) The representations and warranties of the Offerors
in this Agreement are true and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing Date and the
Offerors have complied in all material respects with all the agreements and
satisfied in all material respects all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) The Commission has not issued an order preventing
or suspending the use of the Prospectus or any Preliminary Prospectus or any
amendment thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and, to the knowledge of the respective
signatories, no proceeding for that purpose has been instituted or is pending or
contemplated under the Securities Act;
(iii) Each of the respective signatories of the
certificate has carefully examined the Registration Statement, the Prospectus,
and any amendments or supplements thereto, and such documents contain all
material statements and information required to be made therein, and neither the
Registration Statement nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and, since the date on which the Registration Statement was initially filed, no
event has occurred that was required to be set forth in an amended or
supplemented prospectus or in an amendment to the Registration Statement that
has not been so set forth; provided, however, that no representation need be
made as to information contained in or omitted from the Registration Statement
or any amendment or supplement in reliance upon and in conformity with written
information furnished to the Company and the Trust by or on behalf of any
Underwriter through the Representative; and
(iv) Since the date on which the Registration Statement
was initially filed with the Commission, there has not been any material adverse
change or a development involving a prospective material adverse change in the
business, properties, financial condition, or earnings of the Company and its
Subsidiaries taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as disclosed in the Registration Statement
as heretofore amended or (but only if the Representative expressly consents
thereto in writing) as disclosed in an amendment or supplement thereto filed
with the Commission and delivered to the Representative after the execution of
this Agreement; since such date and except as so disclosed or in the ordinary
course of business, neither the Company nor any Subsidiary has incurred any
liability or obligation, direct or indirect, or entered into any transaction
that is material to the Company or such Subsidiary, as the case may be, not
contemplated in the Prospectus; since such date and except as so disclosed there
has not been any change in the outstanding capital stock of the Company, or any
change that is material to the Company and its Subsidiaries taken as a whole in
the short-term debt or long-term debt of the Company or any Subsidiary; since
such date and except as so disclosed, neither the Company nor any of its
Subsidiaries have incurred any material contingent obligations, and no material
litigation is pending or, to their knowledge threatened against the Company or
any Subsidiary; and, since such date and except as so disclosed, neither the
Company nor any of its Subsidiaries have sustained any material loss or
interference from any strike, fire, flood, windstorm, accident or other calamity
(whether or not insured) or from any court or governmental action, order, or
decree.
(g) Prior to the Closing Date, the Company shall have
furnished to the Representative such further information, certificates and
documents as the Representative may reasonably request in connection with the
offering of the Preferred Securities.
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If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice from the Representative to the Company at any time
without liability on the part of any Underwriters, including the Representative,
or the Company, except for expenses to be paid by the Company pursuant to
Section 7 hereof or reimbursed by the Company pursuant to Section 9 and except
to the extent provided in Section 11.
SECTION 9. Reimbursement of Underwriters' Expenses. If the sale of
the Preferred Securities to the Underwriters on the Closing Date is not
consummated because the offering is terminated or indefinitely suspended by the
Company or by the Representative for any reason permitted by this Agreement,
other than the Underwriters' inability to legally act as Underwriters, the
Company will reimburse the Underwriters for the Underwriters' reasonable
out-of-pocket expenses, including fees and disbursements of their counsel, that
shall have been incurred by the Underwriters in connection with the proposed
purchase and sale of the Preferred Securities in an aggregate amount not to
exceed seventy-five thousand dollars ($75,000). Any such termination or
suspension shall be without liability of any party to the other except that the
provisions of this Section 9, and Sections 7 and 11 shall remain effective and
shall apply.
SECTION 10. Maintain Effectiveness of Registration Statement. The
Representative and the Company will use their respective best efforts to prevent
the issuance of any stop order or other such order suspending the effectiveness
of the Registration Statement and, if such stop order is issued, to obtain the
lifting thereof as soon as possible.
SECTION 11. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, expenses, liabilities, or actions in respect thereof ("Claims"), joint
or several to which such Underwriter or each such controlling person may become
subject under the Securities Act, the Exchange Act, the Securities Act
Regulations, Blue Sky Laws or other federal or state statutory laws or
regulations, at common law or otherwise (including payments made in settlement
of any litigation, if such settlement is effected with the written consent of
the Company, which consent shall not be unreasonably withheld), insofar as such
Claims arise out of or are based upon the inaccuracy or breach of any
representation, warranty, or covenant of the Company or the Trust contained in
this Agreement, any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or in any application filed
under any Blue Sky Law or other document executed by the Offerors for that
purpose or based upon written information furnished by the Offerors and filed in
any state or other jurisdiction to qualify or register any or all of the
Preferred Securities under the securities laws thereof (any such document,
application, or information being hereinafter called a "Blue Sky Application"),
or arise out of or are based upon the omission or alleged omission to state in
any of the foregoing a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Company agrees to reimburse
each Underwriter and each such controlling person promptly for any legal fees or
other expenses incurred by such Underwriter or any such controlling person in
connection with investigating or defending any such Claim or appearing as a
third-party witness in connection with any such Claim; provided, however, that
the Company will not be liable in any such case to the extent that:
(i) Any such Claim arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the Prospectus,
or any amendment or supplement thereto or in any Blue Sky
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<PAGE>
Application in reliance upon and in conformity with the written information
furnished by or on behalf of the Underwriters to the Offerors expressly for use
therein pursuant to Section 4 of this Agreement; or
(ii) Such statement or omission was contained or made in
any Preliminary Prospectus and corrected in the Prospectus and (1) any such
Claim suffered or incurred by any Underwriter (or any person who controls such
Underwriter) resulted from an action, claim, or suit by any person who purchased
Preferred Securities that are the subject thereof from such Underwriter in the
offering of the Preferred Securities, and (2) such Underwriter failed to deliver
a copy of the Prospectus (as then amended if the Offerors shall have amended the
Prospectus) to such person at or prior to the confirmation of the sale of such
Preferred Securities in any case where such delivery is required by the
Securities Act, unless such failure was due to failure by the Company to provide
copies of the Prospectus (as so amended) to the Underwriter as required by this
Agreement.
(b) Each Underwriter severally, but not jointly, agrees to
indemnify and hold harmless the Offerors, each of their directors, each of their
officers who sign the Registration Statement, and each person who controls the
Company or the Trust within the meaning of the Securities Act, against any Claim
to which the Offerors, or any such director, officer, or controlling person may
become subject under the Securities Act, the Exchange Act, the Securities Act
Regulations, Blue Sky Laws, or other federal or state statutory laws or
regulations, at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter and the Representative, which consent shall not be unreasonably
withheld), insofar as such Claim arises out of or is based upon any untrue or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or in any Blue Sky Application, or arises out of or is based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any Blue Sky Application, in reliance
upon and in conformity with the written information furnished by or on behalf of
such Underwriter to the Offerors pursuant to Section 4 of this Agreement. Each
Underwriter will severally reimburse any legal fees or other expenses reasonably
incurred by the Offerors, or any such director, officer, or controlling person
in connection with investigating or defending any such Claim, and from any and
all Claims resulting from failure of such Underwriter to deliver a copy of the
Prospectus, if the person asserting such Claim purchased Preferred Securities
from such Underwriter and a copy of the Prospectus (as then amended if the
Offerors shall have amended the Prospectus) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Preferred
Securities to such person, and if the Prospectus (as so amended) would have
cured the defect giving rise to such Claim (unless such failure was due to a
failure by the Company and the Trust to provide sufficient copies of the
Prospectuses (as so amended) to each Underwriter).
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) of this Section 11 of notice of the commencement of any
action in respect of a Claim, such indemnified party will, if a Claim in respect
thereof is to be made against an indemnifying party under such subsection,
notify the indemnifying party in writing of the commencement thereof. In case
any such action is brought against any indemnified party, and such indemnified
party notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with all other indemnifying parties, similarly notified,
assume the defense thereof, with counsel reasonably
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<PAGE>
satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to the indemnified party and/or other indemnified
parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties.
(d) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the defense of
such action and upon approval by the indemnified party of counsel selected by
the indemnifying party, the indemnifying party will not be liable to such
indemnified party under subsection (a) or (b) of this Section 11 for any legal
fees or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless:
(i) the indemnified party shall have employed separate
counsel in connection with the assumption of legal defenses in accordance with
the proviso to the last sentence of subsection (c) of this Section 11 (it being
understood, however, that the indemnified party shall not be liable for the
legal fees and expenses of more than one separate counsel (plus local counsel),
approved by the Representative if one or more of the Underwriters or their
controlling persons are the indemnified parties); or
(ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the indemnified party's notice
to the indemnifying party of commencement of the action.
(e) If the indemnification provided for in this Section 11 is
unavailable to an indemnified party or insufficient to hold harmless an
indemnified party under subsection (a) or (b) of this Section 11 in respect of
any Claim referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall, subject, to the limitations
hereinafter set forth, contribute to the amount paid or payable by such
indemnified party as a result of such Claim:
(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 hand from the offering of the Preferred Securities; or
(ii) if the allocation provided by clause (e)(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 (e)(i) above, but
also the relative fault of the Offerors on the one hand and the Underwriters on
the other hand in connection with the statements or omissions that resulted in
such Claim, as well as any other relevant equitable considerations.
The respective relative benefits received by the Offerors on the one
hand and the Underwriters on the other hand shall be deemed to be in such
proportion that the Underwriters are responsible for that portion of a Claim
represented by the percentage that the amount of the Underwriting Commission
bears to the public offering price of the Preferred Securities, and the Company
(including the Company's directors, officers, and controlling persons) is
responsible for the remaining portion of such Claim.
The relative fault of the Offerors on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Offerors on the one hand or the Underwriters on
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<PAGE>
the other hand and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by a party as a result of the Claims
referred to above shall be deemed to include, subject to the limitations set
forth in subsections (c) and (d) of this Section 11, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
(f) The Offerors and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 11 were
determined by pro rata or per capita allocation or by any other method or
allocation that does not take into account the equitable considerations referred
to in subsection (e) of this Section 11. Notwithstanding the other provisions of
this Section 11, no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Preferred Securities
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligation to contribute
pursuant to this Section 11 are several in proportion to their respective
underwriting commitments and not joint.
(g) The obligations of the Company, the Trust and the
Underwriters under this Section 11 shall be in addition to any liability that
the Company, the Trust or the Underwriters may otherwise have.
SECTION 12. Default of Underwriters. It shall be a condition to this
Agreement and to the obligations of the Trust to sell and deliver the Preferred
Securities hereunder, and to the obligations of each Underwriter to purchase the
Preferred Securities in the manner described herein, that, except as hereinafter
provided in this Section 12, each of the Underwriters (except a defaulting
Underwriter) shall purchase and pay for all the Preferred Securities agreed to
be purchased by such Underwriter hereunder upon tender to the Representative of
all such Preferred Securities in accordance with the terms hereof. If any
Underwriter or Underwriters default in its or their obligations to purchase
Preferred Securities hereunder on either the Closing Date or the Option Closing
Date and the aggregate liquidation amount of Preferred Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed ten percent (10%) of the liquidation amount of Preferred Securities the
Underwriters are obligated to purchase on such Closing Date, the Representative
may make arrangements for the purchase of such Preferred Securities by other
persons, including any of the Underwriters, but if no such arrangements are made
by such Closing Date or Option Closing Date the nondefaulting Underwriters shall
be obligated severally, in proportion to their respective commitments hereunder,
to purchase the Preferred Securities such defaulting Underwriters agreed but
failed to purchase on such Closing Date or Option Closing Date. If any
Underwriter or Underwriters so default and the liquidation amount of Preferred
Securities with respect to which such default or defaults occur is greater than
the above percentage and arrangements satisfactory to the Representative for the
purchase of such Preferred Securities by other person are not made within
thirty-six (36) hours after such default, this Agreement will terminate without
liability on the part of any nondefaulting Underwriter or the Company, except to
the extent provided in Section 11.
If Preferred Securities to which a default relates are to be
purchased by the nondefaulting Underwriters or by another party or parties, the
Representative or the Company shall have the right to postpone the Closing Date
or Option Closing Date, as the case may be, for not more than seven (7) business
days in order that the necessary changes, if any, in the Registration Statement,
Prospectus, and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term
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<PAGE>
"Underwriter" includes any person substituted for an Underwriter under this
Section 12. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
SECTION 13. Effective Date. This Agreement shall become effective
immediately on the date hereof.
SECTION 14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, this Agreement may be
terminated by the Representative prior to the Closing Date and the option from
the Company and the Trust referred to in Section 3, if exercised, may be
canceled by the Representative at any time prior to the Option Closing Date, if:
(a) The Offerors shall have failed, refused, or been unable,
at or prior to the Closing Date or Option Closing Date, as the case may be to
perform any agreement on its part to be performed hereunder;
(b) Any other condition to the obligations of the Underwriters
hereunder is not fulfilled; or
(c) In the Representative's reasonable judgment, payment for
and delivery of the Preferred Securities is rendered impracticable or
inadvisable because:
(i) Additional governmental restrictions, not in force
and effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been generally
established on any national securities exchange or over-the-counter market, or
trading in securities generally shall have suspended on any national securities
exchange or on the Nasdaq Stock Market, or a general banking moratorium shall
have been established by federal or state authorities;
(ii) Any event shall have occurred or shall exist that
makes untrue or incorrect in any material respect any statement or information
contained in the Registration Statement or that is not reflected in the
Registration Statement but should be reflected therein to make the statements or
information contained therein not misleading in any material respect; or
(iii) Any outbreak or escalation of major hostilities
or other national or international calamity or any substantial change in
political, financial or economic conditions shall have occurred or shall have
accelerated to such extent, in the Representative's reasonable judgment, as to
have a material adverse effect on the general securities market or make it
impracticable or inadvisable to proceed with completion of the sale and payment
for the Preferred Securities as provided in this Agreement.
Any termination pursuant to this Section 14 shall be without
liability on the part of any Underwriter to the Company or on the part of the
Company to any Underwriter (except for expenses to be paid by the Company
pursuant to Section 7 or reimbursed by the Company pursuant to Section 9 and
except as to indemnification and contribution to the extent provided in Section
11).
SECTION 15. Representations and Indemnities to Survive Delivery. The
respective indemnity and contribution agreements of the Company and the
Underwriters, and the representations, warranties, covenants, other statements
of the Offerors and of their directors and officers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, the Offerors, or any
of its or their partners, officers, directors, or any controlling person, as the
case may be, and will survive delivery of and payment for the Preferred
Securities sold hereunder. The respective indemnity and contribution of the
Company and the Underwriters, the provisions of Section 7(a) and Section 9 of
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<PAGE>
this Agreement, and the representations and warranties of the Offerors will
survive the termination or cancellation of this Agreement.
SECTION 16. Notices. All communications hereunder shall be in writing
and, if sent to the Representative, will be mailed, delivered, or telecopied
(with receipt confirmed) to Advest, Inc., at One Rockefeller Plaza, 20th Floor,
New York, New York 10020, Attention: Michael T. Mayes, Managing Director (Fax
No. (212) 584-4292) with a copy to Steven Kaplan, Arnold & Porter, 555 Twelfth
Street, N.W., Washington, D.C. 20004, (Fax No. (202) 942-5999; and if sent to
the Company or the Trust will be mailed, delivered, or telecopied (with receipt
confirmed) to Greater Community Bancorp, 55 Union Boulevard, Totowa, New Jersey
07512, Attention: George E. Irwin, President, (Fax No. (201) 942-6830) with a
copy to John J. Spidi, Malizia, Spidi, Sloane & Fisch, P.C., One Franklin
Square, 1301 K Street, N.W., Suite 700 East, Washington, D.C. 20005 (Fax No.
(202) 434-4661).
SECTION 17. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors or
assigns, and to the benefit of the directors and officers (and their personal
representatives) and controlling persons referred to in Section 11, and no other
person shall acquire or have any right or obligation hereunder. The terms
"successors or assigns," as used in this Agreement, shall not include any
purchaser of the Preferred Securities from any Underwriter merely by reason of
such purchase.
SECTION 18. Partial Unenforceability. If any section, subsection,
clause, or provision of this Agreement is for any reason determined to be
invalid or unenforceable, such determination shall not affect the validity or
enforceability of any other section, subsection, clause, or provision hereof.
SECTION 19. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
SECTION 20. Entire Agreement. This Agreement embodies the entire
agreement among the parties hereto with respect to the transactions contemplated
herein, and there have been and are no agreements among the parties with respect
to such transactions other than as set forth or provided for herein.
SECTION 21. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed counterparts hereof,
whereupon it will become a binding agreement among the Company, the Trust and
the Underwriters, including the Representative, in accordance with its terms.
Very truly yours,
GREATER COMMUNITY BANCORP
By:
-------------------------------------------------
Title:
----------------------------------------------
GCB CAPITAL TRUST
By: GREATER COMMUNITY BANCORP, INC.
as Depositor
By:
-------------------------------------------------
Title:
----------------------------------------------
ADVEST, INC.
As representative of the several Underwriters
listed in Schedule A.
By:
-------------------------------------------------
Title:
----------------------------------------------
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<PAGE>
GCB CAPITAL TRUST
GREATER COMMUNITY BANCORP
SCHEDULE A
Liquidation Amount of
Firm Securities to be
Name of Underwriter Purchased
- ------------------- ---------------------
Advest, Inc.................................................. $
Aggregate Liquidation Amount................................. $20,000,000
==========
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<PAGE>
EXHIBIT A
---------
The opinion of special counsel to the Company to be delivered pursuant to
Section 8(d)(i) of the Underwriting Agreement shall be substantially to the
effect that:
1. The Company is a corporation existing and in good standing under the laws of
the State of New Jersey, with requisite corporate power and authority to own its
properties and conduct its business as described in the Registration Statement,
except for such power and authority the absence of which would not have a
material adverse effect on the Company, and is registered as bank holding
company under the Bank Holding Company Act of 1956, as amended.
2. The Company and each Subsidiary have been duly incorporated or organized and
are validly existing as corporations or banking associations in good standing
under the laws of the jurisdiction of organization, with full corporate power
and authority to own, lease, and operate their respective properties and conduct
their respective businesses as described in the Registration Statement; the
Company and each Subsidiary are qualified to do business as foreign corporations
under the corporation laws of each jurisdiction in which the Company or such
Subsidiary, as the case may be, owns or leases properties, has an office, or in
which business is conducted and such qualification is required, except where the
failure to so qualify would not have a material adverse effect.
3. The Company and the Trust each has full corporate power and authority to
execute, deliver, and perform the Underwriting Agreement and to issue, sell, and
deliver the Preferred Securities to be sold by it to the Underwriters as
provided herein; the Underwriting Agreement has been duly authorized, executed
and delivered by the Company and the Trust, and constitutes a legal, valid, and
binding obligation of each of the Company and the Trust and is enforceable
against each of the Company and the Trust in accordance with its terms, except
as enforceability of this Agreement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally, and by equitable principles limiting the right to specific
performance or other equitable relief and except as the obligations of the
Company under the indemnification and contribution provisions of Section 11 of
the Agreement may be limited by laws or unenforceable as against public policy,
as to which no opinion is expressed, and an implied covenant of good faith and
fair dealing.
4. The Trust Agreement has been duly authorized, executed and delivered by the
Company, and is a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance or similar
laws relating to or affecting creditors' rights generally, general equity
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
5. The Guarantee Agreement has been duly authorized, executed and delivered by
the Company and is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment
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<PAGE>
of debt, moratorium, fraudulent conveyance or similar laws relating to or
affecting creditors' rights generally, general equity principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
6. The Indenture has been duly authorized, executed and delivered by the
Company, has been duly qualified under the Trust Indenture Act, and is a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally, general equity principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
7. The Subordinated Debentures have been duly authorized, executed and delivered
by the Company and when duly authenticated in accordance with the Indenture and
delivered and paid for in accordance with the Underwriting Agreement, will be
valid and binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, readjustment of debt, moratorium,
fraudulent conveyance or similar laws relating to or affecting creditors' rights
generally, general equity principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
8. The Trust is not an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in Investment Company Act of
1940, as amended.
9. The statements set forth in the Registration Statement under the captions
"Supervision and Regulation," "Description of Preferred Securities,"
"Description of Junior Subordinated Debentures," "Description of Guarantee" and
"Relationship Among the Preferred Securities, the Junior Subordinated Debentures
and the Guarantee," insofar as they purport to describe the provisions of the
laws referred to therein, fairly summarize the legal matters described therein.
10. The Preferred Securities, the Subordinated Debentures and the Guarantee
conform in all material respects to the descriptions thereof included in the
Prospectus.
11. The statements of law or legal conclusions and opinions set forth in the
Registration Statement under the caption "Certain Federal Income Tax
Consequences," subject to the assumptions and conditions described therein,
constitute such counsel's opinion.
12. The Registration Statement was declared effective under the Securities Act
as of the date and time specified in such opinion and, to such counsel's
knowledge and information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and no
proceedings therefor have been initiated or threatened by the Commission.
13. The Registration Statement and the Prospectus and any amendment or
supplement thereto made by the Company prior to the Closing Date or any Option
Closing Date (other than the financial statements and financial and statistical
data included therein, as to which no opinion need be rendered), when it or they
became effective or were filed with the Commission, as the case may be,
- 2 -
<PAGE>
and in each case at the Closing Date or any Option Closing Date, complied as to
form in all material respects with the requirements of the Securities Act, the
Trust Indenture Act and the applicable rules and regulations under said acts,
and such counsel has no reason to believe that the Registration Statement, at
the time it became effective, contained any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements
contained therein, not misleading, or that the Prospectus, at the time it was
filed with the Commission or at the Closing Date or any Option Closing Date,
contained any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading.
14. Such counsel knows of no material legal or governmental proceedings pending
to which the Company or any Subsidiary is a party or of which any property of
the Company or any Subsidiary is the subject which are required to be disclosed
in the Registration Statement or which would affect the consummation of the
transactions contemplated in this Agreement, the Indenture or the Preferred
Securities; and such counsel knows of no such proceedings which are threatened
or contemplated by governmental authorities or threatened by others.
15. Such counsel knows of no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described in the Registration
Statement or to be filed as exhibits thereto other than those described therein
or filed or incorporated by reference as exhibits thereto, and such instruments
as are summarized in the Registration Statement are fairly summarized in all
material respects.
16. No approval, authorization, consent, registration, qualification or other
order of any public board or body is required in connection with the execution
and delivery of this Agreement, the Trust Agreement, the Guarantee Agreement,
and the Indenture or the issuance and sale of the Preferred Securities or the
consummation by the Company of the other transactions contemplated by this
Agreement, the Trust Agreement, the Guarantee Agreement, or the Indenture,
except such as have been obtained under the Securities Act, the Exchange Act and
the Trust Indenture Act or such as may be required under the blue sky or
securities laws of various states in connection with the offering and sale of
the Preferred Securities (as to which such counsel need express no opinion).
17. The execution and delivery of this Agreement, the Trust Agreement, the
Guarantee Agreement, and the Indenture, the issue and sale of the Preferred
Securities and the Subordinated Debentures, the compliance by the Company with
the provisions of the Preferred Securities, the Subordinated Debentures, the
Indenture and this Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or constitute a breach of, or
default under, the articles of incorporation or by-laws of the Company or a
breach or default under any contract, indenture, mortgage, loan agreement, note,
lease or other instrument known to such counsel to which either the Company or
any Subsidiary is a party or by which either of them or any of their respective
properties may be bound except for such breaches as would not have a material
adverse effect on the Company and its Subsidiaries considered as one enterprise,
nor will such action result in a violation on the part of the Company
- 3 -
<PAGE>
or any Subsidiary of any applicable law or regulation or of any administrative,
regulatory or court decree known to such counsel.
- 4 -
<PAGE>
EXHIBIT B
---------
The opinion of counsel to the Trust Company and Trust Delaware to be delivered
pursuant to Section 8(d)(ii) of the Underwriting Agreement shall be
substantially to the effect that:
1. The Trust Company is duly incorporated and is validly existing in good
standing as a banking corporation with trust powers under the laws of the State
of New York.
2. The Indenture Trustee has the requisite power and authority to execute,
deliver and perform its obligations under the Indenture, and has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of the Indenture.
3. The Guarantee Trustee has the requisite power and authority to execute,
deliver and perform its obligations under the Guarantee Agreement, and has taken
all necessary corporate action to authorize the execution, delivery and
performance by it of the Guarantee Agreement.
4. The Property Trustee has the requisite power and authority to execute and
deliver the Trust Agreement, and has taken all necessary corporate action to
authorize the execution and delivery of the Trust Agreement.
5. Each of the Indenture and the Guarantee Agreement has been duly executed and
delivered by the Indenture Trustee and the Guarantee Trustee, respectively, and
constitutes a legal, valid and binding obligation of the Indenture Trustee and
the Guarantee Trustee, respectively, enforceable against the Indenture Trustee
and the Guarantee Trustee, respectively in accordance with its respective terms,
except that certain payment obligations may be enforceable solely against the
assets of the Trust and except that such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent
conveyance and transfer or other similar laws affecting the enforcement of
creditors' rights generally, and by general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing (regardless of whether such enforceability is considered in a proceeding
in equity or at law), and by the effect of applicable public policy on the
enforceability of provisions relating to indemnification or contribution.
6. The Subordinated Debentures delivered on the date hereof have been duly
authenticated by the Indenture Trustee in accordance with the terms of the
Indenture.
- 1 -
<PAGE>
EXHIBIT C
---------
The opinion of counsel, as special Delaware counsel to the Company and the Trust
to be delivered pursuant to Section 8(d)(iii) of the Underwriting Agreement
shall be substantially to the effect that:
1. The Trust has been duly created and is validly existing in good standing as a
business trust under the Delaware Business Trust Act, 12 Del. C. Section 3801 et
seq. (the "Delaware Act"), and all filings required under the laws of the State
of Delaware with respect to the creation and valid existence of the Trust as a
business trust have been made.
2. Under the Delaware Act and the Trust Agreement the Trust has the trust power
and authority to own its property and to its conduct its business, all as
described in the Prospectus.
3. The Trust Agreement constitutes a valid and binding obligation of the Company
and the Property Trustee and the Delaware Trustee, and is enforceable against
the Company and the Trustees, in accordance with its terms.
4. Under the Delaware Act and the Trust Agreement, the Trust has the trust power
and authority to execute and deliver, and to perform its obligations under, the
Underwriting Agreement and to issue and perform its obligations under the
Preferred Securities and the Common Securities.
5. Under the Delaware Act and the Trust Agreement, the execution and delivery by
the Trust of the Underwriting Agreement, and the performance by the Trust of its
obligations thereunder, have been duly authorized by all necessary trust action
on the part of the Trust.
6. The Preferred Securities have been duly authorized by the Trust Agreement and
are duly and validly issued and, subject to the qualifications set forth herein,
fully paid and nonassessable undivided beneficial interests in the assets of the
Trust and are entitled to the benefits of the Trust Agreement. The Holders, as
beneficial owners of the Trust, will be entitled to the same limitations of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware. We note
that the Holders may be obligated pursuant to the Trust Agreement, (i) to
provide indemnity and/or security in connection with and pay taxes or
governmental charges arising from transfers or exchanges of Preferred Securities
Certificates and the issuance of replacement Preferred Securities Certificates,
and (ii) to provide security or indemnity in connection with requests of or
directions to the Property Trustee to exercise its rights and powers under the
Trust Agreement.
7. Under the Delaware Act and the Trust Agreement, the issuance of the Preferred
Securities and Common Securities is not subject to preemptive rights.
8. The Common Securities have been duly authorized by the Trust Agreement and
are duly and validly issued undivided beneficial interests in the assets of the
Trust and are entitled to the benefits of the Trust Agreement.
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<PAGE>
9. The issuance and sale by the Trust of the Preferred Securities and Common
Securities, the purchase by the Trust of the Subordinated Debentures, the
execution, delivery and performance by the Trust of the Underwriting Agreement,
the consummation by the Trust of the transactions contemplated by the
Underwriting Agreement and the compliance by the Trust with its obligations
thereunder will not violate (i) any of the provisions of the Certificate of
Trust or the Trust Agreement or (ii) any applicable Delaware law or
administrative regulation.
10. Trust Delaware is duly incorporated and is validly existing in good standing
as a banking corporation with trust powers under the laws of the State of
Delaware.
11. The Delaware Trustee has the requisite power and authority to execute and
deliver the Trust Agreement, and has taken all necessary corporate action to
authorize the execution and delivery of the Trust Agreement.
- 2 -
Exhibit 4.1
<PAGE>
================================================================================
JUNIOR SUBORDINATED INDENTURE
Between
GREATER COMMUNITY BANCORP
and
BANKERS TRUST COMPANY
(as Trustee)
dated as of
____________, 1997
================================================================================
<PAGE>
GCB CAPITAL TRUST
Certain Sections of this Junior Subordinated Indenture relating
to Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Junior Subordinated
Act Section Indenture Section
- --------------- -------------------
Section 310(a)(1)............................................ 6.9
(a)(2)....................................... 6.9
(a)(3)....................................... Not Applicable
(a)(4)....................................... Not Applicable
(a)(5)....................................... 6.9
(b).......................................... 6.8, 6.10
Section 311(a)............................................... 6.13
(b).......................................... 6.13
(b)(2)....................................... 7.3(a)
Section 312(a)............................................... 7.1, 7.2(a)
(b).......................................... 7.2(b)
(c).......................................... 7.2(c)
Section 313(a)............................................... 7.3(a)
(a)(4)....................................... 7.3(a)
(b).......................................... 7.3(b)
(c).......................................... 7.3(a)
(d).......................................... 7.3(c)
Section 314(a)............................................... 7.4
(b).......................................... 7.4
(c)(1)....................................... 1.2
(c)(2)....................................... 1.2
(c)(3)....................................... Not Applicable
(e).......................................... 1.2
Section 315(a)............................................... 6.1(a)
(b).......................................... 6.2, 7.3
(c).......................................... 6.1(b)
(d).......................................... 6.1(c)
(e).......................................... 5.14
Section 316(a)............................................... 5.12
(a)(1)(A).................................... 5.12
(a)(1)(B).................................... 5.13
(a)(2)....................................... Not Applicable
(b).......................................... 5.8
(c).......................................... 1.4(f)
Section 317(a)(1)............................................ 5.3
(a)(2)....................................... 5.4
(b).......................................... 10.3
Section 318(a)............................................... 1.7
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
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ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION........................................ 1
SECTION 1.1. Definitions................................................ 1
SECTION 1.2. Compliance Certificate and Opinions........................ 10
SECTION 1.3. Forms of Documents Delivered to Trustee.................... 10
SECTION 1.4. Acts of Holders............................................ 11
SECTION 1.5. Notices, Etc. to Trustee and Company....................... 12
SECTION 1.6. Notice to Holders; Waiver.................................. 13
SECTION 1.7. Conflict with Trust Indenture Act.......................... 13
SECTION 1.8. Effect of Headings and Table of Contents................... 13
SECTION 1.9. Successors and Assigns..................................... 13
SECTION 1.10. Separability Clause........................................ 13
SECTION 1.11. Benefits of Indenture...................................... 14
SECTION 1.12. Governing Law.............................................. 14
SECTION 1.13. Non-Business Days.......................................... 14
ARTICLE II. SECURITY FORMS............................................. 14
SECTION 2.1. Forms Generally............................................ 14
SECTION 2.2. Form of Face of Security................................... 15
SECTION 2.3. Form of Reverse of Security................................ 18
SECTION 2.4. Additional Provisions Required in Global
Security................................................... 21
SECTION 2.5. Form of Trustee's Certificate of Authentication 21
ARTICLE III. THE SECURITIES............................................. 22
SECTION 3.1. Title and Terms............................................ 22
SECTION 3.2. Denominations.............................................. 22
SECTION 3.3. Execution, Authentication, Delivery
and Dating................................................. 22
SECTION 3.4. Temporary Securities....................................... 24
SECTION 3.5. Global Securities.......................................... 24
SECTION 3.6. Registration, Transfer and Exchange
Generally; Certain Transfers and
Exchanges; Securities Act Legends.......................... 25
SECTION 3.7. Mutilated, Lost and Stolen Securities...................... 26
SECTION 3.8. Payment of Interest and Additional
Interest; Interest Rights Preserved........................ 27
SECTION 3.9. Persons Deemed Owners...................................... 28
SECTION 3.10. Cancellation............................................... 28
SECTION 3.11. Computation of Interest.................................... 29
SECTION 3.12. Deferrals of Interest Payment Dates........................ 29
SECTION 3.13. Right of Set-Off........................................... 30
SECTION 3.14. Agreed Tax Treatment....................................... 30
SECTION 3.15. CUSIP Numbers.............................................. 30
</TABLE>
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ARTICLE IV. SATISFACTION AND DISCHARGE................................. 30
SECTION 4.1. Satisfaction and Discharge of Indenture.................... 30
SECTION 4.2. Application of Trust Money................................. 31
ARTICLE V. REMEDIES................................................... 32
SECTION 5.1. Events of Default.......................................... 32
SECTION 5.2. Acceleration of Maturity; Rescission
and Annulment.............................................. 32
SECTION 5.3. Collection of Indebtedness and Suits
for Enforcement by Trustee................................. 33
SECTION 5.4. Trustee May File Proofs of Claim........................... 34
SECTION 5.5. Trustee May Enforce Claim Without
Possession of Securities................................... 35
SECTION 5.6. Application of Money Collected............................. 35
SECTION 5.7. Limitation on Suits........................................ 35
SECTION 5.8. Unconditional Right of Holders to
Receive Principal, Premium and
Interest; Direct Action by Holders
of Preferred Securities.................................... 36
SECTION 5.9. Restoration of Rights and Remedies......................... 36
SECTION 5.10. Rights and Remedies Cumulative............................. 36
SECTION 5.11. Delay or Omission Not Waiver............................... 36
SECTION 5.12. Control by Holders......................................... 37
SECTION 5.13. Waiver of Past Defaults.................................... 37
SECTION 5.14. Undertaking for Costs...................................... 37
SECTION 5.15. Waiver of Usury, Stay or Extension Laws.................... 38
ARTICLE VI. THE TRUSTEE................................................ 38
SECTION 6.1. Certain Duties and Responsibilities........................ 38
SECTION 6.2. Notice of Defaults......................................... 39
SECTION 6.3. Certain Rights of Trustee.................................. 39
SECTION 6.4. Not Responsible for Recitals or
Issuance of Securities..................................... 40
SECTION 6.5. May Hold Securities........................................ 40
SECTION 6.6. Money Held in Trust........................................ 40
SECTION 6.7. Compensation and Reimbursements............................ 41
SECTION 6.8. Disqualification; Conflicting
Interests.................................................. 41
SECTION 6.9. Corporate Trustee Required;
Eligibility................................................ 42
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<CAPTION>
<S> <C> <C>
SECTION 6.10. Resignation and Removal; Appointment
of Successor............................................... 42
SECTION 6.11. Acceptance of Appointment by
Successor.................................................. 43
SECTION 6.12. Merger, Conversion, Consolidation or
Succession to Business..................................... 44
SECTION 6.13. Preferential Collection of Claims Against
Company.................................................... 44
SECTION 6.14. Appointment of Authenticating Agent........................ 44
ARTICLE VII. HOLDER'S LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY................................... 46
SECTION 7.1. Company to Furnish Trustee Names and
Addresses of Holders....................................... 46
SECTION 7.2. Preservation of Information,
Communications to Holders ................................. 46
SECTION 7.3. Reports by Trustee and Paying Agent........................ 46
SECTION 7.4. Reports by Company......................................... 47
ARTICLE VIII. CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE.......................................... 47
SECTION 8.1. Company May Consolidate, Etc., Only
on Certain Terms........................................... 47
SECTION 8.2. Successor Company Substituted.............................. 48
ARTICLE IX. SUPPLEMENTAL INDENTURES.................................... 48
SECTION 9.1. Supplemental Indentures Without Consent
of Holders................................................. 48
SECTION 9.2. Supplemental Indentures With Consent of
Holders.................................................... 49
SECTION 9.3. Execution of Supplemental Indentures....................... 50
SECTION 9.4. Effect of Supplemental Indentures.......................... 50
SECTION 9.5. Conformity with Trust Indenture Act........................ 50
SECTION 9.6. Reference in Securities to Supplemental
Indentures................................................. 50
ARTICLE X. COVENANTS.................................................. 51
SECTION 10.1. Payment of Principal, Premium and Interest 51
SECTION 10.2. Maintenance of Office or Agency............................ 51
SECTION 10.3. Money for Security Payments to be Held in
Trust...................................................... 51
SECTION 10.4. Statement as to Compliance................................. 52
SECTION 10.5. Waiver of Certain Covenants................................ 53
</TABLE>
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SECTION 10.6. Additional Sums............................................ 53
SECTION 10.7. Additional Covenants....................................... 53
SECTION 10.8. Original Issue Discount.................................... 54
ARTICLE XI. REDEMPTION OF SECURITIES................................... 54
SECTION 11.1. Applicability of This Article.............................. 54
SECTION 11.2. Election to Redeem; Notice to Trustee...................... 55
SECTION 11.3. Selection of Securities to be Redeemed..................... 55
SECTION 11.4. Notice of Redemption....................................... 55
SECTION 11.5. Deposit of Redemption Price................................ 56
SECTION 11.6. Payment of Securities Called for
Redemption................................................. 56
SECTION 11.7. Right of Redemption of Securities
Initially Issued to the Issuer Trust....................... 57
ARTICLE XII. SINKING FUNDS.............................................. 57
ARTICLE XIII. SUBORDINATION OF SECURITIES................................ 57
SECTION 13.1. Securities Subordinate to Senior
Indebtedness............................................... 57
SECTION 13.2. No Payment When Senior Indebtedness
in Default; Payment Over of Proceeds
Upon Dissolution, Etc...................................... 57
SECTION 13.3 Payment Permitted If No Default............................ 59
SECTION 13.4. Subrogation to Rights of Holders of
Senior Indebtedness........................................ 59
SECTION 13.5. Provisions Solely to Define Relative
Rights..................................................... 59
SECTION 13.6. Trustee to Effectuate Subordination........................ 60
SECTION 13.7. No Waiver of Subordination Provisions...................... 60
SECTION 13.8. Notice to Trustee.......................................... 60
SECTION 13.9. Reliance on Judicial Order or
Certificate of Liquidating Agent........................... 61
SECTION 13.10. Trustee Not Fiduciary for Holders of
Senior Indebtedness........................................ 61
SECTION 13.11. Rights of Trustee as Holder of Senior
Indebtedness; Preservation of Trustee's
Rights..................................................... 61
SECTION 13.12. Article Applicable to Paying Agents........................ 61
SECTION 13.13. Certain Conversions or Exchanges
Deemed Payment............................................. 61
</TABLE>
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<PAGE>
JUNIOR SUBORDINATED INDENTURE
-----------------------------
THIS JUNIOR SUBORDINATED INDENTURE, dated as of ________, 1997, between
GREATER COMMUNITY BANCORP, a New Jersey Corporation (the "Company"), having its
principal office at 55 Union Boulevard, Totowa, New Jersey 07512, and BANKERS
TRUST COMPANY, as Trustee, having its principal office at Four Albany Street,
4th Floor, New York, New York 10006 (the "Trustee").
RECITALS OF THE COMPANY
-----------------------
WHEREAS, the Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance of its unsecured junior subordinated
debentures due ___________, 2027 (hereinafter called the "Securities") of
substantially the tenor hereinafter provided, including Securities issued to
evidence loans made to the Company from the proceeds from the issuance from time
to time by GCB Capital Trust, a Delaware business trust (the "Issuer Trust") of
undivided preferred beneficial interests in the assets of such Issuer Trust (the
"Preferred Securities") and common undivided interests in the assets of such
Issuer Trust (the "Common Securities" and, collectively with the Preferred
Securities, the "Trust Securities"), and to provide the terms and conditions
upon which the Securities are to be authenticated, issued and delivered; and
WHEREAS, all things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders (as such term is defined in Section 1.1 hereof)
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Securities or of any series thereof, and intending
to be legally bound hereby, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) The terms defined in this Article have the meanings assigned to them
in this Article, and include the plural as well as the singular;
(2) All other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(3) The words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation";
<PAGE>
- 2 -
(4) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect at the time of computation;
(5) Whenever the context may require, any gender shall be deemed to
include the other;
(6) Unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Indenture; and
(7) The words "hereby", "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"25% Capital Limitation" means the limitation imposed by the Federal
Reserve that the proceeds of certain qualifying securities like the Trust
Securities will qualify as Tier 1 capital of the issuer up to an amount not to
exceed 25% of the Issuer's Tier 1 capital, or any subsequent limitation adopted
by the Federal Reserve.
"Act" when used with respect to any Holder has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on any
interest on the Securities of any series the payment of which has not been made
on the applicable Interest Payment Date and which shall accrue at the rate per
annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject from time to
time as a result of a Tax Event.
"Administrator" means, in respect of the Issuer Trust, each Person
appointed in accordance with the Trust Agreement, solely in such Person's
capacity as Administrator of the Issuer Trust and not in such Person's
individual capacity, or any successor Administrator appointed as therein
provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
<PAGE>
- 3 -
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of the Depositary for such Global Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Securities.
"Board of Directors" means the board of directors of the Company or the
Executive Committee of the board of directors of the Company (or any other
committee of the board of directors of the Company performing similar functions)
or, for purposes of this Indenture, a committee designated by the board of
directors of the Company (or such committee), comprised of two or more members
of the board of directors of the Company or officers of the Company, or both.
"Board Resolution" means a copy of a resolution certified by the Secretary
or any Assistant Secretary of the Company to have been duly adopted by the Board
of Directors, or such committee of the Board of Directors or officers of the
Company to which authority to act on behalf of the Board of Directors has been
delegated, and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in the State of New Jersey or the City of New
York are authorized or required by law or executive order to remain closed, or
(iii) day on which the Corporate Trust Office of the Trustee, or, with respect
to the Securities initially issued to the Issuer Trust, the "Corporate Trust
Office" (as defined in the Trust Agreement) of the Property Trustee or the
Delaware Trustee under the Trust Agreement, is closed for business.
"Capital Treatment Event" means, in respect of the Issuer Trust, the
reasonable determination by the Company that, as a result of the occurrence of
any amendment to, or change (including any announced prospective change) in, the
laws (or any rules or regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement, action or decision is announced on or after the date of the
issuance of the Preferred Securities of the Issuer Trust, there is more than an
insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount (as such term is defined in the Trust Agreement)
of such Preferred Securities as "Tier 1 Capital" (or the then equivalent
thereof), except as otherwise restricted under the 25% Capital Limitation, for
purposes of the risk-based capital adequacy guidelines of the Board of Governors
of the Federal Reserve System, as then in effect and applicable to the Company.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of this
Indenture.
<PAGE>
- 4 -
"Common Stock" means the common stock, par value $1.00 per share, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor entity shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor entity.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by any Chairman of the Board
of Directors, any Vice Chairman of the Board of Directors, its President or a
Vice President, and by its Chief Financial Officer, its Treasurer, its Secretary
or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered.
"Creditor" has the meaning specified in Section 6.7.
"Defaulted Interest" has the meaning specified in Section 3.8.
"Delaware Trustee" means, with respect to the Issuer Trust, the Person
identified as the "Delaware Trustee" in the Trust Agreement, solely in its
capacity as Delaware Trustee of the Issuer Trust under the Trust Agreement and
not in its individual capacity, or its successor in interest in such capacity,
or any successor Delaware trustee appointed as therein provided.
"Depositary" means, with respect to the Securities issuable or issued in
whole or in part in the form of one or more Global Securities, the Person
designated as Depositary by the Company pursuant to Section 3.1 (or any
successor thereto).
"Discount Security" means any security that provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2.
"Dollar" or "$" means the currency of the United States of America that,
as at the time of payment, is legal tender for the payment of public and private
debts.
The term "entity" includes a bank, corporation, association, company,
limited liability company, joint-stock company or business trust.
"Event of Default," has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4.
"Extension Period" has the meaning specified in Section 3.12.
"Global Security" means a Security in the form prescribed in Section 2.4
evidencing all or part of the Securities, issued to the Depositary or its
nominee, and registered in the name of such Depositary or its nominee.
<PAGE>
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"Guarantee" means, with respect to the Issuer Trust, the Guarantee
Agreement, dated ________, 1997, executed by the Company for the benefit of the
Holders of the Preferred Securities issued by the Issuer Trust as modified,
amended or supplemented from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Institutional Accredited Investor" means an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on such Securities.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
"Investment Company Event" means the receipt by the Issuer Trust of an
Opinion of Counsel (as defined in the Trust Agreement) experienced in such
matters to the effect that, as a result of the occurrence of a change in law or
regulation or a written change (including any announced prospective change) in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Issuer Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act,
which change or prospective change becomes effective or would become effective,
as the case may be, on or after the date of the issuance of the Preferred
Securities of the Issuer Trust.
"Issuer Trust" has the meaning specified in the first recital of this
Indenture.
"Maturity" when used with respect to any Security means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 5.1(3).
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman, Chief Executive Officer, President or a Vice President,
and by the Treasurer, an Associate Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of such Person, and delivered to the
Trustee. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Indenture shall include;
(a) a statement by each officer signing the
Officers' Certificate that such officer has read the covenant or condition and
the definitions relating thereto;
(b) a brief statement of the nature and scope of
the examination or investigation undertaken by such officer in rendering the
Officers' Certificate;
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(c) a statement that such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of
such officer, such condition or covenant has been complied with;
provided, however, that the Officers' Certificate delivered pursuant to the
provisions of Section 10.4 hereof shall comply with the provisions of Section
314 of the Trust Indenture Act.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Company or any Affiliate of the Company.
"Original Issue Date" means the date of issuance specified as such in each
Security.
"Outstanding" means, when used in reference to any Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee
or delivered to the Trustee for cancellation;
(ii) Securities for whose payment money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Securities; and
(iii) Securities in substitution for or in lieu of
which other Securities have been authenticated and delivered or that have
been paid pursuant to Section 3.6, unless proof satisfactory to the
Trustee is presented that any such Securities are held by Holders in
whose hands such Securities are valid, binding and legal obligations of
the Company;
provided, however, that in determining whether the Holders of the
requisite principal amount of Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor (other
than, for the avoidance of doubt, the Issuer Trust to which Securities of
the applicable series were initially issued) shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that
the Trustee knows to be so owned shall be so disregarded. Securities so
owned that have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the
pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor (other than, for the
avoidance of doubt, the Issuer Trust). Upon the written request of the
Trustee, the Company shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Securities, if any, known by the
Company to be owned or held by or for the account of the Company, or any
other obligor on the Securities or any Affiliate of the Company or such
obligor (other than, for the avoidance of doubt, the Issuer Trust), and,
subject to the provisions of Section 6.1, the Trustee shall be entitled to
accept such Officers' Certificate as conclusive evidence of the facts
therein set forth and of the fact that all Securities not listed therein
are Outstanding for the purpose of any such determination.
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"Paying Agent" means the Trustee or any Person authorized by the Company
to pay the principal of (or premium, if any) or interest on, or other amounts in
respect of any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment" means, with respect to the Securities, the place or
places where the principal of (and premium, if any) and interest on the
Securities are payable pursuant to Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security. For the purposes of this definition, any security
authenticated and delivered under Section 3.7 in lieu of a mutilated, destroyed,
lost or stolen Security shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.
"Preferred Securities" has the meaning specified in the first recital of
this Indenture.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, with respect to the Issuer Trust, the Person
identified as the "Property Trustee" in the Trust Agreement, solely in its
capacity as Property Trustee of the Issuer Trust under the Trust Agreement and
not in its individual capacity, or its successor in interest in such capacity,
or any successor property trustee appointed as therein provided.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture or the
terms of such Security.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date with respect to the Securities means, unless otherwise provided pursuant to
Section 3.1 with respect to the Securities, the close of business on March 15,
June 15, September 15 or December 15 next preceding such Interest Payment Date
(whether or not a Business Day).
"Responsible Officer", when used with respect to the Property Trustee
means any officer assigned to the Corporate Trust Office, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
having direct responsibility for the administration of this Indenture, and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Restricted Security" means each Security required pursuant to Section
3.6(b) to bear a Restricted Securities Legend.
"Restricted Securities Certificate" means a certificate substantially in
the form set forth in Annex A.
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"Restricted Securities Legend" means a legend substantially in the form of
the legend required in the form of Security set forth in Section 2.2 to be
placed upon a Restricted Security.
"Rights Plan" means any plan of the Company providing for the issuance by
the Company to all holders of its Common Stock, par value $1.00 per share, of
rights entitling the holders thereof to subscribe for or purchase shares of any
class or series of capital stock of the Company which rights (i) are deemed to
be transferred with such shares of such Common Stock, (ii) are not exercisable,
and (iii) are also issued in respect of future issuances of such Common Stock,
in each case until the occurrence of a specified event or events.
"Securities" or "Security" means any debt securities or debt security, as
the case may be, authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as modified, amended or
supplemented from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.6.
"Senior Indebtedness" means, whether recourse is to all or a portion of
the assets of the Company and whether or not contingent, (i) every obligation of
the Company for money borrowed; (ii) every obligation of the Company evidenced
by bonds, debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or businesses;
(iii) every reimbursement obligation of the Company with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account of the
Company; (iv) every obligation of the Company issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business); (v) every
capital lease obligation of the Company; (vi) every obligation of the Company
for claims (as defined in Section 101(4) of the United States Bankruptcy Code of
1978, as amended) in respect of derivative products such as interest and foreign
exchange rate contracts, commodity contracts and similar arrangements; and (vii)
every obligation of the type referred to in clauses (i) through (vi) of another
person and all dividends of another person the payment of which, in either case,
the Company has guaranteed or is responsible or liable, directly or indirectly,
as obligor or otherwise; without limiting the generality of the foregoing,
Senior Indebtedness shall include the 8.5% Redeemable Subordinated Debentures
due November 1, 1998. Senior Indebtedness shall not include (i) any obligations
which, by their terms, are expressly stated to rank pari passu in right of
payment with, or to not be superior in right of payment to, the Junior
Subordinated Debentures, (ii) any Senior Indebtedness of the Company which when
incurred and without respect to any election under Section 1111(b) of the United
States Bankruptcy Code of 1978, as amended, was without recourse to the Company,
(iii) any Senior Indebtedness of the Company to any of its subsidiaries, (iv)
Senior Indebtedness to any executive officer or director of the Company, or (v)
any indebtedness in respect of debt securities issued to any trust, or a trustee
of such trust, partnership or other entity affiliated with the Company that is a
financing entity of the Company in connection with the issuance of such
financing entity of securities that are similar to the Preferred Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.8.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
pursuant to the terms of such Security as the fixed date on which the principal
of such Security or such installment of principal or interest is due
<PAGE>
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and payable, as such date may, in the case of such principal, be shortened or
extended as provided pursuant to the terms of such Security and this Indenture.
"Subsidiary" means an entity more than 50% of the outstanding voting stock
of which is owned, directly or indirectly, by the Company or by one or more
other Subsidiaries, or by the Company and one or more other Subsidiaries. For
purposes of this definition, "voting stock" means stock that ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.7 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Tax Event" means the receipt by the Issuer Trust of an Opinion of Counsel
(as defined in the Trust Agreement) experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official or administrative pronouncement or action or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is announced
on or after the date of issuance of the Preferred Securities of the Issuer
Trust, there is more than an insubstantial risk that (i) the Issuer Trust is, or
will be within 90 days of the delivery of such Opinion of Counsel, subject to
United States federal income tax with respect to income received or accrued on
the corresponding series of Securities issued by the Company to the Issuer
Trust, (ii) interest payable by the Company on the Securities is not, or within
90 days of the delivery of such Opinion of Counsel will not be, deductible by
the Company, in whole or in part, for United States federal income tax purposes,
or (iii) the Issuer Trust is, or will be within 90 days of the delivery of such
Opinion of Counsel, subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
"Trust Agreement" means, the Amended and Restated Trust Agreement, dated
as of ___________, 1997, as amended, modified or supplemented from time to time,
among the trustees of the Issuer Trust named therein, the Company, as depositor,
and the holders from time to time of undivided beneficial ownership interests in
the assets of the Issuer Trust.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this Indenture, solely in its capacity as such and not in its individual
capacity, until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and, if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities
shall mean the Trustee with respect to Securities.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as modified,
amended or supplemented from time to time, except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of this
Indenture.
"Vice President," when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
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SECTION 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent
(including covenants compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent (including covenants compliance with
which constitutes a condition precedent), if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than the certificates provided
pursuant to Section 10.4) shall include:
(1) a statement by each individual signing such
certificate or opinion that such individual has read such covenant or
condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope
of the examination or investigation upon which the statements or opinions
of such individual contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such
individual, he or she has made such examination or investigation as is
necessary to enable him or her to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of
such individual, such condition or covenant has been complied with.
SECTION 1.3. Forms of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his or her certificate or opinion is based
are erroneous. Any such certificate or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given to or taken by Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments is or are delivered to the
Trustee, and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him or her the execution thereof.
Where such execution is by a Person acting in other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority.
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be provided in any other manner that the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(d)The ownership of Securities shall be proved by the Securities Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind every future Holder of
the same Security and the Holder of every Security issued upon the transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities, provided that the Company may not set a record date for,
and the provisions of this paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in the
next succeeding paragraph. If any record date is set pursuant to this paragraph,
the Holders of Outstanding Securities on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date, provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
(as defined below) by Holders of the requisite principal amount of Outstanding
Securities on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be cancelled and of no effect), and nothing in this
<PAGE>
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paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Trustee in writing and to each Holder of Securities in the manner
set forth in Section 1.6.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 5.2, (iii) any request to institute proceedings referred
to in Section 5.7(2), or (iv) any direction referred to in Section 5.12, in each
case with respect to Securities. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities on such record date, and no
other Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date,
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Securities on such record date. Nothing in this paragraph
shall be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect) and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Trustee, at the Company's expense, shall cause notice of such
record date, the proposed action by Holders and the applicable Expiration Date
to be given to the Company in writing and to each Holder of Securities in the
manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the party
hereto that sets such record date may designate any day as the "Expiration Date"
and from time to time may change the Expiration Date to any earlier or later
day, provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities in the manner set forth in Section 1.6 on or prior
to the existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to this Section, the party hereto that
set such record date shall be deemed to have initially designated the 180th day
after such record date as the Expiration Date with respect thereto, subject to
its right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, any holder of
Preferred Securities or the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with the
Trustee at its Corporate Trust Office, or
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(2) the Company by the Trustee, any Holder or any
holder of Preferred Securities shall be sufficient for every purpose
(except as otherwise provided in Section 5.1) hereunder if in writing and
mailed, first class, postage prepaid, to the Company addressed to it at
the address of its principal office specified in the first paragraph of
this instrument or at any other address previously furnished in writing to
the Trustee by the Company.
SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If, by reason of the suspension
of or irregularities in regular mail services or for any other reason, it shall
be impossible or impracticable to mail notice of any event to Holders when said
notice is required to be given pursuant to any provision of this Indenture or of
the Securities, then any manner of giving such notice as shall be satisfactory
to the Trustee shall be deemed to be a sufficient giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
SECTION 1.7. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required thereunder to be a part of and govern
this Indenture, the provision of the Trust Indenture Act shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause.
If any provision in this Indenture or in the Securities shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
<PAGE>
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SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors and
assigns, the holders of Senior Indebtedness, the Holders of the Securities and,
to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and
9.2, the holders of Preferred Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 1.13. Non-Business Days.
If any Interest Payment Date, Redemption Date or Stated Maturity of any
Security shall not be a Business Day, then (notwithstanding any other provision
of this Indenture or the Securities) payment of interest or principal (and
premium, if any) or other amounts in respect of such Security need not be made
on such date, but may be made on the next succeeding Business Day (and no
interest shall accrue in respect of the amounts whose payment is so delayed for
the period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be, until such next succeeding Business Day) except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day (in each case with the
same force and effect as if made on the Interest Payment Date or Redemption Date
or at the Stated Maturity).
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities and the Trustee's certificate of authentication shall be in
substantially the forms set forth in this Article, or in such other form or
forms as shall be established by or pursuant to a Board Resolution or in one or
more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with applicable tax laws or the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such securities, as evidenced by their execution of the Securities. If
the form of Securities is established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by
the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by Section
3.3 with respect to the authentication and delivery of such Securities.
The Trustee's certificates of authentication shall be substantially in the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner
<PAGE>
- 15 -
permitted by the rules of any securities exchange on which the Securities may be
listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Securities distributed to holders of Global Preferred Securities (as
defined in the Trust Agreement) upon the dissolution of the Issuer Trust shall
be distributed in the form of one or more Global Securities registered in the
name of a Depositary or its nominee, and deposited with the Securities
Registrar, as custodian for such Depositary, or with such Depositary, for credit
by the Depositary to the respective accounts of the beneficial owners of the
Securities represented thereby (or such other accounts as they may direct).
Securities distributed to holders of Preferred Securities other than Global
Preferred Securities upon the dissolution of the Issuer Trust shall not be
issued in the form of a Global Security or any other form intended to facilitate
book-entry trading in beneficial interests in such Securities.
SECTION 2.2. Form of Face of Security.
GREATER COMMUNITY BANCORP
____ % Junior Subordinated Debentures due __________, 2027
[If the Security is a Restricted Security, insert -- THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) BY ANY INITIAL INVESTOR THAT IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT,
(I) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 903
OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (III) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), OR (B) BY AN INITIAL INVESTOR THAT IS A QUALIFIED
INSTITUTIONAL BUYER OR BY ANY SUBSEQUENT INVESTOR, AS SET FORTH IN (A) ABOVE
AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH
CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS OF THE UNITED STATES. THE HOLDER OF THIS SECURITY AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS. SECURITIES OWNED BY AN INITIAL
INVESTOR THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN GLOBAL
FORM AND MAY NOT BE TRANSFERRED WITHOUT CERTIFICATION THAT THE TRANSFER COMPLIES
WITH THE FOREGOING RESTRICTIONS, AS PROVIDED IN THE INDENTURE REFERRED TO BELOW.
NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED
BY RULE 144 FOR RESALES OF THE SECURITIES.]
No. $
GREATER COMMUNITY BANCORP, a New Jersey corporation (hereinafter called
the "Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
______________________, or registered assigns, the
<PAGE>
- 16 -
principal sum of _________ Dollars on ________, [if the Security is a Global
Security, then insert, if applicable--, or such other principal amount
represented hereby as may be set forth in the records of the Securities
Registrar hereinafter referred to in accordance with the Indenture,] [; provided
that the Company may (i) shorten the Stated Maturity of the principal of this
Security to a date not earlier than ___________, and (ii) extend the Stated
Maturity of the principal of this Security at any time on one or more occasions,
subject to certain conditions specified in Section 3.15 of the Indenture, but in
no event to a date later than _________]. The Company further promises to pay
interest on said principal from ______________, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, quarterly
(subject to deferral as set forth herein) in arrears on March 31, June 30,
September 30 and December 31 of each year, commencing ________________, 1997 at
the rate of __% per annum, together with Additional Sums, if any, as provided in
Section 10.6 of the Indenture, until the principal hereof is paid or duly
provided for or made available for payment; provided that any overdue principal,
premium or Additional Sums and any overdue installment of interest shall bear
Additional Interest at the rate of __% per annum (to the extent that the payment
of such interest shall be legally enforceable), compounded quarterly from the
dates such amounts are due until they are paid or made available for payment,
and such interest shall be payable on demand. The amount of interest payable for
any period less than a full interest period shall be computed on the basis of a
360-day year of twelve 30-day months and the actual days elapsed in a partial
month in such period. The amount of interest payable for any full interest
period shall be computed by dividing the applicable rate per annum by four. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest installment,
which shall be the 15th day of March, June, September and December (whether or
not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture.
So long as no Event of Default has occurred and is continuing, the Company
shall have the right, at any time during the term of this Security, from time to
time to defer the payment of interest on this Security for up to 20 consecutive
quarterly interest payment periods with respect to each deferral period (each an
"Extension Period"), during which Extension Periods the Company shall have the
right to make partial payments of interest on any Interest Payment Date, and at
the end of which the Company shall pay all interest then accrued and unpaid
including Additional Interest, as provided below; provided, however, that no
Extension Period shall extend beyond the Stated Maturity of the principal of
this Security, as then in effect, and no such Extension Period may end on a date
other than an Interest Payment Date; and provided, further, however, that during
any such Extension Period, the Company shall not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock, or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to this Security (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or
<PAGE>
- 17 -
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a Subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of the
Company's indebtedness for any class or series of the Company's capital stock,
(c) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (d) any declaration of a dividend in
connection with any Rights Plan, or the issuance of rights, stock or other
property under any Rights Plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock). Prior
to the termination of any such Extension Period, the Company may further defer
the payment of interest, provided that no Extension Period shall exceed 20
consecutive quarterly interest payment periods, extend beyond the Stated
Maturity of the principal of this Security or end on a date other than an
Interest Payment Date. Upon the termination of any such Extension Period and
upon the payment of all accrued and unpaid interest and any Additional Interest
then due on any Interest Payment Date, the Company may elect to begin a new
Extension Period, subject to the above conditions. No interest shall be due and
payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest (to the extent that the
payment of such interest shall be legally enforceable) at the rate of __% per
annum, compounded quarterly and calculated as set forth in the first paragraph
of this Security, from the date on which such amounts would otherwise have been
due and payable until paid or made available for payment. The Company shall give
the Holder of this Security and the Trustee notice of its election to begin any
Extension Period at least one Business Day prior to the next succeeding Interest
Payment Date on which interest on this Security would be payable but for such
deferral or so long as such securities are held by GCB Capital Trust, at least
one Business Day prior to the earlier of (i) the next succeeding date on which
Distributions on the Preferred Securities of the Issuer Trust would be payable
but for such deferral, and (ii) the date on which the Property Trustee of the
Issuer Trust is required to give notice to holders of such Preferred Securities
of the record date or the date such Distributions are payable, but in any event
not less than one Business Day prior to such record date.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the United States, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however that at the option of the Company payment of
interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Securities Register, or (ii) if to a
Holder of $1,000,000 or more in aggregate principal amount of this Security, by
wire transfer in immediately available funds upon written request to the Trustee
not later than 15 calendar days prior to the date on which the interest is
payable.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payments to the prior payment
in full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such actions as
may be necessary or appropriate to effectuate the subordination so provided, and
(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, 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.
<PAGE>
- 18 -
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
GREATER COMMUNITY BANCORP
By:
-----------------------------------
Name:
Title:
Attest:
- ---------------------------------------
Secretary or Assistant Secretary
SECTION 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued under the
Junior Subordinated Indenture, dated as of ____________, 1997 (herein called the
"Indenture"), between the Company and Bankers Trust Company, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee, the holders of
Senior Indebtedness and the Holders of the Securities, and of the terms upon
which the Securities are, and are to be, authenticated and delivered.
All terms used in this Security that are defined in the Indenture dated as
of _________ (as modified, amended or supplemented from time to time the "Trust
Agreement"), relating to GCB Capital Trust the ("Issuer Trust") among the
Company, as Depositor, the Trustees named therein and the Holders from time to
time of the Trust Securities issued pursuant thereto shall have the meanings
assigned to them in the Indenture or the Trust Agreement, as the case may be.
The Company has the right to redeem this Security (i) on or after
_________, 2002 in whole at any time or in part from time to time, or (ii) in
whole (but not in part), at any time within 90 days following the occurrence and
during the continuation of a Tax Event, Investment Company Event, or Capital
Treatment Event, in each case at the Redemption Price described below, and
subject to
<PAGE>
- 19 -
possible regulatory approval. The Redemption Price shall equal 100% of the
principal amount hereof being redeemed, together with accrued interest to but
excluding the date fixed for redemption.
In the event of redemption of this Security in part only, a new Security
or Securities for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
[If applicable, insert--The Indenture contains provisions for defeasance
at any time [of the entire indebtedness of this Security] [or] [certain
restrictive covenants and Events of Default with respect to this Security] [, in
each case] upon compliance by the Company with certain conditions set forth in
the Indenture.]
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities to be affected by such supplemental indenture. The Indenture also
contains provisions permitting Holders of specified percentages in principal
amount of the Securities at the time Outstanding, on behalf of the Holders of
all Securities, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
[If the Security is not a Discount Security, insert--As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities at the time Outstanding occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities may declare the principal amount
of all the Securities to be due and payable immediately, by a notice in writing
to the Company (and to the Trustee if given by Holders), provided that, if upon
an Event of Default, the Trustee or such Holders fail to declare the principal
of all the Outstanding Securities to be immediately due and payable, the holders
of at least 25% in aggregate Liquidation Amount of the Preferred Securities then
outstanding shall have the right to make such declaration by a notice in writing
to the Company and the Trustee; and upon any such declaration the principal
amount of and the accrued interest (including any Additional Interest) on all
the Securities shall become immediately due and payable, provided that the
payment of principal and interest (including any Additional Interest) on such
Securities shall remain subordinated to the extent provided in Article XIII of
the Indenture.]
[If the Security is a Discount Security, insert--As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities at the time Outstanding occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities may declare an amount of
principal of the Securities to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), provided that,
if upon an Event of Default, the Trustee or such Holders fail to declare such
principal amount of the Outstanding Securities to be immediately due and
payable, the Holders of at least 25% in aggregate Liquidation Amount of the
Preferred Securities then outstanding shall have the right to make such
declaration by a notice in writing to the Company and the Trustee. The principal
amount payable upon such acceleration shall be equal to [insert formula for
determining the amount]. Upon any such declaration, such amount of the principal
of and the accrued interest (including any Additional Interest) on all the
Securities shall become immediately due
<PAGE>
- 20 -
and payable, provided that the payment of such principal and interest (including
any Additional Interest) on all the Securities shall remain subordinated to the
extent provided in Article XIII of the Indenture. Upon payment (i) of the amount
of principal so declared due and payable and (ii) of interest on any overdue
principal, premium and interest (in each case to the extent that the payment of
such interest shall be legally enforceable), all of the Company's obligations in
respect of the payment of the principal of and premium and interest, if any, on
this Security shall terminate.]
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest (including Additional Interest) on this Security at the times, place
and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the Indenture
for such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Securities, of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000 in excess thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities are exchangeable for a like aggregate principal amount of
Securities and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agrees that for United States federal, state and
local tax purposes it is intended that this Security constitute indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
THIS SECURITY IS A DIRECT AND UNSECURED OBLIGATION OF THE COMPANY, DOES
NOT EVIDENCE DEPOSITS AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
<PAGE>
- 21 -
SECTION 2.4. Additional Provisions Required in Global Security.
Unless otherwise specified as contemplated by Section 3.1, any Global
Security issued hereunder shall, in addition to the provisions contained in
Sections 2.2 and 2.3, bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
SECTION 2.5. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: BANKERS TRUST COMPANY,
------------------ as Trustee
By:
------------------------------------
Authorized Signatory
<PAGE>
- 22 -
ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities that may be authenticated and
delivered under this Indenture is $___________.
The Securities' Stated Maturity shall be _________, 2027.
The Securities, established pursuant to a Board Resolution, shall bear
interest at a per annum rate equal to ________% from ________, 1997 or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, as the case may be, payable quarterly (subject to deferral as set
forth in Section 3.12), in arrears, on March 31, June 30, September 30 and
December 31 of each year, commencing _______________, 1997, until the principal
thereof is paid or made available for payment. Interest will compound quarterly
and will accrue at a per annum rate equal to ________% to the extent permitted
by applicable law, on any interest installment in arrears for more than one
quarterly period or during an extension of an interest payment period as set
forth below in Section 3.12.
The principal of and interest on the Securities shall be payable at the
office or agency of the Paying Agent in the United States maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made (i)
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register or (ii) by wire transfer in immediately
available funds at such place and to such account as may be designated by the
Person entitled thereto as specified in the Security Register.
Securities shall be issuable in whole or in part in the form of one or
more Global Securities and, in such case, the Depositary for such Global
Securities shall be The Depository Trust Company.
The securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII.
SECTION 3.2. Denominations.
The Securities shall be in registered form without coupons and shall be
issuable in denominations of $25 and any integral multiple thereof.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced or impressed thereon and
attested by its Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities. At any time and from time to
time after the
<PAGE>
- 23 -
execution and delivery of this Indenture, the Company may deliver Securities
executed by the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Securities, and the
Trustee in accordance with the Company Order shall authenticate and deliver such
Securities. If the form or terms of the Securities have been established by or
pursuant to one or more Board Resolutions as permitted by Sections 2.1 and 3.1,
in authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 6.1) shall be fully protected in
relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or pursuant to
Board Resolution as permitted by Section 2.1, that such form has been
established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or pursuant
to Board Resolution as permitted by Section 3.1, that such terms have been
established in conformity with the provisions of this Indenture; and
(3) that such Securities, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally
binding obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner that
is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and the preceding paragraph,
if all Securities are not to be originally issued at one time, it shall not be
necessary to deliver the Officers' Certificate otherwise required pursuant to
Section 3.1 or the Company Order and Opinion of Counsel otherwise required
pursuant to such preceding paragraph at or prior to the authentication of each
Security if such documents are delivered at or prior to the authentication upon
original issuance of the first Security to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.10, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
<PAGE>
- 24 -
SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities, the Company may execute,
and upon receipt of a Company Order the Trustee shall authenticate and deliver,
temporary Securities that are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for that purpose without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Securities,
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor one or more definitive securities, of any authorized
denominations having the same Original Issue Date and Stated Maturity and having
the same terms as such temporary Securities. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities.
SECTION 3.5. Global Securities.
(a) Each Global Security issued under this Indenture shall be registered
in the name of the Depositary designated by the Company for such Global Security
or a nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (i) such Depositary advises the Trustee in writing that such
Depositary is no longer willing or able to properly discharge its
responsibilities as Depositary with respect to such Global Security, and the
Company is unable to locate a qualified successor, (ii) the Company executes and
delivers to the Trustee a Company Order stating that the Company elects to
terminate the book-entry system through the Depositary, or (iii) there shall
have occurred and be continuing an Event of Default.
(c) If any Global Security is to be exchanged for other Securities or
cancelled in whole, it shall be surrendered by or on behalf of the Depositary or
its nominee to the Securities Registrar for exchange or cancellation as provided
in this Article III. If any Global Security is to be exchanged for other
Securities or cancelled in part, or if another Security is to be exchanged in
whole or in part for a beneficial interest in any Global Security, then either
(i) such Global Security shall be so surrendered for exchange or cancellation as
provided in this Article III or (ii) the principal amount thereof shall be
reduced, subject to Section 3.6(b)(v), or increased by an amount equal to the
portion thereof to be so exchanged or cancelled, or equal to the principal
amount of such other Security to be so exchanged for a beneficial interest
therein, as the case may be, by means of an appropriate adjustment made on the
records of the Securities Registrar, whereupon the Trustee, in accordance with
the Applicable Procedures, shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Security by the Depositary, accompanied by
registration instructions, the Trustee shall, subject to Section 3.6(b) and as
otherwise provided in this Article III, authenticate and deliver any Securities
issuable in exchange for such Global Security (or any portion thereof) in
accordance with the
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instructions of the Depositary. The Trustee shall not be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be fully
protected in relying on, such instructions.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article III, Section 9.6 or 11.6 or otherwise,
shall be authenticated and delivered in the form of, and shall be, a Global
Security, unless such Security is registered in the name of a Person other than
the Depositary for such Global Security or a nominee thereof.
(e) The Depositary or its nominee, as the registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under
this Indenture and the Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security shall be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or agent. Neither the
Trustee nor the Securities Registrar shall have any liability in respect of any
transfers effected by the Depositary.
(f) The rights of owners of beneficial interests in a Global Security
shall be exercised only through the Depositary and shall be limited to those
established by law and agreements between such owners and the Depositary and/or
its Agent Members.
SECTION 3.6. Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges; Securities Act Legends.
(a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Securities and
transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the offices
or agencies of the Company designated for that purpose, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of any
authorized denominations of like tenor and aggregate principal amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations, of like tenor and aggregate
principal amount upon surrender of the Securities to be exchanged at such office
or agency. Whenever any securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
that the Holder making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall be
the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall (if
so required by the Company or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Securities Registrar, duly executed by the Holder thereof or such Holder's
attorney duly authorized in writing.
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No service charge shall be made to a Holder for any transfer or exchange
of Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (i) to issue, register the transfer of or exchange
any Security during a period beginning at the opening of business 15 days before
the day of selection for redemption of Securities pursuant to Article XI and
ending at the close of business on the day of mailing of the notice of
redemption, or (ii) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except, in the case of any such
Security to be redeemed in part, any portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Notwithstanding any other provision
of this Indenture, transfers and exchanges of Securities and beneficial
interests in a Global Security shall be made only in accordance with this
Section 3.6(b).
(i) Non-Global Security to Non-Global Security. A Security that is not a
Global Security may be transferred, in whole or in part, to a Person who
takes delivery in the form of another Security that is not a Global
Security as provided in Section 3.6(a), provided that if the Security to
be transferred in whole or in part is a Restricted Security, the
Securities Registrar shall have received a Restricted Securities
Certificate duly executed by the transferor Holder or such Holder's
attorney duly authorized in writing.
(ii) Exchanges Between Global Security and Non-Global Security. A
beneficial interest in a Global Security may be exchanged for a Security
that is not a Global Security as provided in Section 3.5.
(iii) Certain Initial Transfers of Non-Global Securities. In the case of
Securities initially issued other than in global form, an initial transfer
or exchange of such Securities that does not involve any change in
beneficial ownership may be made to an Institutional Accredited Investor
or Investors as if such transfer or exchange were not an initial transfer
or exchange; provided that written certification shall be provided by the
transferee and transferor of such Securities to the Securities Registrar
that such transfer or exchange does not involve a change in beneficial
ownership.
SECTION 3.7. Mutilated, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with such
security or indemnity as may be required by the Company or the Trustee to save
each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security, of like tenor and
aggregate principal amount, bearing the same legends, and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security, and
(ii) such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon its request the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Security, a new Security, of like tenor and
aggregate principal amount and bearing the same legends as such destroyed, lost
or stolen Security, and bearing a number not contemporaneously outstanding.
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If any such mutilated, destroyed, lost or stolen Security has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section 3.7, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.8. Payment of Interest and Additional Interest; Interest
Rights Preserved.
Interest and Additional Interest on any Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date, shall be
paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest in respect of Securities, except that, unless otherwise
provided in the Securities, interest payable on the Stated Maturity of the
principal of a Security shall be paid to the Person to whom principal is paid.
The initial payment of interest on any Security that is issued between a Regular
Record Date and the related Interest Payment Date shall be payable as provided
in such Security or in the Board Resolution pursuant to Section 3.1 with respect
to the Securities.
Any interest on any Security that is due and payable, but is not timely
paid or duly provided for, on any Interest Payment Date for Securities (herein
called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities in respect of which interest is in
default (or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the proposed
payment, and which shall be fixed at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted Interest
as in this clause provided. Thereupon, the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest, which shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the
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Special Record Date therefor to be mailed, first class, postage prepaid,
to each Holder of a Security at the address of such Holder as it appears
in the Securities Register not less than 10 days prior to such Special
Record Date. The Trustee may, in its discretion, in the name and at the
expense of the Company, cause a similar notice to be published at least
once in a newspaper, customarily published in the English language on each
Business Day and of general circulation in the Borough of Manhattan, The
City of New York, but such publication shall not be a condition precedent
to the establishment of such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered on such Special Record Date and shall no longer
be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities in respect of which interest is in
default may be listed and, upon such notice as may be required by such
exchange (or by the Trustee if the Securities are not listed), if, after
notice given by the Company to the Trustee of the proposed payment
pursuant to this clause 2, such payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in
lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue interest, that were carried by such other Security.
SECTION 3.9. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee shall
treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 3.8) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary shall have any rights under this Indenture with respect
to such Global Security, and such Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by a Depositary or impair, as between a Depositary and
such holders of beneficial interests, the operation of customary practices
governing the exercise of the rights of the Depositary (or its nominee) as
Holder of any Security.
SECTION 3.10. Cancellation.
All Securities surrendered for payment, redemption, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Securities and Securities surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder that the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section,
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except as expressly permitted by this Indenture. All canceled Securities shall
be destroyed by the Trustee and the Trustee shall deliver to the Company a
certificate of such destruction.
SECTION 3.11. Computation of Interest.
Interest on the Securities for any period shall be computed on the basis
of a 360-day year of twelve 30-day months and the actual number of days elapsed
in any partial month in such period, and interest on the Securities for a full
period shall be computed by dividing the rate per annum by the number of
interest periods that together constitute a full twelve months.
SECTION 3.12. Deferrals of Interest Payment Dates.
So long as no Event of Default has occurred and is continuing, the Company
shall have the right, at any time during the term of the Securities, from time
to time to defer the payment of interest on such Securities for such period or
periods (each an "Extension Period") not to exceed the number of consecutive
quarterly periods that equal five years with respect to each Extension Period,
during which Extension Periods the Company shall have the right to make partial
payments of interest on any Interest Payment Date. No Extension Period shall end
on a date other than an Interest Payment Date. At the end of any such Extension
Period, the Company shall pay all interest then accrued and unpaid on the
Securities (together with Additional Interest thereon, if any, at the rate
specified for the Securities to the extent permitted by applicable law);
provided, however, that no Extension Period shall extend beyond the Stated
Maturity of the principal of the Securities; and provided further, however,
that, during any such Extension Period, the Company shall not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock, or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Securities (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of an exchange or conversion
of any class or series of the Company's capital stock (or any capital stock of a
Subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional interests
in shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any Rights Plan, or the
issuance of rights, stock or other property under any Rights Plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock). Prior to the termination of any such Extension Period,
the Company may further defer the payment of interest, provided that no Event of
Default has occurred and is continuing and provided further, that no Extension
Period shall exceed the period or periods specified in such Securities, extend
beyond the Stated Maturity of the principal of such Securities or end on a date
other than an Interest Payment Date. Upon the termination of any such Extension
Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due on any Interest Payment Date, the Company may elect
to begin a new Extension Period, subject to the above conditions. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would
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otherwise have been due and payable during such Extension Period shall bear
Additional Interest. The Company shall give the Holders of the Securities and
the Trustee notice of its election to begin any such Extension Period at least
one Business Day prior to the next succeeding Interest Payment Date on which
interest on Securities would be payable but for such deferral or, with respect
to any Securities issued to the Issuer Trust, so long as any such Securities are
held by the Issuer Trust, at least one Business Day prior to the earlier of (i)
the next succeeding date on which Distributions on the Preferred Securities of
the Issuer Trust would be payable but for such deferral, and (ii) the date on
which the Property Trustee of the Issuer Trust is required to give notice to
holders of such Preferred Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day prior
to such record date.
The Trustee shall promptly give notice of the Company's election to begin
any such Extension Period to the Holders of the Outstanding Securities.
SECTION 3.13. Right of Set-Off.
With respect to the Securities initially issued to the Issuer Trust,
notwithstanding anything to the contrary herein, the Company shall have the
right to set off any payment it is otherwise required to make in respect of any
such Security to the extent the Company has theretofore made, or is concurrently
on the date of such payment making, a payment under the Guarantee relating to
such Security or to a holder of Preferred Securities pursuant to an action
undertaken under Section 5.8 of this Indenture.
SECTION 3.14. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by its
acceptance of a Security or a beneficial interest therein, the Holder of, and
any Person that acquires a beneficial interest in, such Security agree that for
United States federal, state and local tax purposes it is intended that such
Security constitutes indebtedness.
SECTION 3.15. CUSIP Numbers.
The Company, in issuing the Securities, may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notice
of redemption and other similar or related materials as a convenience to
Holders; provided that any such notice or other materials may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of redemption or other materials
and that reliance may be placed only on the other identification numbers printed
on the Securities, and any such redemption shall not be affected by any defect
in or omission of such numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for and as otherwise provided in this
Section 4.1) and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
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(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 3.7 and (ii) Securities for
whose payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 10.3) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year of the date of deposit, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,and the Company, in the case of subclause (B)(i), (ii) or
(iii) above, has deposited or caused to be deposited with the
Trustee as trust funds in trust for such purpose an amount in the
currency or currencies in which the Securities are payable
sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for
cancellation, for the principal (and premium, if any) and interest
(including any Additional Interest) to the date of such deposit (in
the case of Securities that have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the
obligations of the Company to any Authenticating Agent under Section 6.14
and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section, the obligations of the
Trustee under Section 4.2 and the last paragraph of Section 10.3 shall
survive.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by the Trustee, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest and Additional Interest for the payment of which such money or
obligations have been deposited with or received by the Trustee.
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ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the Securities,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security,
including any Additional Interest in respect thereof, when it becomes due
and payable, and continuance of such default for a period of 30 days
(subject to the deferral of any due date in the case of an Extension
Period); or
(2) default in the payment of the principal of (or premium, if
any, on) any Security at its Stated Maturity; or
(3) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company in the
Securities or in this Indenture for a period of 90 days after the date on
which written notice of such failure, requiring the Company to remedy the
same, shall have been given to the Company by the Trustee by registered or
certified mail or to the Company and the Trustee by the Holders of at
least 25% in aggregate principal amount of the Outstanding Securities; or
(4) the occurrence of the appointment of a receiver or other similar
official in any liquidation, insolvency or similar proceeding with respect
to the Company or all or substantially all of its property; or a court or
other governmental agency shall enter a decree or order appointing a
receiver or similar official and such decree or order shall remain
unstayed and undischarged for a period of 60 days; or
(5) any other Event of Default provided with respect to the
Securities.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(4)) with respect to Securities at the time Outstanding occurs and is
continuing, then, and in every such case, the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities may declare
the principal amount (or, if the Securities are Discount Securities, such
portion of the principal amount as may be specified in the terms) of all the
Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), provided that, if, upon an
Event of Default, the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities fail to declare the principal of all the
Outstanding Securities to be immediately due and payable, the holders of at
least 25% in aggregate Liquidation Amount (as defined in the Trust Agreement) of
the Preferred Securities issued by the Issuer Trust then outstanding shall have
the right to make such declaration by a notice in writing to the Company and the
Trustee; and upon any such declaration such principal amount (or specified
portion thereof) of and the accrued interest (including any Additional Interest)
on all the Securities shall become immediately due and payable. If an Event of
Default specified in Section 5.1(4) with respect to Securities at the time
Outstanding occurs, the principal amount of all the Securities (or, if the
Securities are Discount Securities, such portion of the principal amount of such
Securities as may be
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specified by the terms) shall automatically, and without any declaration or
other action on the part of the Trustee or any Holder, become immediately due
and payable. Payment of principal and interest (including any Additional
Interest) on such Securities shall remain subordinated to the extent provided in
Article XIII notwithstanding that such amount shall become immediately due and
payable as herein provided.
At any time after such a declaration of acceleration with respect to the
Securities has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in aggregate principal amount of the
Outstanding Securities, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay:
(A) all overdue installments of interest on all Securities;
(B) any accrued Additional Interest on all Securities;
(C) the principal of (and premium, if any, on) any Securities that
have become due otherwise than by such declaration of acceleration and
interest and Additional Interest thereon at the rate borne by the
Securities; and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities, other than the
non-payment of the principal of Securities that has become due solely by
such acceleration, have been cured or waived as provided in Section 5.13.
If the Holders of Securities fail to annul such declaration and waive such
default, the holders of a majority in aggregate Liquidation Amount (as defined
in the Trust Agreement) of Preferred Securities issued by the Issuer Trust then
outstanding shall also have the right to rescind and annul such declaration and
its consequences by written notice to the Company and the Trustee, subject to
the satisfaction of the conditions set forth in clauses (1) and (2) above of
this section 5.2.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(1) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security when such interest
becomes due and payable and such default continues for a period of 30
days, or
(2) default is made in the payment of the principal of (and premium,
if any, on) any Security at the Stated Maturity thereof, the Company will,
upon demand of the Trustee, pay to the Trustee, for the benefit of the
Holders of the Securities, the whole amount then due and payable on the
Securities for principal (and premium, if any) and interest (including any
Additional Interest), and, in addition thereto, all amounts owing the
Trustee under Section 6.7.
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If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
monies adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default with respect to Securities occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of Securities by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial or
administrative proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
(a) the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal (and premium, if any) or
interest (including any Additional Interest)) shall be entitled and empowered,
by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest (including any Additional Interest) owing
and unpaid in respect to the Securities and to file such other papers or
documents as may be necessary or advisable and to take any and all actions
as are authorized under the Trust Indenture Act in order to have the
claims of the Holders and any predecessor to the Trustee under Section 6.7
allowed in any such judicial or administrative proceedings; and
(ii) in particular, the Trustee shall be authorized to collect and
receive any monies or other property payable or deliverable on any such
claims and to distribute the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator, sequestrator,
conservator (or other similar official) in any such judicial or administrative
proceeding is hereby authorized by each Holder to make such payments to the
Trustee for distribution in accordance with Section 5.6, and in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it and any predecessor Trustee
under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
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SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, subject to
Article XIII and after provision for the payment of all the amounts owing the
Trustee and any predecessor Trustee under Section 6.7, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to the Securities pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money or property on account of principal (or premium, if
any) or interest (including any Additional Interest), upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts then due
and unpaid upon Securities for principal (and premium, if any) and interest
(including any Additional Interest) in respect of which or for the benefit of
which such money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest (including any Additional
Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 5.7. Limitation on Suits.
Subject to Section 5.8, no Holder of any Securities shall have any right
to institute any proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) or for any other remedy hereunder,
unless:
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities;
(2) the Holders of not less than 25% in aggregate principal amount
of the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the
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Outstanding Securities; it being understood and intended that no one or
more of such Holders shall have any right in any manner whatever by virtue
of, or by availing itself of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holders of Securities, or to
obtain or to seek to obtain priority or preference over any other of such
Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders of
Preferred Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Sections 3.8
and 3.12) interest (including any Additional Interest) on such Security on the
Stated Maturity (or in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder. Any registered holder of the
Preferred Securities issued by the Issuer Trust shall have the right, upon the
occurrence of an Event of Default described in Section 5.1(1) or 5.1(2), to
institute a suit directly against the Company for enforcement of payment to such
holder of principal of (premium, if any) and (subject to Sections 3.8 and 3.12)
interest (including any Additional Interest) on the Securities having a
principal amount equal to the aggregate Liquidation Amount (as defined in the
Trust Agreement) of such Preferred Securities held by such holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred Securities issued by
the Issuer Trust has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee, such Holder or such
holder of Preferred Securities, then, and in every such case, the Company, the
Trustee, such Holders and such holder of Preferred Securities shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee, such Holder and such holder of Preferred Securities shall continue as
though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.7, no
right or remedy herein conferred upon or reserved to the Trustee or the Holders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Security with
respect to the Securities or any holder of any Preferred Security to exercise
any right or remedy accruing upon any Event of Default with respect to the
Securities shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein.
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Every right and remedy given by this Article or by law to the Trustee or
to the Holders and the right and remedy given to the holders of Preferred
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of Preferred
Securities, as the case may be.
SECTION 5.12. Control by Holders.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, with respect to the
Securities, provided that:
(1) such direction shall not be in conflict with any rule of law
or with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow such direction if a Responsible Officer or
Officers of the Trustee shall, in good faith, determine that the
proceeding so directed would be unjustly prejudicial to the Holders not
joining in any such direction or would involve the Trustee in personal
liability.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities affected thereby and, the holders of a majority in
aggregate Liquidation Amount (as defined in the Trust Agreement) of the
Preferred Securities issued by the Issuer Trust may waive any past default
hereunder and its consequences except a default:
(1) in the payment of the principal of (or premium, if any) or
interest (including any Additional Interest) on any Security (unless such
default has been cured and the Company has paid to or deposited with the
Trustee a sum sufficient to pay all matured installments of interest
(including Additional Interest) and all principal of (and premium, if any,
on) all Securities due otherwise than by acceleration), or
(2) in respect of a covenant or provision hereof that under Article
IX cannot be modified or amended without the consent of each Holder of any
Outstanding Security affected.
Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities, or in the case of waiver by holders of Preferred Securities issued
by the Issuer Trust, by all holders of Preferred Securities issued by the Issuer
Trust.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may, in
its discretion, require, in any suit for the
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enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may, in its discretion, assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant, but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in aggregate principal amount of
the Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security on or after the Stated
Maturity.
SECTION 5.15. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture, but
in the case of any such certificates or opinions that by any provisions
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct except that
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(1) this subsection shall not be construed to limit the effect
of subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of Holders pursuant to Section 5.12 relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture with respect to the Securities.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities, the Trustee shall transmit by mail to all Holders of Securities, as
their names and addresses appear in the Securities Register, notice of such
default, unless such default shall have been cured or waived; provided, however,
that, except in the case of a default in the payment of the principal of (or
premium, if any) or interest (including any Additional Interest) on any
Security, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders of
Securities; and provided further, that, in the case of any default of the
character specified in Section 5.1(3), no such notice to Holders of Securities
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event that is, or after
notice or lapse of time or both would become, an Event of Default with respect
to the Securities.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
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(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of the Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Securities
Registrar or such other agent.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
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SECTION 6.7. Compensation and Reimbursement.
(a) The Company agrees to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder in such amounts as the
Company and the Trustee shall agree from time to time (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust).
(b) The Company agrees to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense disbursement or advance as may be attributable to its
negligence or bad faith.
(c) Since the Issuer Trust is being formed solely to facilitate an
investment in the Preferred Securities, the Company, as Holder of the Common
Securities, hereby covenants to pay all debts and obligations (other than with
respect to the Preferred Securities and the Common Securities) and all
reasonable costs and expenses of the Issuer Trust (including without limitation
all costs and expenses relating to the organization of the Issuer Trust, the
fees and expenses of the trustees and all reasonable costs and expenses relating
to the operation of the Issuer Trust) and to pay any and all taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed on the Issuer Trust by the United States, or any taxing
authority, so that the net amounts received and retained by the Issuer Trust and
the Property Trustee after paying such expenses will be equal to the amounts the
Issuer Trust and the Property Trustee would have received had no such costs or
expenses been incurred by or imposed on the Issuer Trust. The foregoing
obligations of the Company are for the benefit of, and shall be enforceable by,
any person to whom any such debts, obligations, costs, expenses and taxes are
owed (each, a "Creditor") whether or not such Creditor has received notice
thereof. Any such Creditor may enforce such obligations directly against the
Company, and the Company irrevocably waives any right or remedy to require that
any such Creditor take any action against the Issuer Trust or any other person
before proceeding against the Company. The Company shall execute such additional
agreements as may be necessary or desirable to give full effect to the
foregoing.
(d) The Company shall indemnify the Trustee, its directors, officers,
employees and agents for, and hold them harmless against, any loss, liability or
expense (including the reasonable compensation and the expenses and
disbursements of its agents and counsel) incurred without negligence or bad
faith, arising out of or in connection with the acceptance or administration of
this trust or the performance of its duties hereunder, including the reasonable
costs and expenses of defending against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder. This
indemnification shall survive the termination of this Indenture or the
resignation or removal of the Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) occurs, the expenses and the compensation
for the services are intended to constitute expenses of administration under the
Bankruptcy Reform Act of 1978 or any successor statute.
SECTION 6.8. Disqualification; Conflicting Interests.
The Trustee for the Securities issued hereunder shall be subject to the
provisions of Section 310(b) of the Trust Indenture Act. Nothing herein shall
prevent the Trustee from filing with the Commission the application referred to
in the second to last paragraph of said Section 310(b).
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SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be:
(a) an entity organized and doing business under the laws of the United
States of America or of any state or territory thereof or of the District of
Columbia, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal, state, territorial or District
of Columbia authority, or
(b) an entity or other Person organized and doing business under the laws
of a foreign government that is permitted to act as Trustee pursuant to a rule,
regulation or order of the Commission, authorized under such laws to exercise
corporate trust powers, and subject to supervision or examination by authority
of such foreign government or a political subdivision thereof substantially
equivalent to supervision or examination applicable to United States
institutional trustees; in either case having a combined capital and surplus of
at least $50,000,000, subject to supervision or examination by federal or state
authority. If such entity publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then, for the purposes of this Section, the combined capital and
surplus of such entity shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article. Neither the Company nor any Person
directly or indirectly controlling, controlled by or under common control with
the Company shall serve as Trustee for the Securities issued hereunder.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities by
giving written notice thereof to the Company. If an instrument of acceptance by
a successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time with respect to the Securities
by Act of the Holders of a majority in aggregate principal amount of the
Outstanding Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer
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shall take charge or control of the Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation;
then, in any such case, (i) the Company, acting pursuant to the authority of a
Board Resolution, may remove the Trustee with respect to the Securities issued
hereunder, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of such Holder and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to the Securities issued hereunder and
the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause with respect
to the Securities, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee with respect to the Securities. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities shall be appointed by Act of
the Holders of a majority in aggregate principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee with respect to the Securities and supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities shall have been so appointed by the Company or the Holders and
accepted appointment in the manner hereinafter provided, any Holder who has been
a bona fide Holder of a Security for at least six months may, subject to Section
5.14, on behalf of such Holder and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities and each appointment of a successor
Trustee with respect to the Securities by mailing written notice of such event
by first-class mail, postage prepaid, to the Holders of Securities as their
names and addresses appear in the Securities Register. Each notice shall include
the name of the successor Trustee with respect to the Securities and the address
of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all rights, powers and trusts referred to in paragraph
(a) of this Section.
(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.
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SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any entity into which the Trustee may be merged or converted or with which
it may be consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any entity succeeding to
all or substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, provided such entity shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
In case any Securities shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated, and in case any Securities shall not have been
authenticated, any successor to the Trustee may authenticate such Securities
either in the name of any predecessor Trustee or in the name of such successor
Trustee, and in all cases the certificate of authentication shall have the full
force which it is provided anywhere in the Securities or in this Indenture that
the certificate of the Trustee shall have.
SECTION 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
the Securities, which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
3.6, and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be an entity organized and doing business under the laws of the United
States of America, or of any state or territory thereof or of the District of
Columbia, authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by federal or state authority. If such Authenticating
Agent publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such Authenticating
Agent shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the provisions of this
Section, such Authenticating Agent shall resign immediately in the manner and
with the effect specified in this Section.
Any entity into which an Authenticating Agent may be merged or converted
or with which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Authenticating Agent shall be a party,
or any entity succeeding to all or substantially all of the corporate trust
business of an Authenticating Agent shall be the successor Authenticating Agent
hereunder, provided such entity shall be otherwise eligible under this Section,
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
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An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent, which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities.
Any successor Authenticating Agent upon acceptance hereunder shall become vested
with all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provision of
this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payment, subject to the provisions
of Section 6.7.
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: BANKERS TRUST COMPANY,
------------------ as Trustee
By:
---------------------------------
As Authenticating Agent
Name:
Title:
By:
---------------------------------
As Authenticating Agent
Name:
Title:
<PAGE>
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ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) quarterly, not more than 15 days after March 15, June 15, September
15, and December 15 in each year, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of such dates,
excluding from any such list names and addresses received by the Trustee in its
capacity as Securities Registrar, and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, excluding from any such list names and addresses received by the
Trustee in its capacity as Securities Registrar.
SECTION 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
SECTION 7.3. Reports by Trustee and Paying Agent.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted within 60 days of January 31 in each
calendar year, commencing with the first January 31 after the issuance of
Securities under this Indenture.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each securities exchange upon which any
Securities are listed and also with the Commission. The Company will notify the
Trustee when any Securities are listed on any securities exchange.
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(d) The Paying Agent shall comply with all withholding, backup
withholding, tax and information reporting requirements under the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations issued thereunder
with respect to payments on, or with respect to, the Securities.
SECTION 7.4. Reports by Company.
The Company shall file or cause to be filed with the Trustee and with the
Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided in the Trust Indenture
Act. In the case of information, documents or reports required to be filed with
the Commission pursuant to Section 13(a) or Section 15(d) of the Exchange Act,
the Company shall file or cause the filing of such information documents or
reports with the Trustee within 15 days after the same is required to be filed
with the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:
(1) If the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the entity formed by such
consolidation or into which the Company is merged or the Person that
acquires by conveyance or transfer, or that leases, the properties and
assets of the Company substantially as an entirety shall be an entity
organized and existing under the laws of the United States of America or
any state thereof or the District of Columbia and shall expressly assume,
by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of (and premium, if any), and interest (including any
Additional Interest) on all the Securities of every series and the
performance of every covenant of this Indenture on the part of the Company
to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event that, after notice or lapse of time, or both, would
constitute an Event of Default, shall have occurred and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and any such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with and, in the case of a transaction subject to this Section
8.1 but not requiring a supplemental indenture under paragraph (1) of this
Section 8.1, an Officer's Certificate or Opinion of Counsel to the effect
that the surviving, resulting or successor entity is legally bound by the
Indenture and the Securities; and the Trustee, subject to Section 6.1, may
rely upon such Officers' Certificates and Opinions of Counsel as
conclusive evidence that such transaction complies with this Section 8.1.
<PAGE>
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SECTION 8.2. Successor Company Substituted.
Upon any consolidation or merger by the Company with or into any other
Person, or any conveyance, transfer or lease by the Company of its properties
and assets substantially as an entirety to any Person in accordance with Section
8.1, the successor entity formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein; and in the event of any such conveyance,
transfer or lease the Company shall be discharged from all obligations and
covenants under the Indenture and the Securities.
Such successor Person may cause to be executed, and may issue either in
its own name or in the name of the Company, any or all of the Securities
issuable hereunder that theretofore shall not have been signed by the Company
and delivered to the Trustee; and, upon the order of such successor Person
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver
any Securities that previously shall have been signed and delivered by the
officers of the Company to the Trustee for authentication pursuant to such
provisions and any Securities that such successor Person thereafter shall cause
to be executed and delivered to the Trustee on its behalf for the purpose
pursuant to such provisions. All the Securities so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form may be made in the Securities thereafter to be
issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may amend
or waive any provision of this Indenture or enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company herein and in
the Securities contained; or
(2) to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee or to surrender any right or power herein conferred upon the
Company; or
(3) to facilitate the issuance of Securities in certificated or other
definitive form; or
(4) to add to the covenants of the Company for the benefit of the Holders
of the Securities or to surrender any right or power herein conferred upon the
Company; or
(5) to add any additional Events of Default for the benefit of the
Holders of the Securities; or
<PAGE>
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(6) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall not apply to any Outstanding
Securities; or
(7) to cure any ambiguity, to correct or supplement any provision herein
that may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this clause (7) shall not
adversely affect the interest of the Holders of Securities in any material
respect or, in the case of the Securities issued to the Issuer Trust and for so
long as any of the Preferred Securities issued by the Issuer Trust shall remain
outstanding, the holders of such Preferred Securities; or
(8) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities and to add to or change any
of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 6.11(b); or
(9) to comply with the requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust Indenture Act.
SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest (including any Additional Interest) on, any
Security, or reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof, or reduce the
amount of principal of a Discount Security that would be due and payable
upon a declaration of acceleration of the Stated Maturity thereof pursuant
to Section 5.2, or change the place of payment where, or the coin or
currency in which, any Security or interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date), or
(2) reduce the percentage in aggregate principal amount of the
Outstanding Securities, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section 5.13 or
Section 10.5, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Security affected thereby;
provided, further, that, in the case of the Securities issued to the
Issuer Trust, so long as any of the Preferred Securities issued by the
Issuer Trust remains outstanding, (i) no such amendment
<PAGE>
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shall be made that adversely affects the holders of such Preferred
Securities in any material respect, and no termination of this Indenture
shall occur, and no waiver of any Event of Default or compliance with any
covenant under this Indenture shall be effective, without the prior
consent of the holders of at least a majority of the aggregate Liquidation
Amount (as defined in the Trust Agreement) of such Preferred Securities
then outstanding unless and until the principal of (and premium, if any,
on) the Securities and all accrued and (subject to Section 3.8) unpaid
interest (including any Additional Interest) thereon have been paid in
full, and (ii) no amendment shall be made to Section 5.8 of this Indenture
that would impair the rights of the holders of Preferred Securities issued
by the Issuer Trust provided therein without the prior consent of the
holders of each such Preferred Security then outstanding unless and until
the principal of (and premium, if any, on) the Securities of such series
and all accrued and (subject to Section 3.8) unpaid interest (including
any Additional Interest) thereon have been paid in full.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.1) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture, and
that all conditions precedent herein provided for relating to such action have
been complied with. The Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
<PAGE>
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ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the Securities that it
will duly and punctually pay the principal of (and premium, if any) and interest
(including any Additional Interest) on the Securities in accordance with the
terms of such Securities and this Indenture.
SECTION 10.2. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company initially appoints the Trustee, acting
through its Corporate Trust Office, as its agent for said purposes. The Company
will give prompt written notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company shall fail to maintain
such office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in each Place of
Payment for Securities for such purposes. The Company will give prompt written
notice to the Trustee of any such designation and any change in the location of
any such office or agency.
SECTION 10.3. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to the Securities, it will, on or before each due date of the principal of (and
premium, if any) or interest (including Additional Interest) on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
(including Additional Interest) so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided, and will promptly
notify the Trustee of its failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, prior
to 10:00 a.m., New York City time, on each due date of the principal of (or
premium, if any) or interest, including Additional Interest on any Securities,
deposit with a Paying Agent a sum sufficient to pay the principal (and premium,
if any) or interest, including Additional Interest so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such principal (and
premium, if any) or interest, including Additional Interest, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of its
failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
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(1) hold all sums held by it for the payment of the principal of (and
premium, if any, or interest (including Additional Interest) on the Securities
in trust for the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon such Securities) in the making of any payment of principal (and
premium, if any) or interest (or Additional Interest) in respect of any
Security;
(3) at any time during the continuance of any default with respect to the
Securities, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent; and
(4) comply with the provisions of the Trust Indenture Act applicable to
it as a Paying Agent.
The Company may, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company in trust for the payment of the principal of (and premium, if any)
or interest (including Additional Interest) on any Security and remaining
unclaimed for two years after such principal (and premium, if any) or interest
(including Additional Interest) has become due and payable shall (unless
otherwise required by mandatory provision of applicable escheat or abandoned or
unclaimed property law) be paid on Company Request to the Company, or (if then
held by the Company) shall (unless otherwise required by mandatory provision of
applicable escheat or abandoned or unclaimed property law) be discharged from
such trust; and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, the City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 10.4. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate covering the preceding calendar year, stating whether or not to the
best knowledge of the signers thereof of the Company is in default in the
performance, observance or fulfillment of or compliance with any of the terms,
provisions, covenants and conditions of this Indenture, and if the Company shall
be in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge. For the purpose of this Section 10.4, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
<PAGE>
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SECTION 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Preferred Securities specified in
Section 9.2, if any, the Company may omit in any particular instance to comply
with any covenant or condition provided pursuant to Section 3.1, 9.1(3) or
9.1(4) with respect to the Securities, if before or after the time for such
compliance the Holders of at least a majority in aggregate principal amount of
the Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company in respect of any such covenant
or condition shall remain in full force and effect.
SECTION 10.6. Additional Sums.
So long as no Event of Default has occurred and is continuing and except
as otherwise specified as contemplated by Section 2.1 or Section 3.1, if (i) the
Issuer Trust is the Holder of all of the Outstanding Securities, and (ii) a Tax
Event described in clause (i) or (iii) of the definition of "Tax Event" in
Section 1.1 hereof has occurred and is continuing in respect of the Issuer
Trust, the Company shall pay the Issuer Trust (and its permitted successors or
assigns under the Trust Agreement) for so long as the Issuer Trust (or its
permitted successor or assignee) is the registered holder of the Outstanding
Securities, such additional sums as may be necessary in order that the amount of
Distributions (including any Additional Amounts (as defined in the Trust
Agreement)) then due and payable by the Issuer Trust on the Preferred Securities
and Common Securities that at any time remain outstanding in accordance with the
terms thereof shall not be reduced as a result of such Additional Taxes (the
"Additional Sums"). Whenever in this Indenture or the Securities there is a
reference in any context to the payment of principal of or interest on the
Securities, such mention shall be deemed to include mention of the payments of
the Additional Sums provided for in this paragraph to the extent that, in such
context, Additional Sums are, were or would be payable in respect thereof
pursuant to the provisions of this paragraph and express mention of the payment
of Additional Sums (if applicable) in any provisions hereof shall not be
construed as excluding Additional Sums in those provisions hereof where such
express mention is not made; provided, however, that the deferral of the payment
of interest pursuant to Section 3.12 or the Securities shall not defer the
payment of any Additional Sums that may be due and payable.
SECTION 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities that it
shall not (x) declare or pay any dividends or distributions on, or redeem
purchase, acquire or make a liquidation payment with respect to, any shares of
the Company's capital stock, or (y) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu in all respects with or junior in interest to the
Securities (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period or other event
referred to below, (b) as a result of an exchange or conversion of any class or
series of the Company's capital stock (or any capital stock of a Subsidiary of
the Company) for any class or series of the Company's capital stock or of any
class or series of the Company's indebtedness for any class or series of the
Company's capital stock, (c) the purchase of fractional interests in shares of
the
<PAGE>
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Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any Rights Plan, or the issuance of
rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock) if at such time (i) there shall have occurred any event (A) of which
the Company has actual knowledge that with the giving of notice or the lapse of
time, or both, would constitute an Event of Default with respect to the
Securities, and (B) which the Company shall not have taken reasonable steps to
cure, (ii) if the Securities are held by the Issuer Trust, the Company shall be
in default with respect to its payment of any obligations under the Guarantee
relating to the Preferred Securities issued by the Issuer Trust, or (iii) the
Company shall have given notice of its election to begin an Extension Period
with respect to the Securities as provided herein and shall not have rescinded
such notice, or such Extension Period, or any extension thereof, shall be
continuing.
The Company also covenants with each Holder of Securities issued to the
Issuer Trust (i) to hold, directly or indirectly, 100% of the Common Securities
of the Issuer Trust, provided that any permitted successor of the Company as
provided under Section 8.2 may succeed to the Company's ownership of such Common
Securities, (ii) as holder of such Common Securities, not to voluntarily
terminate, windup or liquidate the Issuer Trust, other than (a) in connection
with a distribution of the Securities to the holders of the Preferred Securities
in liquidation of the Issuer 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 Issuer Trust to continue not to be taxable as a
corporation for United States federal income tax purposes.
SECTION 10.8. Original Issue Discount.
On or before December 15 of each year during which any Securities are
outstanding, the Company shall furnish to each Paying Agent such information as
may be reasonably requested by each Paying Agent in order that each Paying Agent
may prepare the information which it is required to report for such year on
Internal Revenue Service Forms 1096 and 1099 pursuant to Section 6049 of the
Internal Revenue Code of 1986, as amended. Such information shall include the
amount of original issue discount includible in income for each authorized
minimum denomination of principal amount at Stated Maturity of outstanding
Securities during such year.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of This Article.
Redemption of Securities as permitted or required by any form of Security
issued pursuant to this Indenture shall be made in accordance with such form of
Security and this Article; provided, however, that, if any provision of any such
form of Security shall conflict with any provision of this Article, the
provision of such form of Security shall govern.
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SECTION 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
or pursuant to a Board Resolution. In case of any redemption at the election of
the Company, the Company shall, not less than 30 nor more than 60 days prior to
the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee and, in the case of Securities held by the Issuer
Trust, the Property Trustee under the Trust Agreement, of such date and of the
principal amount of Securities to be redeemed and provide the additional
information required to be included in the notice or notices contemplated by
Section 11.4; provided that, for so long as such Securities are held by the
Issuer Trust, such notice shall be given not less than 45 nor more than 75 days
prior to such Redemption Date (unless a shorter notice shall be satisfactory to
the Property Trustee under the Trust Agreement). In the case of any redemption
of Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities, the Company shall furnish the Trustee
with an Officers' Certificate and an Opinion of Counsel evidencing compliance
with such restriction.
SECTION 11.3. Selection of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of a portion
of the principal amount of any Security, provided that the unredeemed portion of
the principal amount of any Security shall be in an authorized denomination
(which shall not be less than the minimum authorized denomination) for such
Security.
The Trustee shall promptly notify the Company in writing of the Securities
selected for partial redemption and the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security that has been or is to be redeemed.
SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not later than the thirtieth day, and not earlier than the sixtieth day,
prior to the Redemption Date, to each Holder of Securities to be redeemed, at
the address of such Holder as it appears in the Securities Register.
With respect to Securities to be redeemed, each notice of redemption shall
state:
(a) the Redemption Date;
(b) the Redemption Price or, if the Redemption Price cannot be calculated
prior to the time the notice is required to be sent, the estimate of the
Redemption Price provided pursuant to the Indenture together with a statement
that it is an estimate and that the actual Redemption Price will be calculated
on the third Business Day prior to the Redemption Date (if such an estimate of
the Redemption Price is given, a subsequent notice shall be given as set forth
above setting forth the Redemption Price promptly following the calculation
thereof);
(c) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of partial redemption, the respective principal
amounts) of the particular Securities to be redeemed;
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(d) that, on the Redemption Date, the Redemption Price will become due and
payable upon each such Security or portion thereof, and that interest thereon,
if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price;
(f) such other provisions as may be required in respect of the terms of
the Securities; and
(g) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
The notice, if mailed in the manner provided above, shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, a failure to give such notice by mail or any defect in the
notice to the Holder of any Security designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Security.
SECTION 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the Redemption Date specified
in the notice of redemption given as provided in Section 11.4, the Company will
deposit with the Trustee or with one or more Paying Agents (or if the Company is
acting as its own Paying Agent, the Company will segregate and hold in trust as
provided in Section 10.3) an amount of money sufficient to pay the Redemption
Price of, and any accrued interest (including Additional Interest) on, all the
Securities (or portions thereof) that are to be redeemed on that date.
SECTION 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.4,
the Securities or portion of Securities with respect to which such notice has
been given shall become due and payable on the date and at the place or places
stated in such notice at the applicable Redemption Price, together with accrued
interest (including any Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment in said
notice specified, the said Securities or the specified portions thereof shall be
paid and redeemed by the Company at the applicable Redemption Price, together
with accrued interest (including any Additional Interest) to the Redemption
Date; provided, however, that, installments of interest (including Additional
Interest) whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant record
dates according to their terms and the provisions of Section 3.8.
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder thereof, at
the expense of the Company, a new Security or Securities, of authorized
denominations, in aggregate principal amount equal to the unredeemed portion of
the Security so presented and having the same Original Issue Date, Stated
Maturity and terms.
If any Security called for redemption shall not be so paid under surrender
thereof for redemption, the principal of and premium, if any, on such Security
shall, until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
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SECTION 11.7. Right of Redemption of Securities Initially Issued to
the Issuer Trust.
The Company, at its option, may redeem such Securities (i) on or after
___________, 2002, in whole at any time or in part from time to time, or (ii)
upon the occurrence and during the continuation of a Tax Event, an Investment
Company Event or a Capital Treatment Event, at any time within 90 days following
the occurrence and during the continuation of such Tax Event, Investment Company
Event or Capital Treatment Event, in whole (but not in part), in each case at a
Redemption Price specified in such Security, together with accrued interest
(including Additional Interest) to the Redemption Date.
If less than all the Securities are to be redeemed, the aggregate
principal amount of such Securities remaining Outstanding after giving effect to
such redemption shall be sufficient to satisfy any provisions of the Trust
Agreement.
ARTICLE XII
SINKING FUNDS
Except as may be provided in any supplemental or amended indenture, no
sinking fund shall be established or maintained for the retirement of
Securities.
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the payment of the principal
of (and premium, if any) and interest (including any Additional Interest) on
each and all of the Securities are hereby expressly made subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness.
SECTION 13.2. No Payment When Senior Indebtedness in Default; Payment
Over of Proceeds Upon Dissolution, Etc.
If the Company shall default in the payment of any principal of (or
premium, if any) or interest on any Senior Indebtedness when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, upon written notice of such
default to the Company by the holders of Senior Indebtedness or any trustee
therefor, unless and until such default shall have been cured or waived or shall
have ceased to exist, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made on
account of the principal of (or premium, if any) or interest (including
Additional Interest) on any of the Securities, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the Securities.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Company, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of creditors or (iv) any
other marshalling of the assets of the Company (each such event, if any, herein
sometimes referred to as a "Proceeding"), all Senior Indebtedness (including any
interest thereon accruing after the commencement of any such
<PAGE>
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proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made to any Holder on
account thereof. Any payment or distribution, whether in cash, securities or
other property (other than securities of the Company or any other entity
provided for by a plan of reorganization or readjustment, the payment of which
is subordinate, at least to the extent provided in these subordination
provisions with respect to the indebtedness evidenced by the Securities, to the
payment of all Senior Indebtedness at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment), which would otherwise (but for these subordination provisions) be
payable or deliverable in respect of the Securities shall be paid or delivered
directly to the holders of Senior Indebtedness in accordance with the priorities
then existing among such holders until all Senior Indebtedness (including any
interest thereon accruing after the commencement of any Proceeding) shall have
been paid in full.
In the event of any Proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the Holders of the Securities, together
with the holders of any obligations of the Company ranking on a parity with the
Securities, shall be entitled to be paid from the remaining assets of the
Company the amounts at the time due and owing on account of unpaid principal of
(and premium, if any) and interest on the Securities and such other obligations
before any payment or other distribution, whether in cash, property or
otherwise, shall be made on account of any capital stock or any obligations of
the Company ranking junior to the Securities, and such other obligations. If,
notwithstanding the foregoing, any payment or distribution of any character or
any security, whether in cash, securities or other property (other than
securities of the Company or any other entity provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any plan of reorganization or readjustment), shall be received by
the Trustee or any Holder in contravention of any of the terms hereof and before
all Senior Indebtedness shall have been paid in full, such payment or
distribution or security shall be received in trust for the benefit of, and
shall be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full. In the event of the failure of the Trustee or any Holder
to endorse or assign any such payment, distribution or security, each holder of
Senior Indebtedness is hereby irrevocably authorized to endorse or assign the
same.
The Trustee and the Holders shall take such action (including, without
limitation, the delivery of this Indenture to an agent for the holders of Senior
Indebtedness or consent to the filing of a financing statement with respect
hereto) as may, in the opinion of counsel designated by the holders of a
majority in principal amount of the Senior Indebtedness at the time outstanding,
be necessary or appropriate to assure the effectiveness of the subordination
effected by these provisions.
The provisions of this Section 13.2 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Company in respect
of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
The securing of any obligations of the Company, otherwise ranking on a
parity with the Securities or ranking junior to the Securities shall not be
deemed to prevent such obligations from constituting, respectively, obligations
ranking on a parity with the Securities or ranking junior to the Securities.
<PAGE>
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SECTION 13.3. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in any
of the Securities shall prevent (a) the Company, at any time, except during the
pendency of the conditions described in the first paragraph of Section 13.2 or
of any Proceeding referred to in Section 13.2, from making payments at any time
of principal of (and premium, if any) or interest (including Additional
Interest) on the Securities, or (b) the application by the Trustee of any monies
deposited with it hereunder to the payment of or on account of the principal of
(and premium, if any) or interest (including any Additional Interest) on the
Securities or the retention of such payment by the Holders, if, at the time of
such application by the Trustee, it did not have knowledge that such payment
would have been prohibited by the provisions of this Article.
SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become due on all
Senior Indebtedness, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent of
the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article (equally and ratably with the holders
of all indebtedness of the Company that by its express terms is subordinated to
Senior Indebtedness of the Company to substantially the same extent as the
Securities are subordinated to the Senior Indebtedness and is entitled to like
rights of subrogation by reason of any payments or distributions made to holders
of such Senior Indebtedness) to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of (and
premium if any) and interest (including Additional Interest) on the Securities
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior Indebtedness
by Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Indebtedness.
SECTION 13.5. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as between the Company and the Holders of the Securities,
the obligations of the Company, which are absolute and unconditional, to pay to
the Holders of the Securities the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities as and when the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders of the Securities and
creditors of the Company other than their rights in relation to the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
(or to the extent expressly provided herein, the holder of any Preferred
Security) from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, including filing and voting claims in any
Proceeding, subject to the rights, if any, under this Article of the holders of
Senior Indebtedness to receive cash, property and securities otherwise payable
or deliverable to the Trustee or such Holder.
<PAGE>
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SECTION 13.6. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof authorizes and
directs the Trustee on his or her behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination provided in this
Article and appoints the Trustee his or her attorney-in-fact for any and all
such purposes.
SECTION 13.7. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to such Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of such Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extent the time of payment of, or renew or alter,
Senior Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
SECTION 13.8. Notice to Trustee.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of
any payment to or by the Trustee in respect of the Securities. Notwithstanding
the provisions of this Article or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment to or by the Trustee in respect of the
Securities, unless and until the Trustee shall have received written notice
thereof from the Company or a holder of Senior Indebtedness or from any trustee,
agent or representative therefor; provided, however, that if the Trustee shall
not have received the notice provided for in this Section at least two Business
Days prior to the date upon which by the terms hereof any monies may become
payable for any purpose (including, the payment of the principal of (and
premium, if any, on) or interest (including any Additional Interest) on any
Security), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such monies and to apply
the same to the purpose for which they were received and shall not be affected
by any notice to the contrary that may be received by it within two Business
Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
or herself to be a holder of Senior Indebtedness (or a trustee or
attorney-in-fact therefor) to establish that such notice has been given by a
holder of Senior Indebtedness (or a trustee or attorney-in-fact therefor). In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article,
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the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, conservator,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or to
the Holders of Securities, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article.
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall
not be liable to any such holders if it shall in good faith mistakenly pay over
or distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article or otherwise.
SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness that may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
SECTION 13.12. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee.
SECTION 13.13. Certain Conversions or Exchanges Deemed Payment.
For purposes of this Article only, (a) the issuance and delivery of junior
securities upon conversion or exchange of Securities shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any, on) or interest (including any Additional Interest) on such Securities
or on account of the purchase or other acquisition of such Securities, and (b)
the payment, issuance or delivery of cash, property or securities (other than
junior securities) upon
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conversion or exchange of a Security shall be deemed to constitute payment on
account of the principal of such security. For the purposes of this Section, the
term "junior securities" means (i) shares of any stock of any class of the
Company, and (ii) securities of the Company that are subordinated in right of
payment to all Senior Indebtedness that may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as, or
to a greater extent than, the Securities are so subordinated as provided in this
Article.
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
[Remainder of page left intentionally blank; signatures appear on following
page.]
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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 and
attested, all as of the day and year first above written.
Attest: GREATER COMMUNITY BANCORP
-----------------
By:
---------------------------------------
Name:
Title:
Attest: BANKERS TRUST COMPANY, as
----------------- Trustee
By:
---------------------------------------
Name:
Title:
Exhibit 4.2
<PAGE>
GREATER COMMUNITY BANCORP
_____% Junior Subordinated Deferrable Interest Debentures due _______, 2027
No. P-1 CUSIP NO. _________ $__________
GREATER COMMUNITY BANCORP, a New Jersey corporation (hereinafter called
the "Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to GCB
Capital Trust, or registered assigns, the principal sum of _____________ Dollars
on ________, 2027, or such other principal amount represented hereby as may be
set forth in the records of the Securities Registrar hereinafter referred to in
accordance with the Indenture. The Company further promises to pay interest on
said principal from _______, 1997, or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing ____________, 1997 at the rate of _____%
per annum, together with Additional Sums, if any, as provided in Section 10.6 of
the Indenture, until the principal hereof is paid or duly provided for or made
available for payment; provided that any overdue principal, premium or
Additional Sums and any overdue installment of interest shall bear Additional
Interest at the rate of _____% per annum (to the extent that the payment of such
interest shall be legally enforceable), compounded quarterly from the dates such
amounts are due until they are paid or made available for payment, and such
interest shall be payable on demand. The amount of interest payable for any
period less than a full interest period shall be computed on the basis of a
360-day year of twelve 30-day months and the actual days elapsed in a partial
month in such period. The amount of interest payable for any full interest
period shall be computed by dividing the applicable rate per annum by four. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest installment,
which shall be the 15th day of March, June, September and December (whether or
not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time during the term of this Security, from
time to time to defer the payment of interest on this Security for up to 20
consecutive quarterly interest payment periods with respect to each deferral
period (each an "Extension Period"), during which Extension Periods the Company
shall have the right to make partial payments of interest on any Interest
Payment Date, and at the end of which the Company shall pay all interest then
accrued and unpaid including Additional Interest, as provided below; provided,
however, that no Extension Period shall extend beyond the Stated Maturity of the
principal of this Security, as then in effect, and no such Extension Period may
end on a date other than an Interest Payment Date; and provided, further,
however, that during any such Extension Period, the Company shall not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Company's capital
stock, or (ii) make any payment of
<PAGE>
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Company that rank pari passu in all respects with or
junior in interest to this Security (other than (a) repurchases, redemptions or
other acquisitions of shares of capital stock of the Company in connection with
any employment contract, benefit plan or other similar arrangement with or for
the benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of an exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a Subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or series
of the Company's indebtedness for any class or series of the Company's capital
stock, (c) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (d) any declaration of a
dividend in connection with any Rights Plan, or the issuance of rights, stock or
other property under any Rights Plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock). Prior
to the termination of any such Extension Period, the Company may further defer
the payment of interest, provided that no Extension Period shall exceed 20
consecutive quarterly interest payment periods, extend beyond the Stated
Maturity of the principal of this Security or end on a date other than an
Interest Payment Date. Upon the termination of any such Extension Period and
upon the payment of all accrued and unpaid interest and any Additional Interest
then due on any Interest Payment Date, the Company may elect to begin a new
Extension Period, subject to the above conditions. No interest shall be due and
payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest (to the extent that the
payment of such interest shall be legally enforceable) at the rate of _____% per
annum, compounded quarterly and calculated as set forth in the first paragraph
of this Security, from the date on which such amounts would otherwise have been
due and payable until paid or made available for payment. The Company shall give
the Holder of this Security and the Trustee notice of its election to begin any
Extension Period at least one Business Day prior to the next succeeding Interest
Payment Date on which interest on this Security would be payable but for such
deferral or so long as such securities are held by GCB Capital Trust, at least
one Business Day prior to the earlier of (i) the next succeeding date on which
Distributions on the Preferred Securities of the Issuer Trust would be payable
but for such deferral, and (ii) the date on which the Property Trustee of the
Issuer Trust is required to give notice to holders of such Preferred Securities
of the record date or the date such Distributions are payable, but in any event
not less than one Business Day prior to such record date.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the United States, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however that at the option of the Company payment of
interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Securities Register, or (ii) if to a
Holder of $1,000,000 or more in aggregate principal amount of this Security, by
wire transfer in immediately available funds upon written request to the Trustee
not later than 15 calendar days prior to the date on which the interest is
payable.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payments to the prior
payment in full of all Senior Indebtedness, and
<PAGE>
this Security is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
or her behalf to take such actions as may be necessary or appropriate to
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, waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
GREATER COMMUNITY BANCORP
By:
------------------------------
Name:
Title:
Attest:
- ----------------------------------
Secretary or Assistant Secretary
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: , 1997 BANKERS TRUST COMPANY,
----------- as Trustee
By:
---------------------------
Authorized Signatory
<PAGE>
[Reverse of Security]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under the Junior Subordinated Indenture, dated as of _______, 1997,
(herein called the "Indenture"), between the Company and Bankers Trust Company,
as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Indebtedness and the Holders of the Securities,
and of the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof,
limited in aggregate principal amount to $__________.
All terms used in this Security that are defined in the Indenture or
in the Amended and Restated Trust Agreement dated as of ________, 1997 (as
modified, amended or supplemented from time to time the "Trust Agreement"),
relating to GCB Capital Trust the ("Issuer Trust") among the Company, as
Depositor, the Trustees named therein and the Holders from time to time of the
Trust Securities issued pursuant thereto shall have the meanings assigned to
them in the Indenture or the Trust Agreement, as the case may be.
The Company has the right to redeem this Security (i) on or after
______, 2002 in whole at any time or in part from time to time, or (ii) in whole
(but not in part), at any time within 90 days following the occurrence and
during the continuation of a Tax Event, Investment Company Event, or Capital
Treatment Event, in each case at the Redemption Price described below, and
subject to possible regulatory approval. The Redemption Price shall equal 100%
of the principal amount hereof being redeemed, together with accrued interest to
but excluding the date fixed for redemption.
In the event of redemption of this Security in part only, a new Security
or Securities of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities of each series to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, if an
Event of Default with respect to the Securities of this series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities of this series may declare the principal amount of all
the Securities of this series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), provided that,
if upon an Event of Default, the Trustee or such Holders fail to declare the
principal of
<PAGE>
all the Outstanding Securities of this series to be immediately due and payable,
the holders of at least 25% in aggregate Liquidation Amount of the Preferred
Securities then outstanding shall have the right to make such declaration by a
notice in writing to the Company and the Trustee; and upon any such declaration
the principal amount of and the accrued interest (including any Additional
Interest) on all the Securities of this series shall become immediately due and
payable, provided that the payment of principal and interest (including any
Additional Interest) on such Securities shall remain subordinated to the extent
provided in Article XIII of the Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest (including Additional Interest) on this Security at the times, place
and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the Indenture
for such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Securities of this series, of like tenor,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple of $1,000
in excess thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agrees that for United States federal, state and
local tax purposes it is intended that this Security constitute indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
THIS SECURITY IS A DIRECT AND UNSECURED OBLIGATION OF THE COMPANY, DOES
NOT EVIDENCE DEPOSITS AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
Exhibit 4.4
<PAGE>
AMENDED AND RESTATED
TRUST AGREEMENT
among
GREATER COMMUNITY BANCORP, as Depositor,
BANKERS TRUST COMPANY
as Property Trustee,
and
BANKERS TRUST (DELAWARE),
as Delaware Trustee
Dated as of May __, 1997
GCB CAPITAL TRUST
<PAGE>
GCB CAPITAL TRUST
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Trust Agreement
Section Section
- --------------- ---------------
Section 310(a)(1)......................... 8.7
(a)(2)......................... 8.7
(a)(3)......................... 8.9
(a)(4)......................... 2.7(a)(ii)
(b)............................ 8.8, 10.10(b)
Section 311(a)............................ 8.13, 10.10(b)
(b)............................ 8.13, 10.10(b)
Section 312(a)............................ 10.10(b)
(b)............................ 10.10(b), (f)
(c)............................ 5.7
Section 313(a)............................ 8.15(a)
(a)(4)......................... 10.10(c)
(b)............................ 8.15(c), 10.10(c)
(c)............................ 10.8, 10.10(c)
(d)............................ 10.10(c)
Section 314(a)............................ 8.16, 10.10(d)
(b)............................ Not Applicable
(c)(1)......................... 8.17, 10.10(d), (e)
(c)(2)......................... 8.17, 10.10(d), (e)
(c)(3)......................... 8.17, 10.10(d), (e)
(e)............................ 8.17, 10.10(e)
Section 315(a)............................ 8.1(d)
(b)............................ 8.2
(c)............................ 8.1(c)
(d)............................ 8.1(d)
(e)............................ Not Applicable
Section 316(a)............................ Not Applicable
(a)(1)(A)...................... Not Applicable
(a)(1)(B)...................... Not Applicable
(a)(2)......................... Not Applicable
(b)............................ 5.13
(c)............................ 6.7
Section 317(a)(1)......................... Not Applicable
(a)(2)......................... 8.14
(b)............................ 5.10
Section 318(a)............................ 10.10(a)
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Trust Agreement.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I. DEFINED TERMS
SECTION 1.1. Definitions................................... 1
ARTICLE II. CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name.......................................... 10
SECTION 2.2. Office of the Delaware Trustee;
Principal Place of Business................. 10
SECTION 2.3. Initial Contribution of Trust Property,
Organizational Expenses..................... 10
SECTION 2.4. Issuance of the Preferred Securities.......... 10
SECTION 2.5. Issuance of the Common Securities;
Subscription and Purchase of Junior
Subordinated Debentures..................... 11
SECTION 2.6. Declaration of Trust.......................... 11
SECTION 2.7. Authorization to Enter into Certain
Transactions................................ 12
SECTION 2.8. Assets of Trust............................... 14
SECTION 2.9. Title to Trust Property....................... 14
ARTICLE III. PAYMENT ACCOUNT
SECTION 3.1. Payment Account............................... 14
ARTICLE IV. DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions................................. 15
SECTION 4.2. Redemption.................................... 16
SECTION 4.3. Subordination of Common Securities............ 17
SECTION 4.4. Payment Procedures............................ 18
SECTION 4.5. Tax Returns and Reports....................... 18
SECTION 4.6. Payment of Taxes, Duties, Etc.
of the Issuer Trust......................... 19
SECTION 4.7. Payments under Indenture or Pursuant
to Direct Actions........................... 19
SECTION 4.8. Liability of the Holder of Common
Securities.................................. 19
ARTICLE V. TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership............................. 19
SECTION 5.2. The Trust Securities Certificates............. 19
SECTION 5.3. Execution and Delivery of Trust
Securities Certificates....................... 20
SECTION 5.4. Global Preferred Security..................... 20
SECTION 5.5. Registration of Transfer and Exchange
Generally; Certain Transfers and
Exchanges; Preferred Securities
Certificates................................ 21
- i -
<PAGE>
Page
----
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen
Trust Securities Certificates............... 22
SECTION 5.7. Persons Deemed Holders........................ 22
SECTION 5.8. Access to List of Holders'
Names and Addresses........................... 23
SECTION 5.9. Maintenance of Office or Agency............... 23
SECTION 5.10. Appointment of Paying Agent................... 23
SECTION 5.11. Ownership of Common Securities
by Depositor................................ 23
SECTION 5.12. Notices to Clearing Agency.................... 24
SECTION 5.13. Rights of Holders............................. 24
ARTICLE VI. ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Holder's Voting
Rights..................................... 26
SECTION 6.2. Notice of Meetings............................ 26
SECTION 6.3. Meetings of Holders........................... 27
SECTION 6.4. Voting Rights................................. 27
SECTION 6.5. Proxies, etc.................................. 27
SECTION 6.6. Holder Action by Written Consent.............. 27
SECTION 6.7 Record Date for Voting and Other
Purposes.................................... 27
SECTION 6.8. Acts of Holders............................... 28
SECTION 6.9. Inspection of Records......................... 29
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties
of the Property Trustee and
the Delaware Trustee........................ 29
SECTION 7.2. Representations and Warranties of
Depositor................................... 30
ARTICLE VIII. THE ISSUER TRUSTEES; THE ADMINISTRATORS
SECTION 8.1. Certain Duties and Responsibilities........... 30
SECTION 8.2. Certain Notices............................... 32
SECTION 8.3. Certain Rights of Property Trustee............ 33
SECTION 8.4. Not Responsible for Recitals
or Issuance of Securities................... 34
SECTION 8.5. May Hold Securities........................... 34
SECTION 8.6. Compensation; Indemnity; Fees................. 34
SECTION 8.7. Corporate Property Trustee Required;
Eligibility of Trustees and
Administrators.............................. 35
- ii -
<PAGE>
Page
----
SECTION 8.8. Conflicting Interests......................... 36
SECTION 8.9. Co-Trustees and Separate Trustee.............. 36
SECTION 8.10. Resignation and Removal; Appointment
of Successor................................ 37
SECTION 8.11. Acceptance of Appointment by
Successor..................................... 38
SECTION 8.12. Merger, Conversion, Consolidation or
Succession to Business...................... 38
SECTION 8.13. Preferential Collection of Claims
Against Depositor or Issuer Trust........... 38
SECTION 8.14. Trustee May File Proofs of Claim.............. 38
SECTION 8.15. Reports by Property Trustee................... 39
SECTION 8.16. Reports to the Property Trustee............... 39
SECTION 8.17. Evidence of Compliance with Conditions
Precedent................................... 40
SECTION 8.18. Number of Issuer Trustees..................... 40
SECTION 8.19. Delegation of Power........................... 40
SECTION 8.20. Appointment of Administrators................. 40
ARTICLE IX. DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date.............. 41
SECTION 9.2. Early Termination............................. 41
SECTION 9.3. Dissolution................................... 41
SECTION 9.4. Liquidation................................... 42
SECTION 9.5. Mergers, Consolidations, Amalgamations
or Replacements of the Issuer Trust......... 43
ARTICLE X. MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders............... 44
SECTION 10.2. Amendment..................................... 44
SECTION 10.3. Separability.................................. 45
SECTION 10.4. Governing Law................................. 45
SECTION 10.5. Payments Due on Non-Business Day.............. 45
SECTION 10.6. Successors.................................... 45
SECTION 10.7. Headings...................................... 45
SECTION 10.8. Reports, Notices and Demands.................. 45
SECTION 10.9. Agreement Not to Petition..................... 46
SECTION 10.10. Trust Indenture Act; Conflict with
Trust Indenture Act......................... 46
SECTION 10.11. Acceptance of Terms of Trust Agreement,
Guarantee and Indenture..................... 48
- iii -
<PAGE>
Page
----
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depositary Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Preferred Securities Certificate
- iv -
<PAGE>
AGREEMENT
Amended and Restated Trust Agreement, dated as of May __, 1997, among
(i) Greater Community Bancorp, a New Jersey corporation (including any
successors or assigns, the "Depositor"), (ii) Bankers Trust Company, a New York
banking corporation, as property trustee, (in such capacity, the "Property
Trustee" and, in its separate corporate capacity and not in its capacity as
Property Trustee, the "Bank"), and (iii) Bankers Trust (Delaware), a Delaware
banking corporation, as Delaware trustee (the "Delaware Trustee") (the Property
Trustee and the Delaware Trustee are referred to collectively herein as the
"Issuer Trustees") and (iv) the several Holders, as hereinafter defined.
WITNESSETH
WHEREAS, the Depositor and the Delaware Trustee have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into a certain Trust Agreement, dated as of April 29,
1997 (the "Original Trust Agreement"), and by the execution and filing by the
Delaware Trustee with the Secretary of State of the State of Delaware of the
Certificate of Trust, filed on April 29, 1997 (the "Certificate of Trust"),
attached as Exhibit A; and
WHEREAS, the Depositor and the Delaware Trustee desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (i) the issuance of the Common Securities by
the Issuer Trust to the Depositor, (ii) the issuance and sale of the Preferred
Securities by the Issuer Trust pursuant to the Underwriting Agreement, (iii) the
acquisition by the Issuer Trust from the Depositor of all of the right, title
and interest in the Junior Subordinated Debentures, and (iv) the appointment of
the Property Trustee and the Administrators.
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees, intending to be legally
bound, as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions.
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) All other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles as in effect at the time of computation;
<PAGE>
- 2 -
(e) Unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Trust Agreement;
(f) The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(g) all references to the date the Preferred Securities were originally
issued shall refer to the date the Preferred Securities were originally issued.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrators" means each Person appointed in accordance with Section
8.20 solely in such Person's capacity as Administrator of the Issuer Trust
heretofore formed and continued hereunder and not in such Person's individual
capacity, or any successor Administrator appointed as herein provided; with the
initial Administrators being George E. Irwin and C. Mark Campbell.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Preferred Security or beneficial interest
therein, the rules and procedures of the Depositary for such Preferred Security,
in each case to the extent applicable to such transaction and as in effect from
time to time.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable federal or
State bankruptcy, insolvency, reorganization or other similar law, or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of such Person or of any substantial part of its property or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they
<PAGE>
- 3 -
become due and its willingness to be adjudicated a bankrupt, or the taking of
corporate action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor or
the Executive Committee of the board of directors of the Depositor (or any other
committee of the board of directors of the Depositor performing similar
functions) or a committee designated by the board of directors of the Depositor
(or any such committee), comprised of two or more members of the board of
directors of the Depositor or officers of the Depositor, or both.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board of Directors, or such committee of the Board of
Directors or officers of the Depositor to which authority to act on behalf of
the Board of Directors has been delegated, and to be in full force and effect on
the date of such certification, and delivered to the Issuer Trustees.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in the City of New York, New York or in the
State of New Jersey are authorized or required by law or executive order to
remain closed or (c) a day on which the Property Trustee's Corporate Trust
Office or the Delaware Trustee's Corporate Trust Office or the Corporate Trust
Office of the Debenture Trustee is closed for business.
"Capital Treatment Event" means, in respect of any Issuer Trust, the
reasonable determination by the Depositor that, as a result of the occurrence of
any amendment to, or change (including any announced prospective change) in, the
laws (or any rules or regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement, action or decision is announced on or after the date of the
issuance of the Preferred Securities of such Issuer Trust, there is more than an
insubstantial risk that the Depositor will not be entitled to treat an amount
equal to the Liquidation Amount of such Preferred Securities as "Tier 1 Capital"
(or the then equivalent thereof) for purposes of the risk-based capital adequacy
guidelines of the Board of Governors of the Federal Reserve System, as then in
effect and applicable to the Depositor, provided, however that it shall not be
deemed to be a Capital Treatment Event if the Depositor is not entitled to treat
the aggregate amount of the Liquidation Amount of such Preferred Securities as
"Tier 1 Capital" due to the restriction imposed by the Federal Reserve that no
more than 25% of Tier 1 Capital can consist of perpetual preferred stock.
"Certificate Depositary Agreement" means the agreement among the Issuer
Trust, the Depositor and the Depository Trust Company ("DTC"), as the initial
Clearing Agency, dated as of the Closing Date, substantially in the form
attached as Exhibit B, as the same may be amended and supplemented from time to
time.
"Certificate of Trust" has the meaning specified in the preamble to
this Trust Agreement.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. DTC shall be the initial Clearing Agency.
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"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the Time of Delivery for the Firm Securities,
which date is also the date of execution and delivery of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended or any
successor statute, in each case as amended from time to time.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit C.
"Common Security" means an undivided beneficial interest in the assets
of the Issuer Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Corporate Trust Office" means the principal office of the Property
Trustee located in the City of New York, New York, which at the time of the
execution of this Trust Agreement is located at Four Albany Street, New York,
New York 10006; Attention: Corporate Trust and Agency Group - Corporate Market
Services.
"Debenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption of such Debentures
under the Indenture.
"Debenture Trustee" means Bankers Trust Company, a New York banking
corporation and any successor.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. 3801, et seq., as it may be amended from time to time.
"Delaware Trustee" means the corporation identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Issuer Trust continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositary" means the Depository Trust Company or any successor
thereto.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
"DTC" means the Depository Trust Company.
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"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Issuer Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a period of 30
days; or
(c) default by the Issuer Trust in the payment of any Redemption Price
of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer 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 Issuer Trustees and the Depositor by the
Holders of at least 25% in aggregate Liquidation Amount of the Outstanding
Preferred Securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(e) the occurrence of any Bankruptcy Event with respect to the Property
Trustee or all or substantially all of its property if a successor Property
Trustee has not been appointed within a period of 90 days thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute thereto, in each case as amended from time to
time.
"Expiration Date" has the meaning specified in Section 9.1.
"Firm Securities" means an aggregate Liquidation Amount of $20,000,000
of the Issuer Trust's _____% preferred securities.
"Global Preferred Securities Certificate" means a Preferred Securities
Certificate evidencing ownership of Global Preferred Securities.
"Global Preferred Security" means a Preferred Security, the ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 5.4.
"Guarantee Agreement" means the Guarantee Agreement executed and
delivered by the Depositor and Bankers 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.
"Holder" means a Person in whose name a Trust Security or Trust
Securities is registered in the Securities Register; any such Person shall be
deemed to be a beneficial owner within the meaning of the Delaware Business
Trust Act.
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"Indenture" means the Junior Subordinated Indenture, dated as of May
___, 1997, between the Depositor and the Debenture Trustee (as amended or
supplemented from time to time) relating to the issuance of the Junior
Subordinated Debentures.
"Investment Company Act" means the Investment Company Act of 1940, as
amended or any successor statute, in each case as amended from time to time.
"Investment Company Event" means the receipt by the Issuer Trust of an
Opinion of Counsel experienced in such matters to the effect that, as a result
of the occurrence of a change in law or regulation or a written change
(including any announced prospective change) in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Issuer
Trust is or will be considered an "investment company" that is required to be
registered under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or after the
date of the issuance of the Preferred Securities.
"Issuer Trust" means GCB Capital Trust.
"Issuer Trustees" means, collectively, the Property Trustee and the
Delaware Trustee.
"Junior Subordinated Debentures" means the aggregate principal amount
of the Depositor's _____% junior subordinated deferrable interest debentures,
due __________, 2027, issued pursuant to the Indenture.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to that portion
of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Preferred Securities based upon the relative
Liquidation Amounts of such classes and (b) with respect to a distribution of
Junior Subordinated Debentures to Holders of Trust Securities in connection with
a dissolution or liquidation of the Issuer Trust, Junior Subordinated Debentures
having a principal amount equal to the Liquidation Amount of the Trust
Securities of the Holder to whom such Junior Subordinated Debentures are
distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Junior Subordinated
Debentures are to be distributed to Holders of Trust Securities in connection
with a dissolution and liquidation of the Issuer Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in Section 9.4(d).
"Majority in Liquidation Amount of the Preferred Securities" or
"Majority in Liquidation Amount of the Common Securities" means, except as
provided by the Trust Indenture Act, Preferred Securities or Common Securities,
as the case may be, representing more than 50% of the aggregate Liquidation
Amount of all then Outstanding Preferred Securities or Common Securities, as the
case may be.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, Chief Executive Officer, President or Vice President, and by the
Chief Financial Officer, the Treasurer, an
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Assistant Treasurer, the Secretary or an Assistant Secretary, of the Depositor,
and delivered to the party provided herein. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Trust Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate that
such officer has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Depositor or any Affiliate of the Depositor.
"Option Closing Date" shall have the meaning provided in the
Underwriting Agreement.
"Option Securities" means an aggregate Liquidation Amount of $3,000,000
of the Issuer Trust's _____% preferred securities, issuable to the Underwriters,
at its option, exercisable within 30 days after the date of the Prospectus,
solely to cover over-allotments, if any.
"Original Trust Agreement" has the meaning specified in the preamble to
this Trust
Agreement.
"Outstanding," with respect to Trust Securities, means, as of the date
of determination, all Trust Securities theretofore executed and delivered under
this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property Trustee or
delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee or any
Paying Agent for the Holders of such Preferred Securities, provided that if such
Trust Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Trust Agreement; and
(c) Trust Securities which have been paid or in exchange for or in lieu
of which other Trust Securities have been executed and delivered pursuant to
Sections 5.4, 5.5, 5.6 and 5.13; provided, however, that in determining whether
the Holders of the requisite Liquidation Amount of the Outstanding Preferred
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Preferred Securities owned by the Depositor, any
Issuer Trustee, any Administrator or any Affiliate of the Depositor shall be
disregarded and deemed not to be Outstanding, except that (a) in determining
whether any Issuer Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Preferred
Securities that such Issuer Trustee or such Administrator, as the case may be,
knows to be so owned shall be so disregarded and (b) the foregoing shall not
apply at any time when all of the outstanding Preferred Securities are owned by
the Depositor, one or more of the Issuer Trustees, one or more of the
Administrators and/or any such
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Affiliate. Preferred Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Administrators the pledgee's right so to act with respect to such Preferred
Securities and that the pledgee is not the Depositor or any Affiliate of the
Depositor.
"Owner" means each Person who is the beneficial owner of Global
Preferred Securities as reflected in the records of the Clearing Agency or, if a
Clearing Agency Participant is not the Owner, then as reflected in the records
of a Person maintaining an account with such Clearing Agency, directly or
indirectly, in accordance with the rules of such Clearing Agency.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.10 and shall initially be the Property Trustee.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee with the Property Trustee in
its trust department for the benefit of the Holders in which all amounts paid in
respect of the Junior Subordinated Debentures will be held and from which the
Property Trustee, through the Paying Agent, shall make payments to the Holders
in accordance with Sections 4.1 and 4.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated organization or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as Exhibit
D.
"Preferred Security" means a Firm Security or an Option Security, each
constituting a preferred undivided beneficial interest in the assets of the
Issuer Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Property Trustee of the Issuer Trust formed and continued hereunder and not in
its individual capacity, or its successor in interest in such capacity, or any
successor property trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Junior Subordinated Debenture Redemption Date and
the stated maturity of the Junior Subordinated Debentures shall be a Redemption
Date for a Like Amount of Trust Securities, including but not limited to any
date of redemption pursuant to the occurrence of any Special Event.
"Redemption Price" means with respect to a redemption of any Trust
Security, the Liquidation Amount of such Trust Security, together with
accumulated but unpaid Distributions to but excluding the date fixed for
redemption, plus the related amount of the premium, if any, paid by the
Depositor upon the concurrent redemption of a Like Amount of Junior Subordinated
Debentures.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Responsible Officer" when used with respect to the Property Trustee
means any officer assigned to the Corporate Trust Office, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Property Trustee customarily
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performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of the
Indenture, and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.5.
"Special Event" means any Tax Event, Capital Treatment Event or
Investment Company Event.
"Successor Preferred Securities" of any particular Preferred Securities
Certificate means every Preferred Securities Certificate issued after, and
evidencing all or a portion of the same beneficial interest in the Issuer Trust
as that evidenced by, such particular Preferred Securities Certificate; and, for
the purposes of this definition, any Preferred Securities Certificate executed
and delivered under Section 5.6 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Preferred Securities Certificate shall be deemed to
evidence the same beneficial interest in the Issuer Trust as the mutilated,
destroyed, lost or stolen Preferred Securities Certificate.
"Tax Event" means the receipt by the Issuer Trust of an Opinion of
Counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement, action or decision is announced on or after
the date of issuance of the Preferred Securities, there is more than an
insubstantial risk that (i) the Issuer Trust is, or will be within 90 days of
the delivery of such Opinion of Counsel, subject to United States federal income
tax with respect to income received or accrued on the Junior Subordinated
Debentures, (ii) interest payable by the Depositor on the Junior Subordinated
Debentures is not, or within 90 days of the delivery of such Opinion of Counsel
will not be, deductible by the Depositor, in whole or in part, for United States
federal income tax purposes, or (iii) the Issuer Trust is, or will be within 90
days of the delivery of such Opinion of Counsel, subject to more than a de
minimis amount of other taxes, duties or other governmental changes.
"Time of Delivery" means 9:00 a.m. Eastern Standard Time, either (i)
with respect to the Firm Securities or Common Securities, on the fourth Business
Day (unless postponed in accordance with the provisions of Section ____ of the
Underwriting Agreement) following the date of execution of the Underwriting
Agreement, or such other time not later than ten Business Days after such date
as shall be agreed upon by the Underwriters, the Issuer Trust and the Company,
or (ii) with respect to the Option Securities, the Option Closing Date.
"Trust Agreement" means this Amended and Restated Trust Agreement, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including (i) all Exhibits hereto, and (ii) for
all purposes of this Amended and Restated Trust Agreement any such modification,
amendment or supplement, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this Amended and Restated Trust Agreement and
any modification, amendment or supplement, respectively.
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"Trust Indenture Act" means the Trust Indenture Act of 1939 or any
successor statute, in each case as amended from time to time.
"Trust Property" means (a) the Junior Subordinated Debentures, (b) any
cash on deposit in, or owing to, the Payment Account, and (c) all proceeds and
rights in respect of the foregoing and any other property and assets for the
time being held or deemed to be held by the Property Trustee pursuant to the
trusts of this Trust Agreement.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Underwriters" has the meaning specified in the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
________, 1997, among the Issuer Trust, the Depositor and the Underwriters, as
the same may be amended from time to time.
ARTICLE II
CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name.
The Issuer Trust continued hereby shall be known as "GCB Capital
Trust", as such name may be modified from time to time by the Administrators
following written notice to the Holders of Trust Securities and the other Issuer
Trustees, in which name the Administrators and the Issuer Trustees may engage in
the transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Issuer Trust and sue and be sued.
SECTION 2.2. Office of the Delaware Trustee; Principal Place of
Business.
The address of the Delaware Trustee in the State of Delaware is Bankers
Trust (Delaware), 1001 Jefferson Street, Suite 550, Wilmington, DE 19801,
Attention: Lisa Wilkins, or such other address in the State of Delaware as the
Delaware Trustee may designate by written notice to the Holders and the
Depositor. The principal executive office of the Issuer Trust is in care of
Greater Community Bancorp, 55 Union Boulevard, Totowa, New Jersey 07512,
Attention: Office of the Secretary.
SECTION 2.3. Initial Contribution of Trust Property, Organizational
Expenses.
The Property Trustee acknowledges receipt in trust from the Depositor
in connection with this Trust Agreement of the sum of $10, which constitutes the
initial Trust Property. The Depositor shall pay all organizational expenses of
the Issuer Trust as they arise or shall, upon request of any Issuer Trustee,
promptly reimburse such Issuer Trustee for any such reasonable expenses paid by
such Issuer Trustee. The Depositor shall make no claim upon the Trust Property
for the payment of such expenses.
SECTION 2.4. Issuance of the Preferred Securities.
On _________, 1997, the Depositor, both on its own behalf and on behalf
of the Issuer Trust pursuant to the Original Trust Agreement, executed and
delivered the Underwriting Agreement. Contemporaneously with the execution and
delivery of this Trust Agreement, an Administrator, on behalf
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of the Issuer Trust, shall manually execute in accordance with Section 5.3 and
the Property Trustee shall authenticate in accordance with Section 5.3 and
deliver to the Underwriters, Firm Securities Certificates, registered in the
names requested by the Underwriters, in an aggregate amount of 800,000 Firm
Securities having an aggregate Liquidation Amount of $20,000,000, against
receipt of the aggregate purchase price of such Preferred Securities of
$20,000,000, by the Property Trustee. At the option of the Underwriters, within
30 days of the date of the Prospectus, and solely for the purpose of covering an
over-allotment, if any, an Administrator, on behalf of the Issuer Trust, shall
manually execute in accordance with Section 5.3 and the Property Trustee shall
authenticate in accordance with Section 5.4 and deliver to the Underwriters,
Option Securities Certificates, registered in the names requested by the
Underwriters, up to 120,000 Option Securities having an aggregate Liquidation
Amount of $3,000,000, against receipt of the aggregate purchase price of such
Option Securities of $3,000,0000, by the Property Trustee.
SECTION 2.5. Issuance of the Common Securities; Subscription and
Purchase of Junior Subordinated Debentures.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrator, on behalf of the Issuer Trust, shall manually
execute in accordance with Section 5.2 and deliver to the Depositor Common
Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of 24,744 Common Securities having an aggregate Liquidation
Amount of $618,600 against receipt by the Property Trustee of the aggregate
purchase price of such Common Securities of $618,600 by the Property Trustee. In
the event of any exercise of an over-allotment option requiring issuance of
additional Preferred Securities Certificates, as described in Section 2.4 above,
a proportionate number of additional Common Securities Certificates, with
corresponding aggregate Liquidation Amount, shall be delivered to the Depositor.
Contemporaneously with the executions, and deliveries of Common Securities
Certificates and any Preferred Securities Certificates, an Administrator, on
behalf of the Issuer Trust, shall subscribe for and purchase from the Depositor
corresponding amounts of Junior Subordinated Debentures, registered in the name
of the Property Trustee and having an aggregate principal amount equal to
$20,618,600, plus, in the event of any exercise of the over-allotment option (i)
a corresponding additional number of Junior Subordinated Debentures not
exceeding an aggregate principal amount of $3,000,00 and (ii) a corresponding
number of Junior Subordinated Debentures not exceeding an aggregate principal
amount equal to the aggregate Liquidation Amount of Common Securities issued
pursuant to such exercise of an over-allotment option; and, in satisfaction of
the purchase price for such Junior Subordinated Debentures, the Property
Trustee, on behalf of the Issuer Trust, shall deliver to the Depositor the sum
of $20,618,600, plus any corresponding over-allotment option amount (being the
sum of the amounts delivered to the Property Trustee pursuant to (i) the second
sentence of Section 2.4, and (ii) the first and second sentences of this Section
2.5) and receive on behalf of the Issuer Trust the Junior Subordinated
Debentures.
SECTION 2.6. Declaration of Trust.
The exclusive purposes and functions of the Issuer Trust are to (a)
issue and sell Trust Securities and use the proceeds from such sale to acquire
the Junior Subordinated Debentures, and (b) engage in only those other
activities necessary or incidental thereto. The Depositor hereby appoints the
Issuer Trustees as trustees of the Issuer Trust, to have all the rights, powers
and duties to the extent set forth herein, and the Issuer Trustees hereby accept
such appointment. The Property Trustee hereby declares that it will hold the
Trust Property in trust upon and subject to the conditions set forth herein for
the benefit of the Issuer Trust and the Holders. The Depositor hereby appoints
the Administrators (as agents of the Issuer Trust), with such Administrators
having all rights, powers and duties set forth herein with respect to
accomplishing the purposes of the Issuer Trust, and the Administrators hereby
accept such appointment, provided, however, that it is the intent of the parties
hereto that such Administrators shall not be trustees or fiduciaries with
respect to the Issuer Trust and this Agreement
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shall be construed in a manner consistent with such intent. The Property Trustee
shall have the right and power to perform those duties assigned to the
Administrators. The Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrators set forth
herein. The Delaware Trustee shall be one of the trustees of the Issuer Trust
for the sole and limited purpose of fulfilling the requirements of Section 3807
of the Delaware Business Trust Act and for taking such actions as are required
to be taken by a Delaware Trustee under the Delaware Business Trust Act.
SECTION 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees and the Administrators shall conduct the
affairs of the Issuer Trust in accordance with the terms of this Trust
Agreement. Subject to the limitations set forth in paragraph (b) of this Section
and in accordance with the following provisions (i), (ii) and (iii), the Issuer
Trustees and the Administrators shall act as follows:
(i) Each Administrator shall have the power and authority to act on
behalf of the Issuer Trust with respect to the following:
(A) the compliance with the Underwriting Agreement regarding the
issuance and sale of the Trust Securities;
(B) the compliance with the Securities Act, applicable state
securities or blue sky laws, and the Trust Indenture Act;
(C) the listing of the Preferred Securities upon such securities
exchange or exchanges or upon the Nasdaq National Market as shall be
determined by the Depositor, with the registration of the Preferred
Securities under the Exchange Act, if required, and the preparation and
filing of all periodic and other reports and other documents pursuant
to the foregoing;
(D) the application for a taxpayer identification number for the
Issuer Trust; and
(E) the preparation of a registration statement and a prospectus
in relation to the Preferred Securities, including any amendments
thereto and the taking of any action necessary or desirable to sell the
Preferred Securities in a transaction or series of transactions subject
to the registration requirements of the Securities Act.
(F) any action incidental to the foregoing as necessary or
advisable to give effect to the terms of this Trust Agreement.
(ii) The Property Trustee shall have the power and authority to act on
behalf of the Issuer Trust with respect to the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Junior Subordinated Debentures;
(C) the receipt and collection of interest, principal and any
other payments made in respect of the Junior Subordinated Debentures in
the Payment Account;
(D) the distribution of amounts owed to the Holders in respect
of the Trust Securities;
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(E) the exercise of all of the rights, powers and privileges of
a holder of the Junior Subordinated Debentures;
(F) the sending of notices of default and other information
regarding the Trust Securities and the Junior Subordinated Debentures
to the Holders in accordance with this Trust Agreement;
(G) 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 Issuer Trust and the
preparation, execution and filing of the certificate of cancellation
with the Secretary of State of the State of Delaware; and
(I) after an Event of Default (other than under paragraph (b),
(c), (d), or (f) of the definition of such term if such Event of
Default is by or with respect to the Property Trustee), comply with the
provisions of this Trust Agreement and take any action to give effect
to the terms of this Trust Agreement and protect and conserve the Trust
Property for the benefit of the Holders (without consideration of the
effect of any such action on any particular Holder); provided, however,
that nothing in this Section 2.7(a)(ii) shall require the Property
Trustee to take any action that is not otherwise required in this Trust
Agreement.
(b) So long as this Trust Agreement remains in effect, the Issuer Trust
(or the Issuer Trustees or Administrators acting on behalf of the Issuer Trust)
shall not undertake any business, activities or transaction except as expressly
provided herein or contemplated hereby. In particular, neither the Issuer
Trustees nor the Administrators shall (i) acquire any investments or engage in
any activities not authorized by this Trust Agreement, (ii) sell, assign,
transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the
Trust Property or interests therein, including to Holders, except as expressly
provided herein, (iii) take any action that would reasonably be expected to
cause the Issuer Trust to become taxable as a corporation for United States
federal income tax purposes, (iv) incur any indebtedness for borrowed money or
issue any other debt, or (v) take or consent to any action that would result in
the placement of a Lien on any of the Trust Property. The Property Trustee shall
defend all claims and demands of all Persons at any time claiming any Lien on
any of the Trust Property adverse to the interest of the Issuer Trust or the
Holders in their capacity as Holders.
(c) In connection with the issue and sale of the Preferred Securities,
the Depositor shall have the power and authority to assist the Issuer Trust with
respect to, or effect on behalf of the Issuer Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation by the Issuer Trust of, and the execution and
delivery of, a registration statement, and a prospectus in relation to
the Preferred Securities, including any amendments thereto and the
taking of any action necessary or desirable to sell the Preferred
Securities in a transaction or a series of transactions subject to the
registration requirements of the Securities Act;
(ii) the determination of the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred
Securities and the determination of any and all such acts, other than
actions that must be taken by or on behalf of the Issuer Trust, and the
advice to the Issuer Trustees of actions they must take on behalf of
the Issuer Trust, and the preparation for execution and filing of any
documents to be executed and filed by the Issuer
<PAGE>
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Trust or on behalf of the Issuer Trust, as the Depositor deems
necessary or advisable in order to comply with the applicable laws of
any such States in connection with the sale of the Preferred
Securities;
(iii) the negotiation of the terms of, and the execution and
delivery of, the Underwriting Agreement providing for the sale of the
Preferred Securities;
(iv) the taking of any other actions necessary or desirable to
carry out any of the foregoing activities; and
(v) compliance with the listing requirements of the Preferred
Securities upon such securities exchange or exchanges, or upon the
Nasdaq National Market, as shall be determined by the Depositor, the
registration of the Preferred Securities under the Exchange Act, if
required, and the preparation and filing of all periodic and other
reports and other documents pursuant to the foregoing.
(d) Notwithstanding anything herein to the contrary, the Administrators
and the Property Trustee are authorized and directed to conduct the affairs of
the Issuer Trust and to operate the Issuer Trust so that the Issuer Trust will
not be deemed to be an "investment company" required to be registered under the
Investment Company Act, and will not be taxable as a corporation for the United
States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Depositor for United States
income tax purposes. In this connection, the Property Trustee, the
Administrators and the Holders of Common Securities are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or this
Trust Agreement, that the Property Trustee, the Administrators and Holders of
Common Securities determine in their discretion to be necessary or desirable for
such purposes, as long as such action does not adversely affect in any material
respect the interests of the holders of the Outstanding Preferred Securities. In
no event shall the Administrators or the Issuer Trustees be liable to the Issuer
Trust or the Holders for any failure to comply with this section that results
from a change in law or regulations or in the interpretation thereof.
SECTION 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist solely of the Trust
Property.
SECTION 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Issuer Trust and the Holders in
accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and its agents shall have
exclusive control and sole right of withdrawal with respect to the Payment
Account for the purpose of making deposits in and withdrawals from the Payment
Account in accordance with this Trust Agreement. All monies and other property
deposited or held from time to time in the Payment Account shall be held by the
Property Trustee in the Payment Account for the exclusive benefit of the Holders
and for distribution as herein provided, including (and subject to) any priority
of payments provided for herein.
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(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Junior Subordinated Debentures.
Amounts held in the Payment Account shall not be invested by the Property
Trustee pending distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions.
(a) The Trust Securities represent undivided beneficial interests in
the Trust Property, and Distributions (including Distributions of Additional
Amounts) will be made on the Trust Securities at the rate and on the dates that
payments of interest (including payments of Additional Interest, as defined in
the Indenture) are made on the Junior Subordinated Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative and
will accumulate whether or not there are funds of the Issuer Trust
available for the payment of Distributions. Distributions shall
accumulate from ________, 1997, and, except in the event (and to the
extent) that the Depositor exercises its right to defer the payment of
interest on the Debentures pursuant to the Indenture, shall be payable
quarterly in arrears on March 31, June 30, September 30 and December 31
of each year, commencing on ____________, 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 (without any interest or
other payment in respect of any such delay), with the same force and
effect as if made on the date on which such payment was originally
payable (each date on which distributions are payable in accordance
with this Section 4.1(a), a "Distribution Date").
(ii) The Trust Securities shall be entitled to Distributions
payable at a rate of _____% per annum of the Liquidation Amount of the
Trust Securities. The amount of Distributions payable for any period
less than a full Distribution period shall be computed on the basis of
a 360-day year of twelve 30-day months and the actual number of days
elapsed in a partial month in a period. Distributions payable for each
full Distribution period will be computed by dividing the rate per
annum by four. The amount of Distributions payable for any period shall
include any Additional Amounts in respect of such period.
(iii) So long as no Debenture Event of Default has occurred and
is continuing, the Depositor has the right under the Indenture to defer
the payment of interest on the Junior Subordinated Debentures at any
time and from time to time for a period not exceeding 20 consecutive
quarterly periods (an "Extension Period"), provided that no Extension
Period may extend beyond ________, 2027. As a consequence of any such
deferral, quarterly Distributions on the Trust Securities by the Trust
will also be deferred (and the amount of Distributions to which Holders
of the Trust Securities are entitled will accumulate additional
Distributions thereon at the rate per annum of _____% per annum,
compounded quarterly) from the relevant payment date for such
Distributions, computed on the basis of a 360- day year of twelve
30-day months and the actual days elapsed in a partial month in such
period. Additional Distributions payable for each full Distribution
period will be computed by dividing
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the rate per annum by four (4). The term "Distributions" as used in
Section 4.1 shall include any such additional Distributions provided
pursuant to this Section 4.1(a)(iii).
(iv) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Issuer Trust has funds
then on hand and available in the Payment Account for the payment of
such Distributions.
(b) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities at the close of business on the
relevant record date, which shall be at the close of business on the 15th day of
March, June, September or December (whether or not a Business Day).
SECTION 4.2. Redemption.
(a) On each Junior Subordinated Debenture Redemption Date and on the
stated maturity of the Junior Subordinated Debentures, the Issuer Trust will be
required to redeem a Like Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date to each Holder of Trust Securities to be redeemed,
at such Holder's address appearing in the Security Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price, or if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the
estimate of the Redemption Price provided pursuant to the Indenture
together with a statement that it is an estimate and that the actual
Redemption Price will be calculated on the third Business Day prior to
the Redemption Date (and if an estimate is provided, a further notice
shall be sent of the actual Redemption Price on the date, or as soon as
practicable thereafter, that notice of such actual Redemption Price is
received pursuant to the Indenture);
(iii) the CUSIP number or CUSIP numbers of the Preferred
Securities affected;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the total Liquidation Amount of the
particular Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price will become
due and payable upon each such Trust Security to be redeemed and that
Distributions thereon will cease to accumulate on and after said date,
except as provided in Section 4.2(d) below; and
(vi) the place or places where Trust Securities are to be
surrendered for the payment of the Redemption Price.
The Issuer Trust in issuing the Trust Securities shall use "CUSIP"
numbers, and the Property Trustee shall indicate the "CUSIP" numbers of the
Trust Securities in notices of redemption and related materials as a convenience
to Holders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Trust
Securities or as contained in any notice of redemption and related material.
<PAGE>
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(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of Junior Subordinated Debentures. Redemptions of the
Trust Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds then on hand
and available in the Payment Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of
any Preferred Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 4.2(c), the Property Trustee will, with
respect to Preferred Securities held in global form, irrevocably deposit with
the Clearing Agency for such Preferred Securities, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will give
such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities. With respect to
Preferred Securities that are not held in global form, the Property Trustee,
subject to Section 4.2(c), will irrevocably deposit with the Paying Agent, to
the extent available therefor, funds sufficient to pay the applicable Redemption
Price and will give the Paying Agent irrevocable instructions and authority to
pay the Redemption Price to the Holder of the Preferred Securities upon
surrender of their Preferred Securities Certificates. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption shall be payable to the Holders of such
Trust Securities as they appear on the Register for the Trust Securities on the
relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then, upon the
date of such deposit, all rights of Holders holding Trust Securities so called
for redemption will cease, except the right of such Holders to receive the
Redemption Price and any Distribution payable in respect of the Trust Securities
on or prior to the Redemption Date, but without interest, and such Securities
will cease to be Outstanding. In the event that any date on which any applicable
Redemption Price is payable is not a Business Day, then payment of the
applicable Redemption Price payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that, if such Business Day falls in the
next calendar year, such payment will be made on the immediately preceding
Business Day, in each case, with the same force and effect as if made on such
date. 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 Issuer Trust or by the Depositor pursuant to the Guarantee
Agreement, Distributions on such Trust Securities will continue to accumulate,
as set forth in Section 4.1, from the Redemption Date originally established by
the Issuer Trust for such Trust Securities to the date such applicable
Redemption Price is actually paid, in which case the actual payment date will be
the date fixed for redemption for purposes of calculating the applicable
Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the particular
Preferred Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Property Trustee from the Outstanding
Preferred Securities not previously called for redemption in such a manner as
the Property Trustee shall deem fair and appropriate.
SECTION 4.3. Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, the Redemption Price of, and the Liquidation Distribution in
respect of, the Trust Securities, as applicable, shall be made, subject to
Section 4.2(e), pro rata among the Common Securities and the Preferred
Securities based on the Liquidation Amount of such Trust Securities; provided,
however, that if on any Distribution Date or Redemption Date any Event of
Default resulting from a Debenture Event of Default in Section 5.1(1) or 5.1(2)
of the Indenture shall have occurred and be continuing, no payment of any
Distribution (including any Additional Amounts) on, Redemption Price of, or
Liquidation Distribution
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in respect of, any Common Security, and no other payment on account of the
redemption, liquidation or other acquisition of Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid Distributions
(including any Additional Amounts) on all Outstanding Preferred Securities for
all Distribution periods terminating on or prior thereto, or, in the case of
payment of the Redemption Price, the full amount of such Redemption Price on all
Outstanding Preferred Securities then called for redemption, or in the case of
payment of the Liquidation Distribution the full amount of such Liquidation
Distribution on all Outstanding Preferred Securities, shall have been made or
provided for, and all funds immediately available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions (including
any Additional Amounts) on, or the Redemption Price of, Preferred Securities
then due and payable. The existence of an Event of Default does not entitle the
Holders of Preferred Securities to accelerate the maturity thereof.
(b) In the case of the occurrence of any Event of Default resulting
from any Debenture Event of Default, the Holder of the Common Securities shall
have no right to act with respect to any such Event of Default under this Trust
Agreement until the effects of all such Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated. Until all
such Events of Default under this Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the Holders of the Preferred Securities
and not on behalf of the Holder of the Common Securities, and only the Holders
of the Preferred Securities will have the right to direct the Property Trustee
to act on their behalf.
SECTION 4.4. Payment Procedures.
Payments of Distributions (including any Additional Amounts) in respect
of the Preferred Securities shall be made by check mailed to the address of the
Person entitled thereto as such address shall appear on the Securities Register
or, if the Preferred Securities are held by a Clearing Agency, such
Distributions shall be made to the Clearing Agency in immediately available
funds, which will credit the relevant accounts on the applicable Distribution
Dates. Payments of Distributions to Holders of $1,000,000 or more in aggregate
Liquidation Amount of Preferred Securities may be made by wire transfer of
immediately available funds upon written request of such Holder of Preferred
Securities to the Securities Registrar not later than 15 calendar days prior to
the date on which the Distribution is payable. Payments in respect of the Common
Securities shall be made in such manner as shall be mutually agreed between the
Property Trustee and the Holder of the Common Securities.
SECTION 4.5. Tax Returns and Reports.
The Administrators 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
Issuer Trust. In this regard, the Administrators shall (a) prepare and file (or
cause to be prepared and filed) all Internal Revenue Service forms required to
be filed in respect of the Issuer Trust in each taxable year of the Issuer Trust
and (b) prepare and furnish (or cause to be prepared and furnished) to each
Holder all Internal Revenue Service forms required to be provided by the Issuer
Trust. The Administrators shall provide the Depositor and the Property Trustee
with a copy of all such returns and reports promptly after such filing or
furnishing. The Issuer Trustees and the Administrators shall comply with United
States federal withholding and backup withholding tax laws and information
reporting requirements with respect to any payments to Holders under the Trust
Securities.
On or before December 15 of each year during which any Preferred
Securities are outstanding, the Administrators shall furnish to the Paying Agent
such information as may be reasonably requested by the Property Trustee in order
that the Property Trustee may prepare the information which it is required to
report for such year on Internal Revenue Service Forms 1096 and 1099 pursuant to
Section 6049 of the Internal Revenue Code of 1986, as amended. Such information
shall include the amount of original issue discount includible in income for
each outstanding Preferred Security during such year.
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SECTION 4.6. Payment of Taxes; Duties, Etc. of the Issuer Trust.
Upon receipt under the Junior Subordinated Debentures of Additional
Sums, the Property Trustee shall promptly pay any taxes, duties or governmental
charges of whatsoever nature (other than withholding taxes) imposed on the
Issuer Trust by the United States or any other taxing authority.
SECTION 4.7. Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Preferred Securities
shall be reduced by the amount of any corresponding payment such Holder has
directly received pursuant to Section 5.8 of the Indenture or Section 5.13 of
this Trust Agreement.
SECTION 4.8. Liability of the Holder of Common Securities.
The Holder of Common Securities shall be liable for the debts and
obligations of the Issuer Trust as set forth in Section 6.7 of the Indenture
regarding allocation of expenses.
ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.
Upon the formation of the Issuer Trust and the contribution by the
Depositor pursuant to Section 2.3 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the Issuer Trust.
SECTION 5.2. The Trust Securities Certificates.
(a) The Trust Securities Certificates shall be executed on behalf of
the Issuer Trust by manual or facsimile signature of at least one Administrator
except as provided in Section 5.3. Trust Securities Certificates bearing the
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Issuer Trust, shall be validly
issued and entitled to the benefits of this Trust Agreement, notwithstanding
that such individuals or any of them shall have ceased to be so authorized prior
to the delivery of such Trust Securities Certificates or did not hold such
offices at the date of delivery of such Trust Securities Certificates. A
transferee of a Trust Securities Certificate shall become a Holder, and shall be
entitled to the rights and subject to the obligations of a Holder hereunder,
upon due registration of such Trust Securities Certificate in such transferee's
name pursuant to Section 5.5.
(b) Upon their original issuance, Preferred Securities Certificates
shall be issued in the form of one or more fully registered Global Preferred
Securities Certificates which will be deposited with or on behalf of the
Depositary and registered in the name of the Depositary's nominee. Unless and
until it is exchangeable in whole or in part for the Preferred Securities in
definitive form, a global security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor of such Depositary or a nominee of such
successor.
(c) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
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SECTION 5.3. Execution and Delivery of Trust Securities Certificates.
At the Time of Delivery, the Administrators shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 2.4 and 2.5, to be executed on behalf of the Issuer Trust and delivered
to the Property Trustee and upon such delivery the Property Trustee shall
countersign and register such Trust Securities Certificates and deliver such
Trust Securities Certificates upon the written order of the Depositor, executed
by two authorized officers thereof, without further corporate action by the
Depositor, in authorized denominations.
SECTION 5.4. Global Preferred Security.
(a) Any Global Preferred Security issued under this Trust Agreement
shall be registered in the name of the nominee of the Clearing Agency and
delivered to such custodian therefor, and such Global Preferred Security shall
constitute a single Preferred Security for all purposes of this Trust Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, a
Global Preferred Security may not be exchanged in whole or in part for Preferred
Securities registered, and no transfer of the Global Preferred Security in whole
or in part may be registered, in the name of any Person other than the Clearing
Agency for such Global Preferred Security, or its nominee thereof unless (i)
such Clearing Agency advises the Property Trustee in writing that such Clearing
Agency is no longer willing or able to properly discharge its responsibilities
as Clearing Agency with respect to such Global Preferred Security, and the
Depositor is unable to locate a qualified successor, (ii) the Issuer Trust at
its option advises the Depositary in writing that it elects to terminate the
book-entry system through the Clearing Agency, or (iii) there shall have
occurred and be continuing an Event of Default.
(c) If a Preferred Security is to be exchanged in whole or in part for
a beneficial interest in a Global Preferred Security, then either (i) such
Global Preferred Security shall be so surrendered for exchange or cancellation
as provided in this Article V or (ii) the Liquidation Amount thereof shall be
reduced or increased by an amount equal to the portion thereof to be so
exchanged or cancelled, or equal to the Liquidation Amount of such other
Preferred Security to be so exchanged for a beneficial interest therein, as the
case may be, by means of an appropriate adjustment made on the records of the
Security Registrar, whereupon the Property Trustee, in accordance with the
Applicable Procedures, shall instruct the Clearing Agency or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Preferred Security by the Clearing Agency,
accompanied by registration instructions, the Administrators shall execute and
the Property Trustee shall, subject to Section 5.4(b) and as otherwise provided
in this Article V, countersign, register and deliver any Preferred Securities
issuable in exchange for such Global Preferred Security (or any portion thereof)
in accordance with the instructions of the Clearing Agency. The Property Trustee
shall not be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be fully protected in relying on, such
instructions.
(d) Every Preferred Security countersigned, registered and delivered
upon registration of transfer of, or in exchange for or in lieu of, a Global
Preferred Security or any portion thereof, whether pursuant to this Article V or
Article IV or otherwise, shall be authenticated and delivered in the form of,
and shall be, a Global Preferred Security, unless such Global Preferred Security
is registered in the name of a Person other than the Clearing Agency for such
Global Preferred Security or a nominee thereof.
(e) The Clearing Agency or its nominee, as the registered owner of a
Global Preferred Security, shall be considered the Holder of the Preferred
Securities represented by such Global Preferred Security for all purposes under
this Trust Agreement and the Preferred Securities, and owners of beneficial
interests in such Global Preferred Security shall hold such interests pursuant
to the Applicable Procedures and, except as otherwise provided herein, shall not
be entitled to receive physical delivery
<PAGE>
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of any such Preferred Securities in definitive form and shall not be considered
the Holders thereof under this Trust Agreement. Accordingly, any such owner's
beneficial interest in the Global Preferred Security shall be shown only on, and
the transfer of such interest shall be effected only through, records maintained
by the Clearing Agency or its nominee. Neither the Property Trustee, the
Securities Registrar nor the Depositor shall have any liability in respect of
any transfers effected by the Clearing Agency.
(f) The rights of owners of beneficial interests in a Global Preferred
Security shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such owners and the
Clearing Agency.
SECTION 5.5. Registration of Transfer and Exchange Generally;
Certain Transfers and Exchanges; Preferred Securities Certificates.
(a) The Property Trustee shall keep or cause to be kept at its
Corporate Trust Office a register or registers for the purpose of registering
Preferred Securities Certificates and transfers and exchanges of Preferred
Securities Certificates in which the registrar and transfer agent with respect
to the Preferred Securities (the "Securities Registrar"), subject to such
reasonable regulations as it may prescribe, shall provide for the registration
of Preferred Securities Certificates and Common Securities Certificates (subject
to Section 5.11 in the case of Common Securities Certificates) and registration
of transfers and exchanges of Preferred Securities Certificates as herein
provided. Such register is herein sometimes referred to as the "Securities
Register." The Property Trustee is hereby appointed "Securities Registrar" for
the purpose of registering Preferred Securities and transfers of Preferred
Securities as herein provided.
Upon surrender for registration of transfer of any Preferred Security
at the offices or agencies of the Property Trustee designated for that purpose,
the Administrators and the Property Trustee shall execute, countersign, register
and deliver, in the name of the designated transferee or transferees, one or
more new Preferred Securities of the same series of any authorized denominations
of like tenor and aggregate principal amount and bearing such legends as may be
required by this Trust Agreement.
At the option of the Holder, Preferred Securities may be exchanged for
other Preferred Securities of any authorized denominations, of like tenor and
aggregate Liquidation Amount and bearing such legends as may be required by this
Trust Agreement, upon surrender of the Preferred Securities to be exchanged at
such office or agency. Whenever any securities are so surrendered for exchange,
the Administrators shall execute and the Property Trustee shall countersign,
register and deliver the Preferred Securities that the Holder making the
exchange is entitled to receive.
All Preferred Securities issued upon any transfer or exchange of
Preferred Securities shall be the valid obligations of the Issuer Trust,
evidencing the same debt, and entitled to the same benefits under this Trust
Agreement, as the Preferred Securities surrendered upon such transfer or
exchange.
Every Preferred Security presented or surrendered for transfer or
exchange shall (if so required by the Property Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Property Trustee and the Securities Registrar, duly executed by the Holder
thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or
exchange of Preferred Securities, but the Property Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Preferred Securities.
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Neither the Issuer Trust nor the Property Trustee shall be required,
pursuant to the provisions of this Section, (i) to issue, register the transfer
of or exchange any Preferred Security during a period beginning at the opening
of business 15 days before the day of selection for redemption of Preferred
Securities pursuant to Article IV and ending at the close of business on the day
of mailing of the notice of redemption, or (ii) to register the transfer of or
exchange any Preferred Security so selected for redemption in whole or in part,
except, in the case of any such Preferred Security to be redeemed in part, any
portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Trust Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Trust Agreement. Any transfer or purported transfer of any
Trust Security not made in accordance with this Trust Agreement shall be null
and void.
(i) Non Global Security to Non Global Security. A Trust Security
that is not a Global Preferred Security may be transferred, in whole or
in part, to a Person who takes delivery in the form of another Trust
Security that is not a Global Security as provided in Section 5.5(a).
(ii) Free Transferability. Subject to this Section 5.5, Preferred
Securities shall be freely transferable.
(iii) Exchanges Between Global Preferred Security and Non-Global
Preferred Security. A beneficial interest in a Global Preferred
Security may be exchanged for a Preferred Security that is not a Global
Preferred Security as provided in Section 5.4.
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered
to the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrators such security or indemnity as may be required
by them to save each of them harmless, then in the absence of notice that such
Trust Securities Certificate shall have been acquired by a bona fide purchaser,
the Administrators, or any one of them, on behalf of the Issuer Trust shall
execute and make available for delivery, and the Property Trustee shall
countersign and register, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities
Certificate of like class, tenor and denomination. In connection with the
issuance of any new Trust Securities Certificate under this Section, the
Administrators or the Securities Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Trust Securities Certificate issued pursuant
to this Section shall constitute conclusive evidence of an undivided beneficial
interest in the assets of the Issuer Trust corresponding to that evidenced by
the lost, stolen or destroyed Trust Certificate, as if originally issued,
whether or not the lost, stolen or destroyed Trust Securities Certificate shall
be found at any time.
SECTION 5.7. Persons Deemed Holders.
The Issuer Trustees, the Securities Registrar or the Depositor shall
treat the Person in whose name any Trust Securities are issued as the owner of
such Trust Securities for the purpose of receiving Distributions and for all
other purposes whatsoever, and none of the Issuer Trustees, the Administrators,
the Securities Registrar nor the Depositor shall be bound by any notice to the
contrary.
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SECTION 5.8. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold
the Depositor, the Property Trustee, or the Administrators accountable by reason
of the disclosure of its name and address, regardless of the source from which
such information was derived.
SECTION 5.9. Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrators, which consent shall not be unreasonably withheld, an office or
offices or agency or agencies where Preferred Securities Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuer Trustees in respect of the Trust Securities
Certificates may be served. The Property Trustee initially designates its
Corporate Trust Office at 123 Washington Street, New York, NY 10006, Attention:
Corporate Trust and Agency Group - Corporate Market Services, as its corporate
trust office for such purposes. The Property Trustee shall give prompt written
notice to the Depositor, the Administrators and to the Holders of any change in
the location of the Securities Register or any such office or agency.
SECTION 5.10. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Holders from the Payment
Account and shall report the amounts of such Distributions to the Property
Trustee and the Administrators. Any Paying Agent shall have the revocable power
to withdraw funds from the Payment Account solely for the purpose of making the
Distributions referred to above. The Property Trustee may revoke such power and
remove any Paying Agent in its sole discretion. The Paying Agent shall initially
be the Property Trustee. Any Person acting as Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Administrators, and
the Property Trustee. In the event that the Property Trustee shall no longer be
the Paying Agent or a successor Paying Agent shall resign or its authority to
act be revoked, the Property Trustee shall appoint a successor (which shall be a
bank or trust company) that is reasonably acceptable to the Administrators to
act as Paying Agent. Such successor Paying Agent or any additional Paying Agent
appointed by the Administrators shall execute and deliver to the Issuer Trustees
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Issuer Trustees that as Paying Agent, such successor Paying
Agent or additional Paying Agent will hold all sums, if any, held by it for
payment to the Holders in trust for the benefit of the Holders entitled thereto
until such sums shall be paid to such Holders. The Paying Agent shall return all
unclaimed funds to the Property Trustee and upon removal of a Paying Agent such
Paying Agent shall also return all funds in its possession to the Property
Trustee. The provisions of Sections 8.1, 8.3 and 8.6 herein shall apply to the
Bank also in its role as Paying Agent, for so long as the Bank shall act as
Paying Agent and, to the extent applicable, to any other paying agent appointed
hereunder. Any reference in this Trust Agreement to the Paying Agent shall
include any co-paying agent chosen by the Property Trustee unless the context
requires otherwise.
SECTION 5.11. Ownership of Common Securities by Depositor.
At each Time of Delivery, the Depositor shall acquire and retain
beneficial and record ownership of the Common Securities except (i) in
connection with a consolidation or merger of the Depositor into another
corporation or any conveyance, transfer or lease by the Depositor of its
properties and assets substantially as an entirety to any Person, pursuant to
Section 8.1 of the Indenture, or (ii) a transfer to an Affiliate of the
Depositor in compliance with applicable law (including the Securities Act and
applicable state securities and blue sky laws). To the fullest extent permitted
by law, any attempted transfer of the Common Securities shall be void. The
Administrators shall cause each Common Securities
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Certificate issued to the Depositor to contain a legend stating "THIS
CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR IN INTEREST TO THE
DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND
SECTION 5.11 OF THE TRUST AGREEMENT."
SECTION 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Preferred Securities are
represented by a Global Preferred Securities Certificate, the Administrators and
the Issuer Trustees shall give all such notices and communications specified
herein to be given to the Clearing Agency, and shall have no obligations to the
Owners.
SECTION 5.13. Rights of Holders.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Issuer Trust conferred by their Trust
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Issuer Trust except as described below. The
Trust Securities shall be personal property giving only the rights specifically
set forth therein and in this Trust Agreement. The Trust Securities shall have
no preemptive or similar rights and when issued and delivered to Holders against
payment of the purchase price therefor will be fully paid and nonassessable by
the Issuer Trust. Subject to Section 4.8 hereof the Holders of the Trust
Securities, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if,
upon a Debenture Event of Default, the Debenture Trustee fails or the holders of
not less than 25% in principal amount of the outstanding Junior Subordinated
Debentures fail to declare the principal of all of the Junior Subordinated
Debentures to be immediately due and payable, the Holders of at least 25% in
Liquidation Amount of the Preferred Securities then Outstanding shall have such
right to make such declaration by a notice in writing to the Property Trustee,
the Depositor and the Debenture Trustee.
At any time after such a declaration of acceleration with respect to
the Junior Subordinated Debentures has been made and before a judgment or decree
for payment of the money due has been obtained by the Debenture Trustee as
provided in the Indenture, the Holders of a majority in Liquidation Amount of
the Preferred Securities, by written notice to the Property Trustee, the
Depositor and the Debenture Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay
(A) all overdue installments of interest on all of the
Junior Subordinated Debentures,
(B) any accrued Additional Interest on all of the Junior
Subordinated Debentures,
(C) the principal of (and premium, if any, on) any Junior
Subordinated Debentures which have become due otherwise than by
such declaration of acceleration and interest and Additional
Interest thereon at the rate borne by the Junior Subordinated
Debentures, and
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(D) all sums paid or advanced by the Debenture Trustee
under the Indenture and the reasonable compensation, expenses,
disbursements and advances of the Debenture Trustee and the
Property Trustee, their agents and counsel; and
(ii) all Events of Default with respect to the Junior
Subordinated Debentures, other than the non-payment of the
principal of the Junior Subordinated Debentures which has become
due solely by such acceleration, have been cured or waived as
provided in Section 5.13 of the Indenture.
If the Property Trustee fails to annul any such declaration and waive
such default, the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities shall also have the right to rescind and annul such
declaration and its consequences by written notice to the Depositor, the
Property Trustee and the Debenture Trustee, subject to the satisfaction of the
conditions set forth in Clause (i) and (ii) of this Section 5.13.
The Holders of at least a Majority in Liquidation Amount of the
Preferred Securities may, on behalf of the Holders of all the Preferred
Securities, waive any past default under the Indenture, except a default in the
payment of principal or interest (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee) or
a default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debentures. No such rescission shall affect any subsequent
default or impair any right consequent thereon.
Upon receipt by the Property Trustee of written notice declaring such
an acceleration, or rescission and annulment thereof, by Holders of the
Preferred Securities all or part of which is represented by Global Preferred
Securities, a record date shall be established for determining Holders of
Outstanding Preferred Securities entitled to join in such notice, which record
date shall be at the close of business on the day the Property Trustee receives
such notice. The Holders on such record date, or their duly designated proxies,
and only such Persons, shall be entitled to join in such notice, whether or not
such Holders remain Holders after such record date; provided, that, unless such
declaration of acceleration, or rescission and annulment, as the case may be,
shall have become effective by virtue of the requisite percentage having joined
in such notice prior to the day which is 90 days after such record date, such
notice of declaration of acceleration, or rescission and annulment, as the case
may be, shall automatically and without further action by any Holder be canceled
and of no further effect. Nothing in this paragraph shall prevent a Holder, or a
proxy of a Holder, from giving, after expiration of such 90-day period, a new
written notice of declaration of acceleration, or rescission and annulment
thereof, as the case may be, that is identical to a written notice which has
been canceled pursuant to the proviso to the preceding sentence, in which event
a new record date shall be established pursuant to the provisions of this
Section 5.13(b).
(c) For so long as any Preferred Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Debenture Event of Default specified in Section 5.1(1)
or 5.1(2) of the Indenture, any Holder of Preferred Securities shall have the
right to institute a proceeding directly against the Depositor, pursuant to
Section 5.9 of the Indenture, for enforcement of payment to such Holder of the
principal amount of or interest on Junior Subordinated Debentures having an
aggregate principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities of such Holder (a "Direct Action"). Except as set forth in
Sections 5.13(b) and 5.13 (c), the Holders of Preferred Securities shall have no
right to exercise directly any right or remedy available to the holders of, or
in respect of, the Junior Subordinated Debentures.
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ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Holder's Voting Rights.
(a) Except as provided in this Trust Agreement and in the Indenture and
as otherwise required by law, no Holder of Preferred Securities shall have any
right to vote or in any manner otherwise control the administration, operation
and management of the Issuer Trust or the obligations of the parties hereto, nor
shall anything herein set forth or contained in the terms of the Trust
Securities Certificates be construed so as to constitute the Holders from time
to time as members of an association.
(b) So long as any Junior Subordinated Debentures are held by the
Property Trustee on behalf of the Issuer Trust, the Property Trustee shall not
(i) direct the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee, or executing any trust or power
conferred on the Property Trustee with respect to such Junior Subordinated
Debentures, (ii) waive any past default that may be waived under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Junior Subordinated Debentures shall be due and payable
or (iv) consent to any amendment, modification or termination of the Indenture
or the Junior Subordinated Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the Holders of at least a
Majority in Liquidation Amount of the Preferred Securities, provided, however,
that where a consent under the Indenture would require the consent of each
Holder of Junior Subordinated Debentures affected thereby, no such consent shall
be given by the Property Trustee without the prior written consent of each
Holder of Preferred Securities. The Property Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of Preferred
Securities, except by a subsequent vote of the Holders of Preferred Securities.
The Property Trustee shall notify all Holders of the Preferred Securities of any
notice of default received with respect to the Junior Subordinated Debentures.
In addition to obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Issuer Trustees
shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced
in such matters to the effect that such action will not cause the Issuer Trust
to be taxable as a corporation for United States federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or
the Issuer Trust otherwise proposes to effect, (i) any action that would
adversely affect in any material respect the interests, powers, preferences or
special rights of the Preferred Securities, whether by way of amendment to the
Trust Agreement or otherwise, or (ii) the dissolution of the Issuer Trust, other
than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Trust Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities. Notwithstanding any other provision of this
Trust Agreement, no amendment to this Trust Agreement may be made if, as a
result of such amendment, it would cause the Issuer Trust to be taxable as a
corporation for United States federal income tax purposes.
SECTION 6.2. Notice of Meetings.
Notice of all meetings of the Holders, stating the time, place and
purpose of the meeting, shall be given by the Property Trustee pursuant to
Section 10.8 to each Holder of record, at his registered address, at least 15
days and not more than 90 days before the meeting. At any such meeting, any
business properly before the meeting may be so considered whether or not stated
in the notice of the meeting. Any adjourned meeting may be held as adjourned
without further notice.
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SECTION 6.3. Meetings of Holders.
No annual meeting of Holders is required to be held. The Property
Trustee, however, shall call a meeting of Holders to vote on any matter upon the
written request of the Holders of record of 25% of the aggregate Liquidation
Amount of the Preferred Securities and the Administrators or the Property
Trustee may, at any time in their discretion, call a meeting of Holders of
Preferred Securities to vote on any matters as to which Holders are entitled to
vote.
Holders of at least a Majority in Liquidation Amount of the Preferred
Securities, present in person or represented by proxy, shall constitute a quorum
at any meeting of Holders of the Preferred Securities.
If a quorum is present at a meeting, an affirmative vote by the Holders
of record present, in person or by proxy, holding Preferred Securities
representing at least a Majority in Liquidation Amount of the Preferred
Securities held by the Holders present, either in person or by proxy, at such
meeting shall constitute the action of the Holders of Preferred Securities,
unless this Trust Agreement requires a greater number of affirmative votes.
SECTION 6.4. Voting Rights.
Holders shall be entitled to one vote for each $25 of Liquidation
Amount represented by their Outstanding Trust Securities in respect of any
matter as to which such Holders are entitled to vote.
SECTION 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat may vote
by proxy, provided that no proxy shall be voted at any meeting unless it shall
have been placed on file with the Property Trustee, or with such other officer
or agent of the Issuer Trust as the Property Trustee may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of the Property Trustee, proxies may be solicited in the name of the
Property Trustee or one or more officers of the Property Trustee. Only Holders
of record shall be entitled to vote. When Trust Securities are held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be executed
by or on behalf of a Holder shall be deemed valid unless challenged at or prior
to its exercise, and the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its date of
execution.
SECTION 6.6. Holder Action by Written Consent.
Any action which may be taken by Holders at a meeting may be taken
without a meeting if Holders holding at least a Majority in Liquidation Amount
of all Trust Securities entitled to vote in respect of such action (or such
larger proportion thereof as shall be required by any other provision of this
Trust Agreement) shall consent to the action in writing.
SECTION 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to notice
of and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any
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other action, the Administrators or Property Trustee may from time to time fix a
date, not more than 90 days prior to the date of any meeting of Holders or the
payment of a distribution or other action, as the case may be, as a record date
for the determination of the identity of the Holders of record for such
purposes.
SECTION 6.8. Acts of Holders.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as otherwise expressly provided herein,
such action shall become effective when such instrument or instruments are
delivered to the Property Trustee. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Trust Agreement and (subject to Section
8.1) conclusive in favor of the Issuer Trustees, if made in the manner provided
in this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which any Issuer Trustee or Administrator receiving the same deems
sufficient.
The ownership of Trust Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Trust Security shall bind every future Holder
of the same Trust Security and the Holder of every Trust Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Issuer
Trustees, the Administrators or the Issuer Trust in reliance thereon, whether or
not notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise among the Holders, the Administrators or the
Issuer Trustees with respect to the authenticity, validity or binding nature of
any request, demand, authorization, direction, consent, waiver or other Act of
such Holder or Issuer Trustee under this Article VI, then the determination of
such matter by the Property Trustee shall be conclusive with respect to such
matter.
A Holder may institute a legal proceeding directly against the
Depositor under the Guarantee Agreement to enforce its rights under the
Guarantee Agreement without first instituting a legal proceeding against the
Guarantee Trustee (as defined in the Guarantee Agreement), the Issuer Trust, any
Issuer Trustee, any Administrator or any person or entity.
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SECTION 6.9. Inspection of Records.
Upon reasonable notice to the Administrators and the Property Trustee,
the records of the Issuer Trust shall be open to inspection by Holders during
normal business hours for any purpose reasonably related to such Holder's
interest as a Holder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee
and the Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on behalf
of and as to itself, hereby represents and warrants for the benefit of the
Depositor and the Holders that:
(a) The Property Trustee is a banking corporation with trust powers,
duly organized, validly existing and in good standing under the laws of New
York, with trust power and authority to execute and deliver, and to carry out
and perform its obligations under the terms of this Trust Agreement.
(b) The execution, delivery and performance by the Property Trustee of
this Trust Agreement has been duly authorized by all necessary corporate action
on the part of the Property Trustee; and this Trust Agreement has been duly
executed and delivered by the Property Trustee, and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of this Trust Agreement by
the Property Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Property Trustee.
(d) At the Time of Delivery, the Property Trustee has not knowingly
created any liens or encumbrances on the Trust Securities.
(e) No consent, approval or authorization of, or registration with or
notice to, any New York State or federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of this Trust
Agreement.
(f) The Delaware Trustee is duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, the Trust Agreement.
(g) The execution, delivery and performance by the Delaware Trustee of
this Trust Agreement has been duly authorized by all necessary corporate action
on the part of the Delaware Trustee; and this Trust Agreement has been duly
executed and delivered by the Delaware Trustee, and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' right
generally and to general principles of equity and the discretion
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of the court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
(h) The execution, delivery and performance of this Trust Agreement by
the Delaware Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Delaware Trustee.
(i) No consent, approval or authorization of, or registration with or
notice to any state or Federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee, of this Trust Agreement.
(j) The Delaware Trustee is an entity which has its principal place of
business in the State of Delaware.
SECTION 7.2. Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the
Holders that:
(a) the Trust Securities Certificates issued at the Time of Delivery on
behalf of the Issuer Trust have been duly authorized and will have been duly and
validly executed, and, subject to payment therefor, issued and delivered by the
Issuer Trustees pursuant to the terms and provisions of, and in accordance with
the requirements of, this Trust Agreement, and the Holders will be, as of each
such date, entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by
the Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust) under
the laws of the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by either the Property
Trustee or the Delaware Trustee, as the case may be, of this Trust Agreement.
ARTICLE VIII
THE ISSUER TRUSTEES; THE ADMINISTRATORS
SECTION 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees and the
Administrators shall be as provided by this Trust Agreement and, in the case of
the Property Trustee, by the Trust Indenture Act. Notwithstanding the foregoing,
no provision of this Trust Agreement shall require the Issuer Trustees or the
Administrators to expend or risk their own funds or otherwise incur any
financial liability in the performance of any of their duties hereunder, or in
the exercise of any of their rights or powers, if they shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it or them. Whether or not
therein expressly so provided, every provision of this Trust Agreement relating
to the conduct or affecting the liability of or affording protection to the
Issuer Trustees or the Administrators shall be subject to the provisions of this
Section. Nothing in this Trust Agreement shall be construed to release an
Administrator or the Issuer Trustees from liability for his or its own negligent
action, his or its own negligent failure to act, or his or its own willful
misconduct. To the extent that, at law or in equity, an Issuer Trustee or
Administrator has duties and liabilities relating to the Issuer Trust or to the
Holders, such Issuer Trustee or Administrator shall not be liable to the Issuer
Trust or to any Holder for such Issuer Trustee's or Administrator's good faith
reliance on the provisions of this Trust Agreement. The provisions of this Trust
Agreement, to the extent that they restrict the duties and liabilities of the
Issuer Trustees and
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Administrators otherwise existing at law or in equity, are agreed by the
Depositor and the Holders to replace his or such other duties and liabilities of
the Issuer Trustees and Administrators.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only to the extent that there shall be sufficient
revenue or proceeds from the Trust Property to enable the Property Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each Holder,
by his or its acceptance of a Trust Security, agrees that he or it will look
solely to the revenue and proceeds from the Trust Property to the extent legally
available for distribution to it or him as herein provided and that neither the
Issuer Trustees nor the Administrators are personally liable to it or him for
any amount distributable in respect of any Trust Security or for any other
liability in respect of any Trust Security. This Section 8.1(b) does not limit
the liability of the Issuer Trustees expressly set forth elsewhere in this Trust
Agreement or, in the case of the Property Trustee, in the Trust Indenture Act.
(c) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Trust Agreement (including pursuant to Section 10.10), and no implied covenants
shall be read into this Trust Agreement against the Property Trustee. If an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 5.13 of the Indenture), the Property Trustee shall enforce this Trust
Agreement for the benefit of the Holders and shall exercise such of the rights
and powers vested in it by this Trust Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Trust Agreement (including pursuant to Section 10.10), and the
Property Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in
this Trust Agreement (including pursuant to Section 10.10); and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Property Trustee and conforming to the requirements of this
Trust Agreement; but in the case of any such certificates or
opinions that by any provision hereof or of the Trust Indenture
Act are specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Trust Agreement;
(ii) the Property Trustee shall not be liable for any error
of judgment made in good faith by an authorized officer of the
Property Trustee, unless it shall be proved that the Property
Trustee was negligent in ascertaining the pertinent facts;
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(iii) the Property Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of at least a
Majority in Liquidation Amount of the Preferred Securities
relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or
exercising any trust or power conferred upon the Property Trustee
under this Trust Agreement;
(iv) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Junior
Subordinated Debentures and the Payment Account shall be to deal
with such Property in a similar manner as the Property Trustee
deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property
Trustee under this Trust Agreement and the Trust Indenture Act;
(v) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise
agree with the Depositor; and money held by the Property Trustee
need not be segregated from other funds held by it except in
relation to the Payment Account maintained by the Property
Trustee pursuant to Section 3.1 and except to the extent
otherwise required by law;
(vi) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Depositor
with their respective duties under this Trust Agreement, nor
shall the Property Trustee be liable for the default or
misconduct of any other Issuer Trustee, the Administrators or the
Depositor; and
(vii) no provision of this Trust Agreement shall require
the Property Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if
the Property Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Trust Agreement or adequate
indemnity against such risk or liability is not reasonably
assured to it.
(e) The Administrators shall not be responsible for monitoring the
compliance by the Issuer Trustees or the Depositor with their respective duties
under this Trust Agreement, nor shall either Administrator be liable for the
default or misconduct of any other Administrator, the Issuer Trustees or the
Depositor.
SECTION 8.2. Certain Notices.
Within five Business Days after the occurrence of any Event of Default
actually known to a Responsible Officer of the Property Trustee, the Property
Trustee shall transmit, in the manner and to the extent provided in Section
10.8, notice of such Event of Default to the Holders and the Administrators,
unless such Event of Default shall have been cured or waived.
Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the Junior
Subordinated Debentures pursuant to the Indenture, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 10.8, notice of
such exercise to the Holders and the Administrators, unless such exercise shall
have been revoked.
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SECTION 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be fully protected in
acting or refraining from acting in good faith upon any resolution, Opinion of
Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any direction or act of the Depositor contemplated by this Trust
Agreement shall be sufficiently evidenced by an Officers' Certificate;
(c) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
re-recording, refiling or registration thereof;
(d) the Property Trustee may consult with counsel of its own choosing
(which counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees) and the advice of such counsel shall be full and
complete authorization and protection in respect of any action taken suffered or
omitted by it hereunder in good faith and in reliance thereon and in accordance
with such advice; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;
(e) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction; provided that,
nothing contained in this Section 8.3(e) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Agreement;
(f) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders, but the Property
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit;
(g) the Property Trustee may execute any of the trusts or powers
hereunder or perform any of its duties hereunder either directly or by or
through its agents or attorneys, provided that the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(h) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders (which instructions may
only be given by the Holders of the same proportion in Liquidation Amount of the
Trust Securities as would be entitled to direct the Property Trustee under the
terms of the Trust Securities in respect of such remedy, right or action), (ii)
may refrain from enforcing such remedy or right or taking such other
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action until such instructions are received, and (iii) shall be fully protected
in acting in accordance with such instructions; and
(i) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement.
No provision of this Trust Agreement shall be deemed to impose any duty
or obligation on any Issuer Trustee or Administrator to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to any Issuer Trustee or
Administrator shall be construed to be a duty.
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Issuer Trust, and the Issuer Trustees
and the Administrators do not assume any responsibility for their correctness.
The Issuer Trustees and the Administrators shall not be accountable for the use
or application by the Depositor of the proceeds of the Junior Subordinated
Debentures.
SECTION 8.5. May Hold Securities.
Except as provided in the definition of the term "Outstanding" in
Article I, the Administrators, any Issuer Trustee or any other agent of any
Issuer Trustee or the Issuer Trust, in its individual or any other capacity, may
become the owner or pledgee of Trust Securities and, subject to Sections 8.8 and
8.13, may otherwise deal with the Issuer Trust with the same rights it would
have if it were not an Administrator, Issuer Trustee or such other agent.
SECTION 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the Issuer Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) to reimburse the Issuer Trustees and the Administrators upon
request for all reasonable expenses, disbursements and advances incurred or made
by the Issuer Trustees in accordance with any provision of this Trust Agreement
(including the reasonable compensation, expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to their negligence or willful misconduct; and
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Issuer Trustee, (ii) each Administrator, (iii) any
Affiliate of any Issuer Trustee, (iv) any officer, director, shareholder,
employee, representative or agent of any Issuer Trustee, and (v) any employee or
agent of the Issuer Trust, (referred to herein as an "Indemnified Person") from
and against any loss, damage, liability, tax, penalty, expense or claim of any
kind or nature whatsoever incurred by such Indemnified Person arising out of or
in connection with the creation, operation or dissolution of the Issuer Trust or
any act or omission performed or omitted by such Indemnified Person in good
faith on behalf of the Issuer Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Trust Agreement, except that no Indemnified
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Person shall be entitled to be indemnified in respect of any loss, damage or
claim incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions.
The provisions of this Section 8.6 shall survive the termination of
this Trust Agreement.
No Issuer Trustee may claim any lien or charge on any Trust Property as
a result of any amount due pursuant to this Section 8.6.
The Depositor, any Administrator and any Issuer Trustee may engage in
or possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Issuer Trust, and the Issuer Trust and the Holders of Trust Securities shall
have no rights by virtue of this Trust Agreement in and to such independent
ventures or the income or profits derived therefrom, and the pursuit of any such
venture, even if competitive with the business of the Issuer Trust, shall not be
deemed wrongful or improper. Neither the Depositor, any Administrator, nor any
Issuer Trustee shall be obligated to present any particular investment or other
opportunity to the Issuer Trust even if such opportunity is of a character that,
if presented to the Issuer Trust, could be taken by the Issuer Trust, and the
Depositor, any Administrator or any Issuer Trustee shall have the right to take
for its own account (individually or as a partner or fiduciary) or to recommend
to others any such particular investment or other opportunity. Any Issuer
Trustee may engage or be interested in any financial or other transaction with
the Depositor or any Affiliate of the Depositor, or may act as depository for,
trustee or agent for, or act on any committee or body of holders of, securities
or other obligations of the Depositor or its Affiliates.
SECTION 8.7. Corporate Property Trustee Required; Eligibility of
Trustees and Administrators.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that is
a national or state chartered bank and eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Property Trustee with respect to the Trust Securities shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article. At the time of appointment, the Property Trustee must have securities
rated in one of the three highest rating categories by a nationally recognized
statistical rating organization.
(b) There shall at all times be one or more Administrators hereunder.
Each Administrator shall be either a natural person who is at least 21 years of
age or a legal entity that shall act through one or more persons authorized to
bind that entity. An employee, officer or Affiliate of the Depositor may serve
as an Administrator.
(c) There shall at all times be a Delaware Trustee. The Delaware
Trustee shall either be (i) a natural person who is at least 21 years of age and
a resident of the State of Delaware or (ii) a legal entity with its principal
place of business in the State of Delaware and that otherwise meets the
requirements of applicable Delaware law that shall act through one or more
persons authorized to bind such entity.
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SECTION 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to be
specifically described in this Trust Agreement for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 8.9. Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Property Trustee shall have power to
appoint, and upon the written request of the Property Trustee, the Depositor and
the Administrators shall for such purpose join with the Property Trustee in the
execution, delivery, and performance of all instruments and agreements necessary
or proper to appoint, one or more Persons approved by the Property Trustee
either to act as co-trustee, jointly with the Property Trustee, of all or any
part of such Trust Property, or to the extent required by law to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section. Any co-trustee or
separate trustee appointed pursuant to this Section shall either be (i) a
natural person who is at least 21 years of age and a resident of the United
States or (ii) a legal entity with its principal place of business in the United
States that shall act through one or more persons authorized to bind such
entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Trust Securities shall be executed by one or more
Administrators, and the Trust Securities shall be countersigned, registered and
delivered and all rights, powers, duties, and obligations hereunder in respect
of the custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Property Trustees specified
hereunder, shall be exercised, solely by the Property Trustee and not by such
co-trustee or separate trustee.
(b) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by the
Property Trustee and such co-trustee or separate trustee jointly, as shall be
provided in the instrument appointing such co-trustee or separate trustee,
except to the extent that under any law of any jurisdiction in which any
particular act is to be performed, the Property Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or separate
trustee.
(c) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept the
resignation of or remove any co-trustee or separate trustee appointed under this
Section, and, in case a Debenture Event of Default has occurred and is
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continuing, the Property Trustee shall have power to accept the resignation of,
or remove, any such co-trustee or separate trustee without the concurrence of
the Depositor. Upon the written request of the Property Trustee, the Depositor
shall join with the Property Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided in this Section.
(d) 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.
(e) The Property Trustee shall not be liable by reason of any act of
a co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
SECTION 8.10. Resignation and Removal; Appointment of Successor.
No resignation or removal of any Issuer Trustee (the "Relevant
Trustee") and no appointment of a successor Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of Section 8.11.
Subject to the immediately preceding paragraph, a Relevant Trustee may
resign at any time by giving written notice thereof to the Holders. The Holders
of the Common Securities shall appoint a successor by requesting from at least
three Persons meeting the eligibility requirements its expenses and charges to
serve as the successor Trustee on a form provided by the Administrators, and
selecting the Person who agrees to the lowest expenses and charges. If the
instrument of acceptance by the successor Trustee required by Section 8.11 shall
not have been delivered to the Relevant Trustee within 60 days after the giving
of such notice of resignation, the Relevant Trustee may petition, at the expense
of the Issuer Trust, any court of competent jurisdiction for the appointment of
a successor Trustee.
The Property Trustee or the Delaware Trustee may be removed at any time
by Act of the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Issuer Trust) (i) for cause (including upon the
occurrence of an Event of Default described in subparagraph (f) of the
definition thereof with respect to the Relevant Trustee), or (ii) if a Debenture
Event of Default shall have occurred and be continuing at any time.
If a Relevant Trustee shall be removed or become incapable of acting as
Issuer Trustee, or if any vacancy shall occur in the office of any Issuer
Trustee for any cause, the Holders of the Common Securities shall promptly
appoint a successor Trustee or Trustees, and such successor Issuer Trustee shall
comply with the applicable requirements of Section 8.11. If no successor Trustee
shall have been so appointed by the Holders of the Common Securities and
accepted appointment in the manner required by Section 8.11, any Holder, on
behalf of himself and all others similarly situated, or any other Issuer
Trustee, may petition any court in the State of Delaware for the appointment of
a successor Trustee.
The Property Trustee shall give notice of each resignation and each
removal of a Relevant Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 10.8 and shall give notice to the
Depositor and to the Administrators. Each notice shall include the name of the
Relevant Trustee and the address of its Corporate Trust Office if it is the
Property Trustee.
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Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Delaware Trustee who is a natural person dies or
becomes, in the opinion of the Holders of the Common Securities, incompetent or
incapacitated, the vacancy created by such death, incompetence or incapacity may
be filled by the Property Trustee following the procedures regarding expenses
and charges set forth above (with the successor in each case being a Person who
satisfies the eligibility requirement for Administrators or Delaware Trustee, as
the case may be, set forth in Section 8.7).
SECTION 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee, the
retiring Relevant Trustee and each such successor Trustee with respect to the
Trust Securities shall execute, acknowledge and deliver an instrument wherein
each successor 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 Trustee all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Trust Securities and the Issuer
Trust, and upon the execution and delivery of such instrument the resignation or
removal of the retiring Relevant Trustee shall become effective to the extent
provided therein and each such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the Relevant Trustee; but, on request of the Issuer Trust or any
successor Trustee such Relevant Trustee shall duly assign, transfer and deliver
to such successor Trustee all Trust Property, all proceeds thereof and money
held by such Relevant Trustee hereunder with respect to the Trust Securities and
the Trust.
Upon request of any such successor Trustee, the Issuer Trust 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 the first or second preceding paragraph, as the case may be.
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.
SECTION 8.12. Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor of
such Relevant Trustee hereunder, provided that such Person shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
SECTION 8.13. Preferential Collection of Claims Against Depositor or
Issuer Trust.
If and when the Property Trustee shall be or become a creditor of the
Depositor (or any other obligor upon the Trust Securities), the Property Trustee
shall be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Depositor (or any such other obligor) as is
required by the Trust Indenture Act.
SECTION 8.14. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor, the
Property Trustee (irrespective of whether any Distributions on the Trust
Securities shall then be due and payable
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and irrespective of whether the Property Trustee shall have made any demand on
the Issuer Trust for the payment of any past due Distributions) shall be
entitled and empowered, to the fullest extent permitted by law, by intervention
in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Trust Securities and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Property Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Property Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Property Trustee and, in the event the Property Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Property Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, its agents and counsel, and
any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or compensation affecting
the Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 8.15. Reports by Property Trustee.
(a) Not later than January 31 of each year commencing with January 31,
1998, the Property Trustee shall transmit to all Holders in accordance with
Section 10.8, and to the Depositor, a brief report dated as of the immediately
preceding December 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if to
the best of its knowledge it has continued to be eligible under said
Section, a written statement to such effect; and
(ii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken
by the Property Trustee in the performance of its duties hereunder
which it has not previously reported and which in its opinion
materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to Holders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto as set forth in Section 10.10 of
this Trust Agreement.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with the Depositor.
SECTION 8.16. Reports to the Property Trustee.
The Depositor and the Administrators on behalf of the Issuer Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act, as set forth in
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Section 10.10 of this Trust Agreement. The Depositor and the Administrators
shall annually file with the Property Trustee a certificate specifying whether
such Person is in compliance with all the terms and covenants applicable to such
Person hereunder.
SECTION 8.17. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrators on behalf of the Issuer
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Trust Agreement that relate
to any of the matters set forth in Section 314(c) of the Trust Indenture Act as
set forth in Section 10.10 of this Trust Agreement. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) of the Trust
Indenture Act shall be given in the form of an Officers' Certificate.
SECTION 8.18. Number of Issuer Trustees.
(a) The number of Issuer Trustees shall be two. The Property Trustee
and the Delaware Trustee may be the same Person.
(b) If an Issuer Trustee ceases to hold office for any reason, a
vacancy shall occur. The vacancy shall be filled with an Issuer Trustee
appointed in accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee shall not
operate to annul the Issuer Trust.
SECTION 8.19. Delegation of Power.
(a) Any Administrator may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
2.7(a) or making any governmental filing; and
(b) The Administrators shall have power to delegate from time to time
to such of their number the doing of such things and the execution of such
instruments either in the name of the Issuer Trust or the names of the
Administrators or otherwise as the Administrators may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of this Trust Agreement.
SECTION 8.20. Appointment of Administrators.
(a) The Administrators (other than the initial Administrators) shall be
appointed by the Holders of a Majority in Liquidation Amount of the Common
Securities and all Administrators (including the initial Administrators) may be
removed by the Holders of a Majority in Liquidation Amount of the Common
Securities or may resign at any time. Each Administrator shall sign an agreement
agreeing to comply with the terms of this Trust Agreement. If at any time there
is no Administrator, the Property Trustee or any Holder who has been a Holder of
Trust Securities for at least six months may petition any court of competent
jurisdiction for the appointment of one or more Administrators.
(b) Whenever a vacancy in the number of Administrators shall occur,
until such vacancy is filled by the appointment of an Administrator in
accordance with this Section 8.20, the Administrators in office, regardless of
their number (and notwithstanding any other provision of this Trust Agreement),
shall have all the powers granted to the Administrators and shall discharge all
the duties imposed upon the Administrators by this Trust Agreement.
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(c) Notwithstanding the foregoing, or any other provision of this Trust
Agreement, in the event any Administrator or a Delaware Trustee who is a natural
person dies or becomes, in the opinion of the Holders of a Majority in
Liquidation Amount of the Common Securities, incompetent, or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by the
remaining Administrators, if there were at least two of them prior to such
vacancy, and by the Depositor, if there were not two such Administrators
immediately prior to such vacancy (with the successor in each case being a
Person who satisfies the eligibility requirement for Administrators or Delaware
Trustee, as the case may be, set forth in Section 8.7).
(d) Except as otherwise provided in this Trust Agreement, or by
applicable law, any one Administrator may execute any document or otherwise take
any action which the Administrators are authorized to take under this Trust
Agreement.
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date.
Unless earlier dissolved, the Issuer Trust shall automatically dissolve
on ______, 2028 (the "Expiration Date"), following the distribution of the Trust
Property in accordance with Section 9.4.
SECTION 9.2. Early Termination.
The first to occur of any of the following events is an "Early
Termination Event":
(a) the occurrence of the appointment of a receiver or other similar
official in any liquidation, insolvency or similar proceeding with respect to
the Depositor or all or substantially all of its property, or a court or other
governmental agency shall enter a decree or order and such decree or order shall
remain unstayed and undischarged for a period of 60 days, unless the Depositor
shall transfer the Common Securities as provided by Section 5.11, in which case
this provision shall refer instead to any such successor Holder of the Common
Securities;
(b) the written direction to the Property Trustee from the Holder of
the Common Securities at any time to dissolve the Issuer Trust and to distribute
the Junior Subordinated Debentures to Holders in exchange for the Preferred
Securities (which direction, subject to Section 9.4(a), is optional and wholly
within the discretion of the Holders of the Common Securities);
(c) the redemption of all of the Preferred Securities in connection
with the redemption of all the Junior Subordinated Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust by a
court of competent jurisdiction.
SECTION 9.3. Dissolution.
The respective obligations and responsibilities of the Issuer Trustees,
the Administrators and the Issuer Trust created and continued hereby shall
terminate upon the latest to occur of the following: (a) the distribution by the
Property Trustee to Holders of all amounts required to be distributed hereunder
upon the liquidation of the Issuer Trust pursuant to Section 9.4, or upon the
redemption of all of the Trust
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Securities pursuant to Section 4.2, (b) the payment of any expenses owed by the
Issuer Trust, (c) the discharge of all administrative duties of the
Administrators, including the performance of any tax reporting obligations with
respect to the Issuer Trust or the Holders and (d) the filing by the Issuer
Trustees of a certificate of cancellation with the Delaware Secretary of State.
SECTION 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d)
of Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall be
liquidated by the Property Trustee as expeditiously as the Property Trustee
determines to be possible by distributing, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to each Holder a
Like Amount of Junior Subordinated Debentures, subject to Section 9.4(d). Notice
of liquidation shall be given by the Property Trustee by first-class mail,
postage prepaid, mailed not later than 15 nor more than 45 days prior to the
Liquidation Date to each Holder of Trust Securities at such Holder's address
appearing in the Securities Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust Securities
Certificates not surrendered for exchange will be deemed to represent a Like
Amount of Junior Subordinated Debentures; and
(iii) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities Certificates for Junior Subordinated
Debentures, or if Section 9.4(d) applies receive a Liquidation Distribution, as
the Administrators or the Property Trustee shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect
the liquidation of the Issuer Trust and distribution of the Junior Subordinated
Debentures to Holders, the Property Trustee shall establish a record date for
such distribution (which shall be not more than 30 days prior to the Liquidation
Date) and, either itself acting as exchange agent or through the appointment of
a separate exchange agent, shall establish such procedures as it shall deem
appropriate to effect the distribution of Junior Subordinated Debentures in
exchange for the Outstanding Trust Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) the Clearing Agency for the Preferred Securities or its
nominee, as the registered holder of the Global Preferred Securities
Certificate, shall receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Preferred Securities held by the Clearing Agency or
its nominee, and, (iii) any Trust Securities Certificates not held by the
Clearing Agency for the Preferred Securities or its nominee as specified in
clause (ii) above will be deemed to represent Junior Subordinated Debentures
having a principal amount equal to the stated Liquidation Amount of the Trust
Securities represented thereby and bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid Distributions on such Trust
Securities until such certificates are presented to the Securities Registrar for
transfer or reissuance.
(d) If, notwithstanding the other provisions of this Section 9.4,
whether because of an order for dissolution entered by a court of competent
jurisdiction or otherwise, distribution of the Junior Subordinated Debentures is
not practical, or if any Early Termination Event specified in clause (c) of
Section 9 occurs, the Trust Property shall be liquidated, and the Issuer Trust
shall be dissolved by the Property Trustee in such manner as the Property
Trustee determines. In such event, on the date of the dissolution of the Issuer
Trust, Holders will be entitled to receive out of the assets of the Issuer Trust
available for distribution to Holders, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, an amount equal to
the aggregate of Liquidation Amount per Trust Security
<PAGE>
- 43 -
plus accumulated and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"). If, upon any such dissolution, the
Liquidation Distribution can be paid only in part because the Issuer Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then, subject to the next succeeding sentence, the amounts payable
by the Issuer Trust on the Trust Securities shall be paid on a pro rata basis
(based upon Liquidation Amounts). The Holders of the Common Securities will be
entitled to receive Liquidation Distributions upon any such dissolution pro rata
(determined as aforesaid) with Holders of Preferred Securities, except that, if
a Debenture Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities as provided in
Section 4.3.
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of
the Issuer Trust.
The Issuer Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except pursuant to this Section
9.5. At the request of the Holders of the Common Securities, and with the
consent of the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, the Issuer Trust may merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State; provided, however, that (i) such successor entity either (a)
expressly assumes all of the obligations of the Issuer 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 have the same
priority as the Preferred Securities with respect to distributions and payments
upon liquidation, redemption and otherwise, (ii) a trustee of such successor
entity possessing the same powers and duties as the Property Trustee is
appointed to hold the Junior Subordinated Debentures, (iii) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
cause the Preferred Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization if the
Preferred Securities were rated by any nationally recognized statistical rating
organization immediately prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, (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)
such successor entity has a purpose substantially identical to that of the
Issuer Trust, (vi) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Issuer Trustee has received an
Opinion of Counsel from independent counsel experienced in such matters to the
effect that (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 Issuer Trust nor such successor entity will be required to register as an
"investment company" under the Investment Company Act and (vii) the Depositor or
any permitted transferee to whom it has transferred the Common Securities
hereunder own all of the Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee Agreement.
Notwithstanding the foregoing, the Issuer Trust shall not, except with the
consent of holders of 100% in Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer Trust or the successor
entity to be taxable as a corporation for United States federal income tax
purposes.
<PAGE>
- 44 -
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders.
Except as set forth in Section 9.2, 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 Holder for such person, to claim
an accounting, take any action or bring any proceeding in any court for a
partition or winding-up of the arrangements contemplated hereby, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them. Any merger or similar agreement shall be executed by the Administrators on
behalf of the Issuer Trust.
SECTION 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the
Property Trustee and the Holders of a Majority in Liquidation Amount of the
Common Securities, without the consent of the Delaware Trustee or the
Administrators or any Holder of the Preferred Securities (i) to cure any
ambiguity, correct or supplement any provision herein which may be inconsistent
with any other provision herein, or to make any other provisions with respect to
matters or questions arising under this Trust Agreement, provided, however, that
such amendment shall not adversely affect in any material respect the interests
of any Holder or (ii) to modify, eliminate or add to any provisions of this
Trust Agreement to such extent as shall be necessary to ensure that the Issuer
Trust will not be taxable as a corporation for United States federal income tax
purposes at any time that any Trust Securities are Outstanding or to ensure that
the Issuer Trust will not be required to register as an investment company under
the Investment Company Act.
(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Property Trustee and the Holders of a
Majority in Liquidation Amount of the Common Securities without the consent of
the Delaware Trustee or the Administrators but with (i) the consent of Holders
of at least a Majority in Liquidation Amount of the Preferred Securities and
(ii) receipt by the Issuer Trustees of an Opinion of Counsel to the effect that
such amendment or the exercise of any power granted to the Issuer Trustees in
accordance with such amendment will not cause the Issuer Trust to be taxable as
a corporation for United States federal income tax purposes or affect the Issuer
Trust's exemption from status of an "investment company" under the Investment
Company Act.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Holder (such consent being
obtained in accordance with Section 6.3 or 6.6 hereof), this Trust Agreement may
not be amended to (i) change the amount or timing of any Distribution on the
Trust Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a Holder to institute suit for the enforcement of any
such payment on or after such date.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Issuer Trustee shall enter into or consent to any amendment to this Trust
Agreement which would cause the Issuer Trust to fail or cease to qualify for the
exemption from status as an "investment company" under the Investment Company
Act or be taxable as a corporation for United States federal income tax
purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor and the Administrators, this Trust
Agreement may not be amended in a manner which imposes any additional obligation
on the Depositor or the Administrators.
<PAGE>
- 45 -
(f) In the event that any amendment to this Trust Agreement is made,
the Administrators or the Property Trustee shall promptly provide to the
Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
(h) Any amendments to this Trust Agreement shall become effective when
notice of such amendment is given to the holders of the Trust Securities.
SECTION 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
HOLDERS, THE ISSUER TRUST, THE DEPOSITOR, THE ISSUER TRUSTEES AND THE
ADMINISTRATORS WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE.
SECTION 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day that is a Business Day (except as
otherwise provided in Sections 4.2(d)), with the same force and effect as though
made on the date fixed for such payment, and no Distributions shall accumulate
on such unpaid amount for the period after such date.
SECTION 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Issuer Trust, the Administrators
and any Issuer Trustee, including any successor by operation of law. Except in
connection with a consolidation, merger or sale involving the Depositor that is
permitted under Article VIII of the Indenture and pursuant to which the assignee
agrees in writing to perform the Depositor's obligations hereunder, the
Depositor shall not assign its obligations hereunder.
SECTION 10.7. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
SECTION 10.8. Reports, Notices and Demands.
Any report, notice, demand or other communication that by any provision
of this Trust Agreement is required or permitted to be given or served to or
upon any Holder or the Depositor may
<PAGE>
- 46 -
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 Holder of Preferred Securities, to such
Holder as such Holder's name and address may appear on the Securities Register;
and (b) in the case of the Holder of Common Securities or the Depositor, to
Greater Community Bancorp, 55 Union Boulevard, Totowa, New Jersey 07512
Attention: Office of the Secretary, facsimile no.: (201) 942-6830 or to such
other address as may be specified in a written notice by the Depositor to the
Property Trustee. Such notice, demand or other communication to or upon a Holder
shall be deemed to have been sufficiently given or made, for all purposes, upon
hand delivery, mailing or transmission. Such notice, demand or other
communication to or upon the Depositor shall be deemed to have been sufficiently
given or made only upon actual receipt of the writing by the Depositor.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Issuer Trust, the Property Trustee, the Delaware Trustee, the
Administrators, or the Issuer Trust shall be given in writing addressed (until
another address is published by the Issuer Trust) as follows: (a) with respect
to the Property Trustee to Bankers Trust Company, Four Albany Street, 4th Floor,
New York, NY 10006, Attention: Corporate Trust and Agency Group Corporate Market
Services; (b) with respect to the Delaware Trustee to Bankers Trust (Delaware),
1001 Jefferson Street, Suite 550, Wilmington, Delaware 19801, Attention: Lisa
Wilkins; and (c) with respect to the Administrators, to them at the address
above for notices to the Depositor, marked "Attention: Office of the Secretary".
Such notice, demand or other communication to or upon the Issuer Trust or the
Property Trustee shall be deemed to have been sufficiently given or made only
upon actual receipt of the writing by the Issuer Trust, the Property Trustee, or
such Administrator.
SECTION 10.9. Agreement Not to Petition.
Each of the Issuer Trustees, the Administrators and the Depositor agree
for the benefit of the Holders that, until at least one year and one day after
the Issuer Trust has been dissolved in accordance with Article IX, they shall
not file, or join in the filing of, a petition against the Issuer Trust under
any bankruptcy, insolvency, reorganization or other similar law (including,
without limitation, the United States Bankruptcy Code) (collectively,
"Bankruptcy Laws") or otherwise join in the commencement of any proceeding
against the Issuer Trust under any Bankruptcy Law. In the event the Depositor
takes action in violation of this Section 10.9, the Property Trustee agrees, for
the benefit of Holders, that at the expense of the Depositor, it shall file an
answer with the bankruptcy court or otherwise properly contest the filing of
such petition by the Depositor against the Issuer Trust or the commencement of
such action and raise the defense that the Depositor has agreed in writing not
to take such action and should be estopped and precluded therefrom and such
other defenses, if any, as counsel for the Issuer Trustee or the Issuer Trust
may assert. If any Issuer Trustee or Administrator takes action in violation of
this Section 10.9, the Depositor agrees, for the benefit of the Holders, that at
the expense of the Depositor, it shall file an answer with the bankruptcy court
or otherwise properly contest the filing of such petition by such Person against
the Depositor or the commencement of such action and raise the defense that such
Person has agreed in writing not to take such action and should be estopped and
precluded therefrom and such other defenses, if any, as counsel for the Issuer
Trustee or the Issuer Trust may assert. The provisions of this Section 10.9
shall survive the termination of this Trust Agreement.
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) Trust Indenture Act; Application. (i) This Trust Agreement is
subject to the provisions of the Trust Indenture Act that are required to be a
part of this Trust Agreement and shall, to the extent applicable, be governed by
such provisions; (ii) if and to the extent that any provision of this Trust
Agreement limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control; (iii) for purposes of this Trust Agreement, the Property Trustee, to
the extent permitted by applicable law and/or the rules and regulations of the
<PAGE>
- 47 -
Commission, shall be the only Issuer Trustee which is a trustee for the purposes
of the Trust Indenture Act; and (iv) the application of the Trust Indenture Act
to this Trust Agreement shall not affect the nature of the Preferred Securities
and the Common Securities as equity securities representing undivided beneficial
interests in the assets of the Issuer Trust.
(b) Lists of Holders of Preferred Securities. (i) Each of the Depositor
and the Administrators on behalf of the Trust shall provide the Property Trustee
with such information as is required under Section 312(a) of the Trust Indenture
Act at the times and in the manner provided in Section 312(a) and (ii) the
Property Trustee shall comply with its obligations under Sections 310(b), 311
and 312(b) of the Trust Indenture Act.
(c) Reports by the Property Trustee. Within 60 days after May 15 of
each year, the Property Trustee shall provide to the Holders of the Trust
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form, in the manner and at the times provided by Section 313
of the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
(d) Periodic Reports to Property Trustee. Each of the Depositor and the
Administrators on behalf of the Issuer Trust shall provide to the Property
Trustee, the Commission and the Holders of the Trust Securities, as applicable,
such documents, reports and information as required by Section 314(a)(1) -(3)
(if any) of the Trust Indenture Act and the compliance certificates required by
Section 314(a)(4) and (c) of the Trust Indenture Act (provided that any
certificate to be provided pursuant to Section 314(a)(4) of the Trust Indenture
Act shall be provided within 120 days of the end of each fiscal year of the
Issuer Trust).
(e) Evidence of Compliance with Conditions Precedent. Each of the
Depositor and the Administrators on behalf of the Issuer Trust shall provide to
the Property Trustee such evidence of compliance with any conditions precedent,
if any, provided for in this Trust Agreement which relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given pursuant to Section 314(c) shall comply with
Section 314(e) of the Trust Indenture Act.
(f) Disclosure of Information. The disclosure of information as to the
names and addresses of the Holders of Trust Securities in accordance with
Section 312 of the Trust Indenture Act, regardless of the source from which such
information was derived, shall not be deemed to be a violation of any existing
law or any law hereafter enacted which does not specifically refer to Section
312 of the Trust Indenture Act, nor shall the Property Trustee be held
accountable by reason of mailing any material pursuant to a request made under
Section 312(b) of the Trust Indenture Act.
<PAGE>
- 48 -
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee and
Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY
OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE AGREEMENT
AND THE INDENTURE, AND THE AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL CONSTITUTE THE
AGREEMENT OF THE ISSUER TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS
BETWEEN THE ISSUER TRUST AND SUCH HOLDER AND SUCH OTHERS.
GREATER COMMUNITY BANCORP
as Depositor
By:
---------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Property Trustee
By:
---------------------------------
Name:
Title:
BANKERS TRUST (DELAWARE),
as Delaware Trustee and not
in its individual capacity
By:
---------------------------------
Name:
Title:
Subscribed to and Accepted by,
as the Initial Administrators:
- -------------------------------
- -------------------------------
<PAGE>
EXHIBIT A
[CERTIFICATE OF TRUST FILED WITH DELAWARE]
<PAGE>
EXHIBIT B
[FORM OF CERTIFICATE DEPOSITARY AGREEMENT]
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN
AFFILIATE OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND
SECTION 5.11 OF THE TRUST AGREEMENT
Certificate Number Number of Common Securities
C-__
Certificate Evidencing Common Securities
of
GCB Capital Trust
____% Common Securities
(liquidation amount $25 per Common Security)
GCB Capital Trust, a statutory business trust formed under the
laws of the State of Delaware (the "Issuer Trust"), hereby certifies that
Greater Community Bancorp (the "Holder") is the registered owner of _________
(_____) common securities of the Issuer Trust representing undivided beneficial
interests in the assets of the Issuer Trust and has designated the ____% Common
Securities (liquidation amount $25 per Common Security) (the "Common
Securities"). Except in accordance with Section 5.11 of the Trust Agreement (as
defined below) the Common Securities are not transferable and any attempted
transfer hereof other than in accordance therewith shall be void. The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities are set forth in, and this certificate and
the Common Securities represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Amended and Restated Trust Agreement
of the Issuer Trust, dated as of __________________, 1997, as the same may be
amended from time to time (the "Trust Agreement") among Greater Community
Bancorp as Depositor, Bankers Trust Company, as Property Trustee, Bankers Trust
(Delaware), as Delaware Trustee, and the Holders of Trust Securities, including
the designation of the terms of the Common Securities as set forth therein. The
Issuer Trust will furnish a copy of the Trust Agreement to the Holder without
charge upon written request to the Issuer Trust at its principal place of
business or registered office.
Upon receipt of this certificate, the Holder is bound by the
Trust Agreement and is entitled to the benefits thereunder.
Terms used but not defined herein have the meanings set forth in
the Trust Agreement.
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust
has executed this certificate this ___ day of ______________, ____.
GCB CAPITAL TRUST
By:
---------------------------------
Name:
Administrator
<PAGE>
COUNTERSIGNED AND REGISTERED:
BANKERS TRUST COMPANY,
as Securities Registrar
By:
--------------------------
Name:
Signatory Officer
<PAGE>
EXHIBIT D
[IF THE PREFERRED SECURITIES CERTIFICATE IS TO BE A GLOBAL
PREFERRED SECURITIES CERTIFICATE, INSERT -- This Preferred Securities
Certificate is a Global Preferred Securities Certificate within the meaning of
the Trust Agreement hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. This Preferred Security Certificate is
exchangeable for Preferred Securities Certificates registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Trust Agreement and may not be transferred except
as a whole by the Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the Depositary, except in
the limited circumstances described in the Trust Agreement.
Unless this Preferred Security Certificate is presented by an
authorized representative of The Depository Trust Company, a New York
Corporation ("DTC"), to GCB Capital Trust or its agent for registration of
transfer, exchange or payment, and any Preferred Security Certificate issued is
registered in the name of such nominee as is requested by an authorized
representative of DTC (and any payment is made to such entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO A PERSON IS WRONGFUL inasmuch as the registered
owner hereof, has an interest herein.]
NO EMPLOYEE BENEFIT OR OTHER PLAN OR INDIVIDUAL RETIREMENT
ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO ENTITY WHOSE UNDERLYING
ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY (A
"PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN, MAY
ACQUIRE OR HOLD THIS PREFERRED SECURITIES CERTIFICATE OR ANY INTEREST HEREIN,
UNLESS SUCH PURCHASE OR HOLDING IS COVERED BY THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE")
96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH RESPECT
TO SUCH PURCHASE OR HOLDING AND, IN THE CASE OF ANY PURCHASER OR HOLDER RELYING
ON ANY EXEMPTION OTHER THAN PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14, HAS
COMPLIED WITH ANY REQUEST BY THE DEPOSITOR OR THE ISSUER TRUST FOR AN OPINION OF
COUNSEL OR OTHER EVIDENCE WITH RESPECT TO THE APPLICABILITY OF SUCH EXEMPTION.
ANY PURCHASER OR HOLDER OF THIS PREFERRED SECURITIES CERTIFICATE OR ANY INTEREST
HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING HEREOF
THAT EITHER (A) THE PURCHASER AND HOLDER ARE NOT A PLAN OR A PLAN ASSET ENTITY
AND IS NOT PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY
PLAN, OR (B) THE PURCHASE AND HOLDING OF THE PREFERRED SECURITIES IS COVERED BY
THE EXEMPTIVE RELIEF PROVIDED BY PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 OR
ANOTHER APPLICABLE EXEMPTION.
<PAGE>
CERTIFICATE NUMBER NUMBER OF PREFERRED SECURITIES
P-__
CUSIP NO. ________________________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
GCB CAPITAL TRUST
____% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GCB Capital Trust, a statutory business trust formed under the
laws of the State of Delaware (the "Issuer Trust"), hereby certifies that (the
"Holder") is the registered owner of) ( ) preferred securities of the Issuer
Trust representing a preferred undivided beneficial interest in the assets of
the Issuer Trust and has designated the GCB Capital Trust ____ % Preferred
Securities (liquidation amount $25 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are transferable on the books and records
of the Issuer Trust, in person or by a duly authorized attorney, upon surrender
of this certificate duly endorsed and in proper form for transfer as provided in
Section 5.5 of the Trust Agreement (as defined below). The designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Securities are set forth in, and this certificate and the Preferred
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Issuer Trust, dated as of __________________, 1997, as the same may be amended
from time to time (the "Trust Agreement"), among Greater Community Bancorp, as
Depositor, Bankers Trust Company, as Property Trustee, Bankers Trust (Delaware),
as Delaware Trustee, and the Holders of Trust Securities, including the
designation of the terms of the Preferred Securities as set forth therein. The
Holder is entitled to the benefits of the Guarantee Agreement entered into by
Greater Community Bancorp, a New Jersey corporation, and Bankers Trust Company,
as guarantee trustee, dated as of __________________, 1997 (the "Guarantee
Agreement"), to the extent provided therein. The Issuer Trust will furnish a
copy of the Issuer Trust Agreement and the Guarantee Agreement to the Holder
without charge upon written request to the Issuer Trust at its principal place
of business or registered office.
Upon receipt of this certificate, the Holder is bound by the
Trust Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust
has executed this certificate this day of , .
GCB CAPITAL TRUST
By:
---------------------------------
<PAGE>
Name:
Administrator
COUNTERSIGNED AND REGISTERED:
BANKERS TRUST COMPANY,
as Securities Registrar
By:
----------------------------
Name:
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security to:
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax
identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
-------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the Issuer
Trust. The agent may substitute another to act for him or her.
Date:
------------------------
Signature:
--------------------------------
(Sign exactly as your name appears on
the other side of this Preferred Security
Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
Exhibit 4.5
<PAGE>
This Preferred Securities Certificate is a Global Preferred Securities
Certificate within the meaning of the Trust Agreement hereinafter referred to
and is registered in the name of a Depositary or a nominee of a Depositary. This
Preferred Security Certificate is exchangeable for Preferred Securities
Certificates registered in the name of a person other than the Depositary or its
nominee only in the limited circumstances described in the Trust Agreement and
may not be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary, except in the limited circumstances described in the
Trust Agreement.
Unless this Preferred Security Certificate is presented by an
authorized representative of The Depository Trust Company, a New York
Corporation ("DTC"), to GCB Capital Trust or its agent for registration of
transfer, exchange or payment, and any Preferred Security Certificate issued is
registered in the name of such nominee as is requested by an authorized
representative of DTC (and any payment is made to such entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO A PERSON IS WRONGFUL inasmuch as the registered
owner hereof, has an interest herein.
<PAGE>
CERTIFICATE NUMBER NUMBER OF PREFERRED SECURITIES
---------------
P-1
CUSIP NO. ___________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
GCB CAPITAL TRUST
_____% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GCB Capital Trust, a statutory business trust formed under the
laws of the State of Delaware (the "Issuer Trust"), hereby certifies that Cede &
Co. (the "Holder") is the registered owner of $________ aggregate liquidation
amount of preferred securities of the Issuer Trust representing a preferred
undivided beneficial interest in the assets of the Issuer Trust and has
designated the GCB Capital Trust _____% Preferred Securities (liquidation amount
$25 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are transferable on the books and records of the Issuer Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer as provided in Section 5.5 of the Trust
Agreement (as defined below). The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Preferred
Securities are set forth in, and this certificate and the Preferred Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Trust Agreement of the Issuer Trust,
dated as of _______, 1997, as the same may be amended from time to time (the
"Trust Agreement"), among Greater Community Bancorp, as Depositor, Bankers Trust
Company, as Property Trustee, Bankers Trust (Delaware), as Delaware Trustee, and
the Holders of Trust Securities, including the designation of the terms of the
Preferred Securities as set forth therein. The Holder is entitled to the
benefits of the Guarantee Agreement entered into by Greater Community Bancorp, a
New Jersey corporation, and Bankers Trust Company, as guarantee trustee, dated
as of _________, 1997 (the "Guarantee Agreement"), to the extent provided
therein. The Issuer Trust will furnish a copy of the Trust Agreement and the
Guarantee Agreement to the Holder without charge upon written request to the
Issuer Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the
Trust Agreement and is entitled to the benefits thereunder.
<PAGE>
IN WITNESS WHEREOF, one of the Administrators of the Issuer
Trust has executed this certificate this ____ day of _______, 1997.
GCB CAPITAL TRUST
By:
---------------------------------
Name:
Administrator
COUNTERSIGNED AND REGISTERED:
BANKERS TRUST COMPANY,
as Securities Registrar
By:
-------------------------------
Name:
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security to:
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax
identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
-------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the Issuer
Trust. The agent may substitute another to act for him or her.
Date:
--------------------
Signature:
-----------------------------------------------
(Sign exactly as your name appears on
the other side of this Preferred Security
Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
Exhibit 4.6
<PAGE>
- --------------------------------------------------------------------------------
GUARANTEE AGREEMENT
Between
GREATER COMMUNITY BANCORP
(as Guarantor)
and
BANKERS TRUST COMPANY
(as Trustee)
dated as of
May __, 1997
- --------------------------------------------------------------------------------
<PAGE>
GCB CAPITAL TRUST
Certain Sections of this Guarantee Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Guarantee Agreement
Act Section Section
- --------------- -------------------
<S> <C> <C>
Section 310 (a) (1)........................ 4.1 (a)
(a) (2)........................ 4.1 (a)
(a) (3)........................ Not Applicable
(a) (4)........................ Not Applicable
(b)............................ 2.8, 4.1 (c)
Section 311 (a)............................ Not Applicable
(b)............................ Not Applicable
Section 312 (a)............................ 2.2 (a)
(b)............................ 2.2 (b)
(c)............................ Not Applicable
Section 313 (a)............................ 2.3
(a) (4)........................ 2.3
(b)............................ 2.3
(c)............................ 2.3
(d)............................ 2.3
Section 314 (a)............................ 2.4
(b)............................ 2.4
(c) (1)........................ 2.5
(c) (2)........................ 2.5
(c) (3)........................ 2.5
(e)............................ 1.1, 2.5, 3.2
Section 315 (a)............................ 3.1 (d)
(b)............................ 2.7
(c)............................ 3.1 (c)
(d)............................ 3.1 (d)
(e)............................ Not Applicable
Section 316 (a)............................ 1.1, 2.6, 5.4
(a) (1) (A).................... 5.4
(a) (1) (B).................... 5.4
(a) (2)........................ Not Applicable
(b)............................ 5.3
(c)............................ Not Applicable
Section 317 (a) (1)........................ Not Applicable
(a) (2)........................ Not Applicable
(b)............................ Not Applicable
Section 318 (a)............................ 2.1
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Guarantee Agreement.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
ARTICLE I. DEFINITIONS
Section 1.1. Definitions.......................................... 1
ARTICLE II. TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application..................... 4
Section 2.2. List of Holders...................................... 5
Section 2.3. Reports by the Guarantee Trustee..................... 5
Section 2.4. Periodic Reports to 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
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE
TRUSTEE
Section 3.1. Powers and Duties of the Guarantee
Trustee.............................................. 6
Section 3.2. Certain Rights of Guarantee Trustee.................. 7
Section 3.3. Indemnity............................................ 9
Section 3.4. Expenses............................................. 9
ARTICLE IV. GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility....................... 9
Section 4.2. Appointment, Removal and Resignation
of the Guarantee Trustee............................. 10
ARTICLE V. GUARANTEE
Section 5.1. Guarantee............................................ 10
Section 5.2. Waiver of Notice and Demand.......................... 11
Section 5.3. Obligations Not Affected............................. 11
Section 5.4. Rights of Holders.................................... 12
Section 5.5. Guarantee of Payment................................. 12
Section 5.6. Subrogation.......................................... 12
Section 5.7. Independent Obligations.............................. 12
ARTICLE VI. COVENANTS AND SUBORDINATION
Section 6.1. Subordination........................................ 13
Section 6.2. Pari Passu Guarantees................................ 13
ARTICLE VII. TERMINATION
Section 7.1. Termination.......................................... 13
</TABLE>
- i -
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
ARTICLE VIII. MISCELLANEOUS
Section 8.1. Successors and Assigns............................... 13
Section 8.2. Amendments........................................... 13
Section 8.3. Notices.............................................. 14
Section 8.4. Benefit.............................................. 15
Section 8.5. Interpretation....................................... 15
Section 8.6. Governing Law........................................ 16
Section 8.7. Counterparts......................................... 16
</TABLE>
- ii -
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of May __, 1997 is executed and
delivered by GREATER COMMUNITY BANCORP, a New Jersey corporation (the
"Guarantor"), having its principal office at 55 Union Boulevard, Totowa, New
Jersey 07512, and BANKERS TRUST COMPANY, a New York banking corporation, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Securities (as defined herein) of GCB
Capital Trust, a Delaware statutory business trust (the "Issuer Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of May __, 1997, among Greater Community Bancorp,
as Depositor, Bankers Trust Company, as Property Trustee (the "Property
Trustee"), Bankers Trust (Delaware), as Delaware Trustee (the "Delaware
Trustee") (collectively, the "Issuer Trustees") and the Holders from time to
time of preferred undivided beneficial ownership interests in the assets of the
Issuer Trust, the Issuer Trust is issuing $23,000,000 aggregate Liquidation
Amount (as defined herein) of its _____% Preferred Securities, Liquidation
Amount $25 per preferred security (the "Preferred Securities"), representing
preferred undivided beneficial ownership interests in the assets of the Issuer
Trust and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer Trust
and the proceeds thereof, together with the proceeds from the issuance of the
Issuer Trust's Common Securities (as defined herein), will be used to purchase
the Junior Subordinated Debentures due _________, 2027 (as defined in the Trust
Agreement) (the "Junior Subordinated Debentures") of the Guarantor which will be
deposited with Bankers Trust Company, as Property Trustee under the Trust
Agreement, as trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred
Securities the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth herein, to pay to the Holders of the Preferred Securities
the Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase of Preferred
Securities by each Holder, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, and intending to be legally bound hereby, the
Guarantor executes and delivers this Guarantee Agreement for the benefit of the
Holders from time to time of the Preferred Securities.
ARTICLE I. DEFINITIONS
SECTION 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
such terms in the Trust Agreement as in effect on the date hereof.
"Additional Amounts" has the meaning specified in the Trust
Agreement.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.
<PAGE>
- 2 -
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer Trust.
"Distributions" means preferential cumulative cash distributions
accumulating from ____________, 1997 and payable quarterly in arrears on March
31, June 30, September 30, and December 31 of each year, commencing
____________, 1997, at the annual rate of _____% of the Liquidation Amount.
"Event of Default" means (i) a default by the Guarantor in any of its
payment obligations under this Guarantee Agreement, or (ii) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30 days.
"Guarantee Agreement" means this Guarantee Agreement, as modified,
amended or supplemented from time to time.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer Trust: (i) any accrued and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer Trust shall have funds on hand
available therefor at such time, (ii) the Redemption Price, with respect to the
Preferred Securities called for redemption by the Issuer Trust to the extent
that the Issuer Trust shall have funds on hand available therefor at such time,
and (iii) upon a voluntary or involuntary termination, winding-up or liquidation
of the Issuer Trust, unless Junior Subordinated Debentures are distributed to
the Holders, the lesser of (a) the aggregate of the Liquidation Amount and all
accumulated and unpaid Distributions to the date of payment to the extent the
Issuer Trust shall have funds on hand available to make such payment at such
time and (b) the amount of assets of the Issuer Trust remaining available for
distribution to Holders in liquidation of the Issuer Trust (in either case, the
"Liquidation Distribution").
"Guarantee Trustee" means Bankers Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Guarantor" shall have the meaning specified in the first paragraph
of this Guarantee Agreement.
"Holder" means any holder, as registered on the books and records of
the Issuer Trust, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor, the Guarantee Trustee, or any Affiliate of the
Guarantor or the Guarantee Trustee.
<PAGE>
- 3 -
"Indenture" means the Junior Subordinated Indenture dated as of
__________, 1997, between Greater Community Bancorp and Bankers Trust Company,
as trustee, as may be modified, amended or supplemented from time to time.
"Issuer Trust" shall have the meaning specified in the first
paragraph of this Guarantee Agreement.
"Liquidation Amount" means the stated amount of $25 per Preferred
Security.
"Majority in Liquidation Amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, Preferred Securities representing
more than 50% of the aggregate Liquidation Amount of all then outstanding
Preferred Securities issued by the Issuer Trust.
"Like Amount" means (a) with respect to a redemption of Preferred
Securities, Preferred Securities having a Liquidation Amount equal to the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, the proceeds of which will be used to
pay the Redemption Price of such Preferred Securities, (b) with respect to a
distribution of Junior Subordinated Debentures to Holders of Preferred
Securities in connection with a dissolution or liquidation of the Issuer Trust,
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Preferred Securities of the Holder to whom such Junior
Subordinated Debentures are distributed, and (c) with respect to any
distribution of Additional Amounts to Holders of Preferred Securities, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Preferred Securities in respect of which such distribution is
made.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman and Chief Executive Officer, President or a
Vice President, and by the Treasurer, an Associate Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of such Person, and delivered
to the Guarantee Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee Agreement
shall include:
(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in rendering the
Officers' Certificate;
(c) a statement that such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated
<PAGE>
- 4 -
association, or government or any agency or political subdivision thereof, or
any other entity of whatever nature.
"Preferred Securities" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Redemption Date" means, with respect to any Preferred Security to be
redeemed, the date fixed for such redemption by or pursuant to the Trust
Agreement; provided that each Junior Subordinated Debenture Redemption Date (as
such term is defined in the Indenture) and the stated maturity of the Junior
Subordinated Debentures shall be a Redemption Date for a Like Amount of
Preferred Securities.
"Redemption Price" shall have the meaning specified in the Trust
Agreement.
"Responsible Officer" means, when used with respect to the Guarantee
Trustee, any officer assigned to the Corporate Trust Office, including any
managing director, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
the Indenture, and also, with respect to a particular matter, any other officer
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Senior Indebtedness" shall have the meaning specified in the
Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Agreement" means the Amended and Restated Trust Agreement,
dated __________, 1997, executed by Greater Community Bancorp, as Depositor,
Bankers Trust (Delaware), as Delaware Trustee, and Bankers Trust Company, as
Property Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb), as amended.
ARTICLE II. TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Guarantee Agreement, the provision of the Trust
Indenture Act shall control. If any provision of this Guarantee Agreement
modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the latter provision shall be deemed to apply to this
Guarantee Agreement as so modified or excluded, as the case may be.
<PAGE>
- 5 -
SECTION 2.2. List of Holders.
(a) The Guarantor will furnish or cause to be furnished to
the Guarantee Trustee:
(i) quarterly, not more than 15 days after March 15,
June 15, September 15 and December 15 in each year, a list, in such form as the
Guarantee Trustee may reasonably require, of the names and addresses of the
Holders as of such date; and
(ii) at such other times as the Guarantee Trustee may
request in writing, within 30 days after the receipt by the Guarantor of any
such request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished.
(b) The Guarantee Trustee shall comply with the requirements
of Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Not later than January 31 of each year, commencing January 31, 1998,
the Guarantee Trustee shall provide to the Holders such reports, if any, as are
required by Section 313 of the Trust Indenture Act in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, and the Holders
such documents, reports and information, if any, as required by Section 314 of
the Trust Indenture Act and the compliance certificate required by Section 314
of the Trust Indenture Act, in the form, in the manner and at the times required
by Section 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions
Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Guarantee Agreement, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent therefrom.
<PAGE>
- 6 -
SECTION 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default known to the Guarantee
Trustee, unless such Events of Default have been cured before the giving of such
notice; provided that, except in the case of a default in the payment of a
Guarantee Payment, the Guarantee Trustee shall be protected in withholding such
notice if and so long as the Board of Directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Guarantee
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless a Responsible Officer charged with the
administration of this Guarantee Agreement shall have received written notice of
such Event of Default.
SECTION 2.8. Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee
Trustee for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement to any Person except a Holder exercising his
or her rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee hereunder. The right, title and interest of the
Guarantee Trustee, as such, hereunder shall automatically vest in any Successor
Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its
appointment hereunder, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.
(c) The Guarantee Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have occurred,
shall be obligated to perform only such duties as are specifically set forth in
this Guarantee Agreement (including pursuant to Section 2.1), and no implied
covenants shall be read into this Guarantee Agreement against the Guarantee
Trustee. If an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee
<PAGE>
- 7 -
Agreement, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(d) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) Prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions of this Guarantee
Agreement (including pursuant to Section 2.1), and the Guarantee Trustee shall
not be liable except for the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement (including pursuant to
Section 2.1); and
(B) in the absence of bad faith on the part of
the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Guarantee Trustee and
conforming to the requirements of this Guarantee Agreement; but in the case of
any such certificates or opinions that by any provision hereof or of the Trust
Indenture Act are specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Guarantee
Agreement;
(ii) The Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) The Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority in
Liquidation Amount of the Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement; and
(iv) No provision of this Guarantee Agreement shall
require the Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or liability
is not assured to it under the terms of this Guarantee Agreement or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
<PAGE>
- 8 -
(i) The Guarantee Trustee may conclusively rely and
shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor
contemplated by this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this
Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of such
request from the Guarantee Trustee, shall be promptly delivered by the
Guarantor.
(iv) The Guarantee Trustee may consult with legal
counsel, and the advice or written opinion of such legal counsel with respect to
legal matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted to be taken by it hereunder in good
faith and in accordance with such advice or opinion. Such legal counsel may be
legal counsel to the Guarantor or any of its Affiliates and may be one of its
employees. The Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement from any
court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Guarantee Agreement
at the request or direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee such security and indemnity as would satisfy a
reasonable person in the position of the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Guarantee Trustee.
(vi) The Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall not be
responsible for any negligence or willful misconduct on the part of any such
agent or attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this
Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any other
action hereunder, the Guarantee Trustee (A) may request instructions
<PAGE>
- 9 -
from the Holders, (B) may refrain from enforcing such remedy or right or taking
such other action until such instructions are received and (C) shall be fully
protected in acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed
to impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
SECTION 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee, its
directors, officers, employees and agents for, and to hold them harmless
against, any loss, liability or expense incurred without negligence, willful
misconduct or bad faith on the part of the Guarantee Trustee, its directors,
officers, employees and agents, arising out of or in connection with the
acceptance or administration of this Guarantee Agreement, including the costs
and expenses of defending against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The Guarantee
Trustee will not claim or exact any lien or charge on any Guarantee Payments as
a result of any amount due to it under this Guarantee Agreement.
SECTION 3.4. Expenses.
The Guarantor shall from time to time reimburse the Guarantee Trustee
for its reasonable expenses and costs (including reasonable attorneys' or
agents' fees) incurred in connection with the performance of its duties
hereunder.
ARTICLE IV. GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the
Trust Indenture Act to act as such and has a combined capital and surplus of at
least $50,000,000, and shall be a corporation meeting the requirements of
Section 310(a) of the Trust Indenture Act. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority, then, for the purposes of this Section and
to the extent permitted by the Trust Indenture Act, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
<PAGE>
- 10 -
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.2(b).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply
with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of the
Guarantee Trustee.
(a) No resignation or removal of the Guarantee Trustee and no
appointment of a Successor Guarantee Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the Successor Guarantee
Trustee by written instrument executed by the Successor Guarantee Trustee and
delivered to the Holders and the Guarantee Trustee.
(b) Subject to the immediately preceding paragraph, a
Guarantee Trustee may resign at any time by giving written notice thereof to the
Holders. The Guarantee Trustee shall appoint a successor by requesting from at
least three Persons meeting the eligibility requirements such Person's expenses
and charges to serve as the Guarantee Trustee, and selecting the Person who
agrees to the lowest expenses and charges. If the instrument of acceptance by
the Successor Guarantee Trustee shall not have been delivered to the Guarantee
Trustee within 60 days after the giving of such notice of resignation, the
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for the appointment of a Successor Guarantee Trustee.
(c) The Guarantee Trustee may be removed for cause at any time
by Act (within the meaning of Section 6.8 of the Trust Agreement) of the Holders
of at least a Majority in Liquidation Amount of the Preferred Securities,
delivered to the Guarantee Trustee.
(d) If a resigning Guarantee Trustee shall fail to appoint a
successor, or if a Guarantee Trustee shall be removed or become incapable of
acting as Guarantee Trustee, or if any vacancy shall occur in the office of any
Guarantee Trustee for any cause, the Holders of the Preferred Securities, by Act
of the Holders of record of not less than 25% in aggregate Liquidation Amount of
the Preferred Securities then outstanding delivered to such Guarantee Trustee,
shall promptly appoint a successor Guarantee Trustee. If no Successor Guarantee
Trustee shall have been so appointed by the Holders of the Preferred Securities
and such appointment accepted by the Successor Guarantee Trustee, any Holder, on
behalf of himself and all others similarly situated, may petition any court of
competent jurisdiction for the appointment of a Successor Guarantee Trustee.
ARTICLE V. GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full
on a subordinated basis as set forth in Section 6.1 hereof to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by or on
behalf of the Issuer Trust), as and when due, regardless of any defense, right
of set-off or counterclaim which the Issuer Trust may have or assert, except the
defense
<PAGE>
- 11 -
of payment. The Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Issuer Trust to pay such amounts to the Holders. The
Guarantor shall give prompt written notice to the Guarantee Trustee in the event
it makes any direct payment hereunder.
SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, the Issuer Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice
of redemption and all other notices and demands.
SECTION 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer Trust of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities to
be performed or observed by the Issuer Trust;
(b) the extension of time for the payment by the Issuer Trust
of all or any portion of the Distributions (other than an extension of time for
payment of Distributions that results from the extension of any interest payment
period on the Junior Subordinated Debentures as so provided in the Indenture),
Redemption Price, Liquidation Distribution or any other sums payable under the
terms of the Preferred Securities or the extension of time for the performance
of any other obligation under, arising out of, or in connection with, the
Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer Trust granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer Trust or any of
the assets of the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor (other than
payment of the underlying obligation), it
<PAGE>
- 12 -
being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain the consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee
Agreement will be deposited with the Guarantee Trustee to be held for the
benefit of the Holders; (ii) the Guarantee Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly against
the Guarantor to enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
Trust or any other Person.
SECTION 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer Trust) or upon the distribution of Junior Subordinated Debentures
to Holders as provided in the Trust Agreement.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the
Holders against the Issuer Trust in respect of any amounts paid to the Holders
by the Guarantor under this Guarantee Agreement; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee Agreement, at the time of any such
payment, any amounts are due and unpaid under this Guarantee Agreement. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer Trust with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3 hereof.
<PAGE>
- 13 -
ARTICLE VI. COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination.
This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank subordinate and junior in right of payment to all
Senior Indebtedness of the Guarantor to the extent and in the manner set forth
in the Indenture with respect to the Junior Subordinated Debentures, and the
provisions of Article XIII of the Indenture will apply, mutatis mutandis, to the
obligations of the Guarantor hereunder. The obligations of the Guarantor
hereunder do not constitute Senior Indebtedness of the Guarantor.
SECTION 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall
rank pari passu with any similar guarantee agreements issued by the Guarantor on
behalf of the holders of preferred or capital securities issued by the Issuer
Trust and with any other security, guarantee or other obligation that is
expressly stated to rank pari passu with the obligations of the Guarantor under
this Guarantee Agreement.
ARTICLE VII. TERMINATION
SECTION 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force
and effect upon (i) full payment of the Redemption Price of all Preferred
Securities, (ii) the distribution of Junior Subordinated Debentures to the
Holders in exchange for all of the Preferred Securities or (iii) full payment of
the amounts payable in accordance with Article IX of the Trust Agreement upon
liquidation of the Issuer Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder is required to repay any sums paid with respect to
Preferred Securities or this Guarantee Agreement.
ARTICLE VIII. MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder, and any purported assignment that is not in accordance
with these provisions shall be void.
SECTION 8.2. Amendments.
Except with respect to any changes that do not materially adversely
affect the rights of the Holders (in which case no consent of the Holders will
be required), this Guarantee Agreement may
<PAGE>
- 14 -
only be amended with the prior approval of the Holders of not less than a
Majority in Liquidation Amount of the Preferred Securities. The provisions of
Article VI of the Trust Agreement concerning meetings of the Holders shall apply
to the giving of such approval.
SECTION 8.3. Notices.
Any notice, request or other communication required or permitted to
be given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied (confirmed by delivery of the original) or
mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or telecopy
number set forth below or such other address or telecopy number or to the
attention of such other Person as the Guarantor may give notice to the Holders:
Greater Community Bancorp
55 Union Boulevard
Totowa, New Jersey 07512
Facsimile No.: (201) 942-6830
Attention: Office of the Secretary
(b) if given to the Issuer Trust, in care of the Guarantee
Trustee, at the Issuer Trust's (and the Guarantee Trustee's) address set forth
below or such other address or telecopy number or to the attention of such other
Person as the Guarantee Trustee on behalf of the Issuer Trust may give notice to
the Holders:
c/o Greater Community Bancorp
55 Union Boulevard
Totowa, New Jersey 07512
Facsimile No.: (201) 942-6830
Attention: Office of the Secretary
with a copy to:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group;
Corporate Market Services
<PAGE>
- 15 -
(c) if given to the Guarantee Trustee:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group
Corporate Market Services
(d) if given to any Holder, at the address set forth on the
books and records of the Issuer Trust.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and
is not separately transferable from the Preferred Securities.
SECTION 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to them in
Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has
the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa; and
(g) the masculine, feminine or neuter genders used herein
shall include the masculine, feminine and neuter genders.
<PAGE>
- 16 -
SECTION 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 8.7. Counterparts.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
<PAGE>
- 17 -
THIS GUARANTEE AGREEMENT is executed as of the day and year first above written.
GREATER COMMUNITY BANCORP
By:____________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Guarantee Trustee
and not in its individual
capacity
By:____________________________
Name:
Title:
Exhibit 5.1
<PAGE>
[Richards, Layton & Finger Letterhead]
GCB Capital Trust
c/o Greater Community Bancorp
55 Union Boulevard
Totowa, New Jersey 07512
Re: GCB Capital Trust
Ladies and Gentlemen:
We have acted as special Delaware counsel for GCB Capital Trust, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust (the "Certificate"), as filed
in the office of the Secretary of State of the State of Delaware (the "Secretary
of State") on April 29, 1997;
(b) The Trust Agreement of the Trust, dated as of April 29, 1997,
between Greater Community Bancorp, a New Jersey corporation (the "Company"), and
the trustee of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on Form
S-2, including a prospectus (the "Prospectus") relating to the Preferred
Securities of the Trust representing preferred undivided beneficial interests in
the Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"), as filed by the Company and the Trust as set forth therein with
the Securities and Exchange Commission on May 5, 1997;
(d) A form of Amended and Restated Trust Agreement of the Trust, to be
entered into among the Company, the trustees of the Trust named therein, and the
holders, from time to time, of undivided beneficial interests in the Trust (the
"Trust Agreement"), attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated May 8, 1997,
obtained from the Secretary of State.
<PAGE>
GCB Capital Trust
May 8, 1997
Page 2
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed above, and we have assumed that there exists no
provision in any document that we have not reviewed that bears upon or is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Trust Agreement and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Security Certificate for such Preferred
Security and the payment for the Preferred Security acquired by it, in
accordance with the Trust Agreement and the Prospectus, and (vii) that the
Preferred Securities are issued and sold to the Preferred Security Holders in
accordance with the Trust Agreement and the Prospectus. We have not participated
in the preparation of the Registration Statement and assume no responsibility
for its contents.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder which are
currently in effect.
<PAGE>
GCB Capital Trust
May 8, 1997
Page 3
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we hare considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a usiness trust under the Delaware Business Trust Act, 12 Del. C.
ss.3801, et seq.b
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition, we
hereby consent to the use of our name under the heading "Validity of Securities"
in the Prospectus. In giving the foregoing consents, we do not thereby admit
that we come within the category of Persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
-----------------------------
Exhibit 5.2
<PAGE>
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
Attorneys at Law
One Franklin Square
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
Telephone: (202) 434-4660
Telecopier: (202) 434-4661
May 8, 1997
Greater Community Bancorp
55 Union Boulevard
Totowa, New Jersey 07512
Gentlemen:
We have acted as counsel to Greater Community Bancorp (the "Company")
in connection with the preparation and filing by the Company and GCB Capital
Trust (the "Trust") of a registration statement (the "Registration Statement")
on Form S-2 under the Securities Act of 1933, as amended (the "Act"), with
respect to the offer and sale of certain of the Trust's Preferred Securities
(liquidation amount $25 per Preferred Security) (the "Preferred Securities") and
certain of the Company's Junior Subordinated Debentures (the "Debentures") and
the related Guarantee Agreement by and between the Company and Bankers Trust
Company, as trustee (the "Guarantee"). In connection therewith, you have
requested our opinion as to certain matters referred to below.
In our capacity as such counsel, we have familiarized ourselves with
the actions taken by the Company in connection with the registration of the
Debentures and the Guarantee. We have examined originals or certified copies of
such records, agreements, certificates of public officials and others, and such
other documents, including the Registration Statement and the amendment thereto,
as we have deemed relevant and necessary as a basis for the opinions hereinafter
expressed. In such examination, we have assumed the genuineness of all
signatures on original documents and the authenticity of all documents submitted
to us as originals, the conformity to original documents of all copies submitted
to us as conformed or photostatic copies, and the authenticity of the originals
of such latter documents. We are attorneys admitted to practice before the
courts of the United States and the courts of the State of New Jersey and,
accordingly, we express no opinion with respect to matters governed by the laws
of any jurisdiction other than the federal laws of the United States or the
internal laws of the State of New Jersey.
Based upon and subject to the foregoing, we are of the opinion that,
when issued (with respect to the Debentures), or executed and delivered (with
respect to the Guarantee), as set forth in the Registration Statement, the
Debentures and the Guarantee will be the valid and binding obligations of the
Company, enforceable in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or
<PAGE>
Greater Community Bancorp
May 8, 1997
Page 2
similar laws relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of bank holding companies, the accounts of
whose subsidiaries are insured by the Federal Deposit Insurance Corporation, or
by general equity principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
We consent to the references to this opinion and to Malizia, Spidi,
Sloane & Fisch, P.C. in the Prospectus included as part of the Registration
Statement under the caption "Validity of Securities," and to the inclusion of
this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/Malizia, Spidi, Sloane & Fisch, P.C.
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
Exhibit 8.1
<PAGE>
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
Attorneys at Law
One Franklin Square
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
Telephone: (202) 434-4660
Telecopier: (202) 434-4661
May 8, 1997
Board of Directors
Greater Community Bancorp
55 Union Boulevard
Totowa, New Jersey 07511
Dear Board Members:
We have acted as special tax counsel to Greater Community Bancorp (the
"Company") and to GCB Capital Trust (the "Trust") in connection with the
registration statement of the Company and the Trust on Form S-2 (Registration
Nos. 333-26453 and 333-26453-01, for the Company and the Trust, respectively),
as amended ("Registration Statement"), of which a prospectus ("Prospectus") is a
part, filed by the Company and the Trust with the United States Securities and
Exchange Commission under the Securities Act of 1933, as amended. This opinion
is furnished pursuant to the requirements of Item 601(b)(8) of Regulation S-K.
For the purposes of rendering this opinion, we have reviewed and relied
upon the Registration Statement and such other documents and instruments as we
deemed necessary for the rendering of this opinion. In our examination of
relevant documents, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as copies, the authenticity
of such copies and the accuracy and completeness of all corporate records made
available to us by the Company and the Trust.
Based solely upon our review of such documents, and upon such
information as the Company has provided to us (which we have not attempted to
verify in any respect), and reliance upon such documents and information, we
hereby adopt and incorporate by reference the opinion set forth in the
Prospectus under the caption "Certain Federal Income Tax Consequences."
Our opinion is limited to the federal income tax matters described
above and does not address any other federal income tax considerations or any
state, local, foreign, or other tax considerations. If any of the information on
which we have relied is incorrect, or if changes in the relevant facts occur
after the date hereof, our opinion could be affected thereby. Moreover, our
opinion is based on the Internal Revenue Code of 1986, as amended, applicable
Treasury
<PAGE>
Board of Directors
Greater Community Bancorp
May 8, 1997
Page 2
regulations promulgated thereunder, and Internal Revenue Service rulings,
procedures, and other pronouncements published by the United States Internal
Revenue Service. These authorities are all subject to change, and such change
may be made with retroactive effect. We can give no assurance that, after such
change, our opinion would not be different. We undertake no responsibility to
update or supplement our opinion. This opinion is not binding on the Internal
Revenue Service, and there can be no assurance, and none is hereby given, that
the Internal Revenue Service will not take a position contrary to one or more of
the positions reflected in the foregoing opinion, or that our opinion will be
upheld by the courts if challenged by the Internal Revenue Service.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the use of our name in the Prospectus
under the caption "Certain Federal Income Tax Consequences."
Sincerely,
/s/Malizia, Spidi, Sloane & Fisch, P.C.
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
EMPLOYMENT AGREEMENT
BETWEEN
GREAT FALLS BANCORP,
Employer
and
GEORGE E. IRWIN,
Employee
Dated: December 16, 1987
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
1. Employment; Employment Period...........................................................................1
2. Nature of Duties and Services of Employee...............................................................1
3. Direct Compensation of Employee.........................................................................2
4. Expenses; Fringe Benefits of Employee...................................................................2
(a) Expenses.......................................................................................2
(b) Auto Allowance.................................................................................2
(c) Vacations; Other Fringe Benefits...............................................................3
5. Extension; Termination..................................................................................3
(a) Extension of Term..............................................................................3
(b) Termination....................................................................................3
6. Severance Pay...........................................................................................4
(a) Involuntary Termination or Non-Renewal Without Cause...........................................4
(b) Termination Upon Merger, Etc...................................................................4
(c) "Cause" Defined................................................................................5
7. Salary Continuation in the Event of Disability; Termination of
Employment due to Disability............................................................................5
(a) Initial Salary Continuation....................................................................5
(b) Subsequent Salary Continuation.................................................................6
(c) Reinstatement..................................................................................6
(d) Recovery and Recurrence........................................................................6
(e) Termination of Employment due to Disability....................................................8
(f) Determination of Disability Status.............................................................8
(g) Age Limitation on Salary Continuation Disability Benefit.......................................9
8. Confidential Information................................................................................9
9. Noncompetition Covenant.................................................................................9
10. Miscellaneous..........................................................................................10
(a) Entire Agreement..............................................................................10
(b) Governing Law.................................................................................10
(c) No Waiver.....................................................................................10
(d) Notices.......................................................................................10
(e) Captions......................................................................................10
(f) Binding Effect; Assignment....................................................................11
(g) Survival......................................................................................11
</TABLE>
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, made the 16th day of December, 1987, but effective for all
purposes as of the 1st day of January, 1988, by and between GREAT FALLS BANCORP,
a New Jersey corporation having its principal place of business at 55 Union
Boulevard, Totowa, New Jersey 07512 (hereinafter called the "Corporation"); and
GEORGE E. IRWIN, residing at 17 Green Ridge Drive, Montville, New Jersey 07045
(hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Employee is employed by the Corporation; and
WHEREAS, the Corporation desires to continue to employ the Employee,
and the Employee is willing to accept such continued employment, on the terms
and subject to the conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the mutual promises
and covenants hereinafter set forth, the parties hereto agree as follows:
1. Employment; Employment Period. The Corporation hereby employs the
Employee, and the Employee hereby accepts employment by the Corporation, on the
terms and subject to the conditions set forth in this Agreement. Such employment
shall be on a full-time basis for an initial period of one (1) year commencing
on January 1, 1988 (hereinafter referred to as the "Effective Date"), subject to
the provisions for extension and earlier termination as hereinafter set forth in
paragraph 5 hereof.
2. Nature of Duties and Services of Employee. The Employee shall act as
Vice President of the Corporation, subject to the direction and control of the
Chairman of the Board and President and Board of Directors of the Corporation.
The Employee shall also act as
1
<PAGE>
President and Chief Executive Officer of Great Falls Bank, the State-chartered
bank subsidiary of the Corporation (hereinafter referred to as the "Bank"),
subject to the direction and control of the Chairman of the Board and the Board
of Directors of the Bank, for the duration of the Employee's office until the
next annual reorganization meeting of the Board of Directors of the Bank and
thereafter during the term of this Agreement if and for so long as the Employee
may be elected to such position by the Board of Directors of the Bank.
3. Direct Compensation of Employee. As compensation for the Employee's
services performed hereunder from and after the Effective Date, the Employee
will be compensated on the basis of an annual salary payable at the rate of
Eighty Thousand and no/100 Dollars ($80,000). Such salary shall be payable in
equal increments on the same payroll schedule as is followed for the Bank's
salaried employees, but not less frequently than monthly. The Corporation's
obligation to pay earned compensation (i.e., compensation for services
previously rendered) will survive any termination of the Employee's employment
regardless of the circumstances or reason for termination of employment.
4. Expenses; Fringe Benefits of Employee.
(a) Expenses. The Employee will be promptly (but not less frequently
than monthly) reimbursed for all expenses incurred by the Employee in the
performance of his duties hereunder.
(b) Auto Allowance. The Employee will be paid a monthly non-accountable
auto allowance of Five Hundred Dollars ($500.00), which allowance shall be in
lieu of any other reimbursement by the Corporation or the Bank with respect to
the Employee's use of one or more personally-owned automobiles in the
performance of his duties hereunder.
2
<PAGE>
(c) Vacations; Other Fringe Benefits. The Employee shall be entitled to
vacations consistent with his positions with the Corporation and the Bank, and
will be included in, and subject to, any group insurance programs and other
benefits and/or policies in effect from time to time which include salaried
employees of the Corporation and/or the Bank.
5. Extension; Termination.
(a) Extension of Term. The Employee's term of employment hereunder
shall be automatically renewed for additional one-year periods unless either of
the parties gives to the other party, at least ninety (90) days prior to the end
of any calendar year (the calendar year being the employment year for purposes
of this Agreement), a notice to the effect that the notifying party does not
intend to renew the term of employment beyond the end of the employment year. In
the event either party timely gives the other party such a notice of
non-renewal, the Employee's employment pursuant to the terms hereof shall
terminate at the end of such employment year.
(b) Termination. This Agreement will terminate (i) at the close of
business on December 31, 1988, or (ii) at the close of business on December 31
of a later year in the event of one or more renewals of the term of employment
hereunder followed by a notice of non-renewal as provided in subparagraph 5(a)
above, or (iii) upon the death of the Employee, or (iv) in the event of the
Employee becomes "permanently disabled" (as defined in subparagraph 7(e) hereof)
of the Employee. This Agreement shall also be subject to termination by the
Corporation at any time during the term of this Agreement upon notice to the
Employee, subject to the Employee's rights, if any, to severance pay as provided
in paragraph 6 hereof.
3
<PAGE>
6. Severance Pay.
(a) Involuntary Termination or Non-Renewal Without Cause. In the event
that either (i) the Corporation terminates the Employee's employment hereunder
without "cause" (as defined in subparagraph 6(c) below) and without the consent
of the Employee, or (ii) the Corporation gives the Employee a notice of
non-renewal of this Agreement under subparagraph 5(a) hereof without "cause" (as
so defined) and without the consent of the Employee, then the Employee shall be
entitled to be paid severance pay in an amount equal to the Employee's annual
salary in effect at such time. Such severance pay shall be payable in twelve
(12) equal monthly installments, without interest, commencing one (1) month from
the effective date of such termination of employment hereunder.
(b) Termination Upon Merger, Etc. In the event that (i) the Corporation
terminates the Employee's employment hereunder in connection with the
consummation of a merger or other business combination transaction which
includes as an element thereof the replacement of the Chief Executive Officer of
the Bank (hereinafter referred to as the "Replacement Merger"), and (ii) such
termination of the Employee's employment is otherwise without "cause" (as
defined in subparagraph 6(c) below) and without the consent of the Employee,
then the Employee shall be entitled to be paid severance pay in an amount equal
to one and one-half times the Employee's annual salary then in effect. Such
severance pay shall be payable in eighteen (18) equal monthly installments,
without interest, commencing one (1) month from the effective date of such
termination of employment hereunder. Provided, however, that if the corporation
is willing to continue the employment of the Employee (but not as Chief
Executive Officer of the Bank) following the effective date of such a
Replacement Merger, but the Employee decides to
4
<PAGE>
resign because he is to be replaced as the Chief Executive Officer of the Bank
as a result of such Replacement Merger, then if severance pay would otherwise be
payable to the Employee because of such Replacement Merger under the first
sentence of this subparagraph 6(b), the severance pay shall be in the amount of
one (1) year's salary, rather than one and one-half (1-1/2) year's salary, and
such amount shall be payable over a period of twelve (12) months rather than
eighteen (18) months following such a termination of employment.
(c) "Cause" Defined. For purposes of this paragraph 6 and paragraph 9
hereof, the term "cause" shall mean acts of impropriety, fraud, or other
justifiable causes.
7. Salary Continuation in the Event of Disability; Termination of
Employment due to Disability.
(a) Initial Salary Continuation. If the Employee is unable to perform
his duties of employment under this Agreement by reason of injury or sickness,
then the Employee's salary, and all other forms of compensation and benefits
hereunder (except for the auto allowance described in subparagraph 4(b) above),
shall be continued in full for a period of six (6) months (hereinafter referred
to as the "Initial Disability Period") from the date on which the Employee is
first unable to continue his services to the Corporation. Provided, however,
that the Corporation's obligation to continue the Employee's compensation in the
event of disability shall be reduced by any and all of the following benefits
(such benefits being hereinafter sometimes referred to collectively as the
"Reduction Amounts") which the Employee shall be entitled to receive during such
Initial Disability Period:
i) Federal Social Security disability benefits;
ii) New Jersey State temporary disability benefits;
5
<PAGE>
iii) proceeds payable under any long-term disability income
insurance policies covering the Employee for which the Corporation has paid the
premiums (it being understood that the Corporation may, but is not required, to
maintain such insurance on the Employee);
iv) loss of income benefits payable under the New Jersey
No-Fault automobile insurance laws;
v) workers' compensation benefits payable to the Employee;
and/or
vi) any similar benefits receivable by the Employee from any
source for which the Corporation has paid the premiums or other expense of
maintaining the program under which such payments are made, or any governmental
program funded, in whole or in part or directly or indirectly, by taxes or other
contributions made by the Corporation (provided, however, that benefits
receivable by the Employee under any plan or program by reason of retirement, as
opposed to disability, shall not be treated as such similar benefits).
(b) Subsequent Salary Continuation. If the Employee remains unable to
perform his duties of employment hereunder by reason of injury or sickness
beyond the Initial Disability Period, then the Corporation shall continue to pay
the Employee's compensation at the rate of Fifty Percent (50%) of the Employee's
annual rate of base compensation in effect at the time of commencement of the
disability, reduced by the Reduction Amounts, for an additional period of up to
six (6) months (hereinafter referred to as the "Subsequent Disability Period").
(c) Reinstatement. The Employee's full compensation and other benefits
hereunder shall be reinstated immediately upon the Employee's return to
employment during the Initial Disability Period or the Subsequent Disability
Period and the discharge of his full duties of employment hereunder.
(d) Recovery and Recurrence. If the Employee, having been disabled and
having received salary continuation payments from the Corporation as described
above, subsequently returns to active employment and renders services to the
Corporation, prior to a termination of employment due to disability as provided
in subparagraph 7(e) below, and the Employee later
6
<PAGE>
suffers a recurrence of disability arising out of or contributed to by the same
cause or causes as existed during or led to the original period(s) of
disability, then for purposes of this Agreement, the salary continuation amounts
set forth herein shall be computed by taking into account the level(s) and
duration of such payments to the Employee during the prior period(s) of
disability. If the cause of the subsequent disability is entirely unrelated to
the cause or causes of the prior disability, then the salary continuation
amounts set forth above shall be computed without regard to the prior
disability. If there is in effect a disability insurance policy on the Employee
for which the Corporation pays the premiums, and if the insurance company
issuing such policy deems the Employee to have made a recovery so that the
subsequent disability is subject to new maximum benefit and elimination periods,
then the subsequent disability shall be treated as entirely unrelated to the
cause of the prior disability for purposes hereof. Similarly, if there is in
effect such insurance and such insurance company deems the Employee not to have
recovered so that the subsequent disability is treated as recurrent and thus
subject to the original maximum benefit period and no new elimination period is
imposed, then the subsequent disability shall be treated as arising out of or
contributed to by the same cause or causes as existed during or led to the
original period(s) of disability. In the event that there is more than one
company insuring the Employee under disability income policies for which the
Corporation pays the premiums and there is disagreement between the insurance
companies with respect to whether there was a recovery qualifying for new
maximum benefit and elimination periods, then unless otherwise determined by the
Corporation if any such insurance company deems the disability to be recurrent
and a continuation of the original disability, the subsequent disability shall
be treated
7
<PAGE>
for purposes hereof as arising out of or contributed to by the same cause or
causes as existed during or led to the original period(s) of disability.
(e) Termination of Employment due to Disability. If the Employee's
disability continues for longer than the end of the Subsequent Disability Period
(or, upon mutual agreement of the Corporation and the Employee, at any earlier
time), then the Employee shall be treated as "permanently disabled" for purposes
of this Agreement, and the Employee's employment under this Agreement shall
terminate. In such event, the Corporation shall assign to the Employee at no
cost to the Employee all rights which the Corporation may then have in any
disability income insurance policies on the Employee, which policies shall then
become the property of the disabled Employee.
(f) Determination of Disability Status. If the Corporation and the
Employee disagree concerning the Employee's status of disability or fitness for
purposes of this paragraph and there is in force a disability income insurance
policy on the Employee (whether paid for by the Corporation or the Employee),
then the Employee shall be deemed to be disabled for purposes of this Agreement
if any such policy pays benefits to the Employee. If there is no such insurance
in force, and the parties disagree concerning the Employee's status, then the
Employee shall be examined by a physician appointed jointly by the parties, or
failing such joint appointment by the parties, by a physician appointed jointly
by a physician for the Corporation and a physician for the Employee, and the
decision of such physician so appointed shall be binding upon the parties. In
the event that neither the parties nor the physicians for the Corporation and
the Employee mutually agree to an examining physician, then such physician shall
be appointed by the Medical Society in the County in which the Corporation then
maintains
8
<PAGE>
its principal office. The fees and expenses of the physician so appointed shall
be paid by the Corporation. The Employee agrees to submit to and to cooperate
with any such examination; in the event the Employee does not submit to and
cooperate with any such examination, then the Corporation's determination of the
Employee's disability status shall be binding on the parties.
(g) Age Limitation on Salary Continuation Disability Benefit. In no
event shall the Corporation be required to make any salary continuation payments
to the Employee by reason of disability hereunder beyond the end of the month in
which the Employee's sixty-fifth (65th) birthday occurs.
8. Confidential Information. The Employee will not make any
unauthorized disclosure of confidential information relating to the business and
affairs of the Corporation or the Bank during the term of employment or at any
time thereafter.
9. Noncompetition Covenant. For a period of three (3) years following
any termination of employment of the Employee by reason of (a) an election by
the Employee not to renew the term of this Agreement, (b) a resignation of
employment by the Employee, or (c) an involuntary termination of the Employee's
employment hereunder for "cause" (as defined in subparagraph 6(c) hereof), the
Employee will not compete with the Corporation and/or the Bank by engaging in
the competitive conduct of the banking business. For these purposes, the
Employee's competitive conduct of the banking business shall mean being employed
by, or consulting with, a bank or any other business which is in direct
competition with the Corporation and/or the Bank from an office which is the
principal business office of the Employee and which is located within seven (7)
miles from either the main office of the Bank or any branch office
9
<PAGE>
of the Bank which is in operation at the time of such a termination of the
Employee's Employment hereunder.
10. Miscellaneous.
(a) Entire Agreement. This Agreement contains the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and any agreement hereafter made between the parties shall be
ineffective to modify or terminate this Agreement or constitute a waiver of any
of the provisions hereof unless such agreement is in writing and is signed by
the party against whom enforcement of the modification, termination or waiver is
sought.
(b) Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New Jersey.
(c) No Waiver. Neither party's failure to invoke any right,
condition or covenant in this Agreement shall be deemed to imply or constitute a
waiver of any other right, condition or covenant.
(d) Notices. All notices required under this Agreement shall
be delivered personally or sent by registered or certified mail to the
respective parties at their addresses on the first page of this Agreement, or to
such other address as may be given in like manner upon ten (10) days' prior
written notice.
(e) Captions. The captions to the paragraphs in this Agreement
are included for convenience only and are not intended to and shall not be
deemed to modify or explain any of the terms of this Agreement.
10
<PAGE>
(f) Binding Effect; Assignment. The terms and provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
permitted assigns. The obligations of the Employee hereunder are personal and
non-delegable to any other person.
(g) Survival. All of the representations, warranties,
covenants and guarantees contained herein or in any amendments hereof shall
survive the termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
WITNESS: EMPLOYEE:
- -------------------------- ---------------------------------------
GEORGE E. IRWIN, Individually
ATTEST: GREAT FALLS BANCORP
By:
- -------------------------- -----------------------------------
Anthony M. Bruno, Jr. John L. Soldoveri, President
Secretary
11
Exhibit 23.1
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We have issued our report dated January 15, 1997 (except for Note 1, as to
which the date is April 29, 1997), accompanying the consolidated financial
statements of Greater Community Bancorp (formerly Great Falls Bancorp) and
Subsidiaries contained in Amendment No. 1 to the Registration Statement (File
No. 333-26453) and Prospectus. We consent to the use of the aforementioned
report in the Registration Statement and Prospectus, and to the use of our name
as it appears under the caption "Experts."
GRANT THORNTON LLP
/s/ Grant Thornton LLP
Philadelphia, Pennsylvania
May 8, 1997
Exhibit 23.2
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
To Greater Community Bancorp:
As independent public accountants, we hereby consent to the use of our report
dated January 16, 1996 and to all references to our Firm included in or made a
part of this Registration Statement on Form S-2.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Roseland, New Jersey
May 8, 1997
Exhibit 25.1
<PAGE>
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GREATER COMMUNITY BANCORP GCB CAPITAL TRUST
(Exact name of Registrant as specified (Exact name of Registrant as specified
in its charter) in its charter)
NEW JERSEY 22-2545165 DELAWARE REQUESTED
(State or other jurisdiction of (I.R.S. employer (State or other jurisdiction of (I.R.S. employer
Incorporation or organization) Identification no.) incorporation or organization) Identification no.)
55 UNION BOULEVARD c/o GREATER COMMUNITY BANCORP
TOTOWA, NEW JERSEY 07512 55 UNION BOULEVARD
(Address, including zip code TOTOWA, NEW JERSEY 07512
of principal executive offices) (Address, including zip code of
principal executive offices)
</TABLE>
Preferred Securities of GCB Capital Trust
Junior Subordinated Debentures of Greater Community Bancorp
Guarantee of Greater Community Bancorp, of certain obligations under the
Preferred Securities
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising
authority to which it is subject.
Name Address
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
Item 3. -15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of
Bankers Trust Company dated August 7, 1990,
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
June 21, 1995 - Incorporated herein by
reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, and
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
March 20, 1996, copy attached.
Exhibit 2 - Certificate of Authority to commence
business - Incorporated herein by reference
to Exhibit 2 filed with Form T-1 Statement,
Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise
corporate trust powers - Incorporated herein
by reference to Exhibit 2 filed with Form
T-1 Statement, Registration No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust
Company, as amended on February 18, 1997 -
incorporated herein by reference to Exhibit 4
filed with Form T-1 Statement, Registration
No. 333-24509.
-2-
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company
required by Section 321(b) of the Act.
Incorporated herein by reference to Exhibit
4 filed with Form T-1 Statement,
Registration No. 22-18864.
Exhibit 7 - A copy of the latest report of condition of
Bankers Trust Company dated as of December
31, 1996.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 6th day
of May, 1997.
BANKERS TRUST COMPANY
By: /s/Kevin Weeks
------------------------------------------------
Kevin Weeks
Assistant Treasurer
-4-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 12/31/96 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks December 31, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
-------------------------
| C400 |
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
<S> <C> <C> <C>
ASSETS | / / / / / / / / / / / / / / / / / / |
1. Cash and balances due from depository institutions (from Schedule RC-A): | / / / / / / / / / / / / / / / / / / |
a. Noninterest-bearing balances and currency and coin(1) ................ | 0081 1,545,000 |1.a.
b. Interest-bearing balances(2) ......................................... | 0071 2,494,000 |1.b.
2. Securities: | / / / / / / / / / / / / / / / / / / |
a. Held-to-maturity securities (from Schedule RC-B, column A) ........... | 1754 0 |2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).......... | 1773 4,368,000 |2.b.
3 Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and of its Edge and Agreement | / / / / / / / / / / / / / / / / / / |
subsidiaries, and in IBFs: | / / / / / / / / / / / / / / / / / / |
a. Federal funds sold ................................................. | 0276 3,651,000 |3.a.
b. Securities purchased under agreements to resell .................... | 0277 3,230,000 |3.b.
4. Loans and lease financing receivables: | / / / / / / / / / / / / / / / / / / |
a. Loans and leases, net of unearned income (from Schedule RC-C)
RCFD 2122 27,239,000 | / / / / / / / / / / / / / / / / / / |4.a.
b. LESS: Allowance for loan and lease losses.RCFD 3123 917,000 | / / / / / / / / / / / / / / / / / / |4.b.
c. LESS: Allocated transfer risk reserve ....RCFD 3128 0 | / / / / / / / / / / / / / / / / / / |4.c.
d. Loans and leases, net of unearned income, | / / / / / / / / / / / / / / / / / / |
allowance, and reserve (item 4.a minus 4.b and 4.c) ............... | 2125 28,889,000 |4.d.
5. Assets held in trading accounts ......................................... | 3545 38,272,000 |5.
6. Premises and fixed assets (including capitalized leases) ................ | 2145 914,000 |6.
7. Other real estate owned (from Schedule RC-M) ............................ | 2150 213,000 |7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) | 2130 184,000 |8.
9. Customers' liability to this bank on acceptances outstanding ............ | 2155 597,000 |9.
10. Intangible assets (from Schedule RC-M) .................................. | 2143 17,000 |10.
11. Other assets (from Schedule RC-F) ....................................... | 2160 6,056,000 |11.
12. Total assets (sum of items 1 through 11) ................................ | 2170 90,430,000 |12.
</TABLE>
- ------------------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 12/31/96 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
<TABLE>
<CAPTION>
Schedule RC--Continued ____________________________________
Dollar Amounts in Thousands | / / / / / / / / Bil Mil Thou __ __|
- ---------------------------------------------------------------------------------------- ------------------------------------------
<S> <C> <C> <C>
LIABILITIES | / / / / / / / / / / / / / / / / |
13. Deposits: | / / / / / / / / / / / / / / / / |
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part I) | RCON 2200 11,985,000 |13.a.
(1) Noninterest-bearing(1) .....................RCON 6631 2,734,000....... | / / / / / / / / / / / / / / / / |13.a.(1)
(2) Interest-bearing ............................RCON 6636 6,657,000....... | / / / / / / / / / / / / / / / / |13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E part II) | RCFN 2200 21,619,000 |13.b.
(1) Noninterest-bearing ........................RCFN 6631 654,000....... | / / / / / / / / / / / / / / / / |13.b.(1)
(2) Interest-bearing ...........................RCFN 6636 22,731,000....... | / / / / / / / / / / / / / / / / |13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase in | / / / / / / / / / / / / / / / / |
domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBFs: | / / / / / / / / / / / / / / / / |
a. Federal funds purchased ..................................................... | RCFD 0278 6,560,000 |14.a.
b. Securities sold under agreements to repurchase .............................. | RCFD 0279 120,000 |14.b.
15. a. Demand notes issued to the U.S. Treasury .................................... | RCON 2840 0 |15.a.
b. Trading liabilities ......................................................... | RCFD 3548 19,172,000 |15.b.
16. Other borrowed money: | / / / / / / / / / / / / / / / / |
a. With original maturity of one year or less .................................. | RCFD 2332 15,909,000 |16.a.
b. With original maturity of more than one year ................................ | RCFD 2333 3,097,000 |16.b.
17. Mortgage indebtedness and obligations under capitalized leases ................... | RCFD 2910 31,000 |17.
18. Bank's liability on acceptances executed and outstanding ......................... | RCFD 2920 597,000 |18.
19. Subordinated notes and debentures ................................................ | RCFD 3200 1,229,000 |19.
20. Other liabilities (from Schedule RC-G) ........................................... | RCFD 2930 5,235,000 |20.
21. Total liabilities (sum of items 13 through 20) ................................... | RCFD 2948 85,554,000 |21.
| / / / / / / / / / / / / / / / / |
22. Limited-life preferred stock and related surplus ................................. | RCFD 3282 0 |22.
EQUITY CAPITAL | / / / / / / / / / / / / / / / / |
23. Perpetual preferred stock and related surplus .................................... | RCFD 3838 600,000 |23.
24. Common stock ..................................................................... | RCFD 3230 1,001,000 |24.
25. Surplus (exclude all surplus related to preferred stock) ......................... | RCFD 3839 540,000 |25.
26. a. Undivided profits and capital reserves ...................................... | RCFD 3632 3,131,000 |26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ...... | RCFD 8434 ( 14,000) |26.b.
27. Cumulative foreign currency translation adjustments .............................. | RCFD 3284 ( 382,000) |27.
28. Total equity capital (sum of items 23 through 27) ................................ | RCFD 3210 4,876,000 |28.
29. Total liabilities, limited-life preferred stock, and equity capital
(sum of items 21, 22, and 28) .................................................... | RCFD 3300 90,430,000 |29.
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
<S> <C> <C> <C>
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed
for the bank by independent external Number
auditors as of any date during 1995 ........................ | RCFD 6724 N/A | M.1
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ----------------------
(1) Including total demand deposits and noninterest-bearing time and savings
deposits.
<PAGE>
State of New York,
Banking Department
I, PETER M. PHILBIN, Deputy Superintendent of Bank of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated March 20, 1996, providing for an increase in
authorized capital stock from $1,351,666,670 consisting of 85,166,667 shares
with a par value of $10 each designated as Common Stock and 500 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$1,501,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York,
this 21st day of March in the Year of our Lord one thousand
nine hundred and ninety-six.
Peter M. Philbin
----------------------------------
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Three Hundred Fifty One Million, Six Hundred
Sixty-Six Thousand, Six Hundred Seventy Dollars ($1,351,666,670),
divided into Eighty-Five Million, One Hundred Sixty-Six Thousand, Six
Hundred Sixty-Seven (85,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Five Hundred One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,501,666,670), divided into
One Hundred Million, One Hundred Sixty Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
<PAGE>
6. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
20th day of March , 1996.
James T. Byrne, Jr.
-------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
Lea Lahtinen
-------------------
Lea Lahtinen
Sworn to before me this 20th day of March, 1996.
Sandra L. West
- ------------------------------
Notary Public
SANDRA L. WEST Counterpart filed in the
Notary Public State of New York Office of the Superintendent of
No. 31-4942101 Banks, State of New York,
Qualified in New York County This 21st day of March, 1996
Commission Expires September 19, 1996
