<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
EAGLE BANCSHARES, INC./EBI CAPITAL TRUST I
(Exact name of registrant and co-registrant as specified in their charters)
<TABLE>
<S> <C>
GEORGIA 58-1640222
DELAWARE APPLIED FOR
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
</TABLE>
4305 LYNBURN DRIVE
TUCKER, GEORGIA 30084-4441
(770) 908-6690
(Address, including zip code, and telephone number, including area code, of
registrant's and co-registrant's principal executive offices)
C. JERE SECHLER, JR.
EAGLE BANCSHARES, INC.
4305 LYNBURN DRIVE/TUCKER, GEORGIA 30084-4441
(770) 908-6690
(Name, address, including ZIP Code and telephone number including area code, of
agent for service)
---------------------
COPIES TO:
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<S> <C>
WILLIAM L. FLOYD CHARLES D. GANZ
LONG ALDRIDGE & NORMAN LLP SUTHERLAND, ASBILL & BRENNAN LLP
ONE PEACHTREE CENTER, SUITE 5300 999 PEACHTREE STREET, SUITE 2300
303 PEACHTREE STREET ATLANTA, GEORGIA 30309/(404) 853-8000
ATLANTA, GEORGIA 30308/(404) 527-4000
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effectiveness of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
=================================================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
% Trust Preferred Securities of EBI Capital
Trust I...................................... 1,150,000 $25 $28,750,000 $8,481.25
Preferred
Securities
- ---------------------------------------------------------------------------------------------------------------------------------
% Subordinated Debentures of Eagle
Bancshares, Inc.(2)
- ---------------------------------------------------------------------------------------------------------------------------------
Eagle Bancshares, Inc. Guarantee with respect
to the % Cumulative Trust Preferred
Securities of EBI Capital Trust I(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Total(4)(5)............................ $25 $28,750,000 $8,481.25
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(o).
(2) No separate consideration will be received for the % Subordinated
Debentures (the "Debentures") of Eagle Bancshares, Inc.
(3) No separate consideration will be received for the Eagle Bancshares, Inc.
Guarantee, and pursuant to Rule 457(n) under the Securities Act no separate
fee is payable.
(4) This Registration Statement is deemed to cover rights of holders of %
Subordinated Debentures under the Indenture, the rights of holders of %
Cumulative Trust Preferred Securities of EBI Capital Trust I (the "Preferred
Securities") under an Amended and Restated Declaration of Trust, the rights
of holders of such Preferred Securities under the Guarantee and certain
backup undertakings as described herein.
(5) Such amount represents the liquidation amount of the Preferred Securities to
be issued hereunder and the principal amount of Debentures that may be
distributed to holders of such Preferred Securities upon any liquidation of
EBI Capital Trust I.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
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.
SUBJECT TO COMPLETION, DATED JULY , 1998
PROSPECTUS 1,000,000 PREFERRED SECURITIES
EBI CAPITAL TRUST I
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25.00 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
(EAGLE BANCSHARES, INC. LOGO)
The % Cumulative Trust Preferred Securities (the "Preferred Securities")
offered hereby represent preferred undivided beneficial interests in the assets
of EBI Capital Trust I, a statutory business trust created under the laws of the
State of Delaware ("the Trust"). Eagle Bancshares, Inc., a Georgia corporation
(the "Company"), will own all of the
(Continued on next page)
Application has been made to have the Preferred Securities approved for
listing on the American Stock Exchange, under the symbol [ ], subject
to approval and notice of issuance.
SEE "RISK FACTORS" COMMENCING ON PAGE 12 FOR A DISCUSSION OF CERTAIN RISK
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE PREFERRED
SECURITIES OFFERED HEREBY.
---------------------
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.
THE SECURITIES OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS OR DEPOSIT ACCOUNTS,
ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANKING OR NONBANKING AFFILIATE OF
THE COMPANY (EXCEPT TO THE EXTENT THAT PREFERRED SECURITIES ARE GUARANTEED BY
THE COMPANY AS DESCRIBED HEREIN), ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY AND INVOLVE INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
<TABLE>
<CAPTION>
=======================================================================================================================
Underwriting Proceeds to EBI
Price to Public(1) Commission(2) Capital Trust(3)(4)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security.................................. $25.00 (3) $25.00
- -----------------------------------------------------------------------------------------------------------------------
Total(5)................................................ $25,000,000 (3) $25,000,000
=======================================================================================================================
</TABLE>
(1) Plus accumulated Distributions (as defined herein), if any, from the Issue
Date (as defined herein).
(2) The Trust and the Company have each agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) Since the proceeds of the sale of the Preferred Securities will be invested
in the Subordinated Debentures, the Company has agreed to pay the
Underwriters, as compensation, $ per Preferred Security, or
$ in the aggregate. See "Underwriting."
(4) Before deducting expenses of the offering which are payable by the Company,
estimated to be $ .
(5) The Trust and the Company have granted the Underwriters an option,
exercisable within 30 days from the date of this Prospectus, to purchase up
to 150,000 additional Preferred Securities on the same terms and conditions
set forth above solely to cover over-allotments, if any. If the
Underwriters' over-allotment option is exercised in full, the total Price to
Public, Underwriting Commission and Proceeds to the Trust will be
$28,750,000, $ , and $28,750,000, respectively. See "Underwriting."
---------------------
The Preferred Securities are offered by the Underwriters subject to receipt
and acceptance by them, to prior sale and to 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 facilities of The Depository Trust Company
on or about , 1998.
---------------------
INTERSTATE/JOHNSON LANE
CORPORATION
MORGAN KEEGAN & COMPANY, INC.
STERNE, AGEE & LEACH, INC.
July , 1998
<PAGE> 3
(Continued from previous page)
common securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing undivided beneficial interests
in the assets of the Trust. SunTrust Bank is the Property Trustee (the "Property
Trustee") of the Trust. The Trust exists for the purpose of issuing the Trust
Securities and investing the proceeds thereof in an equivalent amount of %
Subordinated Debentures (the "Subordinated Debentures") of the Company. The
Subordinated Debentures will mature on September 30, 2028 (the "Stated
Maturity"). The Preferred Securities will have a preference over the Common
Securities under certain circumstances with respect to cash distributions and
amounts payable on liquidation, redemption or otherwise over the Common
Securities. See "Description of the Preferred Securities -- Subordination of
Common Securities."
Holders of Preferred Securities are entitled to receive cumulative cash
distributions, at the annual rate of % of the liquidation amount of $25.00
per Preferred Security (the "Liquidation Amount"), accruing from the date of
original issuance (the "Issue Date") and payable quarterly in arrears on the
last day of March, June, September and December of each year, commencing
September 30, 1998 (the "Distributions"). THE COMPANY HAS THE RIGHT, SO LONG AS
NO DEBENTURE EVENT OF DEFAULT (AS DEFINED HEREIN) HAS OCCURRED AND IS
CONTINUING, TO DEFER PAYMENT OF INTEREST ON THE SUBORDINATED DEBENTURES AT ANY
TIME OR FROM TIME TO TIME FOR A PERIOD NOT TO EXCEED 20 CONSECUTIVE QUARTERS
WITH RESPECT TO EACH DEFERRAL PERIOD (EACH, AN "EXTENDED INTEREST PAYMENT
PERIOD"); PROVIDED THAT NO EXTENDED INTEREST PAYMENT PERIOD SHALL END ON A DAY
OTHER THAN AN INTEREST PAYMENT DATE (AS DEFINED HEREIN) OR EXTEND BEYOND THE
STATED MATURITY. Upon the termination of any such Extended Interest Payment
Period and the payment of all amounts then due, the Company may elect to begin a
new Extended Interest Payment Period subject to the requirements set forth
herein. If interest payments on the Subordinated Debentures are so deferred,
distributions on the Preferred Securities will also be deferred, and the Company
will not be permitted, subject to certain exceptions described herein, to
declare or pay any cash distributions with respect to its capital stock or debt
securities that rank pari passu with or junior to the Subordinated Debentures.
During an Extended Interest Payment Period, interest on the Subordinated
Debentures will continue to accrue (and the amount of distributions to which
holders of the Preferred Securities are entitled will continue to accumulate) at
the rate of % per annum, compounded quarterly to the extent permitted by
applicable law, and holders of the Preferred Securities will be required to
include interest income in their gross income for United States federal income
tax purposes in advance of receipt of the cash distributions with respect to
such deferred interest payments. A holder of Preferred Securities that disposes
of its Preferred Securities between record dates for payments of distributions
(and consequently does not receive a distribution from the Trust for the period
prior to such disposition) will nevertheless be required to include accrued but
unpaid interest on the Subordinated Debentures through the date of disposition
in income as ordinary income and to add such amount to its adjusted tax basis in
its pro rata share of the underlying Subordinated Debentures deemed disposed of.
See "Description of the Subordinated Debentures -- Option to Extend Interest
Payment Period," "Material Federal Income Tax Consequences -- Potential
Extension of Interest Payment Period and Original Issue Discount" and
"-- Disposition of Preferred Securities."
The Company and the Trust believe that, taken together, the obligations of
the Company under the Guarantee, the Trust Agreement, the Subordinated
Debentures, the Indenture and the Expense Agreement (each as defined herein),
provide, in the aggregate, a full, irrevocable and unconditional guarantee, on a
subordinated basis, of all of the obligations of the Trust under the Preferred
Securities. See "Relationship Among the Preferred Securities, the Subordinated
Debentures and the Guarantee -- Full and Unconditional Guarantee." The Guarantee
of the Company guarantees the payment of Distributions and payments on
liquidation or redemption of the Preferred Securities, but only in each case to
the extent of funds held by the Trust, as described herein. See "Description of
the Guarantee -- General." If the Company does not make interest payments on the
Subordinated Debentures held by the Trust, the Trust will have insufficient
funds to pay Distributions on the Preferred Securities. The Guarantee does not
cover payments of Distributions when the Trust does not have sufficient funds to
pay such Distributions. In such event, a holder of Preferred Securities may
institute a legal proceeding directly against the Company pursuant to the terms
of the
i
<PAGE> 4
Indenture to force payments of amounts equal to such Distributions to such
holder. See "Description of the Subordinated Debentures -- Enforcement of
Certain Rights by Holders of the Preferred Securities." The obligations of the
Company under the Guarantee and the Preferred Securities are subordinate and
junior in right of payment to all Senior Debt, Subordinated Debt and Additional
Senior Obligations (each as defined herein) of the Company. The Subordinated
Debentures are unsecured obligations of the Company and are subordinated to all
Senior Debt, Subordinated Debt and Additional Senior Obligations of the Company.
The Preferred Securities are subject to mandatory redemption, in whole or
in part, upon repayment of the Subordinated Debentures at maturity or their
earlier redemption. Subject to any approval that the Office of Thrift
Supervision (the "OTS") or other bank regulatory authority then having
regulatory authority may have over the Bank (the "Applicable Bank Regulatory
Authority") (if such approval is then required under applicable capital
guidelines or policies of the Applicable Bank Regulatory Authority) the
Subordinated Debentures are redeemable prior to maturity at the option of the
Company (i) on or after September 30, 2003, in whole at any time or in part from
time to time, or (ii) at any time, in whole (but not in part), within 180 days
following the occurrence of a Tax Event, a Capital Event or an Investment
Company Event (each as defined herein), in each case at a redemption price equal
to the accrued and unpaid interest on the Subordinated Debentures so redeemed to
the date fixed for redemption, plus 100% of the principal amount thereof
allocated on a pro rata basis (based upon Liquidation Amounts) among the Trust
Securities (the "Redemption Price"). See "Description of the Preferred
Securities -- Redemption or Exchange."
The Company has the right at any time to dissolve, wind-up or terminate the
Trust, subject to the Company's having received prior approval of the Applicable
Bank Regulatory Authority to do so, if then required under applicable capital
guidelines or policies of the Applicable Bank Regulatory Authority. In the event
of the voluntary or involuntary dissolution, winding up or termination of the
Trust, after satisfaction of liabilities to creditors of the Trust as required
by applicable law, the holders of Preferred Securities will be entitled to
receive a Liquidation Amount of $25.00 per Preferred Security, plus accumulated
and unpaid Distributions thereon to the date of payment, which may be in the
form of a distribution of such amount of a Subordinated Debenture having an
aggregate principal amount equal to the Liquidation Amount of such Preferred
Securities (and carrying with it accumulated interest in an amount equal to the
accumulated and unpaid Distributions then due on such Preferred Securities),
subject to certain exceptions. See "Description of the Preferred
Securities -- Redemption or Exchange" and "-- Liquidation Distribution Upon
Termination."
---------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED
SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
ii
<PAGE> 5
[MAP TO BE PROVIDED]
iii
<PAGE> 6
AVAILABLE INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company and the Trust with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Preferred Securities and the Subordinated
Debentures. This Prospectus does not contain all of the information set forth in
such Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission, although it does include a
summary of the material terms of the Indenture and the Trust Agreement.
Reference is made to such Registration Statement and to the exhibits relating
thereto for further information with respect to the Company, the Trust, the
Preferred Securities and the Subordinated Debentures. Any statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission or incorporated by
reference herein are not necessarily complete, and, in each instance, reference
is made to the copy of such document so filed for a more complete description of
the matter involved. Each such statement is qualified in its entirety by such
reference.
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. The Trust is not currently subject to the information reporting
requirements of the Exchange Act and although the Trust will become subject to
such requirements upon the effectiveness of the Registration Statement, it is
not expected that the Trust will file separate reports under the Exchange Act.
The Company's reports, proxy statements and other information can be inspected
and copied at the following public reference facilities maintained by the
Commission: 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade
Center, Suite 1300, New York, New York 10048; and the Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material may also be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, upon
payment of prescribed rates. The Company's Common Stock is listed on The Nasdaq
Stock Market's National Market, 1735 K Street, N.W., Washington, DC 20006 under
the symbol "EBSI." The Commission maintains an Internet web site that contains
reports, proxy and information statements and other information regarding
issuers, such as the Company, who file electronically with the Commission. The
address of that site is http://www.sec.gov. In addition, reports, proxy
statements and other information concerning the Company may be inspected at the
offices of The Nasdaq Stock Market.
No separate financial statements of the Trust have been included herein.
The Company and the Trust do not consider that such financial statements would
be material to holders of Preferred Securities because (i) all of the voting
securities of the Trust will be owned by the Company, a reporting company under
the Exchange Act, (ii) the Trust has no independent operations but exists for
the sole purpose of issuing securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
Subordinated Debentures issued by the Company, and (iii) the obligations of the
Company described herein under the Indenture and pursuant to the Trust
Agreement, the Guarantee issued by the Company with respect to the Preferred
Securities, the Subordinated Debentures purchased by the Trust and the related
Indenture, taken together, constitute, in the belief of the Company and the
Trust, a full and unconditional guarantee of payments due on the Preferred
Securities. See "Description of the Subordinated Debentures" and "Description of
the Guarantee."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended March 31, 1998,
previously filed by the Company with the Commission pursuant to Section 13 of
the Exchange Act, is incorporated herein by reference.
All documents, reports and any definitive proxy or information statements
filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Preferred Securities offered hereby shall
be deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of
1
<PAGE> 7
such documents. Any statement contained in documents incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits to such documents which are not specifically incorporated by reference
in such documents). Written requests for such copies should be directed to
Richard B. Inman, Jr., Secretary and Treasurer, Eagle Bancshares, Inc., 4305
Lynburn Drive, Tucker, Georgia 30084. Telephone requests may be directed to
(770) 908-6400.
2
<PAGE> 8
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus or
incorporated herein by reference. Unless otherwise indicated, the information in
this Prospectus does not give effect to the exercise of the Underwriters' over-
allotment option. Prospective investors should carefully consider the
information set forth under the heading "Risk Factors." Certain statements in
this Prospectus and documents incorporated herein by reference are
forward-looking. Such statements are identified by the use of forward-looking
words or phrases such as "intend," "will be positioned," "expects," is or are
"expected," "anticipates," "anticipated," "may," "could," "should," "would," and
"believe." These forward-looking statements are based on the Company's current
expectations. To the extent any of the information contained or incorporated by
reference in this Prospectus constitutes a "forward-looking statement" as
defined in Section 27A of the Securities Act, the risk factors set forth below
under the caption "Risk Factors" and in the information incorporated herein by
reference are cautionary statements identifying important factors that could
cause actual results to differ materially from those in the forward-looking
statement.
THE COMPANY
The Company is a unitary savings and loan holding company which owns and
operates Tucker Federal Bank (the "Bank"), Eagle Real Estate Advisors, Inc.
("EREA") and Eagle Bancshares Capital Group, Inc. ("EBCG"). The Company has
grown total assets to $1.1 billion at March 31, 1998, making it one of the
largest financial institutions headquartered in metropolitan Atlanta. The Bank
is a federally chartered stock savings and loan association organized in 1956
and based in Tucker, Georgia, a suburb of Atlanta. The Bank serves the
metropolitan Atlanta area through 15 full service banking offices. As a unitary
thrift holding company, the Company is permitted, under current regulations, to
engage in activities in which bank holding companies may not legally engage. To
capitalize on this advantage, the Company formed EREA in 1991 to perform real
estate brokerage and development activities and formed EBCG in 1997 to provide
mezzanine financing that is not readily available to small and medium size
businesses from traditional commercial banking sources.
Growth in the metropolitan Atlanta area and ongoing consolidation of the
financial services industry have resulted in significant recent increases in
loans, deposits and customers at the Bank. In February 1996, the Company sold
1,435,000 shares of common stock, raising $21.5 million of additional capital to
support growth in deposits and permit investments by the Company. The Company
also has benefited from industry consolidation by hiring experienced banking
executives and acquiring surplus local branches. On March 26, 1997, the Company
acquired Southern Crescent Financial Corp, which had total assets of
approximately $150 million and four full-service branches in the rapidly growing
markets of the south metropolitan Atlanta area. The acquisition also enhanced
the Company's commercial lending capabilities. Since the Company's last
offering, total assets have grown from $558 million at December 31, 1995 to $1.1
billion at March 31, 1998, or 105.9%. Deposits have grown from $332 million to
$779 million, or 134.6%, and the Company's total loan portfolio, which includes
loans held for sale, has increased from $381 million to $868 million, or 128.2%.
The following table summarizes certain selected consolidated financial
information of the Company for the periods presented.
SUMMARY SELECTED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED MARCH 31,
------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Total assets................................................ $419,136 $568,678 $736,384 $823,882 $1,149,483
Loans receivable, net....................................... 271,356 364,491 410,843 515,749 535,732
Loans held for sale......................................... 23,641 41,220 92,552 62,882 332,592
Total deposits.............................................. 334,361 386,353 458,458 557,724 778,975
Shareholders' equity........................................ 38,137 41,637 66,448 67,874 74,702
Net interest income......................................... 17,750 21,116 23,804 30,156 31,893
Non-interest income......................................... 9,984 7,282 10,853 12,911 16,349
Non-interest expense........................................ 17,746 20,164 24,468 34,901 35,391
Net income.................................................. 5,462 4,881 6,219 3,746 7,210
Bank branches............................................... 12 12 13 14 15
</TABLE>
3
<PAGE> 9
BUSINESS STRATEGY
LONG TERM GROWTH STRATEGY
Management believes the best way to maximize long-term shareholder value is
to continue to improve financial performance and operating efficiency and to
continue to grow market share in the metropolitan Atlanta area. Management
intends to continue to pursue allied businesses permitted by its unitary thrift
holding company status. The Company's long-term strategy is focused on
increasing shareholder value by creating competitive advantages in targeted
business niches which include community banking, mortgage banking and real
estate development.
Community Banking. Based on total assets as of March 31, 1998, the Bank is
one of the largest financial institutions headquartered in the metropolitan
Atlanta area. The Bank has a significant strategic opportunity as one of
Atlanta's leading community banks. Management believes that the Bank is well
positioned to continue to build franchise value by increasing market share in
the metropolitan Atlanta area. The Bank's asset size and legal lending limit per
borrower permit it to serve small and middle market customers more effectively
than many smaller Atlanta community banks. Management believes that the Bank's
competitive advantage is its ability to provide a full range of financial
products with personalized service and local decision making, which typically
are not available from financial institutions headquartered out-of-state.
Management utilizes this advantage to develop its relationship banking program
which concentrates on customers' unique needs. Additionally, management believes
that many local borrowers are being underserved as a result of the recent
acquisitions of many of Atlanta's banks and thrifts by large out-of-state banks
and that will allow the Bank to continue to build franchise value by increasing
market share in the metropolitan Atlanta area.
Over the past year, the Bank has incurred increased capital expenditures,
data processing costs, training expenses and consulting fees with the goal of
strategically building the infrastructure necessary to support future growth.
The Bank converted its core and branch processing systems to a data processing
environment comparable to that of commercial banks. These systems increase
capacity and provide enhanced customer information which allows the Bank to
identify its customers with the greatest profit improvement potential. Further,
management has undertaken a number of initiatives to improve core earnings,
including changing deposit mix to lower the cost of funds and rebidding
maintenance, courier, and communications contracts. Management believes these
initiatives will allow it to continue to improve operating efficiency and
customer service.
Mortgage Banking. The Company believes it creates a strategic advantage by
utilizing its experience and historic commitment to construction lending to
generate permanent mortgage loan originations. Because of the Company's
long-term participation in construction lending and its relationship with its
existing homebuilders, it has been able to develop a core business of permanent
mortgage originations. The Company has relationships with approximately 165
homebuilders in the Atlanta metropolitan area, but does not have any significant
loan concentration with any homebuilder or in any particular market area. Over
the past year, the Company continued to upgrade the origination and processing
systems used in its mortgage banking business to improve efficiencies of loan
originations and sales. The Company also is implementing an automated
underwriting system for its conforming mortgage loans to continue to improve
customer service by providing faster loan decisions. In September 1997, the
Company acquired a wholesale mortgage banking business to increase originations
and improve efficiencies of its mortgage banking operations. Currently, the
Company sells the majority of its mortgage servicing rights originated.
Real Estate Development. Management believes that the Company's experience
as a metropolitan Atlanta area real estate lender for over 40 years creates a
strategic advantage for its real estate development activities. Local market
knowledge and relationships with builders and developers give the Company a
unique position to create and evaluate real estate development opportunities.
Additionally, the Company's real estate investments and brokerage activities
have contributed increasing incremental income to the Company since 1995.
STRATEGIC BUSINESS PLAN
The Company reviews and updates its Strategic Business Plan quarterly. The
Company's current plan is focused on five basic areas: (i) improving financial
performance and operating efficiencies, (ii) continuing to grow market share in
metropolitan Atlanta, (iii) developing new sources of net income, (iv) utilizing
technology to enhance operating results and capitalize on new business
opportunities, and (v) being the "Bank of Choice" for the small business
community. See "Business Strategy -- Strategic Business Plan."
4
<PAGE> 10
PENDING LITIGATION
In November 1992, the Bank acquired certain assets from the Resolution
Trust Corporation, which included four mortgage loan origination facilities. The
Bank then entered into an Operating Agreement (the "Agreement") with two
individuals and a corporation controlled by them (collectively, the
"Plaintiffs"), to form the Prime Lending Division ("Prime"). Under the
Agreement, the individual Plaintiffs became employees of the Bank and Plaintiffs
compensation was to include a percentage of the net profits to be calculated
after allocating expenses and overhead to Prime. In mid-1997, a disagreement
arose with respect to the allocation of expenses to Prime, which led to the
filing by the Plaintiffs of a lawsuit on December 5, 1997 alleging that the Bank
had improperly calculated the profits due them under the Agreement since April
1997. The Bank maintains that its calculation of the profits and losses was
proper. In January 1998, the Bank terminated the Agreement with the Plaintiffs
"for cause."
The complaint as amended seeks, among other things (i) a declaration that
the Agreement was terminated "without cause" and that, pursuant to the
Agreement, the Plaintiffs have the right to purchase the assets of Prime at 75%
of fair market value; (ii) alleged unpaid profits from Prime's operations (in an
amount estimated by the Plaintiffs to equal approximately $450,000); (iii) a
determination that the term "assets," as used in connection with the Plaintiffs'
alleged purchase option in the Agreement, includes all loans carried as assets
on the books of the Bank that were originated by Prime (the "Prime Loans") and
that the Plaintiffs would not be required to assume or net against the Prime
Loans any corresponding liability incurred by the Bank in connection with the
Prime Loans; (iv) consequential damages in excess of $20 million, which
represents the Plaintiffs' assessment of the loss they suffered by the Bank's
refusal to sell to the Plaintiffs Prime's assets under Plaintiffs' definition of
"assets" (i.e., including such loans); and (v) unspecified punitive damages and
attorneys fees. The Bank strongly denies all of Plaintiffs' allegations,
including the Plaintiffs' allegation that they have the right to purchase the
assets of Prime. Further, the Bank specifically disputes Plaintiffs' contention
that all loans originated by Prime constitute "assets" of Prime.
The Bank believes that the Plaintiffs are not entitled to purchase the
Prime Loans and that the only assets that the Plaintiffs may be permitted to
purchase are the tangible and intangible assets of Prime. At March 31, 1998,
Prime's tangible assets had a collective book value estimated to be
approximately $1.2 million, which could be purchased at 75% of fair market value
under the Agreement. Although the Bank does not believe that Plaintiffs have the
contractual right to purchase the Prime Loans, the Bank contends that if the
court determines that the Plaintiffs do have a right to purchase the Prime
Loans, the Plaintiffs must assume the liabilities associated with such loans
(including funding expenses). The Agreement specifically provides that, if
Plaintiffs purchase the assets of Prime, they must "assume all obligations
associated with the [Prime Lending] Division."
If Plaintiffs are successful in obtaining a declaration that they are
entitled to purchase the assets of Prime (or if the Bank agrees to compromise
this case with the Plaintiffs), the Bank may cease originating permanent
mortgages and construction loans from the 11 Prime offices situated outside the
metropolitan Atlanta area. The Agreement provides that, if Plaintiffs purchase
the assets of Prime, the Bank shall refrain for two years from originating
conforming residential loans secured by property located within 25 miles of any
Prime office. The Company does not believe that such cessation of operations
would have a material adverse effect upon its or the Bank's business or
operations. Based on the Bank's calculations for the 12 months ending March 31,
1998, the Bank sold approximately $500 million in permanent single family
mortgage loans originated by Prime. However, as a result of expenses
attributable thereto, Prime's permanent mortgage origination business incurred a
pretax loss of $200,000. The Bank estimates that during the same period
construction loans originated by Prime have generated pretax income of
approximately $1.5 million. Pending the outcome of the litigation, the Bank will
continue to operate Prime's mortgage loan origination business. In addition, the
Bank believes it can replace loans originated by Prime through its other
existing operations, including the Wholesale Mortgage Division of the Bank. SEE
RISK FACTORS -- RISK FACTORS REGARDING THE COMPANY -- LITIGATION REGARDING
MORTGAGE ORIGINATION DIVISION.
5
<PAGE> 11
EBI CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) a Trust Agreement, dated as of July , 1998, executed by the Company, as
depositor, and the trustees of the Trust named therein (together with the
Property Trustee, the "Trustees"), and (ii) a Certificate of Trust filed with
the Delaware Secretary of State on July , 1998. The initial trust agreement
will be amended and restated in its entirety (as so amended and restated, the
"Trust Agreement") substantially in the form filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. The Trust
Agreement will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). Upon issuance of the Preferred
Securities, the purchasers thereof will own all of the Preferred Securities. The
Company will acquire all of the Common Securities which will represent an
aggregate liquidation amount equal to at least 3% of the total capital of the
Trust. The Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Preferred Securities, except that upon the occurrence
and during the continuance of an Event of Default (as defined herein) under the
Trust Agreement resulting from a Debenture Event of Default (as defined herein),
the rights of the Company as holder of the Common Securities to payment in
respect of Distributions and payments upon liquidation, redemption or otherwise
will be subordinated to the rights of the holders of the Preferred Securities.
See "Description of the Preferred Securities -- Subordination of Common
Securities." The Trust exists for the exclusive purposes of (i) issuing the
Trust Securities representing undivided beneficial interests in the assets of
the Trust, (ii) investing the gross proceeds of the Trust Securities in the
Subordinated Debentures and payments thereunder issued by the Company, and (iii)
engaging in only those other activities necessary, advisable, or incidental
thereto. The Subordinated Debentures will be the only assets of the Trust and
payments under the Subordinated Debentures will be the only revenue of the
Trust. The Trust has a term of 31 years, but may terminate earlier as provided
in the Trust Agreement. The Company and the Trust anticipate that the Trust will
be conditionally exempted from the reporting requirements of the Exchange Act.
The principal executive office of the Trust is 4305 Lynburn Drive, Tucker,
Georgia 30084-4441 and its telephone number at such address is (770) 908-6690.
6
<PAGE> 12
THE OFFERING
Securities Offered......... 1,000,000 Preferred Securities having a Liquidation
Amount of $25.00 per Preferred Security. The
Preferred Securities represent preferred
undivided beneficial interests in the assets of
the Trust, which assets will consist solely of
the Subordinated Debentures and payments
thereunder. The Company and the Trust have
granted the Underwriters an option, exercisable
within 30 days after the date of this Prospectus,
to purchase up to an additional 150,000 Preferred
Securities at the public offering price set forth
on the cover page of this Prospectus, solely to
cover over-allotments, if any.
Payment of Distributions... The Distributions payable on each Preferred
Security will be fixed at a rate per annum of
% of the Liquidation Amount of $25.00 per
Preferred Security, will be cumulative, will
accrue from 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 September
30, 1998. See "Description of the Preferred
Securities -- Distributions -- Payment of
Distributions."
Option to Extend Interest
Payment Period........... The Company has the right, at any time, so long as
no Debenture Event of Default has occurred and is
continuing, to defer payments of interest on the
Subordinated Debentures for a period not
exceeding 20 consecutive quarters; provided, that
no Extended Interest Payment Period may end on a
day other than an Interest Payment Date or extend
beyond the Stated Maturity of the Subordinated
Debentures. As a consequence of the extension by
the Company of the interest payment period,
quarterly Distributions on the Preferred
Securities will be deferred (though such
Distributions will continue to accrue with
interest thereon compounded quarterly to the
extent permitted by applicable law, since
interest will continue to accrue and compound on
the Subordinated Debentures) during any such
Extended Interest Payment Period. During an
Extended Interest Payment Period, the Company
will be prohibited, subject to certain exceptions
described herein, from declaring or paying any
cash distributions with respect to its capital
stock or debt securities that rank pari passu
with or junior to the Subordinated Debentures.
Upon the termination of any Extended Interest
Payment Period and the payment of all amounts
then due, the Company may commence a new Extended
Interest Payment Period, subject to the foregoing
requirements. See "Description of the Preferred
Securities -- Distributions -- Extended Interest
Payment Period" and "Description of the
Subordinated Debentures -- Option to Extend
Interest Payment Period."
Should an Extended Interest Payment Period occur,
holders of Preferred Securities will be required
to include deferred interest income in their
gross income for United States federal income tax
purposes in advance of receipt of the cash
distributions with respect to such deferred
interest payments. See "Material Federal Income
Tax Consequences -- Potential Extension of
Interest Payment Period and Original Issue
Discount."
Ranking.................... The Preferred Securities will rank pari passu, and
payments thereon will be made pro rata, with the
Common Securities, except as described
7
<PAGE> 13
under "Description of Preferred
Securities -- Subordination of Common
Securities." The Subordinated Debentures will be
unsecured and subordinate and junior in right of
payment to other debt of the Company to the
extent and in the manner set forth in the
Indenture. See "Description of the Subordinated
Debentures." The Guarantee will constitute an
unsecured obligation of the Company and will rank
subordinate and junior in right of payment to
other debt of the Company to the extent and in
the manner set forth in the Guarantee. See
"Description of the Guarantee." In addition,
because the Company is a holding company, the
Subordinated Debentures and the Guarantee will be
effectively subordinated to all existing and
future liabilities of the Company's subsidiaries,
including the Bank's deposit liabilities. See
"Description of the Subordinated Debentures --
Subordination."
Optional Redemption........ The Preferred Securities are subject to redemption,
in whole or in part, upon repayment of the
Subordinated Debentures at maturity or their
earlier redemption. Subject to Applicable Bank
Regulatory Authority approval (if such approval
is then required under applicable capital
guidelines or policies of the Applicable Bank
Regulatory Authority) the Subordinated Debentures
are redeemable prior to maturity at the option of
the Company (i) on or after September 30, 2003 in
whole at any time or in part from time to time,
or (ii) at any time, in whole (but not in part),
within 180 days following the occurrence of a
Capital Event, Tax Event or an Investment Company
Event, in each case at a redemption price equal
to 100% of the principal amount of the
Subordinated Debenture, together with any accrued
but unpaid interest to the date fixed for
redemption (the "Redemption Price"). See
"Description of the Subordinated
Debentures -- Redemption or Exchange."
No Rating.................. The Company does not expect the Preferred
Securities to be rated by any rating service, nor
is any other security issued by the Company so
rated.
Distribution of
Subordinated Debentures.. The Company has the right at any time to terminate
the Trust and cause the Subordinated Debentures
to be distributed to holders of Preferred
Securities in liquidation of the Trust. See
"Description of the Preferred
Securities -- Redemption or Exchange" and
"Description of the Preferred
Securities -- Liquidation Distribution Upon
Termination."
Guarantee.................. The Company has guaranteed the payment of
Distributions and payments on liquidation or
redemption of the Preferred Securities, but only
in each case to the extent of funds held by the
Trust, as described herein. The Company and the
Trust believe that, taken together, the
obligations of the Company under the Guarantee,
the Trust Agreement, the Subordinated Debentures,
the Indenture and the Expense Agreement provide,
in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis,
of all of the obligations of the Trust under the
Preferred Securities. The obligations of the
Company under the Guarantee and the Preferred
Securities are subordinate and junior in right of
payment to (i) all Senior Debt, Subordinated Debt
and Additional Senior Obligations of the Company
8
<PAGE> 14
and (ii) all indebtedness of its subsidiaries. At
March 31, 1998, the Company and its subsidiaries
had total liabilities (excluding liabilities owed
to the Company) of approximately $1.1 billion. If
the Company does not make principal or interest
payments on the Subordinated Debentures, the
Trust will not have sufficient funds to make
distributions on the Preferred Securities, in
which event the Guarantee will not apply to such
Distributions until the Trust has sufficient
funds available therefor. See "Description of the
Guarantee."
Voting Rights.............. The holders of the Preferred Securities will have
no voting rights except under limited
circumstances. Specifically, if any Distributions
payable on the Preferred Securities are in
arrears for six quarterly periods, the holders of
the Preferred Securities, voting separately as a
class with any other preferred securities having
similar voting rights, will be entitled at the
next regular or special meeting of shareholders
of the Company to elect two directors to the
Board of Directors of the Company (such voting
rights will continue until such time as the
Distribution arrearage on the Preferred
Securities have been paid in full). The
affirmative consent of the holders of at least
66 2/3% of the outstanding Preferred Securities
will be required by the Trust for amendments to
the Trust Agreement that would affect adversely
the rights or privileges of the holders of the
Preferred Securities. See "Description of the
Preferred Securities -- Voting Rights; Amendment
of Trust Agreement."
ERISA Considerations....... Prospective purchasers should consider the
restrictions on purchase set forth under "ERISA
Considerations."
Form of Preferred
Securities............... The Preferred Securities will be represented by a
global certificate or certificates (each a
"Global Preferred Security") registered in the
name of Cede & Co., as nominee for The Depository
Trust Company ("DTC"). Beneficial interests in
the Preferred Securities will be evidenced by,
and transfers thereof will be effected only
through, records maintained by the participants
in DTC. Except under the limited circumstances
described herein, Preferred Securities in
certificated form (each a "Certificated Preferred
Security") will not be issued in exchange for
Global Preferred Securities. See "Description of
the Preferred Securities -- Form, Denomination,
Book-Entry Procedures and Transfer."
Absence of Market for the
Preferred Securities..... The Preferred Securities will be a new issue of
securities for which there currently is no
market. Although application has been made to
have the Preferred Securities listed on the
American Stock Exchange, subject to approval and
notice of issuance, there can be no assurance
that an active trading market in the Preferred
Securities will develop or if one does develop,
that it will be maintained. Accordingly, there
can be no assurance as to the development or
liquidity of any market for the Preferred
Securities.
American Stock Exchange
Listing Application...... Application to list the Preferred Securities has
been made with the American Stock Exchange under
the symbol [ ], subject to approval
and notice of issuance.
9
<PAGE> 15
Use of Proceeds............ The proceeds to the Trust from the sale of the
Preferred Securities offered hereby will be used
by the Trust to purchase the Subordinated
Debentures issued by the Company. The net
proceeds to the Company from the sale of
Subordinated Debentures offered hereby are
estimated to be approximately $ million
($ million if the Underwriters'
over-allotment option is exercised in full),
after deducting the underwriting commission and
estimated offering expenses. The Company intends
to use the net proceeds as follows: (i)
approximately $10 million will be contributed to
the Bank to increase the Bank's capital ratios to
support growth, for working capital and to
increase the Bank's regulatory capital from
"adequately capitalized" to "well capitalized" as
defined by the OTS, and (ii) the balance will be
used to repay existing debt, invest in investment
grade preferred securities of other issuers, and
for general corporate purposes. The precise
amount and timing of the application of such net
proceeds used for such corporate purposes will
depend on the funding requirements and
availability of other funds to the Company.
Pending such application by the Company, net
proceeds may be temporarily invested in
short-term interest-bearing securities. The
portion of the net proceeds that the Company
contributes to the Bank will qualify as Tier 1 or
core capital of the Bank under the risk-based
capital guidelines of the OTS. See "Use of
Proceeds."
For additional information regarding the Preferred Securities, see "The
Trust," "Use of Proceeds," "Description of the Preferred Securities,"
"Description of the Subordinated Debentures," "Description of the Guarantee,"
"Relationship Among the Preferred Securities, the Subordinated Debentures and
the Guarantee," "Material Federal Income Tax Consequences," and "ERISA
Considerations."
RISK FACTORS
Prospective purchasers of the Preferred Securities should carefully
consider the risks in connection with this offering set forth under "Risk
Factors."
10
<PAGE> 16
SELECTED CONSOLIDATED FINANCIAL DATA
The summary below should be read in conjunction with the financial
information included in the Company's Annual Report on Form 10-K for the year
ended March 31, 1998. See "Available Information," "Incorporation of Certain
Documents by Reference" and "Selected Consolidated Financial Data."
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED MARCH 31,
------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
SELECTED RESULTS OF OPERATIONS:
Interest income...................................... $ 32,026 $ 39,618 $ 52,625 $ 63,785 $ 71,900
Interest expense..................................... 14,276 18,502 28,821 33,629 40,007
Net interest income.................................. 17,750 21,116 23,804 30,156 31,893
Provision for loan losses............................ 1,034 643 1,000 2,652 2,601
Noninterest income................................... 9,984 7,282 10,853 12,911 16,349
Noninterest expenses................................. 17,746 20,164 24,468 34,901 35,391
Income before income taxes........................... 8,954 7,591 9,189 5,514 10,250
Net income........................................... 5,462 4,881 6,219 3,746 7,210
PER COMMON SHARE:
Earnings per common share -- basic................... $ 1.40 $ 1.21 $ 1.46 $ 0.68 $ 1.27
Earnings per common share -- diluted................. 1.36 1.18 1.40 0.66 1.23
Dividends declared................................... 0.24 0.36 0.42 0.56 0.60
Book value per share................................. 9.54 10.25 12.03 11.99 13.03
Average common shares outstanding -- basic........... 3,889 4,032 4,251 5,528 5,691
Average common shares outstanding -- diluted......... 4,004 4,126 4,430 5,705 5,839
SELECTED BALANCE SHEET DATA:
Total assets......................................... $419,136 $568,678 $736,384 $823,882 $1,149,483
Securities available for sale........................ 36,730 33,160 105,988 96,921 104,736
Investment securities held to maturity............... 68,816 76,578 55,341 51,907 58,138
Loans held for sale.................................. 23,641 41,220 92,552 62,882 332,592
Loans receivable, net................................ 271,356 364,491 410,843 515,749 535,732
Reserve for loan losses.............................. 4,791 4,704 5,464 5,198 6,505
Investment in real estate............................ -- 6,620 12,962 25,828 27,595
Deposits............................................. 334,361 386,353 458,458 557,724 778,975
FHLB advances and other borrowings................... 31,394 120,688 174,337 153,805 240,855
Stockholders' equity................................. 38,137 41,637 66,448 67,874 74,702
PERFORMANCE RATIOS:
Return on average assets............................. 1.32% 1.01% 0.99% 0.49% 0.83%
Return on average equity............................. 16.31 12.33 13.32 5.55 10.00
Net interest margin -- taxable equivalent............ 4.59 4.81 4.20 4.37 4.11
Equity to assets..................................... 9.10 7.32 9.02 8.24 6.50
Efficiency ratio..................................... 63.99 71.01 70.60 81.04 73.36
ASSET QUALITY DATA:
Total non-accrual loans.............................. $ 1,890 $ 994 $ 6,317 $ 7,866 $ 7,948
Potential problem loans.............................. 2,652 2,963 4,329 2,503 4,009
Total non-accrual and problem loans.................. 4,542 3,957 10,646 10,369 11,957
Real estate owned, net............................... 1,273 1,139 1,344 2,074 2,947
Total problem assets................................. 5,815 5,096 11,990 12,443 14,904
Total problem assets/Total assets.................... 1.39% 0.90% 1.63% 1.51% 1.30%
Total problem assets/Loans receivable, net (plus
reserves).......................................... 2.11 1.38 2.88 2.39 2.75
Reserve for loan losses/Total problem assets......... 82.39 92.31 45.57 41.77 43.65
Ratio of net charge-offs to average loans............ 0.06 0.22 0.05 0.55 0.21
FIXED CHARGE COVERAGE RATIOS:
Ratio of earnings to fixed charges(1)
Excluding interest on deposits..................... 4.42x 2.81x 2.12x 1.63x 1.97x
Including interest on deposits..................... 1.62 1.41 1.32 1.16 1.25
CAPITAL RATIOS (TUCKER FEDERAL BANK):
Leverage capital..................................... 8.89% 6.56% 10.14% 6.72% 4.59%
Tier 1 capital....................................... 10.34 8.37 11.76 10.14 7.47
Total capital........................................ 11.53 9.44 12.65 11.08 8.31
</TABLE>
- ---------------
(1) The consolidated ratio of earnings to fixed charges has been computed by
dividing income before tax plus fixed charges by fixed charges. Fixed
charges represent all interest expense and the interest factor in rent
expense (ratios are presented both excluding and including interest on
deposits). Interest expense (other than on deposits) includes interest on
federal funds purchased and securities sold under agreements to repurchase,
Federal Home Loan Bank advances, and other borrowed funds.
11
<PAGE> 17
RISK FACTORS
Prospective investors should carefully consider, together with the other
information contained and incorporated by reference in this Prospectus, the
following risk factors before purchasing the Preferred Securities offered
hereby. Certain statements in this Prospectus and documents incorporated herein
by reference are forward-looking. Such statements are identified by the use of
forward-looking words or phrases such as "intend," "will be positioned,"
"expects," is or are "expected," "anticipates," "anticipated," "may," "could,"
"should," "would" and "believe." These forward-looking statements are based on
the Company's current expectations. To the extent any of the information
contained or incorporated by reference in this Prospectus constitutes a
"forward-looking statement" as defined in Section 27A of the Securities Act and
Section 21E(i)(1) of the Exchange Act, the risk factors set forth below and in
the information incorporated herein by reference are cautionary statements
identifying important factors that could cause actual results to differ
materially from those in the forward-looking statement. These considerations are
not intended to represent a complete list of the general or specific risks that
may affect the Preferred Securities, the Subordinated Debentures or the Company
and the Trust. It should be recognized that other risks may be significant,
presently or in the future.
RISK FACTORS RELATING TO THE PREFERRED SECURITIES
Preferred Securities are not Insured. The Preferred Securities are not
insured by the Bank Insurance Fund or the SAIF of the FDIC or by any other
governmental agency.
Ranking of Subordinated Obligations Under the Guarantee and the
Subordinated Debentures. The obligations of the Company under the Guarantee
issued for the benefit of the holders of Preferred Securities and under the
Subordinated Debentures are unsecured and rank subordinate and junior in right
of payment to all Senior Debt, Subordinated Debt and Additional Senior
Obligations of the Company. Because the Company is a holding company, the right
of the Company to participate in any distribution of assets of any of its
subsidiaries upon such subsidiary's liquidation or reorganization or otherwise
(and thus the ability of holders of the Preferred Securities to benefit
indirectly from such distribution) is subject to the prior claims of creditors
of that subsidiary, except to the extent that the Company may itself be
recognized as a creditor of that subsidiary. At March 31, 1998, the Company and
its subsidiaries had total liabilities of approximately $1.1 billion (excluding
liabilities owed to the Company). The Subordinated Debentures, therefore, will
be effectively subordinated to all existing and future liabilities of the
subsidiaries and holders of Subordinated Debentures and Preferred Securities
should look only to the assets of the Company for payments on the Subordinated
Debentures. Neither the Indenture, the Guarantee nor the Trust Agreement places
any limitation on the amount of secured or unsecured debt, including Senior
Debt, Subordinated Debt and Additional Senior Obligations, that may be incurred
by the Company. See "Description of the Guarantee -- Status of the Guarantee"
and "Description of the Subordinated Debentures -- Subordination."
No payments on account of principal or interest in respect of the
Subordinated Debentures may be made if there has occurred and is continuing a
default in any payment with respect to Senior Debt, Subordinated Debt or
Additional Senior Obligations of the Company or an event of default with respect
to any Senior Debt, Subordinated Debt or Additional Senior Obligations of the
Company resulting in the acceleration of the maturity thereof.
The ability of the Trust to pay amounts due on the Preferred Securities is
solely dependent upon the Company's making payments on the Subordinated
Debentures as and when required.
Regulations limit the amount of dividends that may be paid by the Bank
without prior regulatory approval. As of March 31, 1998, the Bank could declare
no additional dividends to the Company without prior regulatory approval.
Federal and state regulatory agencies also have the authority to limit further
the Bank's payment of dividends based on other factors, such as the maintenance
of adequate capital for the Bank, which could reduce the amount of dividends
otherwise payable.
Option to Extend Interest Payment Period; Tax Consequences; Market Price
Consequences. The Company has the right under the Indenture, so long as no
Debenture Event of Default has occurred and is
12
<PAGE> 18
continuing, to defer the payment of interest on the Subordinated Debentures at
any time or from time to time for a period not exceeding 20 consecutive quarters
with respect to each Extended Interest Payment Period; provided that no Extended
Interest Payment Period may extend beyond the Stated Maturity of the
Subordinated Debentures. As a consequence of any such deferral, quarterly
Distributions on the Preferred Securities by the Trust will be deferred (and the
amount of Distributions to which holders of the Trust Securities are entitled
will accumulate additional Distributions thereon at the rate of % per
annum, compounded quarterly, to the extent permitted by applicable law, from the
relevant payment date for such Distributions) during any such Extended Interest
Payment Period. During any such Extended Interest Payment 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 (other than the reclassification of any class of the
Company's capital stock into another class of capital stock), (ii) make any
payment of principal, interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Company that rank pari passu with or junior in
interest to the Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks pari passu with or junior in interest to
the Subordinated Debentures (other than payments under the Guarantee), or (iii)
redeem, purchase or acquire less than all of the Subordinated Debentures or any
of the Preferred Securities. Prior to the termination of any such Extended
Interest Payment Period, the Company may further defer the payment of interest;
provided that no Extended Interest Payment Period may exceed 20 consecutive
quarters or extend beyond the Stated Maturity of the Subordinated Debentures.
Upon the termination of any Extended Interest Payment 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 Extended Interest Payment
Period, subject to the above requirements. Subject to the foregoing, there is no
limitation on the number of times that the Company may elect to begin an
Extended Interest Payment Period. See "Description of the Preferred
Securities -- Distributions -- Extended Interest Payment Period" and
"Description of the Subordinated Debentures -- Option to Extend Interest Payment
Period."
Should an Extended Interest Payment Period occur, each holder of Preferred
Securities will be required to accrue and recognize income (in the form of
original issue discount) in respect of its pro rata share of the interest
accruing on the Subordinated Debentures held by the Trust for United States
federal income tax purposes. A holder of Preferred Securities must, as a result,
include such income in gross income for United States federal income tax
purposes in advance of the receipt of cash, and will not receive the cash
related to such income from the Trust if the holder disposes of the Preferred
Securities prior to the record date for the payment of the related
Distributions. See "Material Federal Income Tax Consequences -- Potential
Extension of Interest Payment Period and Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures. Should the Company elect, however, to exercise such
right in the future, the market price of the Preferred Securities is likely to
be adversely affected. A holder that disposes of its Preferred Securities during
an Extended Interest Payment Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its Preferred
Securities. As a result of the existence of the Company's right to defer
interest payments, the market price of the Preferred Securities may be more
volatile than the market prices of other securities on which original issue
discount accrues that are not subject to such optional deferrals.
Capital Event; Tax Event; or Investment Company Event; Redemption. The
Company has the right to redeem the Subordinated Debentures in whole (but not in
part) within 180 days following the occurrence of a Capital Event, Tax Event or
Investment Company Event (whether occurring before or after September 30, 2003),
and, therefore, cause a mandatory redemption of the Preferred Securities.
"Capital Event" means the receipt by the Trust of an opinion of counsel
experienced in such matters (which may be counsel to the Company) that the
Company cannot, or, within 90 days after the date of the opinion of such
counsel, will not be permitted by the applicable regulatory authorities, due to
a change in law, regulation, policy or guideline or interpretation or
application of law or regulation, policy or guideline, to
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<PAGE> 19
account for the Preferred Securities as Tier 1 capital under the capital
guidelines or policies of the Applicable Bank Regulatory Authority.
"Tax Event" means the receipt by the Trust of an opinion of counsel
experienced in such matters (which may be counsel to the Company) to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such pronouncement or decision is announced on or after the date of
issuance of the Preferred Securities under the Trust Agreement, there is more
than an insubstantial risk that (i) the Trust is, or will be within 90 days of
the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Subordinated Debentures, (ii)
interest payable by the Company on the Subordinated Debentures is not, or,
within 90 days of such opinion, will not be, deductible by the Company, in whole
or in part, for United States federal income tax purposes, or (iii) the Trust
is, or will be within 90 days of the date of the opinion, subject to more than a
de minimis amount of other taxes, duties or other governmental charges. The
Trust or the Company must request and receive an opinion with regard to such
matters within a reasonable period of time after the Company becomes aware of
the possible occurrence of any of the events described in clauses (i) through
(iii) above.
"Investment Company Event" means the receipt by the Trust of an opinion of
counsel experienced in such matters (which may be counsel to the Company) to the
effect that, as a result of the occurrence of a change in law or regulation or a
change in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, the Trust is or will
be considered an "investment company" that is required to be registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act"),
which change becomes effective on or after the date of original issuance of the
Preferred Securities.
In recent years, there have been several proposals to adopt legislation
which, if enacted and made applicable to the Subordinated Debentures, would
preclude the Company from deducting interest thereon. The most recent proposal
was made by the Clinton Administration on March 19, 1997. Such proposals have
not been adopted by Congress, but there can be no assurance that similar
proposals will not be adopted in the future and made applicable to the
Subordinated Debentures. Accordingly, there can be no assurance that any such
legislation will not result in a Tax Event which would permit the Company to
cause a mandatory redemption of the Preferred Securities before, or after,
September 30, 2003, at the Redemption Price.
In 1994, the Internal Revenue Service issued Notice 94-47. In this Notice,
the Internal Revenue Service stated that it was concerned with a series of
transactions in which instruments had been issued that were "designed to be
treated as debt for federal income tax purposes but as equity for regulatory,
rating agency, or financial accounting purposes." The Notice further stated that
"(u)pon examination, the Service will scrutinize instruments of this type to
determine if their purported status as debt for federal income tax purposes is
appropriate."
On April 6, 1998, Enron Corp. filed a Petition in the United States Tax
Court contesting the proposed disallowance by the Internal Revenue Service of a
deduction claimed by Enron Corp. relating to interest paid with respect to
certain instruments ("MIPS") issued in 1993 and 1994. The Tax Court has not
rendered an opinion on the deductibility of the interest paid by Enron Corp. The
Preferred Securities have certain characteristics that could be viewed as
similar to the MIPS involved in the Enron Corp. case.
There can be no assurance that a Tax Court opinion in the Enron Corp. case,
or any similar case, will not result in a Tax Event which would permit the
Company to cause a mandatory redemption of the Subordinated Debentures (which
shall cause a redemption of the Preferred Securities) before the stated maturity
at the Redemption Price.
Exchange of Preferred Securities for Subordinated Debentures. The Company
has the right at any time to dissolve, wind-up or terminate the Trust and cause
the Subordinated Debentures to be distributed to the holders of the Trust
Securities in exchange therefor in liquidation of the Trust. The Company will
have the
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<PAGE> 20
right, in certain circumstances, to redeem the Subordinated Debentures in whole
or in part, in lieu of a distribution of the Subordinated Debentures by the
Trust, in which event the Trust will redeem the Trust Securities on a pro rata
basis to the same extent as the Subordinated Debentures are redeemed by the
Company. See "Description of the Preferred Securities -- Redemption or
Exchange -- Capital Event, Tax Event or Investment Company Event Redemption."
Under current United States federal income tax law, a distribution of
Subordinated Debentures upon the dissolution of the Trust would not be a taxable
event to holders of the Preferred Securities. If, however, the Trust is
characterized as an association taxable as a corporation at the time of the
dissolution of the Trust, the distribution of the Subordinated Debentures may
constitute a taxable event to holders of Preferred Securities. Moreover, upon
occurrence of a Tax Event, a dissolution of the Trust in which holders of the
Preferred Securities receive cash may be a taxable event to such holders. See
"Material Federal Income Tax Consequences -- Receipt of Subordinated Debentures
or Cash Upon Liquidation of the Trust."
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities upon a dissolution or liquidation of the Trust. The
Preferred Securities or the Subordinated Debentures, may, therefore, trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby. Because holders of Preferred Securities may receive
Subordinated Debentures, prospective purchasers of Preferred Securities are also
making an investment decision with regard to the Subordinated Debentures and
should carefully review all the information regarding the Subordinated
Debentures contained herein.
If the Subordinated Debentures are distributed to the holders of Preferred
Securities upon the liquidation of the Trust, the Company will use its
reasonable best efforts to list the Subordinated Debentures on the American
Stock Exchange or such stock exchanges or inter-dealer quotation system, if any,
on which the Preferred Securities are then listed.
Rights Under the Guarantee. SunTrust Bank will act as Guarantee Trustee
and will hold the Guarantee for the benefit of the holders of the Preferred
Securities. SunTrust Bank also will act as Property Trustee and as Debenture
Trustee under the Indenture. Wilmington Trust Company will act as the Delaware
Trustee under the Trust Agreement. The Guarantee guarantees to the holders of
the Preferred Securities, to the extent not paid by the Trust, (i) any accrued
and unpaid Distributions required to be paid on the Preferred Securities, to the
extent that the Trust has funds available therefor at such time, (ii) the
Redemption Price (as defined herein) with respect to any Preferred Securities
called for redemption, to the extent that the Trust has funds available therefor
at such time, and (iii) upon a voluntary or involuntary dissolution, winding-up
or liquidation of the Trust (other than in connection with the distribution of
Subordinated Debentures to the holders of Preferred Securities or a redemption
of all of the Preferred Securities), the lesser of (a) the amount of the
Liquidation Distribution (as defined herein), to the extent the Trust has funds
available therefor at such time, and (b) the amount of assets of the Trust
remaining available for distribution to holders of the Preferred Securities in
liquidation of the Trust. The holders of not less than a majority in Liquidation
Amount of the Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Guarantee. Any holder of the
Preferred Securities may institute a legal proceeding directly against the
Company to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other Person
(as defined in the Guarantee). If the Company were to default on its obligation
to pay amounts payable under the Subordinated Debentures, the Trust would lack
funds for the payment of Distributions or amounts payable on redemption of the
Preferred Securities or otherwise, and, in such event, holders of Preferred
Securities would not be able to rely upon the Guarantee for such amounts. In the
event, however, that a Debenture Event of Default has occurred and is continuing
and such event is attributable to the failure of the Company to pay interest on
or principal of the Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Preferred Securities may institute
a legal proceeding directly against the Company for enforcement of payment to
such holder of the principal of or interest on such Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities of such holder (a "Direct Action"). The exercise by the
Company of its right, as described herein, to defer the
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<PAGE> 21
payment of interest on the Subordinated Debentures does not constitute a
Debenture Event of Default. In connection with such Direct Action, the Company
will have a right of set-off under the Indenture to the extent of any payment
made by the Company to such holder of Preferred Securities in the Direct Action.
Except as described herein, holders of Preferred Securities will not be able to
exercise directly any other remedy available to the holders of the Subordinated
Debentures or assert directly any other rights in respect of the Subordinated
Debentures. See "Description of the Subordinated Debentures -- Enforcement of
Certain Rights by Holders of the Preferred Securities," "-- Debenture Events of
Default" and "Description of the Guarantee."
The Trust Agreement provides that each holder of Preferred Securities by
acceptance thereof agrees to the provisions of the Guarantee and the Indenture.
Limited Voting Rights. Holders of Preferred Securities will have no voting
rights except in limited circumstances relating only to the modification of the
Preferred Securities and the exercise of the rights of the Trust as holder of
the Subordinated Debentures and the Guarantee. If any Distributions payable on
the Preferred Securities are in arrears for six quarterly periods, the holders
of the Preferred Securities, voting separately as a class with any other
preferred securities having similar voting rights, will be entitled at the next
regular or special meeting of shareholders of the Company to elect two directors
to the Board of Directors of the Company (such voting rights will continue until
such time as the Distribution arrearage on the Preferred Securities have been
paid in full). The affirmative consent of the holders of at least 66 2/3% of the
outstanding Preferred Securities will be required by the Trust for amendments to
the Trust Agreement that would affect adversely the rights or privileges of the
holders of the Preferred Securities. Holders of Preferred Securities will not be
entitled to vote to appoint, remove or replace the Property Trustee or the
Delaware Trustee, as such voting rights are vested exclusively in the holder of
the Common Securities (except upon the occurrence of certain events described
herein). The Property Trustee, the Administrative Trustees and the Company may
amend the Trust Agreement without the consent of holders of Preferred Securities
to ensure that the Trust will be classified for United States federal income tax
purposes as a grantor trust even if such action adversely affects the interests
of such holders. See "Description of the Preferred Securities -- Voting Rights;
Amendment of Trust Agreement" and "-- Removal of the Trust Trustees."
Trading Price; Absence of Prior Market for the Preferred Securities. The
Preferred Securities may trade at prices that do not fully reflect the value of
accrued but unpaid interest with respect to the underlying Subordinated
Debentures. A holder of Preferred Securities that disposes of its Preferred
Securities between record dates for payments of Distributions (and consequently
does not receive a Distribution from the Trust for the period prior to such
disposition) will nevertheless be required to include accrued but unpaid
interest on the Subordinated Debentures through the date of disposition in
income as ordinary income and to add such amount to its adjusted tax basis in
its pro rata share of the underlying Subordinated Debentures deemed disposed of.
Such holder will recognize a capital loss to the extent the selling price (which
may not fully reflect the value of accrued but unpaid interest) is less than its
adjusted tax basis (which will include all accrued but unpaid interest). Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes. See "Material
Federal Income Tax Consequences -- Disposition of Preferred Securities."
There is no current public market for the Preferred Securities. Although
application has been made to have the Preferred Securities approved for
quotation on the American Stock Exchange, there can be no assurance that an
active public market will develop for the Preferred Securities or that, if such
market develops, the market price will equal or exceed the public offering price
set forth on the cover page of this Prospectus. The public offering price for
the Preferred Securities has been determined through negotiations between the
Company and the Underwriters. Prices for the Preferred Securities will be
determined in the marketplace and may be influenced by many factors, including
prevailing interest rates, the liquidity of the market for the Preferred
Securities, the financial condition of the Company, investor perceptions of the
Company and general industry and economic conditions. In addition,
notwithstanding the registration of the Preferred Securities, holders who are
"affiliates" of the Company or the Trust as defined under Rule 405 of the
Securities Act may publicly offer for sale or resell the Preferred Securities
only in compliance with the provisions of Rule 144 under the Securities Act.
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<PAGE> 22
RISK FACTORS RELATING TO THE COMPANY
Dependence on Primary Geographic Markets; Credit Risk, & Loan
Concentration. The financial condition of the Company is primarily dependent on
economic conditions in the Atlanta metropolitan area. The majority of deposits
gathered originate from the Company's Atlanta-based banking branches. Over the
past five years, the Company has experienced significant growth in its
construction, acquisition and development and permanent single-family
residential mortgage loan portfolios. The largest component of the Company's
loan portfolio is residential permanent mortgages held for sale. These loans are
originated through the Company's mortgage banking operations. As of March 31,
1998, these loans represented $332.6 million or 38% of the Company's net loan
portfolio. Of the total loans held for sale, $46.9 million were mortgages on
properties in the metropolitan Atlanta area, and $285.7 million were mortgages
on homes located outside of metropolitan Atlanta. The Company's portfolio of
single-family residential mortgage loans (held to maturity) was $193.0 million
at March 31, 1998, which is the second largest component of the loan portfolio
representing 22.0% of the Company's net loan portfolio.
Construction loans comprise the third largest component of the Company's
loan portfolio. At March 31, 1998, construction and acquisition and development
loans constituted 18.6% of the Company's loan portfolio and totaled $162.5
million. Construction and acquisition and development loans in the metropolitan
Atlanta area totaled $86.3 million or 9.9%, and $76.2 million or 8.8% of net
loans receivable, including loans held for sale, were loans on property located
outside of metropolitan Atlanta. Construction loans frequently involve greater
risks than permanent mortgage loans primarily due to (i) the credit worthiness
of construction borrowers in general, (ii) the potential risks associated with
securing permanent financing and (iii) general market conditions in the housing
industry.
While management believes the economy in metropolitan Atlanta is generally
healthy and has experienced above average growth, adverse changes in economic
conditions in metropolitan Atlanta could adversely impact the Company's growth
and financial performance. Although the Company's problem assets as a percentage
of total assets was 1.3% as of March 31, 1998, there is a risk that the quality
of the Company's loan portfolio could decline, particularly as a result of the
rapid growth in loans and the concentration of construction loans.
Reliance on Residential Mortgage Originations to Produce Fee Income. The
market for residential mortgages is highly volatile and an increase in interest
rates could have a material adverse effect on both non-interest income and
interest income and in the growth of the Company's residential mortgage
portfolio. In addition, a substantial portion of the Company's non-interest
income has been derived from gains on the sale of mortgage loans and mortgage
production fees consisting of proceeds from the sale of mortgage servicing
rights, gains on sale of mortgage loans, loan origination fees and discount
points. Due to the cyclical nature of residential mortgage originations, there
can be no assurance that the Company will be able to sustain recent levels of
gains on the sale of mortgage loans and mortgage production fees.
Litigation Regarding Mortgage Origination Division. Two individuals and a
corporation controlled by them who were formerly parties to an agreement with
the Bank for the operation of the Bank's Prime Lending Division have brought an
action against the Bank alleging violations of the agreement by the Bank. The
complaint, as now amended, seeks, among other things, (i) a declaration that the
Agreement was terminated "without cause" and that, pursuant to the Agreement,
the Plaintiffs have the right to purchase the assets of Prime at 75% of fair
market value; (ii) alleged unpaid profits from Prime's operations (in an amount
estimated by the Plaintiffs to equal approximately $450,000); (iii) a
determination that the term "assets," as used in connection with the Plaintiffs'
alleged purchase option in the Agreement, includes all loans carried as assets
on the books of the Bank that were originated by Prime (the "Prime Loans") and
that the Plaintiffs would not be required to assume or net against the Prime
Loans any corresponding liability incurred by the Bank in connection with the
Prime Loans; (iv) consequential damages in excess of $20 million, which
represents the Plaintiffs' assessment of the loss they suffered by the Bank's
refusal to sell to the Plaintiffs Prime's assets under Plaintiffs' definition of
"assets" (i.e., including such loans); and (v) unspecified punitive damages and
attorneys fees. An adverse decision could also result in the Bank ceasing
origination of permanent mortgages and construction loans from the 11 Prime
Lending Division offices outside the
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metropolitan Atlanta area and being contractually prohibited for two years from
originating conforming residential loans secured by property located within 25
miles of any Prime Lending Division office. A significant damage award could
have a material adverse effect on the financial condition of the Bank and,
correspondingly, the Company. See Business Strategy -- "Recent
Developments -- Pending Litigation."
Interest Rate Sensitivity. The profitability of the Company depends to a
large extent upon its net interest income, which is the difference between
interest income and interest expense. The net interest income of the Company
could be adversely affected if, for example, changes in market interest rates
resulted in the cost of interest-bearing liabilities increasing faster than the
increase in the yield on the interest-earning assets. Additionally, increasing
interest rates could have an adverse impact on house sales which could
negatively impact construction lending and permanent mortgage originations.
Holding Company Investments. As a unitary thrift holding company, the
Company is permitted to make investments which national bank holding companies
are not permitted to make. Those activities are concentrated in the Company's
two subsidiaries, EREA and EBCG. Approximately $27.6 million, or 2.4%, of the
Company's total assets as of March 31, 1998 were invested in six real estate
development projects in the metropolitan Atlanta area. The Company intends to
acquire and develop real estate on a limited basis in metropolitan Atlanta where
the zoning and market conditions are understood and the return is commensurate
with the risk taken. Real estate development also is subject to the associated
risk related to delays in the construction and development, lot absorption,
financing availability and failure of properties to perform as expected.
Additionally, EBCG has invested $10.7 million, or 0.9%, of Company's total
assets as of March 31, 1998 in mezzanine financing loans. Each of these loans
represents a second mortgage on a commercial real estate property. While the
returns expected from these investments are greater than traditional commercial
real estate loans, they are subject to the associated risk related to a higher
loan to value, construction occupancy and general economic conditions.
Status of the Company as a Thrift Holding Company. The Company is a legal
entity separate and distinct from its subsidiaries, although the principal
source of the Company's cash revenues is dividends from its subsidiaries. The
right of the Company to participate in the assets of any subsidiary upon the
subsidiary's liquidation, reorganization or otherwise (and thus the ability of
the holders of the 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. In addition, certain regulations limit the
amount of dividends that may be paid by the Bank without prior regulatory
approval. See "Business Strategy -- Recent Developments."
Competition. The Company's subsidiaries face substantial competition for
loans and deposits as well as other sources of funding in the communities they
serve. Competitors include other national and state banks, thrifts and trust
companies, insurance companies, mortgage banking operations, credit unions,
finance companies, money market funds and other financial and non-financial
companies which may offer products functionally equivalent to those offered by
the Company's subsidiaries. Many competing providers have greater financial
resources than the Company and offer services within and outside the market
areas served by the Company's subsidiaries.
Developments in Technology. The market for financial services, including
banking services, is increasingly effected by advances in technology, including
developments in telecommunications, data processing, computers, automation,
internet-based banking, telebanking, debit cards and so-called "smart cards."
The ability of the Company to compete successfully in its markets may depend on
the extent to which it is able to exploit such technological changes.
Additionally, the Bank is responsible for ensuring that its in-house processing
and service providers and software vendors are fully compliant with the year
2000 requirements. The Bank has identified and developed plans for all mission
critical applications including those provided by third party vendors; however,
additional expenses may be incurred if problems are encountered which were not
previously identified. The ability of the Company to compete successfully in its
markets may depend on the extent to which it is able to exploit technological
changes and test and modify its systems as required to meet the challenges of
the year 2000. There can be no assurance that the development of these or any
other new technologies or the Company's success or failure in anticipating or
responding to such developments will
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materially affect the Company's business, financial condition and operating
results. Based upon the year 2000 plan developed by management, the Company
expects that it will require less than $1 million in additional capital
expenditures to be fully compliant with year 2000 requirements.
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<PAGE> 25
THE COMPANY
The Company is a unitary savings and loan holding company which owns and
operates the Bank, EREA and EBCG. The Company has grown total assets to $1.1
billion at March 31, 1998, making it one of the largest financial institutions
headquartered in metropolitan Atlanta. The Bank is a federally chartered stock
savings and loan association organized in 1956 and based in Tucker, Georgia, a
suburb of Atlanta. The Bank serves the metropolitan Atlanta area through 15 full
service banking offices. As a unitary thrift holding company, the Company is
permitted, under current regulations, to engage in activities in which bank
holding companies may not legally engage. To capitalize on this advantage, the
Company formed EREA in 1991 to perform real estate brokerage and development
activities and formed EBCG in 1997 to provide mezzanine financing that is not
readily available from traditional commercial banking sources.
Growth in the metropolitan Atlanta area and ongoing consolidation of the
financial services industry have resulted in significant recent increases in
loans, deposits and customers at the Bank. In February 1996, the Company sold
1,435,000 shares of common stock, raising $21.5 million of additional capital to
support growth in deposits and permitted investments by the Company. The Company
also has benefited from industry consolidation by hiring experienced banking
executives and acquiring surplus local branches. On March 26, 1997, the Company
acquired Southern Crescent Financial Corp and its wholly owned subsidiary,
Southern Crescent Bank, with total assets of $150 million and four full-service
branches in the rapidly growing markets of the south metropolitan Atlanta area.
Simultaneously, Southern Crescent Bank was merged with and into the Bank. The
acquisition also enhanced the Company's commercial lending capabilities. Since
the Company's last offering, total assets have grown from $558 million at
December 31, 1995 to $1.1 billion at March 31, 1998, or 105.9%. Deposits have
grown from $332 million to $779 million, or 134.6%, and the Company's total loan
portfolio, which includes loans held for sale, has increased from $381 million
to $868 million, or 128.2%.
BUSINESS STRATEGY
LONG TERM GROWTH STRATEGY
Management believes the best way to maximize long-term shareholder value is
to continue to improve financial performance and operating efficiency and to
continue to grow market share in the metropolitan Atlanta area. Management
intends to continue to pursue allied businesses permitted by its unitary thrift
holding company status. The Company's long-term strategy is focused on
increasing shareholder value by creating competitive advantages in targeted
business niches which include community banking, mortgage banking and real
estate development.
Community Banking. Based on total assets as of March 31, 1998, the Bank is
one of the largest financial institutions headquartered in the metropolitan
Atlanta area. The Bank has a significant strategic opportunity as one of
Atlanta's leading community banks. Management believes that the Bank is well
positioned to continue to build franchise value by increasing market share in
the metropolitan Atlanta area. The Bank's asset size and legal lending limit per
borrower permit it to serve small and middle market customers more effectively
than many smaller Atlanta community banks. The Bank's competitive advantage is
its ability to provide a full range of financial products with personalized
service and local decision making, which typically are not available from
financial institutions headquartered out of state. Additionally, management
believes that many local borrowers are being underserved as a result of the
recent acquisitions of many of Atlanta's banks and thrifts by large out-of-state
banks and that the Bank will continue to build franchise value by increasing
market share in the metropolitan Atlanta area.
Mortgage Banking. The Company creates a strategic advantage by utilizing
its experience and historic commitment to construction lending to generate
permanent mortgage loan originations. Because of the Company's long-term
participation in construction lending and its relationships with its existing
homebuilders, it has been able to develop a core business of permanent mortgage
originations. The Company has relationships with approximately 165 homebuilders
in the Atlanta metropolitan area but does not have any significant loan
concentration with any homebuilder or in any particular market area. Over the
past year, the
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Company has been upgrading the origination and processing systems used in its
mortgage banking business to improve customer service and the efficiencies of
loan originations and sales. Management is implementing an automated
underwriting system for its conforming mortgage loans to continue to improve
customer service by providing faster loan decisions. In September 1997, the
Company acquired a wholesale mortgage banking business to increase loan
originations and improve efficiencies of its mortgage banking operations. The
Company sells the majority of its mortgage loans, with servicing released to
third party investors.
Real Estate Development. The Company's experience as a metropolitan
Atlanta area real estate lender for over 40 years creates a strategic advantage
for its real estate development activities. Local market knowledge and
relationships with builders and developers give the Company a unique position to
create and evaluate real estate development opportunities. Additionally, the
Company's real estate investments and brokerage activities have contributed
increasing incremental income to the Company since 1995.
STRATEGIC BUSINESS PLAN
The Company reviews and updates its Strategic Business Plan quarterly.
Having reached $1.1 billion in assets, the Company has the capability to provide
a broad array of financial services to consumers and small and medium sized
businesses that consider personalized service and local decision making to be an
important component of a banking relationship. The Company's plan is focused
upon five basic principles:
Improving Financial Performance and Operating Efficiencies. The Company's
ability to increase market share in the rapidly growing metropolitan Atlanta
area has produced dynamic growth in total assets. Continued rapid growth,
however, has impacted operating efficiencies. To mitigate this impact and
provide for future growth, the Bank has converted its core and branch processing
systems to a data processing environment comparable to that of commercial banks.
Therefore, over the past year, the Company has incurred increased capital
expenditures, data processing costs, training expenses and consulting fees with
the goal of strategically building the infrastructure necessary to support
future growth. This system increases capacity and provides enhanced customer
information.
Management has undertaken a number of initiatives to improve core earnings.
These initiatives are designed to continue to improve customer service and
operating efficiency while increasing fee income and controlling expenses and
include:
- Changing the deposit mix by emphasizing demand deposit accounts, which
has the effect of lowering the cost of funds and increasing fee income.
The Bank intends to cross-sell borrowers to increase their demand deposit
accounts and require multiple account relationships in order to earn a
higher interest rate on certificates of deposit.
- Converting the core and branch processing systems from off-site data
processing systems to on-site data processing systems. The conversion was
completed in February 1998, at which time the Bank changed to a new item
processing environment to provide increased capacity to service
transaction accounts and allow branch staff to more effectively serve
business customers. The systems use a data warehouse to analyze customer
profitability information for front line employees and provide the
foundation of the Bank's relationship management program.
- Developing new products to increase fee income from existing customers.
These initiatives include a plan to offer insurance products to builders,
small businesses and mortgage customers.
- Acquiring a wholesale mortgage banking operation to increase loan
origination volume, increase the efficiency of mortgage banking
operations and add diversity to the Bank's sources of mortgage loans. The
acquisition occurred in September 1997 and has included implementation of
technology and operating systems such as an automated underwriting
system. These technology and operating improvements are now being
implemented in the retail mortgage operation.
- Implementing initiatives to improve efficiency and control noninterest
expense. Management has initiated cost control measures by renegotiating
communications, facilities maintenance and courier
21
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contracts to take advantage of increased size. Additionally, management
is developing a new branch staffing model to achieve improved branch
efficiencies.
- Developing an extensive profitability analysis for each line of business
and office. For the year ending March 31, 1998, a number of offices did
not cover their costs of operation. Management has identified those
offices which currently are not able to meet profitability goals and has
instituted a plan designed to increase overall profitability.
Continuing to Grow Market Share in Metropolitan Atlanta. Management
believes that consolidation in the banking industry is causing an increasing
number of customers to consider local decision making an important issue in
choosing a financial institution. The Bank will use personalized service in a
traditional branch setting to position itself as a leading community bank in the
metropolitan Atlanta banking market. The Bank's new data warehouse provides
customer and household profitability information that enhances its ability to
cross-sell the Bank's services and increase its overall profitability.
The Company is pursuing three approaches to increase market share. First,
it intends to sell more products to its existing customers through its
relationship banking program. Management is utilizing enhanced customer
information and is training employees to search for opportunities to provide
financial solutions to the Bank's customers and is enhancing the products and
services offered to existing mortgage and deposit customers. Second, it is
developing new customers in its existing markets through an aggressive marketing
communications and direct mail program. Third, it is continuing to evaluate
opportunities to expand market share through acquisitions.
The following table sets forth information regarding total deposits at June
30 of each of the years reported for the metropolitan Atlanta, Georgia market
and for the Bank. At March 31, 1998 deposits for the Bank were $779 million, or
34.5% greater than deposits at June 30, 1997 as reported by the Federal Deposit
Insurance Corporation.
<TABLE>
<CAPTION>
METROPOLITAN ATLANTA DEPOSIT DATA COMPOUND
AT JUNE 30, ANNUAL
----------------------------------------------- GROWTH
1993 1994 1995 1996 1997 RATE
------- ------- ------- ------- ------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Metropolitan Atlanta Deposits........... $35,682 $36,956 $39,312 $42,178 $45,501 6.27%
Deposits of the Bank.................... 271 353 403 502 579 20.90
Market Share of the Bank................ .76 .96 1.03 1.19 1.27 13.70
</TABLE>
Developing New Sources of Income. The Company will continue to pursue
allied businesses permitted by its unitary thrift holding company status. The
Company formed EBCG last year to provide financing to borrowers that have the
potential for significant growth, adequate collateral coverage and experienced
management teams with significant equity ownership. Management will focus on
making loans with equity features and will identify investment opportunities
through the Bank's customer base as well as a referral network comprised of
venture capitalists, investment bankers, attorneys and accountants. As of March
31, 1998, the Company has invested $10.7 million in mezzanine financing for
twelve affiliated LLC's that operate extended stay hotels.
EREA recently formed Eagle Residential Realty to market lots in the
Company's developments. EREA continues to identify investment opportunities as a
result of its local market knowledge in metropolitan Atlanta. EREA's
contribution to the Company's income has steadily increased since 1995.
22
<PAGE> 28
The following table summarizes the activities of EREA for the periods
presented.
<TABLE>
<CAPTION>
REAL ESTATE ACTIVITY
AS OF AND FOR THE YEAR ENDED MARCH 31,
-----------------------------------------------
1994 1995 1996 1997 1998
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Investment in real estate.................................. $ 0 $ 6,620 $12,962 $25,828 $27,595
Gain on sales of investments in real estate................ 0 0 697 1,377 2,160
Real estate commissions, (net)............................. 176 143 165 405 510
Rental income.............................................. 0 0 0 353 773
</TABLE>
Utilizing Technology to Enhance the Company's Operating Results and
Capitalize on New Business Opportunities. The Company converted its data and
check processing systems from a traditional thrift system to a system comparable
to a commercial bank. The data processing systems provide significant capacity
for future growth and enhance the Company's ability to provide timely and cost
efficient customer service. The new processing systems use a data warehouse to
identify customers with the highest profit improvement potential and allow
relationship managers to identify financial products which may be offered to
existing customers to increase the Bank's profitability. The Company will use
technology to implement alternate product delivery methods by expanding its call
center, providing cash management products for small businesses and implementing
automatic underwriting in its mortgage and retail lending operation. The long
term plan contemplates the addition of PC Banking capabilities.
The Company is implementing an integrated mortgage banking loan origination
system. This system together with the automated underwriting system will be
fully operational in the Bank's wholesale mortgage banking group and will be
implemented throughout its retail mortgage group. This new system will increase
efficiency of the retail and wholesale groups and can significantly reduce the
time and number of documents required to process mortgage loans.
Being the "Bank of Choice" for the Small Business Community. Personal
relationships and local decision-making are important considerations to small
and medium sized businesses. The Company's size allows it to offer a full range
of products and services to business customers with a level of personal service
that exceeds service provided by larger financial institutions. The Company
recruited experienced bankers to expand its Small Business Administration
("SBA") and commercial lending areas and to offer a complete array of financing
including SBA guaranteed loans, asset based loans to finance receivables and
inventory, plant and headquarters expansion, as well as to identify mezzanine
financing opportunities for rapidly growing businesses.
RECENT DEVELOPMENTS
Pending Litigation. In November 1992, the Bank acquired certain assets
from the Resolution Trust Corporation, which included four mortgage loan
origination facilities. The Bank then entered into an Operating Agreement (the
"Agreement") with two individuals and a corporation controlled by them
(collectively, the "Plaintiffs"), to form the Prime Lending Division ("Prime").
Under the Agreement, the individual Plaintiffs became employees of the Bank and
Plaintiffs compensation was to include a percentage of the net profits to be
calculated after allocating expenses and overhead to Prime. In mid-1997, a
disagreement arose with respect to the allocation of expenses to Prime, which
led to the filing by the Plaintiffs of a lawsuit on December 5, 1997 alleging
that the Bank had improperly calculated the profits due them under the Agreement
since April 1997. In January 1998, the Bank terminated the Agreement with the
Plaintiffs "for cause." The Bank also maintains that its calculation of the
profits and losses was proper.
The complaint as amended seeks, among other things (i) a declaration that
the Agreement was terminated "without cause" and that, pursuant to the
Agreement, the Plaintiffs have the right to purchase the assets of Prime at 75%
of fair market value; (ii) alleged unpaid profits from Prime's operations (in an
amount estimated by the Plaintiffs to equal approximately $450,000); (iii) a
determination that the term "assets," as used in connection with the Plaintiffs'
alleged purchase option in the Agreement, includes all loans carried as assets
on the books of the Bank that were originated by Prime (the "Prime Loans") and
that the Plaintiffs would not be required to assume or net against the Prime
Loans any corresponding liability incurred by the
23
<PAGE> 29
Bank in connection with the Prime Loans; (iv) consequential damages in excess of
$20 million, which represents the Plaintiffs' assessment of the loss they
suffered by the Bank's refusal to sell to the Plaintiffs Prime's assets under
Plaintiffs' definition of "assets" (i.e., including such loans); and (v)
unspecified punitive damages and attorneys fees. The Bank strongly denies all of
Plaintiffs' allegations, including the Plaintiffs' allegation that they have the
right to purchase the assets of Prime. Further, the Bank specifically disputes
Plaintiffs' contention that all loans originated by Prime constitute "assets" of
Prime.
The Bank believes that the Plaintiffs are not entitled to purchase the
Prime Loans and that the only assets that the Plaintiffs may be permitted to
purchase are the tangible and intangible assets of Prime. At March 31, 1998,
Prime's tangible assets had a collective book value estimated to be
approximately $1.2 million, which could be purchased at 75% of fair market value
under the Agreement. Although the Bank does not believe that Plaintiffs have the
contractual right to purchase the Prime Loans, the Bank contends that if the
court determines that the Plaintiffs do have a right to purchase the Prime
Loans, the Plaintiffs must assume the liabilities associated with such loans
(including funding expenses). The Agreement specifically provides that, if
Plaintiffs purchase the assets of Prime, they must "assume all obligations
associated with the [Prime Lending] Division."
If Plaintiffs are successful in obtaining a declaration that they are
entitled to purchase the assets of Prime (or if the Bank agrees to compromise
this case with the Plaintiffs), the Bank may cease originating permanent
mortgages and construction loans from the 11 Prime offices situated outside the
metropolitan Atlanta area. The Agreement provides that, if Plaintiffs purchase
the assets of Prime, the Bank shall refrain for two years from originating
conforming residential loans secured by property located within 25 miles of any
Prime office. The Company does not believe that such cessation of operations
would have a material adverse effect upon its or the Bank's business or
operations. Based on the Bank's calculations for the 12 months ending March 31,
1998. However, as a result of expenses attributable thereto, the Bank sold
approximately $500 million permanent single family mortgage loans originated by
Prime. Prime's permanent mortgage origination business incurred a pretax loss of
$200,000. The Bank estimates that during the same period construction loans
originated by Prime have generated pretax income of approximately $1.5 million.
Pending the outcome of the litigation, the Bank will continue to operate Prime's
mortgage loan origination business. In addition, the Bank believes it can
replace loans originated by Prime through its other existing operations,
including the Wholesale Mortgage Division of the Bank.
Pending Legislation. On May 13, 1998, the House of Representatives passed
the Financial Services Act of 1998, H.R. 10, originally introduced in early 1997
by Representative Jim Leach, Chairman of the Banking Company of the United
States House of Representatives. Pursuant to the Act, existing unitary thrift
holding companies prior to March 31, 1998 could continue to engage in all
activities which were permitted prior to the Act. Activities of the Company in
connection with real estate development and related activities are permissible
for a unitary thrift under the current law and as amended by the Act but would
not be permissible for a bank holding company. The Act also would provide for
(1) creation of financial holding companies which under certain circumstances
may engage in a broad variety of financial services activities not permitted for
banking holding companies under the current law and (2) for broader insurance
and securities powers for financial institutions, subject to the implementation
of regulations.
Stockholder Proposal. On March 18, 1998, the Company received written
notice from J.C. Serrato, Jr., M.D., a beneficial owner of Common Stock of the
Company, of his intent to present a proposal at the next Annual Meeting of
Stockholders of the Company. The stockholder proposal for inclusion in the
Company's 1998 Proxy Statement "recommends that the Board of Directors of the
Company take steps to achieve a sale, merger or other acquisition of the
Company." The Board of Directors unanimously opposes the current proposal and
has recommended that the shareholders vote against it. J.C. Serrato, Jr., M.D.
has made two previous proposals, the first in 1993 involved a proposal to elect
a slate of two directors in opposition to the slate of directors proposed by the
Board of Directors of the Company and a second proposal in 1994 recommending the
Board of Directors eliminate the Shareholder Protection Rights Agreement.
Neither proposal was approved by the stockholders of the Company.
24
<PAGE> 30
ACCOUNTING TREATMENT
The Trust will be treated, for financial reporting purposes, as a
subsidiary of the Company and, accordingly, the accounts of the Trust will be
included in the consolidated financial statements of the Company. All future
reports of the Company filed under the Exchange Act will (i) present the Trust
Securities issued by the Trust on the balance sheet as a separate line item
entitled "Guaranteed Preferred Beneficial Interests in the Company's
Subordinated Debentures," (ii) include in a footnote to the financial statements
disclosure that the sole assets of the Trust are the Subordinated Debentures
(including the outstanding principal amount, interest rate and maturity date of
such Subordinated Debentures), and (iii) include in a footnote to the financial
statements disclosure that the Company owns all of the Common Securities of the
Trust, the sole assets of the Trust are the Subordinated Debentures, and the
back-up obligations, in the aggregate constitute a full and unconditional
guarantee by the Company of the obligations of the Trust under the Preferred
Securities.
USE OF PROCEEDS
The proceeds to the Trust from the sale of the Preferred Securities offered
hereby will be used by the Trust to purchase the Subordinated Debentures issued
by the Company. The net proceeds to the Company from the sale of Subordinated
Debentures offered hereby are estimated to be approximately $ million
($ million if the Underwriters' over-allotment option is exercised in
full), after deducting the underwriting commission and estimated offering
expenses. The Company intends to use the net proceeds as follows: (i)
approximately $10 million will be contributed to the Bank to increase the Bank's
capital ratios to support growth, provide working capital and increase the
Bank's regulatory capital from "adequately capitalized" to "well capitalized" as
defined by the OTS, and (ii) the balance will be used to repay existing debt,
invest in investment grade preferred securities of other issuers and for general
corporate purposes. The precise amount and timing of the application of such net
proceeds used for such corporate purposes will depend on the funding
requirements and availability of other funds to the Company. Pending such
application by the Company, net proceeds may be temporarily invested in
short-term interest-bearing securities. The portion of the net proceeds that the
Company contributes to the Bank will qualify as Tier 1 or core capital to the
Bank under the risk-based capital guidelines of the OTS.
Indebtedness of $4.2 million with a weighted average interest rate of 8.5%,
which matures in November 1999, will be repaid with no prepayment penalty. The
debt was incurred to purchase land currently being developed for one of the
Company's real estate projects. The Company may invest a portion of the proceeds
in investment grade preferred equity securities which offer tax benefits through
a dividend received deduction. These investments will be purchased to provide
future liquidity and a tax benefit which increases the taxable equivalent yield.
Preferred stock investments will be considered "held for sale" enabling the
Company to sell the securities to fund the future growth of its subsidiaries.
Investments will be made only in accordance with the Company's Investment Policy
and concentrations in a single issuer will not exceed 5% of stockholder's
equity. Market conditions which drive the availability of investment
opportunities and the Company's investment policy limitations may restrict the
funds used to invest in this type of security.
25
<PAGE> 31
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company as of March 31, 1998, and as adjusted to give effect to the
consummation of the offering of the Preferred Securities offered hereby and the
application of the net proceeds thereof as if the sale of the Preferred
Securities had been consummated on March 31, 1998. The following data should be
read in conjunction with the financial information included in the documents
incorporated by reference. See "Incorporation of Certain Documents by Reference"
and "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1998
-------------------------------
AS ADJUSTED FOR
PREFERRED SECURITIES
ACTUAL ISSUANCE
-------- --------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Total long-term debt........................................ $115,520 $115,520
Guaranteed preferred beneficial interests in the Company's
subordinated debentures................................... 0 25,000
Shareholders' equity:
Common stock; $1.00 par value; 10,000,000 authorized
shares; 6,037,100 shares issued........................ 6,037 6,037
Additional paid in capital.................................. 37,336 37,336
Unrealized gain on securities available for sale............ 838 838
Retained earnings........................................... 32,028 32,028
Employee stock ownership trust note payable................. (165) (165)
Unamortized restricted stock................................ (296) (296)
Treasury stock (301,800 shares at cost)..................... (1,076) (1,076)
-------- --------
Total shareholders' equity.................................. 74,702 74,702
-------- --------
Total capitalization.............................. $190,222 $215,222
======== ========
</TABLE>
26
<PAGE> 32
SELECTED CONSOLIDATED FINANCIAL DATA
The summary below should be read in conjunction with the financial
information included in the Company's Annual Report on Form 10-K for the year
ended March 31, 1998. See "Available Information," "Incorporation of Certain
Documents by Reference" and "Selected Consolidated Financial Data."
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED MARCH 31,
------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
SELECTED RESULTS OF OPERATIONS:
Interest income............................ $ 32,026 $ 39,618 $ 52,625 $ 63,785 $ 71,900
Interest expense........................... 14,276 18,502 28,821 33,629 40,007
Net interest income........................ 17,750 21,116 23,804 30,156 31,893
Provision for loan losses.................. 1,034 643 1,000 2,652 2,601
Noninterest income......................... 9,984 7,282 10,853 12,911 16,349
Noninterest expenses....................... 17,746 20,164 24,468 34,901 35,391
Income before income taxes................. 8,954 7,591 9,189 5,514 10,250
Net income................................. 5,462 4,881 6,219 3,746 7,210
PER COMMON SHARE:
Earnings per common share -- basic......... $ 1.40 $ 1.21 $ 1.46 $ 0.68 $ 1.27
Earnings per common share -- diluted....... 1.36 1.18 1.40 0.66 1.23
Dividends declared......................... 0.24 0.36 0.42 0.56 0.60
Book value per share....................... 9.54 10.25 12.03 11.99 13.03
Average common shares
outstanding -- basic..................... 3,889 4,032 4,251 5,528 5,691
Average common shares
outstanding -- diluted................... 4,004 4,126 4,430 5,705 5,839
SELECTED BALANCE SHEET DATA:
Total assets............................... $419,136 $568,678 $736,384 $823,882 $1,149,483
Securities available for sale.............. 36,730 33,160 105,988 96,921 104,736
Investment securities held to maturity..... 68,816 76,578 55,341 51,907 58,138
Loans held for sale........................ 23,641 41,220 92,552 62,882 332,592
Loans receivable, net...................... 271,356 364,491 410,843 515,749 535,732
Reserve for loan losses.................... 4,791 4,704 5,464 5,198 6,505
Investment in real estate.................. -- 6,620 12,962 25,828 27,595
Deposits................................... 334,361 386,353 458,458 557,724 778,975
FHLB advances and other borrowings......... 31,394 120,688 174,337 153,805 240,855
Stockholders' equity....................... 38,137 41,637 66,448 67,874 74,702
PERFORMANCE RATIOS:
Return on average assets................... 1.32% 1.01% 0.99% 0.49% 0.83%
Return on average equity................... 16.31 12.33 13.32 5.55 10.00
Net interest margin -- taxable
equivalent............................... 4.59 4.81 4.20 4.37 4.11
Equity to assets........................... 9.10 7.32 9.02 8.24 6.50
Efficiency ratio........................... 63.99 71.01 70.60 81.04 73.36
ASSET QUALITY DATA:
Total non-accrual loans.................... $ 1,890 $ 994 $ 6,317 $ 7,866 $ 7,948
Potential problem loans.................... 2,652 2,963 4,329 2,503 4,009
Total non-accrual and problem loans........ 4,542 3,957 10,646 10,369 11,957
Real estate owned, net..................... 1,273 1,139 1,344 2,074 2,947
Total problem assets....................... 5,815 5,096 11,990 12,443 14,904
Total problem assets/Total assets.......... 1.39% 0.90% 1.63% 1.51% 1.30%
Total problem assets/Loans receivable, net
(plus reserves).......................... 2.11 1.38 2.88 2.39 2.75
Reserve for loan losses/Total problem
assets................................... 82.39 92.31 45.57 41.77 43.65
Ratio of net charge-offs to average
loans.................................... 0.06 0.22 0.05 0.55 0.21
</TABLE>
27
<PAGE> 33
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED MARCH 31,
------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
FIXED CHARGE COVERAGE RATIOS:
Ratio of earnings to fixed charges(1)
Excluding interest on deposits........... 4.42x 2.81x 2.12x 1.63x 1.97x
Including interest on deposits........... 1.62 1.41 1.32 1.16 1.25
CAPITAL RATIOS (TUCKER FEDERAL BANK):
Leverage capital........................... 8.89% 6.56% 10.14% 6.72% 4.59%
Tier 1 capital............................. 10.34 8.37 11.76 10.14 7.47
Total capital.............................. 11.53 9.44 12.65 11.08 8.31
</TABLE>
- ---------------
(1) The consolidated ratio of earnings to fixed charges has been computed by
dividing income before tax plus fixed charges by fixed charges. Fixed
charges represent all interest expense and the interest factor in rent
expense (ratios are presented both excluding and including interest on
deposits). Interest expense (other than on deposits) includes interest on
federal funds purchased and securities sold under agreements to repurchase,
Federal Home Loan Bank advances, and other borrowed funds.
THE TRUST
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) a Trust Agreement, dated as of July , 1998, executed by the Company, as
depositor, the administrative trustees and the Delaware Trustee of the Trust
(together with the Property Trustee, the "Trustees"), and (ii) a Certificate of
Trust filed with the Secretary of State of the State of Delaware on July ,
1998. The initial Trust Agreement will be amended and restated in its entirety
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus forms a part and as so amended and restated is referred to
herein as the "Trust Agreement". The Trust Agreement will be qualified as an
indenture under the Trust Indenture Act. Upon issuance of the Preferred
Securities, the purchasers thereof will own all of the Preferred Securities. The
Company will acquire all of the Common Securities which will represent an
aggregate liquidation amount equal to 3% of the total capital of the Trust. The
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Preferred Securities, except that upon the occurrence and during
the continuance of an Event of Default (as defined herein) under the Trust
Agreement resulting from a Debenture Event of Default, the rights of the Company
as holder of the Common Securities to payment in respect of Distributions and
payments upon liquidation, redemption or otherwise will be subordinated to the
rights of the holders of the Preferred Securities. See "Description of the
Preferred Securities -- Subordination of Common Securities." The Trust exists
for the exclusive purposes of (i) issuing the Trust Securities representing
undivided beneficial interests in the assets of the Trust, (ii) investing the
gross proceeds of the Trust Securities in the Subordinated Debentures issued by
the Company, and (iii) engaging in only those other activities necessary,
convenient, or incidental thereto. The Subordinated Debentures will be the only
assets of the Trust, and payments under the Subordinated Debentures will be the
only revenue of the Trust. The Trust has a term of 31 years, but may terminate
earlier as provided in the Trust Agreement. The principal executive office of
the Trust is 4305 Lynburn Drive, Tucker, Georgia 30084 and its telephone number
is (770) 908-6400.
The number of the Trustees will, pursuant to the Trust Agreement, initially
be four. Two of the trustees, C. Jere Sechler, Jr., Chairman, President and
Chief Executive Officer, and Richard B. Inman, Jr., Treasurer and Secretary, of
the Company, will be administrative trustees (the "Administrative Trustees").
The third trustee, the Property Trustee, will be a financial institution that is
unaffiliated with the Company, which trustee will serve as institutional trustee
under the Trust Agreement and as indenture trustee for the purposes of
compliance with the provisions of the Trust Indenture Act. SunTrust Bank, a
state chartered trust company organized under the laws of Georgia will be the
Property Trustee until removed or replaced by the holder of the Common
Securities. For purposes of compliance with the provisions of the Trust
Indenture Act, SunTrust Bank also will act as trustee under the Guarantee (the
"Guarantee Trustee") and as Debenture Trustee (as
28
<PAGE> 34
defined herein) under the Indenture. The fourth trustee will be an entity that
maintains its principal place of business in the State of Delaware (the
"Delaware Trustee"). Wilmington Trust Company, a Delaware chartered trust
company, will act as Delaware Trustee.
The Property Trustee will hold title to the Subordinated Debentures for the
benefit of the holders of the Trust Securities and in such capacity will have
the power to exercise all rights, powers and privileges under the Indenture. The
Property Trustee will also maintain exclusive control of a segregated
noninterest-bearing bank account (the "Property Account") to hold all payments
made in respect of the Subordinated Debentures for the benefit of the holders of
the Trust Securities. The Property Trustee will make payments of Distributions
and payments on liquidation, redemption and otherwise to the holders of the
Trust Securities out of funds from the Property Account. The Guarantee Trustee
will hold the Guarantee for the benefit of the holders of the Preferred
Securities. The Company, as the holder of all the Common Securities, will have
the right to appoint, remove or replace any Trustee and to increase or decrease
the number of the Trustees. The Company will pay all fees and expenses related
to the Trust and the offering of the Trust Securities.
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the Trust
Agreement, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities and the Common Securities will be issued pursuant
to the terms of the Trust Agreement. The Trust Agreement will be qualified as an
indenture under the Trust Indenture Act. The Property Trustee will act as
indenture trustee for the Preferred Securities under the Trust Agreement for
purposes of complying with the provisions of the Trust Indenture Act. The terms
of the Preferred Securities will include those stated in the Trust Agreement and
those made part of the Trust Agreement by the Trust Indenture Act and the Trust
Act. The following summary of the material terms and provisions of the Preferred
Securities and the Trust Agreement does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Trust
Agreement, the Trust Act, and the Trust Indenture Act. Wherever particular
defined terms of the Trust Agreement are referred to, but not defined herein,
such defined terms are incorporated herein by reference. The form of the Trust
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.
GENERAL
Pursuant to the terms of the Trust Agreement, the Administrative Trustees,
on behalf of the Trust, will issue the Trust Securities. All of the Common
Securities will be owned by the Company. The Preferred Securities will represent
preferred undivided beneficial interests in the assets of the Trust and the
holders thereof will be entitled to a preference in certain circumstances with
respect to Distributions and amounts payable on redemption, liquidation or
otherwise over the Common Securities, as well as other benefits as described in
the Trust Agreement. The Trust Agreement does not permit the issuance by the
Trust of any securities other than the Trust Securities or the incurrence of any
indebtedness by the Trust.
The Preferred Securities will be limited to $25,000,000 aggregate
Liquidation Amount outstanding (or $28,750,000 if the underwriters'
over-allotment option described under the heading "Underwriting" is exercised by
the Underwriters). The Preferred Securities will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities, except as described
under "-- Subordination of Common Securities." Legal title to the Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Trust Securities. The Guarantee executed by the Company for the
benefit of the holders of the Preferred Securities will be a guarantee on a
subordinated basis with respect to the Preferred Securities, but will not
guarantee payment of Distributions or amounts payable on redemption, liquidation
or otherwise of such Preferred Securities when the Trust does not have funds on
hand available to make such payments. The Guarantee Trustee will hold the
Guarantee for the benefit of the Holders of the Preferred Securities. See
"Description of the Guarantee."
29
<PAGE> 35
If the Company does not make interest payments on the Subordinated
Debentures, the Property Trustee will not have funds available to pay
Distributions on the Preferred Securities. The payment of Distributions (if and
to the extent the Trust has funds legally available for the payment of such
Distributions and cash sufficient to make such payments) is guaranteed by the
Company. See "Description of the Guarantee."
DISTRIBUTIONS
Payment of Distributions. Distributions on each Preferred Security will be
payable at the annual rate of % of the stated Liquidation Amount
of $25.00, payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, to the holders of the Preferred Securities on the
relevant record dates (each date on which Distributions are payable in
accordance with the foregoing, a "Distribution Date"). The record date will be
the 15th day of the month in which the relevant Distribution Date occurs.
Distributions will accumulate from the date of original issuance. The first
Distribution Date for the Preferred Securities will be September 30, 1998. The
amount of Distributions payable for any period will be computed on the basis of
a 360- day year of twelve 30-day months. Except as provided in the following
sentence, the amount of interest payable for any period shorter than a full
quarterly period for which interest is computed will be computed on the basis of
the actual number of days elapsed in such period. In the event that any date on
which Distributions are payable on the Preferred Securities is not a Business
Day, then payment of the Distributions payable on such date will be made on the
next succeeding day that is a Business Day (and without any additional
Distributions, interest or other payment in respect of any such delay), in each
case with the same force and effect as if made on the date such payment was
originally due and payable. "Business Day" means any day other than a Saturday
or Sunday, or a day on which banking institutions in the City of Atlanta,
Georgia are authorized or required by law, executive order or regulation to
remain closed or a day on which the corporate trust office of the Property
Trustee or the Debenture Trustee is closed for business.
Extended Interest Payment Period. The Company has the right under the
Indenture, so long as no Event of Default has occurred and is continuing to an
Extended Interest Payment Period which, if exercised, would defer quarterly
Distributions on the Preferred Securities during any such Extended Interest
Payment Period. Distributions to which holders of the Preferred Securities are
entitled will accumulate additional Distributions thereon at the rate per annum
of % thereof, compounded quarterly from the relevant Distribution
Date (to the extent permitted by applicable law). "Distributions," as used
herein, includes any such additional Distributions. The right to defer the
payment of interest on the Subordinated Debentures is limited, however, to a
period not exceeding 20 consecutive quarters and no Extended Interest Payment
Period may extend beyond the Stated Maturity of the Subordinated Debentures.
During any such Extended Interest Payment 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 (other than the reclassification of any class of the Company's capital
stock into another class of capital stock), (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in interest to the
Subordinated Debentures or make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any subsidiary of the Company
if such guarantee ranks pari passu with or junior in interest to the
Subordinated Debentures (other than payments under the Guarantee), or (iii)
redeem, purchase or acquire less than all of the Subordinated Debentures or any
of the Preferred Securities. Prior to the termination of any such Extended
Interest Payment Period, the Company may further defer the payment of interest;
provided that such Extended Interest Payment Period may not exceed 20
consecutive quarters, end on a day other than an Interest Payment Date or extend
beyond the Stated Maturity of the Subordinated Debentures. Upon the termination
of any such Extended Interest Payment Period and the payment of all amounts then
due, the Company may elect to begin a new Extended Interest Payment Period,
subject to the above requirements. Subject to the foregoing, there is no
limitation on the number of times that the Company may elect to begin an
Extended Interest Payment Period, but the Company may prepay at any time all or
any portion of the interest accrued during an Extended Interest Payment Period.
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures.
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Source of Distributions. The funds of the Trust available for distribution
to holders of its Preferred Securities will be limited to payments under the
Subordinated Debentures in which the Trust will invest the proceeds from the
issuance and sale of its Trust Securities. See "Description of the Subordinated
Debentures." Distributions will be paid through the Paying Agent (who initially
will be the Property Trustee) who will hold amounts received in respect of the
Subordinated Debentures in the Property Account for the benefit of the holders
of the Trust Securities. If the Company does not make interest payments on the
Subordinated Debentures, the Property Trustee will not have funds available to
pay Distributions on the Preferred Securities. The payment of Distributions (if
and to the extent the Trust has funds legally available for the payment of such
Distributions and cash sufficient to make such payments) is guaranteed by the
Company. See "Description of the Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of holders of the Preferred Securities on
the relevant record dates, which date will be the 15th day of the month in which
the relevant Distribution Date occurs. Subject to any applicable laws and
regulations and the provisions of the Trust Agreement, each such payment will be
made as described above under "-- Distributions -- Payment of Distributions."
REDEMPTION OR EXCHANGE
General. The Subordinated Debentures will mature on the Stated Maturity.
The Company will have the right to redeem the Subordinated Debentures (i) on or
after September 30, 2003, in whole at any time or in part from time to time, or
(ii) at any time, in whole (but not in part), within 180 days following the
occurrence of a Capital Event, a Tax Event, or an Investment Company Event. A
redemption or repayment at the Stated Maturity of the Subordinated Debentures
would cause a mandatory redemption of a Like Amount (as defined herein) of the
Preferred Securities and Common Securities at the Redemption Price. The Company
will not have the right to purchase the Subordinated Debentures, in whole or in
part, from the Trust until after September 30, 2003, except if a Capital Event,
a Tax Event, or an Investment Company Event has occurred and is continuing. If a
partial redemption of the Subordinated Debentures would result in the delisting
of the Preferred Securities issued by the Trust from the American Stock Exchange
or any national securities exchange or other organization on which the Preferred
Securities are then listed, the Company will not be permitted to effect such
partial redemption and may only redeem the Subordinated Debentures in whole. See
"Description of the Subordinated Debentures -- General."
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of any Subordinated Debentures, whether at the Stated Maturity or upon
earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption will be applied by the Property Trustee to redeem a Like
Amount of the Trust Securities, upon not less than 30 nor more than 60 days'
notice (the "Redemption") equal to the aggregate Liquidation Amount of such
Trust Securities plus accumulated but unpaid Distributions thereon to the date
of redemption (the "Redemption Date"). See "Description of the Subordinated
Debentures Redemption or Exchange." If less than all of the Subordinated
Debentures are to be repaid or redeemed on a Redemption Date, then the proceeds
from such repayment or redemption will be allocated to the redemption of the
Trust Securities pro rata.
Distribution of Subordinated Debentures. The Company will have the right
at any time to dissolve, wind-up or terminate the Trust and, after satisfaction
of the liabilities of creditors of the Trust as provided by applicable law,
cause the Subordinated Debentures to be distributed to the holders of Trust
Securities in liquidation of the Trust. See "-- Liquidation Distribution Upon
Termination."
Capital Event, Tax Event or Investment Company Event Redemption. If a
Capital Event, a Tax Event or an Investment Company Event in respect of the
Trust Securities occurs and is continuing, the Company has the right to redeem
the Subordinated Debentures in whole (but not in part) and thereby cause a
mandatory redemption of such Trust Securities in whole (but not in part) at the
Redemption Price within 180 days following the occurrence of such Capital Event,
Tax Event or Investment Company Event. In the event a Capital Event, a Tax Event
or an Investment Company Event in respect of the Trust Securities has occurred
and the Company does not elect to redeem the Subordinated Debentures and thereby
causes a
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mandatory redemption of such Trust Securities or to liquidate the Trust and
cause Subordinated Debentures to be distributed to holders of such Trust
Securities in liquidation of the Trust as described below under "-- Liquidation
Distribution Upon Termination," such Preferred Securities will remain
outstanding and Additional Interest (as defined herein) may be payable on the
Subordinated Debentures.
"Additional Interest" means the additional amounts as may be necessary in
order that the amount of Distributions then due and payable by the Trust on the
outstanding Trust Securities will not be reduced as a result of any additional
taxes, duties, assessments and other governmental charges to which the Trust has
become subject as a result of a Tax Event.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to that portion of the
principal amount of Subordinated Debentures to be contemporaneously redeemed in
accordance with the Indenture, which will be used to pay the Redemption Price of
such Trust Securities, and (ii) with respect to a distribution of Subordinated
Debentures to holders of Trust Securities in connection with a dissolution or
liquidation of the Trust, Subordinated Debentures having a principal amount
equal to the Liquidation Amount of the Trust Securities of the holder to whom
such Subordinated Debentures are distributed. Each Subordinated Debenture
distributed pursuant to clause (ii) above will carry with it accumulated
interest in an amount equal to the accumulated and unpaid interest then due on
such Subordinated Debenture.
"Liquidation Amount" means the stated amount of $25.00 per Trust Security.
After the liquidation date fixed for any distribution of Subordinated
Debentures for Preferred Securities (i) such Preferred Securities will no longer
be deemed to be outstanding, and (ii) any certificates representing Preferred
Securities will be deemed to represent the Subordinated Debentures having a
principal amount equal to the Liquidation Amount of such Preferred Securities,
and bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on the Preferred Securities until such certificates are
presented to the Administrative Trustees or their agent for transfer or
reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities if a dissolution and liquidation of the Trust were to
occur. The Preferred Securities that an investor may purchase, or the
Subordinated Debentures that an investor may receive on dissolution and
liquidation of the Trust, may, therefore, trade at a discount to the price that
the investor paid to purchase the Preferred Securities offered hereby.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date will be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Subordinated Debentures. Redemptions of the Preferred
Securities will be made and the Redemption Price will be payable on each
Redemption Date only to the extent that the Trust has funds on hand available
for the payment of such Redemption Price. See "-- Subordination of Common
Securities."
If the Trust gives a notice of redemption in respect of its Preferred
Securities, then the Property Trustee, to the extent funds are available, will
deposit with the paying agent for the Preferred Securities funds sufficient to
pay the aggregate Redemption Price and will give the paying agent for the
Preferred Securities irrevocable instructions and authority to pay the
Redemption Price to the holders thereof upon surrender of their certificates
evidencing such Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Preferred
Securities called for redemption will be payable to the holders of such
Preferred Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption will have been given and funds deposited as
required, then upon the date of such deposit, all rights of the holders of such
Preferred Securities so called for redemption will cease, except the right of
the holders of such Preferred Securities to receive the Redemption Price and any
Distribution payable on or prior to the Redemption Date, but without interest,
and such Preferred Securities will cease to be outstanding. In the event that
any date fixed for redemption of Preferred Securities is not a Business Day,
then payment of the Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (and
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without any additional Distribution, interest or other payment in respect of any
such delay) with the same force and effect as if made on such date 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 Trust, or by the
Company pursuant to the Guarantee, Distributions on such Preferred Securities
will continue to accrue at the then applicable rate, from the Redemption Date
originally established by the Trust for such Preferred Securities to the date
such Redemption Price is actually paid, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
Redemption Price. See "Description of the Guarantee."
Subject to applicable law (including, without limitation, United States
federal securities law) and further provided, that the Company has not and is
not continuing to exercise its right to defer interest payments, the Company or
its subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender in the open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Subordinated Debentures to holders of Preferred Securities will
be made to the applicable record holders thereof as they appear on the register
for the Preferred Securities on the relevant record date, which date will be the
date 15 days prior to the Redemption Date.
If less than all of the Trust Securities are to be redeemed on a Redemption
Date, then the aggregate Liquidation Amount of such Trust Securities to be
redeemed will be allocated pro rata to the Trust Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed will be selected by the Property Trustee from the
outstanding Preferred Securities not previously called for redemption, by such
method as the Property Trustee deems fair and appropriate and which may provide
for the selection for redemption of portions (equal to $25.00 or an integral
multiple of $25.00 in excess thereof) of the Liquidation Amount of Preferred
Securities of a denomination larger than $25.00. The Property Trustee will
promptly notify the registrar for the Preferred Securities in writing of the
Preferred Securities selected for redemption and, in the case of any Preferred
Securities selected for partial redemption, the Liquidation Amount thereof to be
redeemed. For all purposes of the Trust Agreement, unless the context otherwise
requires, all provisions relating to the redemption of Preferred Securities will
relate to the portion of the aggregate Liquidation Amount of Preferred
Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address. Unless the Company defaults in payment of
the Redemption Price on the Subordinated Debentures, on and after the Redemption
Date interest will cease to accrue on such Subordinated Debentures or portions
thereof (and Distributions will cease to accrue on the related Preferred
Securities or portions thereof) called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Preferred
Securities and Common Securities, as applicable, will be made pro rata based on
the Liquidation Amount of the Preferred Securities and Common Securities;
provided, however, that if on any Distribution Date or Redemption Date a
Debenture Event of Default has occurred and is continuing, no payment of any
Distribution on, or Redemption Price of, any of the Common Securities, and no
other payment on account of the redemption, liquidation or other acquisition of
such Common Securities, will be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the outstanding Preferred
Securities for all Distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all of the outstanding Preferred Securities then called for redemption,
will have been made or provided for, and all funds available to the Property
Trustee will first be applied to the payment in full in cash of all
Distributions on, or Redemption Price of, the Preferred Securities then due and
payable.
In the case of any Event of Default resulting from a Debenture Event of
Default, the Company as holder of the Common Securities will be deemed to have
waived any right to act with respect to any such Event of
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Default under the Trust Agreement until the effect of all such Events of Default
with respect to the Preferred Securities has been cured, waived or otherwise
eliminated. Until any 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 Company, as holder of the Common
Securities, and only the holders of the Trust Securities will have the right to
direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
The Company will have the right at any time to dissolve, wind-up or
terminate the Trust and cause the Subordinated Debentures to be distributed to
the holders of the Trust Securities.
If the Company, while a holder of Common Securities, dissolves the Trust
prior to the Stated Maturity of the Subordinated Debentures and the dissolution
of the Trust is deemed to constitute the redemption of capital instruments by
the Applicable Bank Regulatory Authority under its risk-based capital guidelines
or policies, the dissolution of the Trust by the Company may be subject to the
prior approval of the Applicable Bank Regulatory Authority. Moreover, any
changes in applicable law or changes in the Applicable Bank Regulatory
Authority's risk-based capital guidelines or policies could impose a requirement
on the Company that it obtain the prior approval of the Applicable Bank
Regulatory Authority to dissolve the Trust.
Pursuant to the Trust Agreement, the Trust will automatically terminate
upon expiration of its term and will terminate earlier on the first to occur of
(i) certain events of bankruptcy, dissolution or liquidation of the Company,
(ii) the distribution of a Like Amount of the Subordinated Debentures to the
holders of its Trust Securities, if the Company, as depositor, has given written
direction to the Property Trustee to dissolve the Trust (which direction is
optional and wholly within the discretion of the Company, as depositor), (iii)
redemption of all of the Preferred Securities as described under "Description of
the Preferred Securities -- Redemption or Exchange -- Mandatory Redemption," or
(iv) the entry of an order for the dissolution of the Trust by a court of
competent jurisdiction.
Upon expiration or early termination as described in clause (i), (ii) or
(iv) of the preceding paragraph or upon the end of its term, the Trust will be
liquidated by the Trustees as expeditiously as the Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, to the holders of such Trust Securities a
Like Amount of the Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of the Trust available for
distribution to holders, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, an amount equal to, in the case of holders
of Preferred Securities, the aggregate of the Liquidation Amount plus accrued
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 Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities will be paid on a pro rata basis. The Company,
as the holder of the Common Securities, will be entitled to receive
distributions upon any such liquidation pro rata with the holders of the
Preferred Securities, except that, if a Debenture Event of Default has occurred
and is continuing, the Preferred Securities will have a priority over the Common
Securities. See "-- Subordination of Common Securities."
Under current United States federal income tax law and interpretations and
assuming, as expected, that the Trust is treated as a grantor trust, a
distribution of the Subordinated Debentures should not be a taxable event to
holders of the Preferred Securities. Should there be a change in law, a change
in legal interpretation, a Tax Event or other circumstances, however, the
distribution could be a taxable event to holders of the Preferred Securities.
See "Material Federal Income Tax Consequences -- Receipt of Subordinated
Debentures or Cash Upon Liquidation of the Trust." If the Company elects neither
to redeem the Subordinated Debentures prior to maturity nor to liquidate the
Trust and distribute the Subordinated Debentures to holders of the Preferred
Securities, the Preferred Securities will remain outstanding until the repayment
of the Subordinated Debentures.
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If the Company elects to liquidate the Trust and thereby causes the
Subordinated Debentures to be distributed to holders of the Preferred Securities
in liquidation of the Trust, the Company will continue to have the right to
shorten or extend the maturity of such Subordinated Debentures, subject to
certain conditions. See "Description of the Subordinated Debentures -- General."
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities if a dissolution and liquidation of the Trust were to
occur. Accordingly, the Preferred Securities that an investor may purchase, or
the Subordinated Debentures that the investor may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price that the investor
paid to purchase the Preferred Securities offered hereby.
LIQUIDATION VALUE
The amount of the Liquidation Distribution payable on the Preferred
Securities in the event of any liquidation of the Trust is $25.00 per Preferred
Security plus accrued and unpaid Distributions thereon to the date of payment,
which may be in the form of a distribution of such amount in Subordinated
Debentures, subject to certain exceptions. See "-- Liquidation Distribution Upon
Termination."
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an event of default under the
Trust Agreement (an "Event of Default") with respect to the Preferred Securities
(whatever the reason for such Event of Default and whether voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any administrative or
governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description
of the Subordinated Debentures -- Debenture Events of Default"); or
(ii) default by the Trust in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of
30 days; or
(iii) default by the Trust in the payment of any Redemption Price of
any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Trustees in the Trust Agreement (other
than a covenant or warranty, a default in the performance of which or the
breach of which is dealt with in clauses (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Trustee(s) by the
holders of at least 25% in aggregate Liquidation Amount of the outstanding
Preferred Securities, a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Company to appoint a
successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of the Preferred Securities, the
Administrative Trustees and the Company, as depositor, unless such Event of
Default has been cured or waived. The Company, as depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Trust
Securities will have a preference over the Common Securities upon termination of
the Trust. See "-- Liquidation Distribution Upon Termination." The existence of
an Event of Default does not entitle the holders of Preferred Securities to
accelerate the maturity thereof.
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REMOVAL OF THE TRUSTEES
Unless a Debenture Event of Default has occurred and is continuing, any
Trustee may be removed at any time by the holder of the Common Securities. If a
Debenture Event of Default has occurred and is continuing, the Property Trustee
and the Delaware Trustee may be removed at such time by the holders of a
majority in Liquidation Amount of the outstanding Preferred Securities. In no
event, however, will the holders of the Preferred Securities have the right to
vote to appoint, remove or replace the Administrative Trustees, which voting
right is vested exclusively in the Company as the holder of the Common
Securities. No resignation or removal of a Trustee and no appointment of a
successor trustee will be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default has occurred and is continuing, at any time or
times, for the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any part of the Trust Property (as defined
in the Trust Agreement) may at the time be located, the Company, as the holder
of the Common Securities, will have the power to appoint one or more Persons (as
defined in the Trust Agreement) either to act as a co- trustee, jointly with the
Property Trustee, of all or any part of such Trust Property, or, to the extent
required by law, to act as separate trustee of any such Trust Property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. In case a Debenture Event of Default has
occurred and is continuing, the Property Trustee alone will have the power to
make such appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural Person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Trustee is a party, or any Person
succeeding to all or substantially all the corporate trust business of such
Trustee, will be the successor of such Trustee under the Trust Agreement,
provided such Person is otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. The Trust may, at the request of the Company, with the consent
of the Administrative Trustees and without the consent of the holders of the
Preferred Securities, the Property Trustee or the Delaware Trustee, merge with
or into, consolidate, amalgamate, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to a trust organized as
such under the laws of any State; provided, that (i) such successor entity
either (a) expressly assumes all of the obligations of the Trust with respect to
the Preferred Securities, or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank the same as the
Preferred Securities in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly appoints a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee in its capacity as the holder of the Subordinated Debentures,
(iii) the Successor Securities are listed, or any Successor Securities will be
listed upon notification of issuance, on any national securities exchange or
other organization on which the Preferred Securities are then listed, if any
(including, if applicable, the American Stock Exchange, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Preferred Securities (including any Successor Securities) in any material
respect, (v) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Company has received an opinion from
independent counsel to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor
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Securities) in any material respect, and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Trust nor such successor entity will be required to register as an
"investment company" under the Investment Company Act, and (vi) the Company owns
all of the common securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at least to
the extent provided by the Guarantee. Notwithstanding the foregoing, the Trust
will 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 Person or permit any other Person to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or the successor entity to be classified as other than a grantor trust for
United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under "Description of the
Guarantee -- Amendments and Assignment" and "Removal of the Trustees " and as
otherwise required by the Trust Act and the Trust Agreement, the holders of the
Preferred Securities will have no voting rights.
If any Distributions payable on the Preferred Securities are in arrears for
six quarterly periods, the holders of the Preferred Securities, voting
separately as a class with any other preferred securities having similar voting
rights, will be entitled at the next regular or special meeting of the
shareholders of the Company to elect two directors to the Board of Directors of
the Company. Such voting rights will continue until such time as the
Distribution arrearage on the Preferred Securities has been paid in full. The
affirmative consent of the holders of at least 66 2/3% of the outstanding
Preferred Securities will be required by the Trust for amendments to the Trust
Agreement that would affect adversely the rights or privileges of the holders of
the Preferred Securities.
The Trust Agreement may be amended from time to time by the Company, the
Property Trustee, the Delaware Trustee and the Administrative Trustees, without
the consent of the holders of the Preferred Securities (i) with respect to
acceptance of appointment by a successor trustee, (ii) to cure any ambiguity,
correct or supplement any provisions in 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 such
amendment is not inconsistent with the other provisions of the Trust Agreement),
or (iii) to modify, eliminate or add to any provisions of the Trust Agreement to
such extent as is necessary to ensure that the Trust will be classified for
United States federal income tax purposes as a grantor trust at all times that
any Trust Securities are outstanding or to ensure that the Trust will not be
required to register as an "investment company" under the Investment Company
Act; provided, however, that in the case of clause (ii), such action may not
adversely affect in any material respect the interests of any holder of Trust
Securities, and any such amendments of the Trust Agreement will become effective
when notice thereof is given to the holders of Trust Securities. The Trust
Agreement may be amended by the Trustees and the Company with (i) the consent of
holders representing not less than a majority in the aggregate Liquidation
Amount of the outstanding Trust Securities, and (ii) receipt by the Trustees of
an opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Trustees in accordance with such amendment will not affect
the Trust's status as a grantor trust for United States federal income tax
purposes or the Trust's exemption from status as an "investment company" under
the Investment Company Act. Notwithstanding anything in this paragraph to the
contrary, without the consent of each holder of Trust Securities, the Trust
Agreement may not be amended to (a) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date, or (b) restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.
The Trustees will not, so long as any Subordinated Debentures are held by
the Property Trustee, (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Property Trustee with respect to the
Subordinated Debentures, (ii) waive any past default that is waivable under the
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Subordinated Debentures will be due and payable, or (iv)
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consent to any amendment, modification or termination of the Indenture or the
Subordinated Debentures, where such consent is required, without, in each case,
obtaining the prior approval of the holders of a majority in aggregate
Liquidation Amount of all outstanding Preferred Securities; provided, however,
that where a consent under the Indenture requires the consent of each holder of
Subordinated Debentures affected thereby, no such consent will be given by the
Property Trustee without the prior consent of each holder of the Preferred
Securities. The Trustees may not revoke any action previously authorized or
approved by a vote of the holders of the Preferred Securities except by
subsequent vote of the holders of the Preferred Securities. The Property Trustee
will notify each holder of Preferred Securities of any notice of default with
respect to the Subordinated Debentures. In addition to obtaining the foregoing
approvals of the holders of the Preferred Securities, prior to taking any of the
foregoing actions, the Trustees must obtain an opinion of counsel experienced in
such matters to the effect that the Trust will continue to be classified as a
grantor trust and will not be classified as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be given
to each holder of record of Preferred Securities in the manner set forth in the
Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for the Trust to redeem and cancel its Preferred Securities in accordance with
the Trust Agreement.
Notwithstanding the fact that holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the Trustees or any
affiliate of the Company or any Trustee, will, for purposes of such vote or
consent, be treated as if they were not outstanding.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
The Preferred Securities to be issued in the offering may be transferred or
exchanged in the manner and at the offices described below.
The Preferred Securities to be issued in the offering initially will be
represented by one or more Preferred Securities in registered, global form
(collectively, the "Global Preferred Securities"). The Global Preferred
Securities will be deposited upon issuance with the Property Trustee as
custodian for The Depository Trust Company ("DTC"), and registered in the name
of DTC or its nominee, in each case for credit to an account of a direct or
indirect participant in DTC, as described below.
Except as set forth below, the Global Preferred Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Preferred
Securities may not be exchanged for certificated Preferred Securities except in
the limited circumstances described under "-Exchange of Book-Entry Preferred
Securities for Certificated Preferred Securities" below. In addition, transfer
of beneficial interests in the Global Preferred Securities will be subject to
the applicable rules and procedures of DTC and its direct or indirect
participants, which may change from time to time.
Depository Procedures. DTC has advised the Trust and the Company that DTC
is a limited-purpose trust company created to hold securities for its
participating organizations (collectively, the "Participants") and to facilitate
the clearance and settlement of transactions in those securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership
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interest of each actual purchaser of each security held by or on behalf of DTC
are recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Company that, pursuant to procedures
established by it, (i) upon deposit of the Global Preferred Securities, DTC will
credit the accounts of Participants on behalf of purchasers of the Preferred
Securities with portions of the Liquidation Amount of the Global Preferred
Securities and (ii) ownership of such interests in the Global Preferred
Securities will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with respect
to other owners of beneficial interests in the Global Preferred Securities).
Investors in the Global Preferred Securities may hold their interests
therein directly through DTC if they are Participants in such system, or
indirectly through organizations which are Participants in such system. All
interests in a Global Preferred Security may be subject to the procedures and
requirements of DTC. The laws of some states require that certain persons take
physical delivery in certificated form of securities that they own.
Consequently, the ability to transfer beneficial interests in a Global
Preferred Security to such persons will be limited to that extent. Because DTC
can act only on behalf of Participants, which in turn act on behalf of Indirect
Participants and certain banks, the ability of a person having beneficial
interests in a Global Preferred Security to pledge such interest to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of such interests, may be affected by the lack of a physical certificate
evidencing such interests. For certain other restrictions on the transferability
of the Preferred Securities, see "Exchange of Book -- Entry Preferred Securities
for Certificated Preferred Securities."
Except as described below, owners of interests in the Global Preferred
Securities will not have Preferred Securities registered in their name, will not
receive physical delivery of certificated Preferred Securities and will not be
considered the registered owners or holders thereof under the Trust Agreement
for any purpose.
Payments in respect of the Global Preferred Security registered in the name
of DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Trust Agreement. Under the terms of
the Trust Agreement, the Property Trustee will treat the persons in whose names
the Preferred Securities, including the Global Preferred Securities, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Property
Trustee nor any agent thereof has or will have any responsibility or liability
for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Preferred Securities, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Preferred Securities or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Trust and the Company that its current practice, upon receipt of any
payment in respect of securities such as Preferred Securities, is to credit the
accounts of the relevant Participants with the payment on the payment date, in
amounts proportionate to their respective holdings in Liquidation Amount of
beneficial interests in the relevant security as shown on the records of DTC
unless DTC has reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of Preferred Securities will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility of
DTC, the Property Trustee, the Trust or the Company. Neither the Trust nor the
Company nor the Property Trustee will be liable for any delay by DTC or any of
its Participants in identifying the beneficial owners of the Preferred
Securities, and the Trust or the Company and the Property Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
DTC has advised the Trust and the Company that it will take any action
permitted to be taken by a holder of Preferred Securities only at the direction
of one or more Participants to whose account with DTC interests in the Global
Preferred Securities are credited and only in respect of such portion of the
Liquidation Amount of the Preferred Securities as to which such Participant or
Participants has or have given such
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direction. However, if there is an Event of Default under the Trust Agreement,
DTC reserves the right to exchange the Global Preferred Securities for
certificated Preferred Securities and to distribute such Preferred Securities to
its Participants.
The information in this section concerning DTC and book-entry systems has
been obtained from sources that the Trust and the Company believe to be
reliable, but neither the Trust nor the Company takes responsibility for the
accuracy thereof.
Exchange of Book-Entry Preferred Securities for Certificated Preferred
Securities. A Global Preferred Security is exchangeable for certificated
Preferred Securities if (i) DTC (x) notifies the Company that it is unwilling or
unable to continue as depository for the Global Preferred Security and the
Company thereupon fails to appoint a successor depository within 90 days or (y)
has ceased to be a clearing agency registered under the Exchange Act and the
Company thereupon fails to appoint a successor depository within 90 days, (ii)
the Company in its sole discretion elects to cause the issuance of the Preferred
Securities in certificated form or (iii) there shall have occurred and be
continuing an Event of Default. In addition, beneficial interests in a Global
Preferred Security may be exchanged for certificated Preferred Securities upon
request but only upon at least 20 days' prior written notice given to the
Property Trustee by or on behalf of DTC in accordance with customary procedures.
In all cases, certificated Preferred Securities delivered in exchange for any
Global Preferred Security or beneficial interests therein will be registered in
the names, and issued in any approved denominations, requested by or on behalf
of DTC (in accordance with its customary procedures).
PAYMENT AND PAYING AGENTS
Payments in respect of the Preferred Securities held in global form shall
be made to DTC, which shall credit the relevant accounts at DTC on the
applicable Distribution Dates or, in respect of the Preferred Securities that
are not held by DTC, such payments shall be made by check mailed to the address
of the holder entitled thereto as such address shall appear on the register. The
paying agent for the Preferred Securities will initially be the Property Trustee
and any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Company. The paying agent for the Preferred
Securities may resign as paying agent upon 30 days' written notice to the
Administrative Trustees, Property Trustee and the Company. In the event that the
Property Trustee no longer is the paying agent for the Preferred Securities, the
Property Trustee will appoint a successor (which must be a bank or trust company
reasonably acceptable to the Administrative Trustees and the Company) to act as
paying agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as the registrar and the transfer agent for
the Preferred Securities. Registration of transfers of Preferred Securities will
be effected without charge by or on behalf of the Trust, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The Trust will not be required to register or cause to be
registered the transfer of Preferred Securities after such Preferred Securities
have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than upon the occurrence and during the
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trust Agreement and, 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 the
Trust Agreement, and if the matter is not one on which holders of Preferred
Securities are entitled under the Trust Agreement to vote, then the Property
Trustee will take such action as is directed by the Company and if not so
directed, will take such action as it deems advisable and in the best interests
of the holders of the Trust Securities and will have no liability except for its
own bad faith, negligence or willful misconduct.
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MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States federal income tax purposes and so that the Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. The Company and the Administrative Trustees are
authorized, in this connection, to take any action, not inconsistent with
applicable law, the certificate of trust of the Trust (the "Certificate of
Trust") or the Trust Agreement, that the Company and the Administrative Trustees
determine in their discretion to be necessary or desirable for such purposes, so
long as such action does not materially adversely affect the interests of the
holders of the related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
The Trust Agreement and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
DESCRIPTION OF THE SUBORDINATED DEBENTURES
Concurrently with the issuance of the Preferred Securities, the Trust will
invest the proceeds thereof, together with the consideration paid by the Company
for the Common Securities, in the Subordinated Debentures issued by the Company.
The Subordinated Debentures will be issued as unsecured debt under the
Indenture, to be dated as of July , 1998, between the Company and SunTrust
Bank, the Debenture Trustee (the "Indenture"). The Indenture will be qualified
as an indenture under the Trust Indenture Act. The following summary of the
material terms and provisions of the Subordinated Debentures and the Indenture
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the Indenture and to the Trust Indenture Act. Wherever
particular defined terms of the Indenture are referred to, but not defined
herein, such defined terms are incorporated herein by reference. The form of the
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.
GENERAL
The Subordinated Debentures will be limited in aggregate principal amount
to approximately $25,773,196 (or $29,639,175 if the over-allotment option
described under the heading "Underwriting" is exercised by the Underwriters),
such amount being the sum of the aggregate stated Liquidation Amount of the
Trust Securities. The Subordinated Debentures will bear interest at the annual
rate of % of the principal amount thereof, payable quarterly in arrears on
the Interest Payment Date beginning September 30, 1998, to the Person (as
defined in the Indenture) in whose name each Subordinated Debenture is
registered, subject to certain exceptions, at the close of business on the 15th
day of the last month of the calendar quarter. It is anticipated that, until the
liquidation, if any, of the Trust, the Subordinated Debentures will be held in
the name of the Property Trustee in trust for the benefit of the holders of the
Trust Securities. The amount of interest payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months. Except as provided in
the following sentence, the amount of interest payable for any period shorter
than a full quarterly period for which interest is computed, will be computed on
the basis of the actual number of days elapsed in such period. In the event that
any date on which interest is payable on the Subordinated Debentures is not a
Business Day, then payment of the interest payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), in each case with the same force
and effect as if made on the date such payment was originally due and payable.
Accrued interest that is not paid on the applicable Interest Payment Date will
bear additional interest on the amount thereof (to the extent permitted by law)
at the rate per annum of % thereof, compounded quarterly. The term
"interest," as used herein, includes quarterly interest payments, interest on
quarterly interest payments not paid on the applicable Interest Payment Date and
Additional Interest, as applicable. The Subordinated Debentures will mature on
September 30, 2028, the Stated Maturity.
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The Subordinated Debentures will be unsecured and will rank junior and be
subordinate in right of payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company. Because the Company is a holding
company, the right of the Company to participate in any distribution of assets
of any subsidiary, including the Bank, upon any such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Subordinated
Debentures to benefit indirectly from such distribution), is subject to the
prior claim of creditors of such subsidiary, except to the extent that the
Company may itself be recognized as a creditor of such subsidiary. At March 31,
1998, the Company and its Subsidiaries had total liabilities (excluding
liabilities owed to the Company) of approximately $1.1 billion. The Subordinated
Debentures will, therefore, be effectively subordinated to all existing and
future liabilities of the subsidiaries, and holders of Subordinated Debentures
should look only to the assets of the Company for payments on the Subordinated
Debentures. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, including Senior Debt, Subordinated
Debt and Additional Senior Obligations, whether under the Indenture or any
existing indenture or other indenture that the Company may enter into in the
future or otherwise. See "-- Subordination."
In addition, as the Company is a non-operating holding company, almost all
of the operating assets of the Company are owned by the Company's subsidiaries.
The Company relies primarily on dividends from such subsidiaries to meet its
obligations for payment of principal and interest on its outstanding debt
obligations, if any, and corporate expenses. The Bank is subject to certain
restrictions imposed by federal law on any extensions of credit to, and certain
other transactions with, the Company and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent the
Company and such other affiliates from borrowing from the Bank unless the loans
are secured by various types of collateral. Further, such secured loans, other
transactions and investments by the Bank are generally limited in amount as to
the Company and as to each of such other affiliates to 10% of the Bank's capital
and surplus and as to the Company and all of such other affiliates to an
aggregate of 20% of the Bank's capital and surplus. In addition, payment of
dividends to the Company by the Bank is subject to ongoing review by the OTS and
is subject to various statutory limitations and in certain circumstances
requires prior approval by banking regulatory authorities. Under current
regulations, at March 31, 1998, the Bank could not declare additional dividends
to the Company without prior regulatory approval. Federal regulatory agencies
also have the authority to limit further the Bank's payment of dividends based
on other factors, such as the maintenance of adequate capital for the Bank,
which could reduce the amount of dividends otherwise payable.
The Indenture does not contain provisions that afford holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction or other similar transaction involving the Company that may
adversely affect such holders.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Indenture at any time during the term
of the Subordinated Debentures, so long as no Event of Default has occurred and
is continuing to defer the payment of interest at any time, or from time to
time, for an Extended Interest Payment Period. The right to defer the payment of
interest on the Subordinated Debentures is limited, however, to a period, in
each instance, not exceeding 20 consecutive quarters and no Extended Interest
Payment Period may extend beyond the Stated Maturity of the Subordinated
Debentures. At the end of each Extended Interest Payment Period, the Company
must pay all interest then accrued and unpaid (together with interest thereon at
the annual rate of %, compounded quarterly, to the extent
permitted by applicable law). During an Extended Interest Payment Period,
interest will continue to accrue and holders of Subordinated Debentures (or the
holders of Preferred Securities if such securities are then outstanding) will be
required to accrue and recognize income for United States federal income tax
purposes. See "Material Federal Income Tax Consequences -- Potential Extension
of Interest Payment Period and Original Issue Discount."
During any such Extended Interest Payment 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 (other than the reclassification of any class of the Company's capital
stock into another class of capital stock), (ii) make any payment of principal,
interest or premium, if any, on or repay,
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repurchase or redeem any debt securities of the Company that rank pari passu
with or junior in interest to the Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any subsidiary of the Company if such guarantee ranks pari passu with or junior
in interest to the Subordinated Debentures (other than payments under the
Guarantee), or (iii) redeem, purchase or acquire less than all of the
Subordinated Debentures or any of the Preferred Securities. Prior to the
termination of any such Extended Interest Payment Period, the Company may
further defer the payment of interest; provided that no Extended Interest
Payment Period may exceed 20 consecutive quarters or extend beyond the Stated
Maturity of the Subordinated Debentures. Upon the termination of any such
Extended Interest Payment Period and the payment of all amounts then due on any
Interest Payment Date, the Company may elect to begin a new Extended Interest
Payment Period subject to the above requirements. No interest will be due and
payable during an Extended Interest Payment Period, except at the end thereof,
but the Company may prepay at any time all or any portion of the interest
accrued during an Extended Interest Payment Period. The Company has no present
intention of exercising its rights to defer payments of interest on the
Subordinated Debentures. The Company must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election of such
Extended Interest Payment Period one Business Day prior to the earlier of (i)
the next succeeding date on which Distributions on the Trust Securities would
have been payable except for the election to begin such Extended Interest
Payment Period, or (ii) the date the Trust is required to give notice of the
record date, or the date such Distributions are payable, to the American Stock
Exchange (or other applicable self-regulatory organization) or to holders of the
Preferred Securities, but in any event at least one Business Day prior to such
record date. Subject to the foregoing, there is no limitation on the number of
times that the Company may elect to begin an Extended Interest Payment Period.
ADDITIONAL SUMS
If the Trust or the Property Trustee is required to pay any additional
taxes, duties or other governmental charges as a result of the occurrence of a
Tax Event, the Company will pay Additional Interest on the Subordinated
Debentures as may be required so that the net amounts received and retained by
the Trust after paying any such additional taxes, duties or other governmental
charges will not be less than the amounts the Trust would have received had such
additional taxes, duties or other governmental charges not been imposed.
REDEMPTION OR EXCHANGE
The Company will have the right to redeem the Subordinated Debentures prior
to maturity (i) on or after September 30, 2003, in whole at any time or in part
from time to time, or (ii) at any time in whole (but not in part), for cash
within 180 days following the occurrence of a Capital Event, a Tax Event or an
Investment Company Event, in each case at a redemption price equal to the
accrued and unpaid interest in the Subordinated Debentures so redeemed to the
date fixed for redemption, plus 100% of the principal amount thereof. The
proceeds of any such redemption will be used by the Trust to redeem the
Preferred Securities. If a partial redemption of the Subordinated Debentures
would result in the delisting of the Preferred Securities issued by the Trust
from the American Stock Exchange or any national securities exchange or other
organization on which the Preferred Securities are then listed, the Company will
not be permitted to effect such partial redemption and may only redeem the
Subordinated Debentures in whole.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Subordinated Debentures to
be redeemed at its registered address. Unless the Company defaults in payment of
the Redemption Price for the Subordinated Debentures, on and after the
redemption date interest ceases to accrue on such Subordinated Debentures or
portions thereof called for redemption.
The Subordinated Debentures will not be subject to any sinking fund.
DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Preferred Securities -- Liquidation
Distribution Upon Termination," under certain circumstances involving the
termination of the Trust, the Subordinated Debentures may
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be distributed to the holders of the Preferred Securities in liquidation of the
Trust after satisfaction of liabilities to creditors of the Trust as provided by
applicable law. If the Subordinated Debentures are distributed to the holders of
Preferred Securities upon the liquidation of the Trust, the Company will use its
best efforts to list the Subordinated Debentures on the American Stock Exchange,
or stock exchanges, if any, on which the Preferred Securities are then listed.
There can be no assurance as to the market price of any Subordinated Debentures
that may be distributed to the holders of Preferred Securities.
RESTRICTIONS ON CERTAIN PAYMENTS
If at any time (i) there has occurred a Debenture Event of Default, (ii)
the Company is in default with respect to its obligations under the Preferred
Securities Guarantee, or (iii) the Company has given notice of its election of
an Extended Interest Payment Period as provided in the Indenture with respect to
the Subordinated Debentures and has not rescinded such notice, or such Extended
Interest Payment Period, or any extension thereof, is continuing, the Company
will not (a) 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 (other than the reclassification of any class of the
Company's capital stock into another class of capital stock), (b) make any
payment of principal, interest or premium, if any, on or repay or repurchase or
redeem any debt securities of the Company that rank pari passu with or junior in
interest to the Subordinated Debentures (other than payments under the Preferred
Securities Guarantee), or (c) redeem, purchase or acquire less than all of the
Subordinated Debentures or any of the Preferred Securities.
SUBORDINATION
The Indenture provides that the Subordinated Debentures issued thereunder
are subordinated and junior in right of payment to all Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company. Upon any payment or
distribution of assets to creditors upon any liquidation, dissolution, winding
up, or reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, the holders of Senior
Debt, Subordinated Debt and Additional Senior Obligations of the Company will
first be entitled to receive payment in full of principal of (and premium, if
any) and interest, if any, on such Senior Debt, Subordinated Debt and Additional
Senior Obligations of the Company before the holders of Subordinated Debentures
will be entitled to receive or retain any payment in respect of the principal of
or interest on the Subordinated Debentures.
In the event of the acceleration of the maturity of any Subordinated
Debentures, the holders of all Senior Debt, Subordinated Debt and Additional
Senior Obligations of the Company outstanding at the time of such acceleration
will first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders of the
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the principal of or interest on the Subordinated Debentures.
No payments on account of principal or interest in respect of the
Subordinated Debentures may be made if there has occurred and is continuing a
default in any payment with respect to Senior Debt, Subordinated Debt or
Additional Senior Obligations of the Company or an event of default with respect
to any Senior Debt, Subordinated Debt or Additional Senior Obligations of the
Company resulting in the acceleration of the maturity thereof.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), (v) every capital lease obligation of such Person, and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment
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of which, in either case, such Person has guaranteed or is responsible for or
liable, directly or indirectly, as obligor or otherwise.
"Senior Debt" means, with respect to the Company, the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not such claim for post-petition interest is allowed in such
proceeding), on Debt, whether incurred on or prior to the date of the Indenture
or thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Subordinated Debentures
or to other Debt which is pari passu with, or subordinated to, the Subordinated
Debentures; provided, however, that Senior Debt will not be deemed to include
(i) any Debt of the Company which when incurred and without respect to any
election under section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Company, (ii) any Debt of the Company to
any of its subsidiaries, (iii) any Debt to any employee of the Company, (iv) any
Debt which by its terms is subordinated to trade accounts payable or accrued
liabilities arising in the ordinary course of business to the extent that
payments made to the holders of such Debt by the holders of the Subordinated
Debentures as a result of the subordination provisions of the Indenture would be
greater than they otherwise would have been as a result of any obligation of
such holders to pay amounts over to the obligees on such trade accounts payable
or accrued liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject, and (v) any Debt which
constitutes Subordinated Debt.
"Subordinated Debt" means, with respect to the Company, the principal of
(and premium, if any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating to
the Company whether or not such claim for post-petition interest is allowed in
such proceeding), on Debt, whether incurred on or prior to the date of the
Indenture or thereafter incurred, which is by its terms expressly provided to be
junior and subordinate to other Debt of the Company (other than the Subordinated
Debentures).
"Additional Senior Obligations" means, with respect to the Company, all
indebtedness, whether incurred on or prior to the date of the Indenture or
thereafter incurred, for claims in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; provided, however, that Additional Senior Obligations do not
include claims in respect of Senior Debt or Subordinated Debt or obligations
which, by their terms, are expressly stated to be not superior in right of
payment to the Subordinated Debentures or to rank pari passu in right of payment
with the Subordinated Debentures. For purposes of this definition, "claim" has
the meaning assigned thereto in Section 101(4) of the United States Bankruptcy
Code of 1978, as amended.
The Indenture places no limitation on the amount of additional Senior Debt,
Subordinated Debt or Additional Senior Obligations that may be incurred by the
Company. The Company expects from time to time to incur indebtedness
constituting Senior Debt, Subordinated Debt and Additional Senior Obligations.
Because the Company is a holding company, the Subordinated Debentures are
effectively subordinated to all existing and future liabilities of the Company's
subsidiaries, including obligations to depositors of the Bank. The Company and
its subsidiaries had total liabilities (excluding liabilities owed to the
Company) of approximately $1.1 billion as of March 31, 1998.
FORM, REGISTRATION AND TRANSFER
If the Subordinated Debentures are distributed to the holders of the
Preferred Securities issued in the Offering, the Subordinated Debentures may be
represented by one or more global certificates registered in the name of Cede &
Co. as the nominee of DTC. The depository arrangements for such Subordinated
Debentures are expected to be substantially similar to those in effect for the
Preferred Securities issued in the Offering. For a description of DTC and the
terms of the depository arrangements relating to payments, transfers, voting
rights, redemptions and other notices and other matters, see "Description of the
Preferred Securities -- Form, Denomination, Book -- Entry Procedures and
Transfer."
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PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on the Subordinated Debentures
will be made initially at the office of the Debenture Trustee in Atlanta,
Georgia, except that, at the option of the Company, payment of any interest may
be made (i) by check mailed to the address of the Person entitled thereto as
such address appears in the register of holders of the Subordinated Debentures,
or (ii) by wire transfer to an account maintained by the Person entitled thereto
as specified in the register of holders of the Subordinated Debentures, provided
that proper transfer instructions have been received by the regular record date.
Payment of any interest on Subordinated Debentures will be made to the Person in
whose name such Subordinated Debenture is registered at the close of business on
the regular record date for such interest, except in the case of defaulted
interest. The Company may at any time designate additional paying agents for the
Subordinated Debentures or rescind the designation of any paying agent for the
Subordinated Debentures; however, the Company will at all times be required to
maintain a paying agent, and each place of payment for the Subordinated
Debentures. Notwithstanding the foregoing, so long as the holder of any
Subordinated Debentures is the Property Trustee, the payment of the principal of
and interest (including compounded interest and Additional Interest, if any) on
such Subordinated Debentures held by the Property Trustee may be made at such
place and to such account as may be designated by the Property Trustee.
Any moneys deposited with the Debenture Trustee or any paying agent for the
Subordinated Debentures, or then held by the Company in trust, for the payment
of the principal of or interest on the Subordinated Debentures and remaining
unclaimed for two years after such principal or interest has become due and
payable will be repaid to the Company or (if then held in trust by the Company)
will be discharged from such trust and the holder of such Subordinated Debenture
will thereafter look, as general unsecured creditor, only to the Company for
payment thereof.
REGISTRAR AND TRANSFER AGENT
The Debenture Trustee initially will act as the registrar and the transfer
agent for the Subordinated Debentures. Subordinated Debentures may be presented
for registration of transfer (with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed), at the office of
the registrar. The Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts; provided that the Company maintains a transfer agent. The
Company may at any time designate additional transfer agents with respect to the
Subordinated Debentures. In the event of any Redemption, neither the Company nor
the Debenture Trustee will be required to (i) issue, register the transfer of or
exchange Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for Redemption of Subordinated
Debentures and ending at the close of business on the day of mailing of the
relevant notice of redemption, or (ii) transfer or exchange any Subordinated
Debentures so selected for redemption, except, in the case of any Subordinated
Debentures being redeemed in part, any portion thereof not to be redeemed.
MODIFICATION OF INDENTURE
The Company and the Debenture Trustee may, from time to time without the
consent of the holders of the Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies and qualifying, or maintaining
the qualification of, the Indenture under the Trust Indenture Act and making any
other change that does not materially adversely affect the rights of any holder
of Subordinated Debentures. The Indenture contains provisions permitting the
Company and the Debenture Trustee, with the consent of the holders of not less
than a majority in principal amount of the outstanding Subordinated Debentures,
to modify the Indenture; provided, that no such modification may, without the
consent of the holder of each outstanding Subordinated Debenture affected by
such proposed modification, (i) extend the fixed maturity of the Subordinated
Debentures, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, or (ii) reduce the percentage of
principal amount of Subordinated Debentures, the holders of which are required
to consent to any such modification of the Indenture; provided that so long as
any of the Preferred Securities remain outstanding, no such modification may be
made that requires the consent of the
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holders of the Subordinated Debentures, and no termination of the Indenture may
occur, and no waiver of any Debenture Event of Default may be effective, without
the prior consent of the holders of at least a majority, and in certain cases
all, of the aggregate Liquidation Amount of the Preferred Securities.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Subordinated Debentures that has occurred and is
continuing constitutes an event of default (each, a "Debenture Event of
Default") with respect to the Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Subordinated
Debentures, when due (subject to the deferral of any due date in the case
of an Extended Interest Payment Period); or
(ii) failure to pay any principal on the Subordinated Debentures when
due whether at maturity, upon redemption, by declaration or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Company from the Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of the Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
As described in "Description of the 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 a majority in aggregate outstanding principal amount of the
Subordinated Debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee. The
Debenture Trustee, or the holders of not less than 25% in aggregate outstanding
principal amount of the Subordinated Debentures, may declare the principal due
and payable immediately upon a Debenture Event of Default. The holders of a
majority in aggregate outstanding principal amount of the Subordinated
Debentures may annul such declaration and waive the default if the default
(other than the non-payment of the principal of the Subordinated Debentures
which has become due solely by such acceleration) has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
Should the holders of the Subordinated Debentures fail to annul such declaration
and waive such default, the holders of a majority in aggregate Liquidation
Amount of the Preferred Securities will have such right.
The Company is required to file annually with the Debenture Trustee a
certificate as to whether or not the Company is in compliance with all the
conditions and covenants applicable to it under the Indenture.
If a Debenture Event of Default has occurred and is continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such Subordinated Debentures, and any other amounts payable under
the Indenture, to be forthwith due and payable and to enforce its other rights
as a creditor with respect to such Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest on or
principal of the Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Preferred Securities may institute
a direct action against the Company for enforcement of payment to such holder of
the principal of or interest on such Subordinated Debentures having a principal
amount equal to the aggregate Liquidation Amount of the Preferred Securities of
such holder. In connection with such direct action, the Company will have a
right of set-off under the Indenture to the extent of any payment made by the
Company to such holder of Preferred Securities in the direct action. The Company
may not amend the Indenture to remove the foregoing right to bring a direct
action without the prior written consent of the holders of all of the Preferred
Securities. If the right to bring a direct action is removed, the Trust may
become subject to the reporting obligations under the
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Exchange Act. The Company has the right under the Indenture to set off any
payment made to such holder of Preferred Securities by the Company in connection
with a direct action.
The holders of the Preferred Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the Subordinated Debentures except under the
circumstances described in the preceding paragraph. See "Description of the
Preferred Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Company may not consolidate with or merge into any other Person or
convey or transfer its properties and assets substantially as an entirety to any
Person, and no Person may consolidate with or merge into the Company or sell,
convey, transfer or otherwise dispose of its properties and assets substantially
as an entirety to the Company, unless (i) in the event the Company consolidates
with or merges into another Person or conveys or transfers its properties and
assets substantially as an entirety to any Person, the successor Person is
organized under the laws of the United States or any state or the District of
Columbia, and such successor Person expressly assumes by supplemental indenture
the Company's obligations on the Subordinated Debentures issued under the
Indenture, and (ii) immediately after giving effect thereto, no Debenture Event
of Default, and no event which, after notice or lapse of time, or both, would
become a Debenture Event of Default, has occurred and is continuing, and (iii)
certain other conditions as prescribed in the Indenture are met.
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect (except as to the
Company's obligations to pay certain sums due pursuant to the Indenture and to
provide certain officers' certificates and opinions of counsel described
therein) and the Company will be deemed to have satisfied and discharged the
Indenture when, among other things, all Subordinated Debentures not previously
delivered to the Debenture Trustee for cancellation (i) have become due and
payable, or (ii) will become due and payable at their Stated Maturity within one
year or are to be called for redemption and the Company deposits or causes to be
deposited with the Debenture Trustee funds, in trust, for the purpose and in an
amount sufficient to pay and discharge the entire indebtedness on the
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation.
GOVERNING LAW
The Indenture and the Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of Georgia.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee has and is subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Subordinated Debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The Debenture Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance of
its duties if the Debenture Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
SunTrust Bank, 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
SunTrust Bank and its affiliates.
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MISCELLANEOUS
The Company has agreed, pursuant to the Indenture, for so long as Trust
Securities remain outstanding, (i) to maintain directly or indirectly 100%
ownership of the Common Securities of the Trust (provided that certain
successors which are permitted pursuant to the Indenture may succeed to the
Company's ownership of the Common Securities), (ii) to use reasonable efforts to
cause the Trust to remain a business trust, exceptin connection with (a) a
distribution of Subordinated Debentures to the holders of the Preferred
Securities in liquidation of the Trust (b) the redemption of all the Trust
Securities, or (c) in connection with certain mergers, consolidations or
amalgamations permitted by the Trust Agreement, and (iii) to use its reasonable
efforts, consistent with the terms and provisions of the Trust Agreement, to
cause the Trust to remain classified as a grantor trust and not as an
association taxable as a corporation for United States federal income tax
purposes and (iv) to use reasonable efforts to cause each holder of Trust
Securities to be treated as owning a beneficial interest in the Subordinated
Debentures.
DESCRIPTION OF THE GUARANTEE
The Preferred Securities Guarantee will be executed and delivered by the
Company concurrently with the issuance of the Preferred Securities for the
benefit of the holders of the Preferred Securities. The Guarantee will be
qualified as an indenture under the Trust Indenture Act. The Guarantee Trustee
will act as indenture trustee under the Guarantee for purposes of complying with
the provisions of the Trust Indenture Act. The Guarantee Trustee, SunTrust Bank,
will hold the Guarantee for the benefit of the holders of the Preferred
Securities. The following summary of the material terms and provisions of the
Guarantee does not purport to be complete and is subject to, and qualified in
its entirety by reference to, all of the provisions of the Guarantee and the
Trust Indenture Act. Wherever particular defined terms of the Guarantee are
referred to, but not defined herein, such defined terms are incorporated herein
by reference. The form of the Guarantee has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
GENERAL
The Company will, pursuant to the Guarantee, irrevocably agree to pay in
full on a subordinated basis, to the extent set forth therein, the Guarantee
Payments (as defined below) to the holders of the Preferred Securities, as and
when due, regardless of any defense, right of set-off or counterclaim that the
Trust may have or assert other than the defense of payment. The following
payments with respect to the Preferred Securities, to the extent not paid by or
on behalf of the Trust (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accrued and unpaid Distributions required to be paid on the
Preferred Securities, to the extent that the Trust has funds available therefor
at such time, (ii) the Redemption Price with respect to any Preferred Securities
called for redemption to the extent that the Trust has funds available therefor
at such time, and (iii) upon a voluntary or involuntary dissolution, winding up
or liquidation of the Trust (other than in connection with the distribution of
Subordinated Debentures to the holders of Preferred Securities or a redemption
of all of the Preferred Securities), the lesser of (a) the amount of the
Liquidation Distribution, to the extent the Trust has funds available therefor
at such time, and (b) the amount of assets of the Trust remaining available for
distribution to holders of Preferred Securities in liquidation of the Trust. The
obligation of the Company to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the Preferred
Securities or by causing the Trust to pay such amounts to such holders.
The Company will, through the Guarantee, the Trust Agreement, the
Subordinated Debentures and the Indenture, taken together, fully, irrevocably
and unconditionally guarantee all of the Trust's obligations under the Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Subordinated Debentures and the Guarantee."
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The Guarantee will not apply to any payment of Distributions except to the
extent the Trust has funds available therefor. If the Company does not make
interest payments on the Subordinated Debentures held by the Trust, the Trust
will not pay Distributions on the Preferred Securities and will not have funds
legally available therefor.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company in the same
manner as the Subordinated Debentures. The Guarantee does not place a limitation
on the amount of additional Senior Debt, Subordinated Debt or Additional Senior
Obligations that may be incurred by the Company. The Company expects from time
to time to incur additional indebtedness constituting Senior Debt, Subordinated
Debt and Additional Senior Obligations.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the Company to enforce its rights under the Guarantee without first instituting
a legal proceeding against any other Person or entity). The Guarantee will not
be discharged except by payment of the Guarantee Payments in full to the extent
not paid by the Trust or upon distribution of the Subordinated Debentures to the
holders of the Preferred Securities. Because the Company is a holding company,
the right of the Company to participate in any distribution of assets of any
subsidiary, including the Bank, upon such subsidiaries' liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Company may itself be recognized as a
creditor of that subsidiary. The Company's obligations under the Guarantee,
therefore, will be effectively subordinated to all existing and future
liabilities of the Company's subsidiaries, and claimants should look only to the
assets of the Company for payments thereunder.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Preferred Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of the
outstanding Preferred Securities. See "Description of the Preferred
Securities -- Voting Rights; Amendment of Trust Agreement." All guarantees and
agreements contained in the Guarantee will bind the successors, assigns,
receivers, trustees and representatives of the Company and will inure to the
benefit of the holders of the Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate Liquidation Amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee.
Any 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 Trust, the
Guarantee Trustee or any other Person.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the
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Guarantee. After default with respect to the Guarantee, the Guarantee Trustee
will exercise its rights and powers under the Guarantee using the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to such provisions, the Guarantee Trustee is under
no obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of any Preferred Securities, unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
For information concerning the relationship between SunTrust Bank, the
Guarantee Trustee, and the Company, see "Description of the Subordinated
Debentures -- Information Concerning the Debenture Trustee."
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon (i)
full payment of the Redemption Price of the Preferred Securities, (ii) full
payment of the amounts payable upon liquidation of the Trust, or (iii)
distribution of the Subordinated Debentures to the holders of the Preferred
Securities. The Guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of the Preferred Securities must
restore payment of any sums paid under such Preferred Securities or the
Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of Georgia.
EXPENSE AND LIABILITIES AGREEMENT
The Company will, pursuant to the Agreement as to Expenses and Liabilities
entered into by it under the Trust Agreement (the "Expense Agreement"),
irrevocably and unconditionally guarantee to each person or entity to whom the
Trust becomes indebted or liable, the full payment of any costs, expenses or
liabilities of the Trust, other than obligations of the Trust to pay to the
holders of the Preferred Securities or other similar interests in the Trust of
the amounts due such holders pursuant to the terms of the Preferred Securities
or such other similar interests, as the case may be. Third party creditors of
the Trust may proceed directly against the Company under the Expense Agreement,
regardless of whether such creditors had notice of the Expense Agreement.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE SUBORDINATED
DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of the Guarantee." The Company and the Trust
believe that, taken together, the obligations of the Company under the
Subordinated Debentures, the Indenture, the Trust Agreement, the Expense
Agreement, and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis, of payment of Distributions
and other amounts due on the Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such a guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and unconditional
guarantee of the obligations of the Trust under the Preferred Securities. If and
to the extent that the Company does not make payments on the Subordinated
Debentures, the Trust will not pay Distributions or other amounts due on the
Preferred Securities. The Guarantee does not cover payment of Distributions when
the Trust does not have sufficient funds to pay such Distributions. In such
event, the remedy of a holder of Preferred Securities would be to institute a
legal proceeding directly against the Company for enforcement of payment of such
Distributions to such holder.
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The obligations of the Company under the Guarantee are subordinate and junior in
right of payment to all Senior Debt, Subordinated Debt and Additional Senior
Obligations of the Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Subordinated Debentures, such payments will be sufficient to cover Distributions
and other payments due on the Preferred Securities, primarily because (i) the
aggregate principal amount of the Subordinated Debentures will be equal to the
sum of the aggregate stated Liquidation Amount of the Trust Securities, (ii) the
interest rate and interest and other payment dates on the Subordinated
Debentures will match the Distribution rate and Distribution and other payment
dates for the Preferred Securities, (iii) the Company will pay for all and any
costs, expenses and liabilities of the Trust (except the obligations of the
Trust to holders of the Preferred Securities), and (iv) the Trust Agreement
further provides that the Trust will not engage in any activity that is not
consistent with the limited purposes of the Trust.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, the Trust or
any other Person. A default or event of default under any Senior Debt,
Subordinated Debt or Additional Senior Obligations of the Company would not
constitute a default or Event of Default under the Indenture, the Trust
Agreement or the Guarantee. In the event, however, of payment defaults under, or
acceleration of, Senior Debt, Subordinated Debt or Additional Senior Obligations
of the Company, the subordination provisions of the Indenture provide that no
payments may be made in respect of the Subordinated Debentures until such Senior
Debt, Subordinated Debt or Additional Senior Obligations have been paid in full
or any payment default thereunder has been cured or waived. Failure to make
required payments on the Subordinated Debentures would constitute an Event of
Default.
LIMITED PURPOSE OF THE TRUST
The Preferred Securities evidence preferred undivided beneficial interests
in the assets of the Trust. The Trust exists for the sole purpose of issuing the
Trust Securities and investing the proceeds thereof in Subordinated Debentures.
A principal difference between the rights of a holder of a Preferred Security
and the rights of a holder of a Subordinated Debenture is that a holder of a
Subordinated Debenture is entitled to receive from the Company the principal
amount of and interest accrued on Subordinated Debentures held, while a holder
of Preferred Securities is entitled to receive Distributions from the Trust (or
from the Company under the Guarantee) if and to the extent the Trust has funds
available for the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
the Trust involving the liquidation of the Subordinated Debentures, the holders
of the Preferred Securities will be entitled to receive, out of assets held by
the Trust after satisfaction of liabilities to creditors as required by
applicable law, the Liquidation Distribution in cash. See "Description of the
Preferred Securities -- Liquidation Distribution Upon Termination." Upon any
voluntary or involuntary liquidation or bankruptcy of the Company, the Property
Trustee, as holder of the Subordinated Debentures, would be a subordinated
creditor of the Company, subordinated in right of payment to all Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company, but entitled
to receive payment in full of principal and interest before any shareholders of
the Company receive payments or distributions. Since the Company is the
guarantor under the Guarantee and has agreed to pay for all costs, expenses and
liabilities of the Trust (other than the obligations of the Trust to the holders
of its Preferred Securities), the positions of a holder of the Preferred
Securities and
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a holder of the Subordinated Debentures relative to other creditors and to
shareholders of the Company in the event of liquidation or bankruptcy of the
Company are expected to be substantially the same.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Long Aldridge & Norman LLP, counsel to the Company and
the Trust the following discussion summarizes the material United States federal
income tax considerations that may be relevant to the purchasers of Preferred
Securities. This summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), regulations thereunder and
current administrative rulings and court decisions, all of which are subject to
change at any time, with possible retroactive effect. Subsequent changes may
cause tax consequences to vary substantially from the consequences described
below. Furthermore, the authorities on which the following summary is based are
subject to various interpretations, and it is therefore possible that the United
States federal income tax treatment of the purchase, ownership, and disposition
of Preferred Securities may differ from the treatment described below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Preferred
Securities. Moreover, the discussion generally focuses on holders of Preferred
Securities who (i) are individual citizens or residents of the United States,
corporations and partnerships created or organized in or under the laws of the
United States or any political subdivision thereof, 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 a trust if a court within the Untied
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust ("U.S. Holders"), and (ii) who acquire
Preferred Securities on their original issue at their offering price and hold
Preferred Securities as capital assets. The discussion does not address persons
who are not U.S. Holders or all the tax consequences that may be relevant to
U.S. Holders who may be subject to special tax treatment, such as, for example,
banks, thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt investors,
or persons that will hold the Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. The following summary also does not address the tax consequences
to persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of Preferred
Securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the Preferred Securities.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT, AND SHOULD RELY EXCLUSIVELY ON,
SUCH INVESTOR'S OWN TAX ADVISORS IN ANALYZING THE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP OR DISPOSITION OF PREFERRED
SECURITIES.
CLASSIFICATION OF THE SUBORDINATED DEBENTURES
The Company intends to take the position that the Subordinated Debentures
will be classified for United States federal income tax purposes as indebtedness
of the Company under current law, and, by acceptance of a Preferred Security,
each holder covenants to treat the Subordinated Debentures as indebtedness and
the Preferred Securities as evidence of an indirect beneficial ownership
interest in the Subordinated Debentures.
In 1994, the Internal Revenue Service issued Notice 94-47. In this Notice,
the Internal Revenue Service stated that it was concerned with a series of
transactions in which instruments had been issued that were "designed to be
treated as debt for federal income tax purposes but as equity for regulatory,
rating agency, or financial accounting purposes." The Notice further stated that
"(u)pon examination, the Service will scrutinize instruments of this type to
determine if their purported status as debt for federal income tax purposes is
appropriate."
53
<PAGE> 59
On April 6, 1998, Enron Corp. filed a Petition in the United States Tax
Court contesting the proposed disallowance by the Internal Revenue Service of a
deduction claimed by Enron Corp. relating to interest paid with respect to
certain instruments ("MIPS") issued in 1993 and 1994. The Tax Court has not
rendered an opinion on the deductibility of the interest paid by Enron Corp. The
Preferred Securities have certain characteristics that could be viewed as
similar to the MIPS involved in the Enron Corp. case.
There can be no assurance that a Tax Court opinion in the Enron Corp. case,
or any similar case, will not result in a Tax Event which would permit the
Company to cause a mandatory redemption of the Subordinated Debentures (which
shall cause a redemption of the Preferred Securities) before the stated maturity
at the Redemption Price.
CLASSIFICATION OF THE TRUST
With respect to the Preferred Securities, Long Aldridge & Norman LLP,
counsel to the Company and the Trust, has rendered its opinion generally to the
effect that, under then current law and assuming full compliance with the terms
of the Trust Agreement and Indenture, the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal income tax
purposes, each holder of Preferred Securities generally will be treated as
owning an undivided beneficial interest in the Subordinated Debentures, and each
holder will be required to include in its gross income each item of income or
gain with respect to its allocable share of the Subordinated Debentures.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
The Company's option to extend the interest payment period on the
Subordinated Debentures may cause the indebtedness to be issued with original
issue discount ("OID"). Under Treasury regulations (the "Regulations"), a
contingency that stated interest will not be timely paid that is "remote" will
be ignored in determining whether such debt instrument is issued with OID. As a
result of the terms and conditions of the Subordinated Debentures that prohibit
certain payments with respect to the Company's capital stock and indebtedness if
the Company elects to extend interest payment periods, the Company believes that
the likelihood of its exercising its option to defer payments is remote. Based
on the foregoing, the Company intends to take the position that the Subordinated
Debentures will not be considered to be issued with OID at the time of their
original issuance, and accordingly, a holder of Preferred Securities should
include in gross income such holder's allocable share of interest on the
Subordinated Debentures in accordance with its own method of tax accounting.
There can be no assurance, however, that the Internal Revenue Service will
not successfully contest the Company's position. If the Internal Revenue Service
were successful in such a contention, then all of the stated interest payments
on the Subordinated Debentures would be treated as OID. In such case, the
holders of the Preferred Securities would be required to include OID in income
on an economic accrual basis regardless of whether any interest is actually paid
or their method of tax accounting, but would not be required to report actual
payments of interest as taxable income.
If Company exercises its option to defer any payment of interest, the
Subordinated Debentures would at the time of such exercise be treated as issued
with OID, and all stated interest thereafter payable on the Subordinated
Debentures would be treated as OID. In such event, the holders of the Preferred
Securities would be required to account for the OID as stated in the immediately
preceding paragraph. Consequently, a holder of Preferred Securities would be
required to include in gross income OID even though the Company would not make
any actual interest payments during an Extended Interest Payment Period.
MARKET DISCOUNT AND ACQUISITION PREMIUM
Holders of Preferred Securities other than a holder who purchased the
Preferred Securities upon original issuance may be considered to have acquired
their undivided interests in the Subordinated Debentures with "market discount'
or "acquisition premium" as such phrases are defined for United States federal
income tax
54
<PAGE> 60
purposes. Such holders are advised to consult their tax advisors as to the
income tax consequences of the acquisition, ownership and disposition of the
Preferred Securities.
RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under "Description of the
Preferred Securities -- Redemption or Exchange" and "-- Liquidation Distribution
Upon Termination," the Subordinated Debentures may be distributed to holders of
Preferred Securities upon a liquidation of the Trust. Under current United
States federal income tax law, such a distribution would be treated as a
nontaxable event to each such holder and would result in such holder having an
aggregate tax basis in the Subordinated Debentures received in the liquidation
equal to such holder's aggregate tax basis in the Preferred Securities
immediately before the distribution. A holder's holding period in the
Subordinated Debentures so received in liquidation of the Trust would include
the period for which such holder held the Preferred Securities.
If, however, a Tax Event were to occur based on the Trust being treated as
an association taxable as a corporation, the distribution would likely
constitute a taxable event to holders of the Preferred Securities. Under certain
circumstances described herein, the Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Under current law, such a redemption would, for
United States federal income tax purposes, constitute a taxable disposition of
the redeemed Preferred Securities, and a holder would recognize gain or loss as
if the holder sold such Preferred Securities for cash. See "Description of the
Preferred Securities -- Redemption or Exchange" and "-- Liquidation Distribution
Upon Termination."
DISPOSITION OF PREFERRED SECURITIES
A holder of Preferred Securities that sells Preferred Securities will
recognize gain or loss equal to the difference between its adjusted tax basis
for the Preferred Securities and the amount realized on the sale of such
Preferred Securities. A Preferred Security holder's adjusted tax basis for the
Preferred Securities generally will be its initial purchase price. However, if
the Subordinated Debentures are deemed to have been issued initially with OID,
or OID results due to the Company's deferral of any interest payment, a
Preferred Security holder's adjusted tax basis for the Preferred Securities
generally will be its initial purchase price, increased by OID previously
included in such holder's gross income to the date of disposition and decreased
by distributions and other payments received on the Preferred Securities since
the date the Subordinated Debentures are deemed to have OID. Such gain or loss
generally will be a capital gain or loss (except to the extent any amount
realized is treated as a payment of accrued interest with respect to such
holder's pro rata share of the Subordinated Debentures) and will be a
short-term, mid-term or long-term capital gain or loss depending on the length
of time the Preferred Securities have been held.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder that disposes of its Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Subordinated Debentures through the
date of disposition in income as ordinary income, and to add such amount to its
adjusted tax basis in its pro rata share of the underlying Subordinated
Debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which basis will include, in the form of OID, all
accrued but unpaid interest), 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.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Interest paid on the Subordinated Debentures, or the amount of OID on the
Subordinated Debentures, if applicable, deemed held of record by individual
citizens or residents of the United States, or certain trusts, estates, and
partnerships, will be reported to the Internal Revenue Service ("IRS") on Forms
1099, which forms should be mailed to such holders of Preferred Securities by
January 31 following each calendar year. Payments made on, and proceeds from the
sale of, the Preferred Securities may be subject to a "backup"
55
<PAGE> 61
withholding tax (currently at 31%) unless the holder complies with certain
identification and other requirements. Any amounts withheld under the backup
withholding rules will be allowed as a credit against the holder's U.S. federal
income tax liability provided the required information is provided to the IRS.
THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON THE PARTICULAR
SITUATION OF A HOLDER OF PREFERRED SECURITIES. HOLDERS OF PREFERRED SECURITIES
SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED SECURITIES,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS
AND THE POSSIBLE EFFECTS OF CHANGES IN U.S. FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
("Plans"), generally may purchase Preferred Securities, subject to the investing
fiduciary's determination that the investment in Preferred Securities satisfies
ERISA's fiduciary standards and other requirements applicable to investments by
the Plan.
In any case, the Company and/or any of its affiliates may be considered a
"party in interest" (within the meaning of ERISA) or a "disqualified person'
(within the meaning of Section 4975 of the Code) with respect to certain plans
(generally, Plans maintained or sponsored by, or contributed to by, any such
persons with respect to which the Company or an affiliate is a fiduciary or
Plans for which the Company or an affiliate provides services). The acquisition
and ownership of Preferred Securities by a Plan (or by an individual retirement
arrangement or other Plans described in Section 4975(e)(1) of the Code) with
respect to which the Company or any of its affiliates is considered a party in
interest or a disqualified person may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Preferred
Securities are acquired pursuant to and in accordance with an applicable
exemption.
As a result, Plans with respect to which the Company or any of its
affiliates is a party in interest or a disqualified person should not acquire
Preferred Securities unless such Preferred Securities are acquired pursuant to
and in accordance with an applicable exemption such as Prohibited Transaction
Class Exemption ("PTCE") 84-14 (an exemption for certain transactions determined
by an independent qualified professional asset manager), PTCE 91-38 (an
exemption for certain transactions involving bank collective investment funds),
PTCE 90-1 (an exemption for certain transactions involving insurance company
pooled separate accounts), PTCE 95-60 (an exemption for transactions involving
certain insurance company general accounts) or PTCE 96-23 (an exemption for
certain transactions determined by an in-house asset manager). Plans or other
entities whose assets include Plan assets subject to ERISA or Section 4975 of
the Code proposing to acquire Preferred Securities should consult with their own
counsel.
In addition, a Plan fiduciary considering the purchase of Preferred
Securities should be aware that the assets of the Trust may be considered "plan
assets" for ERISA purposes. Therefore, to avoid certain prohibited transactions
under ERISA and the Code that could thereby result, each investing Plan, by
purchasing the Preferred Securities, will be deemed to have directed the Trust
to invest in the Subordinated Debentures and to have appointed the Property
Trustee.
56
<PAGE> 62
UNDERWRITING
Pursuant to the Underwriting Agreement, the form of which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, and
subject to the terms and conditions thereof, the Underwriters named below,
acting through Interstate/Johnson Lane Corporation, Morgan Keegan & Company,
Inc., and Sterne Agee & Leach, Inc., as representatives of the several
Underwriters (the "Representatives"), have severally agreed to purchase from the
Trust the number of Preferred Securities set forth below opposite their
respective names.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER SHARES
------------------- ---------
<S> <C>
Interstate/Johnson Lane Corporation
Morgan Keegan Company, Inc.
Sterne, Agee & Leach, Inc.
---------
Total.............................................
---------
</TABLE>
The several Underwriters have agreed in the Underwriting Agreement, subject
to the terms and conditions set forth therein, to purchase all the Preferred
Securities offered hereby if any of the Preferred Securities are purchased. In
the event of default by an Underwriter, the Underwriting Agreement provides
that, in certain circumstances, purchase commitments of the nondefaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.
The Representatives have advised the Trust that they propose initially to
offer the Preferred Securities to the public at the public offering price set
forth on the cover page of this Prospectus. After the initial public offering,
the public offering price may be changed.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Debentures of the Company,
the Underwriting Agreement provides that the Company will pay as compensation to
the Underwriters arranging the investment of such proceeds, an amount in
immediately available funds of $ per Preferred Security (or
$ in the aggregate or $ if the Underwriters' over-allotment
option is exercised) for the accounts of the several Underwriters.
The offering of the Preferred Securities is made for delivery when, as and
if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares.
The Trust has granted the Underwriters an option to purchase up to an
additional 150,000 Preferred Securities at the initial public offering price.
Such option, which expires 30 days from the date of this Prospectus, may be
exercised solely to cover over-allotments made in connection with the sale of
shares of Preferred Securities offered hereby. To the extent that the
Underwriters exercise such option, each of the Underwriters will have a firm
commitment to purchase approximately the same percentage thereof which the
number of shares of Preferred Securities to be purchased by it shown in the
table above bears to the total and the Trust and will be obligated pursuant to
the option, to sell such shares to the Underwriters. If purchased, the
Underwriters will sell such additional shares on the same terms as those on
which the shares are being offered.
To the extent that the Underwriters exercise their option to purchase
additional Preferred Securities, the Trust will issue and sell to the Company
additional Common Securities and the Company will issue and sell Subordinated
Debentures to the Trust in an aggregate principal amount equal to the total
aggregate Liquidation Amount of the additional Common Securities being purchased
and the additional Preferred Securities being purchased pursuant to the option.
During a period of 120 days from the date of this Prospectus, neither the
Trust nor the Company will, subject to certain exceptions, without the prior
written consent of the Representatives, directly or indirectly, sell, offer to
sell, grant any option for sale of, or otherwise dispose of, any Preferred
Securities, any security convertible into or exchange into or exercisable for
Preferred Securities or Subordinated Debentures or any debt securities
substantially similar to the Subordinated Debentures or equity securities
substantially similar to
57
<PAGE> 63
the Preferred Securities (except for the Subordinated Debentures and the
Preferred Securities offered hereby).
Application has been made to the have the Preferred Securities approved for
quotation on the American Stock Exchange. The offering price and distribution
rate have been determined by negotiations among representatives of the Company
and the Underwriters, and the offering price of the Preferred Securities may not
be indicative of the market price following the offering. The Representatives
will have no obligation to make a market in the Preferred Securities, however,
and may cease market-making activities, if commenced, at any time.
The Trust and the Company have agreed to indemnify the Underwriters and
controlling persons, if any, against certain liabilities, including liabilities
under the Securities Act, or will contribute to payments that the Underwriters
or any such controlling persons may be required to make in respect thereof.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Trust Agreement and the formation of the
Trust will be passed upon by Richards, Layton & Finger, P.A., special Delaware
counsel. Certain legal matters for the Company and the Trust, including the
validity of the Guarantee and the Subordinated Debentures will be passed upon
for the Company and the Trust by Long Aldridge & Norman LLP, counsel to the
Company and the Trust. Certain legal matters will be passed upon for the
Underwriters by Sutherland, Asbill & Brennan LLP. Long Aldridge & Norman LLP and
Sutherland, Asbill & Brennan LLP will rely on the opinion of Richards, Layton &
Finger, P.A. with regard to matters pertaining to Delaware law. Certain matters
relating to United States federal income tax considerations will be passed upon
for the Company by Long Aldridge & Norman LLP.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries,
as of March 31, 1998 and 1997 and for each of the three years in the period
ended March 31, 1998 incorporated by reference in this Prospectus and
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in giving said reports.
58
<PAGE> 64
======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, EBI CAPITAL TRUST I OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR EBI
CAPITAL TRUST I SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................
Incorporation of Certain Documents by
Reference...........................
Prospectus Summary....................
Risk Factors..........................
The Company...........................
Business Strategy.....................
Accounting Treatment..................
Use of Proceeds.......................
Capitalization........................
Selected Consolidated Financial
Data................................
The Trust.............................
Description of the Preferred
Securities..........................
Description of the Subordinated
Debentures..........................
Description of the Guarantee..........
Expense and Liabilities Agreement.....
Relationship among the Preferred
Securities, the Subordinated
Debentures and the Guarantee........
Material Federal Income Tax
Consequences........................
ERISA Considerations..................
Underwriting..........................
Validity of Securities................
Experts...............................
</TABLE>
======================================================
======================================================
1,000,000
PREFERRED SECURITIES
EBI CAPITAL TRUST I
% CUMULATIVE TRUST
PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25.00
PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
LOGO
EAGLE BANCSHARES, INC.
-------------------
PROSPECTUS
-------------------
INTERSTATE/JOHNSON LANE
CORPORATION
MORGAN KEEGAN & COMPANY, INC.
STERNE, AGEE & LEACH, INC.
July , 1998
======================================================
<PAGE> 65
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with this offering are as set forth in
the following table:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $8,481.25
National Association of Securities Dealers, Inc. Filing
Fee....................................................... $ *
American Stock Exchange Listing Fee......................... $ *
Blue Sky Qualification Fees and Expenses.................... $ *
Accounting Fees and Expenses................................ $ *
Legal Fees and Expenses..................................... $ *
Trustees' Fees and Expenses................................. $ *
Printing and Engraving Expenses............................. $ *
Transfer and Registrar Fees................................. $ *
Miscellaneous............................................... $ *
Total............................................. $ *
</TABLE>
- ---------------
* To be provided by amendment. All amounts other than the Securities and
Exchange Commission registration fee, American Stock Exchange listing fee and
the National Association of Securities Dealers, Inc. filing fee are estimated.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 14-2-202(b)(4) of the Georgia Business Corporation Code provides
that a corporation's articles of incorporation may include a provision that
eliminates or limits the personal liability of directors for monetary damages to
a corporation or its shareholders for breach of their fiduciary duties as
directors. The Section does not, however, authorize a corporation to eliminate
or limit the liability of a director for appropriating, in violation of his or
her duties, any business opportunity of the corporation, engaging in intentional
misconduct or a knowing violation of law, obtaining an improper personal
benefit, or authorizing a dividend, stock repurchase or redemption, distribution
of assets or other distribution in violation of Section 14-2-640 of the Georgia
Business Corporation Code or the articles of incorporation of the corporation.
Section 14-2-202(b)(4) also does not eliminate or limit the right of a
corporation or any shareholder to seek an injunction, a rescission or any other
equitable (non-monetary) relief in the event of a breach of a director's
fiduciary duty. In addition, Section 14-2-202(b)(4) applies only to claims
against a director arising out of his or her role as a director and does not
relieve a director from liability arising from his or her role as an officer or
in any other capacity. Article XVIII of the Company's Articles of Incorporation
eliminates the personal monetary liability of directors of the Company to the
full extent allowed by Section 14-2-202(b)(4).
As permitted by the Georgia Business Corporation Code, the Company's
Articles of Incorporation provide that the Company shall indemnify its directors
and officers for liability incurred by them in connection with any civil,
criminal, administrative or investigative action, suit or proceeding (other than
actions brought as derivative actions by or in the right of a corporation) in
which they may become involved by reason of being a director, officer, employee
or agent of the Company. The Articles also provide such indemnity for directors
and officers who, at the request of the Company, act as directors, officers,
employees or agents of another corporation, partnership, joint venture, trust,
or other enterprise. The Articles permit indemnification if a director or
officer acted in a manner which he or she reasonably believed to be in or not
opposed to the best interest of the Company and, in addition, in criminal
actions, if he or she had no reasonable cause to believe his or her conduct to
be unlawful. If the required standard of conduct is met, indemnification may
include judgments, settlements, penalties, fines or reasonable expenses
(including attorney's fees) incurred with respect to a proceeding; provided,
however, that indemnification of a director or officer in connection with a
proceeding by or in the right of the Company is limited to reasonable expenses
incurred in connection with the derivative proceeding; and provided, further,
that if a director or officer is adjudged liable on the basis that a
II-1
<PAGE> 66
personal benefit was improperly received, the director or officer will only be
entitled to such indemnification for reasonable expenses as a court finds to be
proper in accordance with the provisions of Section 14-2-854 of the Georgia
Business Corporation Code.
Section 14-2-852 of the Georgia Business Corporation Code provides that
directors and officers who are successful with respect to any claim against them
are entitled to indemnification against reasonable expenses as of right. On the
other hand, if the charges made in any action are sustained, the determination
of whether the required standard of conduct has been met will be made, in
accordance with the provisions of Georgia Business Corporation Code Section
14-2-855, by either the Board of Directors or a committee thereof, acting by
disinterested members, by special legal counsel or by the shareholders, but
shares owned by or voted under the control of directors seeking indemnification
may not be voted.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement.
4.1 (a) -- Restated Articles of Incorporation of the Company (Exhibit 3
to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1998)
4.1 (b) -- Articles of Amendment to Restated Articles of Incorporation
of the Company (Exhibit 3(a) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1991).
4.1 (c) -- Articles of Amendment to Restated Articles of Incorporation
of the Company (Exhibit 3.1(c) to the Company's Registration
Statement on Form S-2 filed with the Securities and Exchange
Commission on January 24, 1996, Registration
Number 333-00081).
4.2 -- Bylaws of the Company, as amended (Exhibit 3(b) to the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1991).
4.3 -- Form of Indenture.
4.4* -- Form of Subordinated Debenture.
4.5* -- Certificate of Trust of the Trust dated as of July , 1998.
4.6 -- Trust Agreement of the Trust dated as of July , 1998.
4.7 -- Form of Amended and Restated Trust Agreement of the Trust.
4.8 -- Form of Common Securities Certificate (included as an
exhibit to Exhibit 4.7).
4.9* -- Form of Global Preferred Security Certificate of the Trust.
4.10 -- Form of Preferred Securities Guarantee Agreement for the
Trust.
4.11 -- Form of Agreement as to Expenses and Liabilities (included
as an exhibit to Exhibit 4.7).
5.1* -- Opinion of Long Aldridge & Norman LLP as to the validity of
the issuance of the Subordinated Debentures.
5.2* -- Opinion of Richards, Layton & Finger, P.A., special Delaware
counsel, as to the validity of the Preferred Securities to
be issued by the Trust.
8.1* -- Opinion of Long Aldridge & Norman LLP as to material federal
income tax matters.
12.1 -- Statement Regarding Computation of Ratio of Earnings to
Fixed Charges.
23.1 -- Consent of Arthur Andersen LLP, Independent Public
Accountants.
23.2* -- Consent of Long Aldridge & Norman LLP (to be included in
their opinions filed herewith as Exhibits 5.1 and 8.1).
23.3* -- Consent of Richards, Layton & Finger, P.A. (to be included
in their opinion filed herewith as Exhibit 5.2).
24.1 -- Power of Attorney (included on the signature page).
25.1* -- Form T-1 Statement of Eligibility of SunTrust Bank to act as
trustee under the Indenture.
</TABLE>
II-2
<PAGE> 67
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <C> <S>
25.2 * -- Form T-1 Statement of Eligibility of SunTrust Bank to act as
trustee under Amended and Restated Trust Agreement.
25.3 * -- Form T-1 Statement of Eligibility of SunTrust Bank to act as
trustee under the Preferred Securities Guarantee Agreement.
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions described under "Item 15 -- Indemnification of
Directors and Officers" above, or otherwise, the Company has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Company hereby undertakes that: (i) for purposes of determining any
liability under the Act, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Company pursuant to Rule
424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; (ii) for the
purpose of determining any liability under the Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and (iii) for the purpose of determining any liability
under the Securities Act, each filing of the registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-3
<PAGE> 68
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing this Registration Statement and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Tucker, State of Georgia, on July 2, 1998.
EAGLE BANCSHARES, INC.
By: /s/ C. JERE SECHLER, JR.
------------------------------------
C. Jere Sechler, Jr.,
Chairman of the Board,
President and Principal Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints C. Jere Sechler, Jr. and Richard B. Inman, Jr.
and each of them (with full power to each of them to act alone), his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and any subsequent registration statements
pursuant to Rule 462 under the Securities Act, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in- fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ C. JERE SECHLER, JR. Chairman of the Board and July 2, 1998
- ----------------------------------------------------- President (Principal Executive
C. Jere Sechler, Jr. Officer)
/s/ RICHARD B. INMAN, JR. Director, Secretary and Treasurer July 2, 1998
- -----------------------------------------------------
Richard B. Inman, Jr.
/s/ WALTER C. ALFORD Director July 2, 1998
- -----------------------------------------------------
Walter C. Alford
Director July , 1998
- -----------------------------------------------------
Richard J. Burrell
/s/ WELDON A. NASH, JR. Director July 2, 1998
- -----------------------------------------------------
Weldon A. Nash, Jr.
Director July , 1998
- -----------------------------------------------------
George G. Thompson
/s/ LUANN DURDEN Chief Financial Officer July 2, 1998
- ----------------------------------------------------- (Principal Financial and
Luann Durden Accounting Officer)
</TABLE>
II-4
<PAGE> 69
SIGNATURES
Pursuant to the requirements of the Securities Act, the Trust I certifies
that it has reasonable grounds to believe that it meets all the requirements for
filing this Registration Statement and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Tucker, State of Georgia on July 2, 1998.
EBI CAPITAL TRUST I
By: /s/ C. JERE SECHLER, JR.
------------------------------------
C. Jere Sechler, Jr., Trustee
II-5
<PAGE> 70
EXHIBIT INDEX
<TABLE>
<C> <C> <S>
1.1 -- Form of Underwriting Agreement.
4.1(a) -- Restated Articles of Incorporation of the Company (Exhibit 3
to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1988).
4.1(b) -- Articles of Amendment to Restated Articles of Incorporation
of the Company (Exhibit 3(a) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1991).
4.1(c) -- Articles of Amendment to Restated Articles of Incorporation
of the Company (Exhibit 3.1(c) to the Company's Registration
Statement on Form S-2 filed with the Securities and Exchange
Commission on January 24, 1996, Registration Number
333-00081).
4.2 -- Bylaws of the Company, as amended (Exhibit 3(b) to the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1991).
4.3 -- Form of Indenture.
*4.4 -- Form of Subordinated Debenture.
*4.5 -- Certificate of Trust of the Trust dated as of July , 1998.
4.6 -- Trust Agreement of the Trust dated as of July , 1998.
4.7 -- Form of Amended and Restated Trust Agreement of the Trust.
4.8 -- Form of Common Stock Securities Certificate (included as an
exhibit to Exhibit 4.7).
*4.9 -- Form of Global Preferred Security Certificate of the Trust.
4.10 -- Form of Preferred Securities Guarantee Agreement for the
Trust.
4.11 -- Form of Agreement as to Expenses and Liabilities (included
as an exhibit to Exhibit 4.7).
*5.1 -- Opinion of Long Aldridge & Norman LLP as to the validity of
the issuance of the Subordinated Debentures.
*5.2 -- Opinion of Richards, Layton & Finger, P.A., special Delaware
counsel, as to the validity of the Preferred Securities to
be issued by the Trust.
*8.1 -- Opinion of Long Aldridge & Norman LLP as to material federal
income tax matters.
12.1 -- Statement Regarding Computation of Ratio of Earnings to
Fixed Charges.
23.1 -- Consent of Arthur Andersen LLP, Independent Public
Accountants.
*23.2 -- Consent of Long Aldridge & Norman LLP (to be included in
their opinions filed herewith as Exhibits 5.1 and 8.1).
*23.3 -- Consent of Richards, Layton & Finger, P.A. (to be included
in their opinion filed herewith as Exhibit 5.2).
24.1 -- Power of Attorney (included on the signature page).
*25.1 -- Form T-1 Statement of Eligibility of SunTrust Bank to act as
trustee under the Indenture.
*25.2* -- Form T-1 Statement of Eligibility of SunTrust Bank to act as
trustee under Amended and Restated Trust Agreement.
*25.3* -- Form T-1 Statement of Eligibility of SunTrust Bank to act as
trustee under the Preferred Securities Guarantee Agreement.
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
1,000,000
Preferred Securities
EBI Capital Trust I
UNDERWRITING AGREEMENT
July ____, 1998
INTERSTATE/JOHNSON LANE CORPORATION
MORGAN KEEGAN & COMPANY, INC.
STERNE AGEE & LEACH, INC.
as Representatives of the Several Underwriters
c/o Interstate/Johnson Lane Corporation
945 East Paces Ferry Road
Atlanta, Georgia 30326
Ladies and Gentlemen:
EBI Capital Trust I (the "Trust"), a statutory business trust created
under the Business Trust Act (the "Delaware Act") of the State of Delaware
(Chapter 38, Title 12, of the Delaware Code, 12 Del. (Sections 3801, et seq.))
and Eagle Bancshares, Inc., a Georgia corporation (the "Company" and together
with the Trust, the "Offerors"), confirm their agreement (the "Agreement") with
Interstate/Johnson Lane Corporation ("I/JL") and each of the other Underwriters
named in Schedule A hereto (collectively, the "Underwriters," which term shall
also include any underwriter substituted as hereinafter provided in Section 10
hereof) for whom I/JL, Morgan Keegan & Company, Inc. and Sterne Agee & Leach,
Inc. are acting as representatives (in such capacity, I/JL, Morgan Keegan &
Company, Inc. and Sterne Agee & Leach, Inc. will be referred to as the
"Representatives"), with respect to the issue and sale by the Trust and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number set forth in Schedule A of 1,000,000 _____% Cumulative Trust
Preferred Securities (liquidation amount of $25.00 per security) of the Trust.
Said aggregate of 1,000,000 Preferred Securities are herein referred to as the
"Firm Preferred Securities." In addition, the Company proposes to grant to the
Underwriters an option to purchase up to 150,000 additional ____% Cumulative
Trust Preferred Securities (the "Optional Preferred Securities"), as provided
in Section 2 hereof. The Firm Preferred Securities and, to the extent
<PAGE> 2
such option is exercised, the Optional Preferred Securities are hereinafter
collectively referred to as the "Preferred Securities." The Preferred Securities
will be guaranteed by the Company, to the extent described in the Prospectus,
with respect to distributions and payments upon liquidation, redemption and
otherwise pursuant to the Preferred Securities Guarantee Agreement (the
"Preferred Securities Guarantee"), to be dated as of July ____, 1998, between
the Company and _______________________ as Trustee (the "Guarantee Trustee").
The Preferred Securities issued in book-entry form will be issued to Cede & Co.
as nominee of The Depository Trust Company ("DTC") pursuant to a letter
agreement, to be dated as of the First Closing Date (as defined herein) or the
Second Closing Date (as defined herein), as the case may be (the "DTC
Agreement"), among the Trust, the Guarantee Trustee and DTC.
Concurrently with the Offering, the Trust will sell to the Company its
common securities (the "Common Securities"), as guaranteed by the Company, to
the extent set forth in the Prospectus, with respect to distributions and
payments upon liquidation, redemption and otherwise pursuant to the Common
Securities Guarantee Agreement (the "Common Guarantee" and, together with the
Preferred Securities Guarantee, the "Guarantees"), to be dated as of July ____,
1998, made by the Company. The entire proceeds from the sale of the Preferred
Securities in the Offering will be combined with the entire proceeds from the
sale of the Common Securities and will be used by the Trust to purchase
$25,773,196 aggregate principal amount (plus up to an additional $3,865,979
aggregate principal amount if the Underwriters' over-allotment option is
exercised) of ____% Subordinated Debentures due _____________, 2028 (the
"Subordinated Debentures") issued by the Company. The Preferred Securities and
the Common Securities will be issued pursuant to the Trust Agreement, to be
dated as of July ____, 1998 (the "Trust Agreement"), among the Company, as
sponsor, and C. Jere Sechler, Jr. and Richard B. Inman as administrators (the
"Administrative Trustees"), __________________________, as property trustee (the
"Property Trustee"), and , as Delaware trustee (the "Delaware Trustee" and,
together with the Property Trustee and the Administrative Trustees, the
"Trustees"), and the holders, from time to time, of undivided beneficial
interests in the assets of the Trust. The Subordinated Debentures will be issued
pursuant to an indenture, to be dated as of July ____, 1998 (the "Indenture"),
between the Company and ____________________________, as trustee (the "Debenture
Trustee").
The Preferred Securities, the Preferred Securities Guarantee and the
Subordinated Debentures are hereinafter collectively referred to as the
"Securities."
The Indenture, the Trust Agreement, the Guarantees, the Expense
Agreement, the DTC Agreement, and this Agreement are hereinafter referred to
collectively as the "Operative Documents."
The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (File No. 333-______)
containing a preliminary prospectus relating to the Offering under the
Securities Act of 1933, as amended
2
<PAGE> 3
(the "1933 Act"), and have filed such amendments thereto and such amended
preliminary prospectuses as may have been required by the Commission on or
prior to the date hereof. Promptly after execution and delivery of this
Agreement, the Offerors will file such additional amendments to the
registration statement and such amended prospectuses relating to the Offering
(pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"),
the rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), the 1933 Act, the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations") or otherwise) as may hereafter be
required by the Commission or pursuant to the terms of this Agreement. Such
registration statement, as amended, at the time such registration statement
becomes effective and, in the event any post-effective amendment thereto
becomes effective prior to the First Closing Date, at the time such
post-effective amendment becomes effective, (including all financial
statements, schedules and exhibits thereto and all documents incorporated or
deemed incorporated by reference therein pursuant to Item 12 of Form S-3 under
the 1933 Act, all exhibits to such documents and the information, if any,
deemed to be a part thereof pursuant to Rule 430A(b) of the 1933 Act
Regulations), as from time to time amended or supplemented pursuant to the 1934
Act, the 1934 Act Regulations, the 1933 Act, the 1933 Act Regulations or
otherwise, is referred to herein as the "Registration Statement." Any
registration statement increasing the size of the Offering filed pursuant to
Rule 462(b) of the 1933 Act Regulations is referred to herein as a "Rule 426(b)
Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus, including all financial statements, schedules and exhibits thereto
and all documents incorporated or deemed incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, and all exhibits to such
documents, is referred to herein as the "Prospectus," except that if any
revised prospectus relating to the Offering shall be provided to the
Underwriters by the Offerors for use in the Offering which differs from the
prospectus relating to the Offering on file at the Commission at the time of
such use (whether or not such revised prospectus is required to be filed by the
Offerors pursuant to Rule 424(b) of the 1933 Act Regulations), the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided to the Underwriters for such use. The term "Preliminary
Prospectus" means the preliminary prospectus dated July ___, 1998 distributed
by the Underwriters prior to the date hereof.
The Offerors understand that the Underwriters propose to make the
Offering of the Securities as soon as the Representatives deem advisable after
the Registration Statement becomes effective and after the Trust Agreement, the
Indenture and the Preferred Securities Guarantee have been qualified under the
Trust Indenture Act of 1939, as amended (the "1939 Act").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any Preliminary Prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which
3
<PAGE> 4
are incorporated by reference in the Registration Statement, any Preliminary
Prospectus or the Prospectus; and all references in this Agreement to
amendments or supplements to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the 1934 Act which is incorporated by reference in the
Registration Statement, any Preliminary Prospectus or the Prospectus.
SECTION 1. Representations and Warranties.
(a) The Offerors jointly and severally represent and warrant to
each Underwriter as of the date hereof and as of each of the First Closing Date
and the Second Closing Date, and agree with each Underwriter as follows:
(i) The Company meets the requirements for use of Form
S-3 under the 1933 Act.
(ii) The Offerors have filed the Registration Statement
with the Commission. The Registration Statement and any post-effective
amendment thereto, each in the form heretofore delivered to you, have
been declared effective by the Commission in such form. Other than
such Registration Statement and any such post-effective amendment, no
document with respect to the Registration Statement has been filed
with the Commission. No stop order suspending the effectiveness of the
Registration Statement, or any amendment thereto and no cease and
desist order or temporary order under Section 8A of the 1933 Act has
been issued, and no proceeding for either such purpose has been
instituted or is pending or threatened by the Commission. No order
preventing or suspending the use of any Prospectus or any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the 1933 Act and the 1933 Act
Regulations and did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
the "Underwriter Information" (as defined in Section 6(a) hereof)
relating to the Underwriters.
(iii) The Registration Statement conforms, and the
Prospectus and any Rule 462(b) Registration Statement and any further
amendment or supplement to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements
of the 1933 Act and the 1933 Act Regulations and will not, as of the
effective date of each of such Registration Statements and any
amendment thereto, and as of the applicable filing date of the
Prospectus and any amendment or supplement thereto, and as of each of
the First Closing Date and the Second Closing Date, contain an untrue
statement of a material fact or omit to state a material fact required
to be
4
<PAGE> 5
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with the Underwriter Information.
(iv) Each document incorporated or deemed incorporated by
reference into the Prospectus pursuant to Item 12 of Form S-3 under
the 1933 Act, at the time it was or hereafter is filed with the
Commission, conformed or will conform, as the case may be, in all
material respects with the requirements of the 1934 Act and the 1934
Act Regulations, and, when read together and with the other
information in the Prospectus at each time the Registration Statement
and any amendment thereto is declared effective, during the time the
Prospectus is required to be delivered by the 1933 Act, and at the
First Closing Date and at the Second Closing Date, as the case may be,
do not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(v) Arthur Andersen LLP, which have audited certain
financial statements of the Company, are, and were during the periods
covered in its report incorporated by reference into the Registration
Statement and the Prospectus, independent public accountants with
respect to the Company and its subsidiaries, as required by the 1933
Act, the 1933 Regulations, the 1934 Regulations and Commission
Regulation S-X.
(vi) The Company's and its subsidiaries' systems of
internal accounting controls taken as a whole are, in the opinion of
management, sufficient to meet the broad objectives of internal
accounting control insofar as those objectives pertain to the
prevention or detection of errors or irregularities in amounts that
would be material in relation to the Company's financial statements.
(vii) Except as disclosed in the Registration Statement
and the Prospectus, no labor dispute is known to exist with the
Company's or its subsidiaries' employees or is known to be imminent
which could materially adversely affect the Company and its
subsidiaries, considered as one enterprise.
(viii) The consolidated financial statements, together with
the related schedules and notes, included or incorporated by reference
in the Registration Statement and the Prospectus present fairly the
consolidated financial position of the Company and its subsidiaries at
the dates indicated and the consolidated results of operations and
cash flows of the Company and its subsidiaries for the periods
specified; said financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved, except as disclosed
in the notes to such financial statements. The supporting schedules,
if any, included or incorporated by reference in the Registration
Statement
5
<PAGE> 6
and the Prospectus present fairly, in all material respects, the
information required to be stated therein. The summary and selected
financial data included or incorporated by reference in the
Registration Statement and the Prospectus present fairly, in all
material respects, the information shown therein and have been
compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement and the Prospectus.
(ix) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
otherwise stated therein or contemplated thereby, there has not been
(A) any change in the capital stock, long-term debt or short-term debt
of the Company, (B) any material adverse change, or any development
involving a prospective material adverse change, in the condition
(financial or otherwise), earnings, business affairs or business
prospects of the Trust, or the Company and its subsidiaries,
considered as one enterprise, whether or not arising in the ordinary
course of business, (C) any transaction entered into by the Trust, the
Company or any subsidiary, other than in the ordinary course of
business, that is material to the Trust, or the Company and its
subsidiaries, considered as one enterprise, or (D) any dividend or
distribution of any kind declared, paid or made by the Company on its
capital stock, except for normal recurring dividends on the capital
stock of the Company.
(x) Each of the Company and its subsidiaries other than
Tucker Federal Bank (the "Bank") has been duly organized and is
validly existing as a corporation in good standing under the laws of
the jurisdiction in which it is incorporated, with full power and
authority to own, lease and operate its properties and conduct its
businesses as now conducted and as described in the Registration
Statement and the Prospectus, and is duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business so as to require such
qualification, except where the failure to so qualify would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as one enterprise; the Bank is duly
organized and validly existing as a federally chartered stock savings
and loan association and is in good standing under the laws of the
United States with full power and authority to own, lease and operate
its properties and conduct its business as now conducted and as
described in the Prospectus, and is duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction, if any, in which it is
required to qualify, except where the failure to so qualify would not
have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Bank; and the Bank is a member in good standing of the Federal Home
Loan Bank of Atlanta, and is a member in good standing of the Savings
Association Insurance Fund ("SAIF") of the
6
<PAGE> 7
Federal Deposit Insurance Corporation ("FDIC") with its deposit
accounts insured by the SAIF up to applicable limits.
(xi) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued and outstanding shares
of capital stock of the Company have been duly and validly authorized
and issued, are fully paid and nonassessable, are not subject to or
have been issued in violation of any preemptive or similar rights; all
shares of common stock of the Company subject to outstanding options
or warrants, if any, have been duly authorized and when issued in
accordance with the terms of the applicable option or warrant, will be
validly issued, fully-paid and non-assessable and will not be issued
in violation of any preemptive rights (contractual or other); except
as disclosed in the Prospectus, there are no outstanding options,
warrants or other rights which require the issuance or sale of, and
there is no commitment, plan or arrangement to issue, any share of
capital stock of the Company or any security convertible into or
exchangeable for capital stock of the Company.
(xii) The Company owns beneficially and of record all of
the issued and outstanding capital stock of the Bank, Eagle Real
Estate Advisers, Inc. ("EREA") and Eagle Bancshares Capital Group,
Inc. ("EBCG"), free and clear of any mortgage, pledge, lien,
encumbrance or claim, and the Bank owns beneficially and of record all
of the issued and outstanding capital stock of Eagle Service Corp.
("Eagle Service"), Prime Eagle Mortgage Corporation ("Prime Eagle")
and Eagle A.R.M.S., Inc., free and clear of any mortgage, pledge,
lien, encumbrance or claim, and the Bank has no other subsidiaries
(the Bank, EREA, EBCG, Eagle Service, Prime Eagle and Eagle A.R.M.S.,
Inc. are sometimes hereinafter collectively referred to as the
"Subsidiaries" or individually as a "Subsidiary" and the capital stock
of the Subsidiaries is hereinafter collectively referred to as the
"Subsidiary Stock"). All of the issued and outstanding shares of
Subsidiary Stock have been duly and validly authorized and issued and
are fully-paid and nonassessable, and except as disclosed in the
Prospectus, there are no outstanding options, warrants or other rights
which require the issuance or sale of, and no commitment, plan or
arrangement to issue, any Subsidiary Stock, or any security
convertible into or exchangeable for any such stock.
(xiii) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act
with the power and authority to own property and to conduct its
business as described in the Registration Statement and the Prospectus
and to enter into and perform its obligations under the Operative
Documents, as applicable, and the Preferred Securities; the Trust is
duly qualified to transact business and is in good standing in each
jurisdiction, if any, in which it is required to qualify, except where
the failure to so qualify would not have a material adverse effect on
the condition, financial or otherwise, of the Trust; the Trust is not
a party to or otherwise bound by any material agreement other than
those described in the Registration Statement and the Prospectus; and
the Trust is and will, under current
7
<PAGE> 8
law, be classified for United States federal income tax purposes as a
grantor trust and not as an association taxable as a corporation.
(xiv) The Common Securities have been duly authorized by
the Trust Agreement and, when issued and delivered by the Trust to the
Company against payment therefor as described in the Registration
Statement and the Prospectus, will be validly issued and fully paid
and non-assessable undivided beneficial interests in the assets of the
Trust; the issuance of the Common Securities is not subject to
preemptive or other similar rights (contractual or other); and at the
First Closing Date and at the Second Closing Date, as the case may be,
all of the issued and outstanding Common Securities of the Trust will
be directly owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equitable
right.
(xv) As of the First Closing Date and at the Second
Closing Date, as the case may be, the Preferred Securities will have
been duly authorized by the Trust Agreement and, when issued and
delivered against payment therefor in accordance with the Trust
Agreement, as provided herein, will be validly issued and fully paid
and non-assessable undivided beneficial interests in the assets of the
Trust, will be entitled to the benefits of the Trust Agreement and
will conform in all material respects to the description thereof
contained in the Prospectus and the issuance of the Preferred
Securities will not be subject to preemptive or other similar rights.
(xvi) This Agreement has been duly authorized, executed
and delivered by the Offerors and will, at the First Closing Date and
at the Second Closing Date, be a valid and binding obligation of each
Offeror, enforceable against each Offeror in accordance with its
terms, except to the extent that enforcement thereof may be limited by
the receivership, conservatorship and supervisory powers of bank
regulatory agencies generally as well as to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally or by general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity)
and the availability of equitable remedies (collectively, the
"Enforceability Exceptions").
(xvii) The Trust Agreement has been duly authorized by the
Company and, at the First Closing Date and at the Second Closing Date,
will have been duly executed and delivered by the Company and the
Trustees, and assuming due authorization of the Trust Agreement by the
Trustees, the Trust Agreement will, at the First Closing Date and at
the Second Closing Date, be a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except to the extent that enforcement thereof may be limited by the
Enforceability Exceptions; and at the First Closing Date, the Trust
Agreement will have been duly qualified under the 1939 Act.
8
<PAGE> 9
(xviii) Each of the Guarantees has been duly authorized by
the Company and, at the First Closing Date and at the Second Closing
Date, each of the Guarantees will have been duly executed and
delivered by the Company, and will constitute a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by the Enforceability Exceptions; and at the
First Closing Date, the Preferred Securities Guarantee will have been
duly qualified under the 1939 Act.
(xix) The Indenture has been duly authorized by the
Company and, at the First Closing Date and at the Second Closing Date,
will have been duly executed and delivered by the Company and will
constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to the extent
that enforcement thereof may be limited by the Enforceability
Exceptions; and at the First Closing Date, the Indenture will have
been duly qualified under the 1939 Act.
(xx) The Subordinated Debentures have been duly
authorized by the Company and, at the First Closing Date and at the
Second Closing Date, will have been duly executed by the Company and,
when authenticated in the manner provided for in the Indenture and
delivered against payment therefor as described in the Registration
Statement and the Prospectus, will constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforcement thereof may be
limited by the Enforceability Exceptions; and the Subordinated
Debentures will be in the form contemplated by, and entitled to the
benefits of, the Indenture and will conform in all material respects
to the description thereof in the Prospectus; and the issuance of the
Subordinated Debentures will not be subject to preemptive or similar
rights.
(xxi) Each of the Administrative Trustees of the Trust is
an officer of the Company and has been duly authorized by the Company
to execute and deliver the Trust Agreement.
(xxii) The Trust is not, and following consummation of the
transactions contemplated hereby will not be an "investment company"
or a company "controlled" by an "investment company" which is required
to be registered under the Investment Company Act of 1940, as amended
(the "1940 Act").
(xxiii) The Operative Documents described in the
Registration Statement and the Prospectus conform in all material
respects to the summary descriptions thereof contained in the
Registration Statement and the Prospectus.
(xxiv) None of the Trust, the Company nor any of the
Subsidiaries is (i) in violation of any provision of its charter or
by-laws or other constituent instrument; (ii) in default in the
performance or observance of any obligation, agreement, covenant or
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<PAGE> 10
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which it is
a party or by which it may be bound or to which any of its properties
may be subject, (iii) in violation of any material judgment, ruling,
decree, order, franchise, license or permit or any statute, rule or
regulation of any federal, state or local court or other governmental
authority applicable to the business or properties of the Company or
its subsidiaries or the Trust, including, without limitation, any
rule, regulation or order of, any agreement or understanding with, or
any commitment to, the Office of Thrift Supervision ("OTS"), the FDIC
or any other supervisory or regulatory authority that could result in
any enforcement action against the Company, any of its subsidiaries or
the Trust or their officers or directors, or (iv) not in compliance in
all material respects with the statutes, rules and regulations of any
state or other jurisdiction in which the Company or its subsidiaries
or the Trust, as applicable, does business except for such defaults,
violations or non-compliance that alone or in the aggregate, would not
have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its subsidiaries, considered as one enterprise, or of the
Trust.
(xxv) The execution, delivery and performance of the
Operative Documents by the Trust or the Company, as the case may be,
the issuance and delivery of the Securities, the consummation by the
Offerors of the transactions contemplated in the Operative Documents,
and compliance by each of the Offerors with the terms of the Operative
Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Company, and do not and
will not result in any violation of the charter or by-laws of the
Company or any of the Subsidiaries or the Trust Agreement or the
certificate of trust of the Trust filed with the State of Delaware on
______, 1998 (the "Trust Certificate"), and do not and will not
conflict with, or result in a breach of any of the terms or provisions
of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Trust, the Company or any of the Subsidiaries under (A)
any indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Trust, the Company or any of the
Subsidiaries is a party or by which it may be bound or to which any of
its properties may be subject, except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Trust, or the
Company and its subsidiaries considered as one enterprise or (B) any
existing applicable law rule, regulation, judgment, order or decree of
any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Trust, the Company or any of the
Subsidiaries or any of their properties, except for such defaults that
would not have a material adverse effect on the condition (financial
or otherwise), earnings, business affairs or business prospects of the
Company and its subsidiaries, considered as one enterprise or of the
Trust.
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<PAGE> 11
(xxvi) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, other than those that have been made
or obtained, is necessary or required for the performance by the
Company or the Trust of their obligations hereunder, in connection
with the issuance and sale of the Preferred Securities or the
consummation of the transactions contemplated by the Operative
Documents.
(xxvii) Except as disclosed in the Registration Statement
and the Prospectus, there is no action, suit or proceeding before or
by any government, governmental instrumentality or court, domestic or
foreign, now pending or, to the knowledge of the Company or the Trust,
threatened against or affecting the Trust, or the Company or any of
the Subsidiaries that is required to be disclosed in the Registration
Statement and the Prospectus or that, in the final outcome, could, in
the judgment of the Company, result in any material adverse effect on
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Trust, or the Company and the Subsidiaries
considered as one enterprise, or that could materially and adversely
affect the properties or assets of the Trust, or the Company and the
Subsidiaries considered as one enterprise, or that could adversely
affect the consummation of the transactions contemplated in the
Operative Documents; the aggregate liability or loss, if any,
resulting from the final outcome of all pending legal or governmental
proceedings to which the Trust, the Company or any of the Subsidiaries
is a party or which affect any of its properties that are not
described in the Registration Statement and the Prospectus, including
ordinary routine litigation incidental to its business, would not have
a material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Trust, or the
Company and the Subsidiaries considered as one enterprise.
(xxviii) There are no contracts or documents of a character
required to be described in the Registration Statement and the
Prospectus that are not described as required.
(xxix) Each of the Offerors and the Subsidiaries owns or
possesses, or can acquire on reasonable terms, adequate patents,
patent licenses, trademarks, service marks and trade names necessary
to carry on their businesses as presently conducted, except where the
failure to own, procure or obtain any of the foregoing would not have
a material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as one enterprise, or of the Trust, and
none of the Offerors nor the Subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with
respect to any patents, patent licenses, trademarks, service marks or
trade names that, in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on
the condition (financial or otherwise), earnings, business
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<PAGE> 12
affairs or business prospects of the Trust, or the Company and its
subsidiaries considered as one enterprise.
(xxx) The Company is duly registered as a savings and loan
holding company, and each of the Offerors and the Subsidiaries owns,
possesses or has obtained all material governmental licenses, permits,
certificates, consents, orders, approvals and other authorizations
necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as presently conducted and as
described in the Registration Statement and the Prospectus, and
neither the Offerors nor any of the Subsidiaries is aware of or has
received any notice of proceedings relating to revocation or
modification of any such licenses, permits, certificates, consents,
orders, approvals or authorizations that, in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could
materially adversely affect the condition (financial or otherwise),
earnings, business affairs or business prospects of the Trust, or the
Company and its subsidiaries considered as one enterprise.
(xxxi) The Offerors and the Subsidiaries each has good and
marketable title to all properties and assets described in the
Registration Statement and the Prospectus as owned by it, free and
clear of all liens, charges, encumbrances or restrictions, except such
as (A) are described in the Registration Statement and the Prospectus
or (B) are neither material in amount nor materially significant in
relation to the business of the Trust, or the Company and the
Subsidiaries considered as one enterprise; and all of the leases and
subleases material to the business of the Trust, and the Company and
the Subsidiaries considered as one enterprise, and under which the
Offerors or any of the Subsidiaries holds properties described in the
Registration Statement and the Prospectus, are in full force and
effect, and neither the Offerors nor any of the Subsidiaries has any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Offerors or such Subsidiary under
any of the leases or subleases mentioned above, or affecting or
questioning the rights of such corporation to the continued possession
of the leased or subleased premises under any such lease or sublease.
(xxxii) Each of the Company, the Subsidiaries and the Trust
has filed all federal, state and local income and franchise tax
returns required to be filed through the date hereof (or has obtained
extensions for such filings as permitted by applicable law) and has
paid all taxes shown as owing thereon as and when due, or the Company,
a Subsidiary or the Trust, as applicable, is engaged in bona fide
negotiations or discussions with applicable government agencies with
respect to the amount of taxes alleged to be due which amounts,
including interest and penalties, if any, would not have a material
adverse effect on the financial condition or results of operations
(when considered on an annualized basis) of the Trust, or the Company
and the Subsidiaries, considered as one enterprise.
(xxxiii) The Company has not (i) taken and will not take,
directly or indirectly, any action which constitutes, or which is
designed to, or that might be reasonably expected
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<PAGE> 13
to, cause or result in stabilization or manipulation of the price of
the Preferred Securities or the common stock of the Company and (ii)
since the filing of the Registration Statement, except for the
marketing of the Securities and the payment to the Underwriters of the
compensation contemplated by Section 2 of this Agreement, (A) sold,
bid for, purchased or paid anyone any compensation for soliciting
purchases of the Securities or (B) paid or agreed to pay to any person
any compensation for soliciting another person to purchase any
securities of the Company.
(xxxiv) Neither the Company, the Subsidiaries, or the Trust,
nor, to the knowledge of the Company and the Trust, any director,
officer, agent, employee or other person acting on behalf of the
Company, has directly or indirectly: (i) used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (ii) made any unlawful
payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate
funds; (iii) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(xxxv) All offers and sales of the Company's capital stock
prior to the date hereof were at all relevant times duly registered or
exempt from the registration requirements of the Act, and were duly
registered or the subject of an available exemption from the
registration requirements of the applicable state securities or Blue
Sky laws, or, to the extent that such offers or sales were not so
registered or subject to an available exemption (1) the applicable
statutes of limitations relating to any violations thereof have
expired, (2) any such violations have been effectively waived, or (3)
any such violations will not have a material adverse effect on the
financial condition, results of operation or business of the Company
and its subsidiaries, considered as one enterprise.
(xxxvi) There are no persons with registration or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under
the 1933 Act.
(b) Any certificate signed by any Trustee of the Trust or any
duly authorized officer of the Company or any of the Subsidiaries and delivered
to the Representatives or to counsel for the Underwriters shall be deemed a
joint and several representation and warranty by the Trust and the Company to
each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Trust
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Trust, at a
price of $25.00 per Security, the number of Firm Preferred Securities set forth
in
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<PAGE> 14
Schedule A opposite the name of such Underwriter, plus any additional Preferred
Securities which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 10 hereof.
(b) The Firm Preferred Securities to be purchased by each
Underwriter hereunder will be represented by one or more definitive global Firm
Preferred Securities in book-entry form which will be deposited by or on behalf
of the Trust with DTC or its designated custodian. The Trust will deliver the
Firm Preferred Securities to I/JL, for the account of each Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor by
Federal wire transfer of same-day funds, by causing DTC to credit the Firm
Preferred Securities to the account of I/JL at DTC. The Trust will cause the
certificates representing the Firm Preferred Securities to be made available to
I/JL for checking at least twenty-four hours prior to the First Closing Date at
the office of DTC or its designated custodian. The time and date of such
delivery and payment shall be 10:00 A.M., on _________, 1998, unless postponed
in accordance with the provisions of Section 10, or such other time not later
than ten business days after such date as shall be agreed upon by I/JL and the
Offerors (such time and date of payment and delivery being herein called the
"First Closing Date").
(c) It is understood that each Underwriter has authorized I/JL,
for its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Firm Preferred Securities which it has agreed to
purchase. I/JL individually and not as representative of the Underwriters, may
(but shall not be obligated to) make payment of the purchase price for the Firm
Preferred Securities, if any, to be purchased by any Underwriter whose funds
have not been received by the First Closing Date, but such payment shall not
relieve such Underwriter from its obligations hereunder.
(d) In addition, on the basis of the representations, warranties
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 150,000 Optional
Preferred Securities at the purchase price per security to be paid for the Firm
Preferred Securities, for use solely in covering any over-allotments made by
the Representatives for the account of the Underwriters in the sale and
distribution of the Firm Preferred Securities. The option granted hereunder may
be exercised at any time (but not more than once) within 30 days after the
first date that any of the Preferred Securities are released by the
Representatives for sale to the public, upon notice by the Representatives to
the Company setting forth the aggregate number of Optional Preferred Securities
as to which the Underwriters are exercising the option and the time of
delivery. Such time of delivery (which may not be earlier than the First
Closing Date), being herein referred to as the "Second Closing Date," shall be
determined by the Representative, but if at any time other than the First
Closing Date shall not be earlier than three nor later than five full business
days after delivery of such notice of exercise. The number of Optional
Preferred Securities to be purchased by each Underwriter shall be determined by
multiplying the number of Optional Preferred Securities to be sold by the
Company pursuant to such notice of exercise by a fraction, the numerator of
which is the number of Firm Preferred
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<PAGE> 15
Securities to be purchased by such Underwriter as set forth opposite its name
in Schedule A and the denominator of which is 1,000,000 (subject to such
adjustments to eliminate any fractional share purchases as the Representatives
in their discretion may make). The manner of payment for and delivery of the
Optional Preferred Securities shall be the same as for the Firm Preferred
Securities purchased from the Company as specified in the three preceding
paragraphs. At any time before lapse of the option, you may cancel such option
by giving written notice of such cancellation to the Company. If the option is
canceled or expires unexercised in whole or in part, the Company will
deregister under the 1933 Act the number of Optional Preferred Securities as to
which the option has not been exercised.
(e) As compensation to the Underwriters for their commitments
hereunder and in view of the fact that the proceeds of the sale of the
Preferred Securities will be used to purchase Subordinated Debentures of the
Company, the Company hereby agrees to pay at the First Closing Date or the
Second Closing Date, as the case may be, to I/JL in immediately available
funds, for the accounts of the several Underwriters, $______ per Preferred
Security to be delivered by the Trust hereunder at the First Closing Date or
the Second Closing Date, as the case may be, or if agreed by the
Representatives and the Company, by deduction from the amount payable by the
Underwriters to the Trust in respect of the Preferred Securities being
purchased on such date.
(f) The Underwriters will comply with all material applicable
laws and rules in connection with the sale of the Securities and the
Underwriters are not acting as an agent for the Company.
SECTION 3. Covenants of the Offerors. The Offerors jointly and
severally covenant with each Underwriter as follows:
(a) The Company will comply with Rule 430A under the Act, if
applicable. The Company will make no further amendment or any supplement to the
Registration Statement or the Prospectus prior to any First Closing Date which
shall be reasonably disapproved by the Representatives after reasonable notice
thereof. The Company will notify the Representatives immediately and confirm
the notice in writing (i) when any post-effective amendment to the Registration
Statement (and any other amendment thereto) has been declared effective by the
Commission, (ii) of the transmittal to the Commission for filing of any
amendment or supplement to the Prospectus or any document that will be
incorporated by reference in the Prospectus, (iii) of the receipt by the
Company of any comments from the Georgia Department of Banking and Finance
("Georgia Department"), the Commission or any state securities commission with
respect to the transactions contemplated by this Agreement, (iv) of any request
by the Georgia Department, the Commission or any state securities commission
for any amendment or supplement to the Registration Statement or the
Prospectus, or for additional information, (v) of the issuance by the Office of
Thrift Supervision (the "OTS"), the Federal Reserve Board, the Georgia
Department, the Commissioner or any state securities commission or court of
competent jurisdiction of any order suspending either the Offering or the use
of either the Preliminary Prospectus or the Prospectus or of the threat of any
such action by any such entity, (vi) of the
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<PAGE> 16
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or any amendment thereto or of the receipt by the
Company of any notification with respect to the suspension of the registration
qualification or exemption of the Preferred Securities for offering or sale in
any jurisdiction, or the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of any
stop order or of any order preventing or suspending the use of any preliminary
Prospectus or Prospectus or suspending any such registration, qualification of
exemption, and if such an order is issued, the Company promptly will use its
best efforts to obtain its withdrawal.
(b) The Company will give the Representatives notice of its
intention to file or prepare any amendment or supplement to the Registration
Statement or any filing under Rule 462(b) or any amendment or supplement to the
Prospectus (whether, in the case of the Registration Statement and the
Prospectus, by the filing of documents pursuant to the 1934 Act, the 1933 Act
or otherwise and, in the case of the Prospectus, by amending or supplementing
the Prospectus then being used by the Underwriters) and will furnish the
Representatives with copies of any such amendment or supplement or other
document proposed to be filed a reasonable amount of time prior to such
proposed filing and will not file any such amendment or supplement or other
document or use any such prospectus to which the Representatives or counsel to
the Underwriters shall reasonably object.
(c) The Company has furnished or will deliver to the
Representatives and counsel for the Underwriters, without charge, signed copies
of the Registration Statement as originally filed and of each amendment thereto
including exhibits filed therewith or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will also
deliver to the Representatives a conformed copy of the Registration Statement
as originally filed and of each amendment thereto (without exhibits) for each
of the Underwriters.
(d) The Company has delivered or will deliver to each
Underwriter, without charge, from time to time until the effective date of the
Registration Statement, as many copies of each Preliminary Prospectus as such
Underwriter may reasonably request, and the Company and the Trust hereby
consent to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each Underwriter, without charge, from time to time
during the period when the Prospectus is required to be delivered under the
1933 Act or the 1934 Act, such number of copies of the Prospectus (as amended
or supplemented) as such Underwriter may reasonably request for the purposes
contemplated by the 1933 Act or the 1934 Act or the respective applicable rules
and regulations of the Commission thereunder.
(e) If any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the Underwriters or for
the Company, to amend the Registration Statement or the Prospectus in order
that the Prospectus will not include any untrue statements of a material fact
or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the
16
<PAGE> 17
Registration Statement or the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Offerors will
promptly prepare and file with the Commission, subject to Section 3(b), such
amendment or supplement as may be necessary to correct such statement or
omission or to make the registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may reasonably
request.
(f) If, at the time that the Registration Statement or a
post-effective amendment thereto becomes effective, any information shall have
been omitted therefrom in reliance upon Rule 430A of the 1933 Act Regulations,
then immediately following effectiveness, the Company will prepare, and file or
transmit for filing with the Commission in accordance with such Rule 430A and
Rule 424(b) of the 1933 Act Regulations, copies of an amended Prospectus, or,
if required by such Rule 430A, a post-effective amendment to the Registration
Statement (including an amended Prospectus), containing all information so
omitted and will use its best efforts to cause any such post-effective
amendment to be declared effective as promptly as practicable.
(g) The Offerors, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, will file, in
accordance with the 1934 Act, all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the time
periods required by the 1934 Act and the 1934 Act Regulations.
(h) The Company will use its best efforts, in cooperation with
the Underwriters, to qualify the Preferred Securities for offering and sale
under the applicable securities laws of such states and other jurisdictions of
the United States as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the
effective date of the Registration Statement; provided, however, that the
Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject. In each jurisdiction in which the Preferred Securities
have been so qualified the Company will file such statements and reports as may
be required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement.
(i) The Company will, on behalf of the Trust, make generally
available to the Trust's security holders as soon as practicable, but not later
than 90 days after the close of the period covered thereby, an earnings
statement (in form complying with the provisions of Rule 158 of the 1933 Act
Regulations) covering a 12-month period beginning not later than the first day
of the Company's fiscal quarter next following the "effective date" (as defined
in said Rule 158) of the Registration Statement.
(j) For so long as the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, to furnish to
the holder of Preferred Securities as soon as practicable after the end of each
fiscal year an annual report (including a balance sheet
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<PAGE> 18
and statements of income, stockholders' equity and cash flow of the Company and
its subsidiaries on a consolidated basis, certified by independent public
accountants).
(k) During the period of five years from the effective date of
the Registration Statement (provided the Preferred Securities continue to be
publicly traded), to furnish and deliver to you as soon as they are available
(i) copies of all reports or other communications (financial or other)
furnished to stockholders and copies of any reports and financial statements
furnished to or filed with the Commission, Nasdaq National Market, American
Stock Exchange or any other national securities exchange on which any class of
securities of the Company is listed and (ii) such additional information
concerning the business and financial condition of the Company and its
Subsidiaries as you may, from time to time, reasonably request (subject to the
Underwriters' obligation to handle any material nonpublic information provided
to them by the Company in a confidential manner and in accordance with their
obligations under applicable federal securities laws).
(l) The Offerors will cooperate with the Underwriters and use
their best efforts to permit the Preferred Securities to be eligible for
clearance and settlement through the facilities of DTC.
(m) The Trust will use the net proceeds received by it from the
sale of the Preferred Securities, and the Company will use the proceeds
received by it from the sale of the Subordinated Debentures, in the manners
specified in the Prospectus under "Use of Proceeds."
(n) Prior to 120 days from date of issuance neither the Trust nor
the Company will, without the prior written consent of I/JL, directly or
indirectly, issue, sell, offer or agree to sell, grant any option for the sale
of, or otherwise dispose of, any securities that are substantially similar to
the Preferred Securities, any security convertible into exchangeable or
exercisable for Preferred Securities or any equity security substantially
similar to the Preferred Securities (except for the Securities issued pursuant
to this Agreement or with the prior written consent of I/JL).
SECTION 4. Payment of Expenses.
The Company will pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 9 hereof, including all costs and expenses
incident to (i) the preparation, printing or other production and filing of
documents with respect to the transaction including without limitation the
Operative Documents and including without limitation any costs of preparation,
printing and filing of the Registration Statement originally filed with respect
to the Preferred Securities and any amendment thereto, any Rule 462(b)
Registration Statement, and the Prospectus and any amendment or supplement
thereto, this Agreement and any blue sky memoranda, (ii) all arrangements
relating to the delivery to the Underwriters of copies of the foregoing
documents, (iii) the fees and disbursements of the counsel, the accountants and
any other experts or advisors retained by the Company, the Subsidiaries or the
Trust,
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<PAGE> 19
(iv) preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Preferred Securities, including transfer agent's and registrar's
fees, (v) the qualification of the Preferred Securities under state securities
and blue sky laws, including filing fees and fees and disbursements of counsel
for the Underwriters relating thereto, (vi) the filing fees of the Commission
and the National Association of Securities Dealers, Inc. relating to the
Preferred Securities, (vii) the fees and expenses of listing the Preferred
Securities on the American Stock Exchange, (viii) the fees and expenses of any
trustee appointed under any of the Operative Documents, including the fees an
disbursements of counsel for such trustees in connection with the Operative
Document (ix) the travel and lodging expenses of employees of the Company or
the Subsidiaries who participate in the advertising and marketing of the
Preferred Securities; and (x) all other costs and expenses incident to the
performance of the obligations of the Company or the Trust hereunder which are
not otherwise specifically provided for in this Section. If the sale of the
Preferred Securities provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth in Section 5 hereof
is not satisfied, because this Agreement is terminated pursuant to Section 9
hereof or because of any failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder other than by reason of a default by any of
the Underwriters, the Company will reimburse the Representatives upon demand
for all reasonable out-of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by it in connection with the
proposed purchase and sale of the Preferred Securities. The Company shall not
in any event be liable to any of the Underwriters for the loss of anticipated
profits from the transactions covered by this Agreement.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Offerors contained in Section 1 hereof or
in certificates of any Trustee of the Trust, officer of the Company or any of
its subsidiaries delivered pursuant to the provisions hereof, to the
performance by the Offerors of their obligations hereunder, and to the
following further conditions:
(a) The Registration Statement, including any Rule 462(b)
Registration Statement, shall be effective at the time of execution of this
Agreement. If required, the Prospectus that constitutes a part of the
Registration Statement and any amendment or supplement thereto shall have been
filed with the Commission in the manner and within the time period required by
Rule 424(b) under the Act; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto shall have been issued, and no
proceedings for that purpose shall have been instituted or threatened or, to
the knowledge of the Company or I/JL, shall be contemplated by the Commission;
and the Company shall have complied with any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise).
(b) Opinion of Outside Counsel for Offerors. At the First Closing
Date, the Underwriters shall have received the favorable opinion, dated as of
the First Closing Date, of Long, Aldridge & Norman, counsel for the Company, to
the effect set forth in Exhibit A hereto.
19
<PAGE> 20
Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deemed proper, upon certificates
of Trustees of the Trust, officers of the Company and its subsidiaries and
certificates of public officials.
(c) Opinion of Special Delaware Counsel for Offerors. If the
opinion referred to in Section 5(b) does not cover applicable matters of
Delaware law, at the First Closing Date, the Underwriters shall have received
the favorable opinion, dated as of the First Closing Date, of special Delaware
counsel of the Offerors, to the effect set forth in Exhibit B hereto.
(d) Opinion of Counsel for State Street Bank and Trust Company.
At the First Closing Date, the Underwriters shall have received the favorable
opinion, dated as of the First Closing Date, of ________________, counsel to
_____________________, as Property Trustee under the Trust Agreement, and
Guarantee Trustee under the Preferred Securities Guarantee Agreement, to the
effect set forth in Exhibit C hereto.
(e) Opinion of Special Tax Counsel for the Offerors. At the
First Closing Date, the Underwriters shall have received an opinion, dated as
of the First Closing Date, of _______________________, special tax counsel to
the Offerors, that (i) the Trust will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation and (ii) although the discussion set forth in the Prospectus under
the heading "Material Federal Income Tax Consequences" does not purport to
discuss all possible United states federal income tax consequences of the
purchase, ownership and disposition of the Preferred Securities, such
discussion constitutes, in all materials respects, a fair and accurate summary
of the United States federal income tax consequences of the purchase, ownership
and disposition of the Preferred Securities under current law. Such opinion may
be conditioned on, among other things, the initial and continuing accuracy of
the facts, financial and other information, covenants and representations set
forth in certificates of officers of the Company and other documents deemed
necessary for such opinion.
(f) Opinion of Counsel for Underwriters. At the First Closing
Date, the Underwriters shall have received the favorable opinion, dated as of
the First Closing Date, of Sutherland, Asbill & Brennan LLP, counsel for the
Underwriters, to the effect set forth in Exhibit D hereto.
(g) Certificates. At the First Closing date, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Trust, or the Company and its subsidiaries considered
as one enterprise, whether or not arising in the ordinary course of business,
and the Underwriters shall have received a certificate of the Chairman, any
Vice Chairman, the Chief Executive Officer, the President or any Vice President
of the Company and of the chief financial officer or the chief accounting
officer of the Company and a certificate of an Administrative Trustee of the
Trust, dated as of the First Closing Date, to the effect that (i) there has
been no such material adverse change, (ii) the representations and warranties
in Section 1 hereof were true and correct in all
20
<PAGE> 21
material respects, when made and are true and correct, in all material
respects, with the same force and effect as though expressly made at and as of
the First Closing Date, and (iii) the Offerors have complied with all
agreements and satisfied all conditions on their part to be performed or
satisfied at or prior to the First Closing Date.
(h) Accountants' Comfort Letter. At the time of the execution of
this Agreement, the Underwriters shall have received from Arthur Andersen LLP a
letter, dated such date, in form and substance reasonably satisfactory to the
Underwriters, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to Underwriters with respect to the
financial statements and certain financial information contained in the
Prospectus.
(i) Bring-down Comfort Letter. At the First Closing Date, the
Underwriters shall have received from Arthur Andersen LLP a letter, dated as of
the First Closing Date, to the effect that they reaffirm the statements made in
the letter furnished pursuant to subsection (h) of this Section, except that
the specified date referred to shall be a date not more than three business
days prior to the First Closing Date.
(j) Further Assurances. On or before the First Closing Date, the
Representatives and counsel for the Underwriters shall have received such
further certificates, documents or other information as they may have
reasonably requested from the Company.
(k) NASD Approval. At the date of this Agreement and at the First
Closing Date, the NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to such offering, such terms or the
Underwriters' participation in such offering.
(l) Approval for Listing on AMEX. At the date of this Agreement
and at the First Closing Date, the Preferred Securities shall have been
approved for listing on the American Stock Exchange, subject only to official
notice of issuance.
(m) Termination of Agreement. 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 to the Offerors
at any time at or prior to the First Closing Date, and such termination shall
be without liability of any party to any other party except as provided in
Section 4 and except that Sections 6, 7 and 8 and this Section 5(m) shall
survive any such termination and remain in full force and effect.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
21
<PAGE> 22
The respective obligations of the several Underwriters to purchase any
pay for any Optional Preferred Securities shall be subject, in their
discretion, to each of the foregoing conditions to purchase the Firm Preferred
Securities, except that all references to the Firm Preferred Securities and the
First Closing Date shall be deemed to refer to such Optional Preferred
Securities and the related Second Closing Date, respectively.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Offerors agree to
jointly and severally indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact included in
the Registration Statement or any amendment to the Registration
Statement including the information deemed to be part of the
Registration Statement pursuant to Rule 430A(b) of the 1933 Act
Regulations, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or prospectus, including the
Prospectus (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to section 6(d) below) any such
settlement is effected with the written consent of the Offerors; and
(iii) against any and all expense whatsoever, as incurred
(including the reasonable fees and disbursements of counsel chosen by
I/JL), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that nay such
expense is not paid under (i) or (ii) above;
provided, however, that this Section 6(a) shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the
22
<PAGE> 23
Offerors by any Underwriter through I/JL expressly for use in the Registration
Statement or any amendment to the Registration Statement or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto). Such
written information provided by any Underwriter through I/JL expressly for such
use is referred to as "Underwriter Information."
The foregoing indemnification with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom
the person asserting any such losses, claims, damages or liabilities
purchased Preferred Securities, or any person controlling such
Underwriter if a copy of the Prospectus (as then amended or
supplemented if the Offerors shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if such is required by law, at or prior to
the written confirmation of the sale of such shares to such person and
if the Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability.
(b) Indemnification of Offerors, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors and officers, the Trust, each of the Trustees and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Offerors by such
Underwriter through I/JL expressly for use in the Registration Statement (or
any amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
I/JL, and, in the case of parties indemnified pursuant to Section 6(b) above,
counsel to the indemnified parties shall be selected by the Offerors. An
indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or
23
<PAGE> 24
compromise or consent to the entry of any judgment with respect to any
litigation or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
shall not be liable for any settlement of the nature contemplated by Section
6(a)(ii) effected without its consent if such indemnifying party (x) reimburses
such indemnified party in accordance with such request to the extent the
indemnifying party in its judgment considers such request to be reasonable and
(y) provides written notice to the indemnified party stating the reason it
deems the unpaid balance unreasonable, in each case prior to 45 days after
receipt by such indemnifying party of the aforesaid request from the
indemnified party.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances under which the indemnification provided for in
Section 6 hereof is for any reason insufficient to hold harmless, or is held to
be unenforceable by an indemnified party in respect of any losses, liabilities,
claims, damages or expenses referred to therein, then each indemnifying party
shall contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (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 pursuant to this Agreement or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company, on
the one hand, and the Underwriters, on the other hand, in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant considerations.
The relative benefits received by the Offerors on the one hand and the
Underwriters on the other hand in connection with the offering of the Preferred
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the
24
<PAGE> 25
offering of the Preferred Securities pursuant to this Agreement (before
deducting expenses) received by the Offerors and the total commission received
by the Underwriters in the Preferred Offering, bear to the aggregate initial
offering price of the Preferred Securities. The relative fault of the Company,
on the one hand, and the Underwriters, on the other hand, shall be determined
by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company, on the one hand,
or the Underwriters, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Offerors and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Preferred Securities purchased by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1993 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter,
and each officer and director of the Company, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company. The Underwriters respective obligations to contribute pursuant to this
Section 7 are several in proportion to the number of Securities set forth
opposite their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or trustees of the
Trust submitted pursuant hereto, shall remain operative
25
<PAGE> 26
and in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or controlling person, or by or on behalf of the
Trust or the Company, and shall survive delivery of the Preferred Securities to
the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Underwriters may terminate this
Agreement with respect to the Firm Preferred Securities or any Optional
Preferred Securities, by notice to the Offerors, at any time at or prior to the
First Closing Date or the Second Closing Date, respectively (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Trust, or the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or any outbreak of hostilities or
escalation thereof or other calamity or crisis, in each case the effect of
which is such as to make it, in the judgment of the Underwriters, impracticable
to market the Preferred Securities or to enforce contracts for the sale of the
Preferred Securities, or (iii) if trading in any securities of the Company has
been suspended or limited by the Commission, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq
National Market System has been suspended or limited, or minimum or maximum
prices for trading have been fixed, or maximum rages for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal or Georgia authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that
Sections 6, 7 and 8 and this Section 9 shall survive such termination and
remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the First Closing Date or at the Second
Closing Date to purchase the Firm Preferred Securities or the Optional
Preferred Securities, as the case may be, which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the Underwriters
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other Underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Underwriters shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the total number of Securities to be purchased hereunder, each of the
non-defaulting Underwriters shall be obligated,
26
<PAGE> 27
severally and not jointly to purchase the full amount thereof in the
proportions that their respective purchasing obligations hereunder bear to the
purchasing obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
Securities to be purchased hereunder, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Underwriters or the Company shall
have the right to postpone the First Closing Date or the Second Closing Date,
as the case may be, for a period not exceeding seven days in order to effect
any required changes in the Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Underwriters c/o Interstate/Johnson Lane
Corporation at 945 East Paces Ferry Road, Atlanta, Georgia 30326, attention of
Richard G. Steingraber with a copy to Sutherland, Asbill & Brennan LLP, 999
Peachtree Street, Atlanta, Georgia 30309, Attention of Charles D. Ganz; notices
to the Offerors shall be directed to Eagle Bancshares, Inc., 2355 Main Street,
Tucker, Georgia 30084, attention of C.J. Sechler, Jr., Chairman, President and
Chief Executive Officer, with a copy to Long, Aldridge & Norman, One Peachtree
Center, 303 Peachtree Street, Atlanta, Georgia 30308, attention of William L.
Floyd.
SECTION 12. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the Offerors and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Offerors and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters and the Offerors
and their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Preferred Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
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<PAGE> 28
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
SECTION 14. Effect of Headings. The Article and Section hearings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Offerors in accordance with its
terms.
Very truly yours,
EAGLE BANCSHARES, INC.
By:
-------------------------------
Title:
-------------------------------
EBI CAPITAL TRUST I
By:
-------------------------------
Title:
-------------------------------
CONFIRMED AND ACCEPTED, as
of the date first above
written:
INTERSTATE/JOHNSON LANE CORPORATION
MORGAN KEEGAN & COMPANY, INC.
STERNE, AGEE & LEACH, INC.
By: INTERSTATE/JOHNSON LANE
CORPORATION
By:
-------------------------------
Authorized Signatory
28
<PAGE> 29
SCHEDULE A
<TABLE>
<CAPTION>
Name of Underwriters Number of Preferred
- -------------------- -------------------
Securities
----------
<S> <C>
Interstate/Johnson Lane Corporation
Morgan Keegan & Company, Inc.
Sterne Agee & Leach, Inc.
Total 1,000,000
=========
</TABLE>
<PAGE> 1
EXHIBIT 4.3
===============================================================================
EAGLE BANCSHARES, INC.
AND
SUNTRUST BANK, ATLANTA,
AS INDENTURE TRUSTEE
INDENTURE
___% SUBORDINATED DEBENTURES DUE SEPTEMBER 30, 2028
DATED AS OF JULY _____, 1998
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
RECITALS
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions of Terms..............................................................1
ARTICLE II.
ISSUE, DESCRIPTION, TERMS, CONDITIONS
REGISTRATION AND EXCHANGE OF THE DEBENTURES
Section 2.1. Designation and Principal Amount.................................................7
Section 2.2. Maturity.........................................................................8
Section 2.3. Form and Payment.................................................................8
Section 2.4. Interest.........................................................................8
Section 2.5. Execution and Authentications....................................................8
Section 2.6. Registration of Transfer and Exchange............................................9
Section 2.7. Temporary Debentures............................................................10
Section 2.8. Mutilated, Destroyed, Lost or Stolen Debentures.................................10
Section 2.9. Cancellation....................................................................11
Section 2.10. Benefit of Indenture............................................................11
Section 2.11. Authentication Agent............................................................11
ARTICLE III.
REDEMPTION OF DEBENTURES
Section 3.1. Redemption......................................................................12
Section 3.2. Special Event Redemption........................................................12
Section 3.3. Optional Redemption by Company..................................................12
Section 3.4. Notice of Redemption............................................................12
Section 3.5. Payment upon Redemption.........................................................13
Section 3.6. No Sinking Fund.................................................................13
ARTICLE IV.
EXTENSION OF INTEREST PAYMENT PERIOD
Section 4.1. Extension of Interest Payment Period............................................14
Section 4.2. Notice of Extension.............................................................14
Section 4.3. Limitation on Transactions......................................................14
ARTICLE V.
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1. Payment of Principal and Interest...............................................15
Section 5.2. Maintenance of Agency...........................................................15
Section 5.3. Paying Agents...................................................................15
Section 5.4. Appointment to Fill Vacancy in Office of Trustee................................16
Section 5.5. Compliance with Consolidation Provisions........................................16
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
Section 5.6. Limitation on Transactions.......................................................16
Section 5.7. Covenants as to the Trust........................................................16
Section 5.8. Covenants as to Purchases........................................................17
ARTICLE VI.
DEBENTUREHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
Section 6.1. Company to Furnish Trustee Names
and Addresses of Debentureholders................................................17
Section 6.2. Preservation of Information Communications with Debentureholders.................17
Section 6.3. Reports by the Company...........................................................17
Section 6.4. Reports by the Trustee...........................................................18
ARTICLE VII.
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT
Section 7.1. Events of Default................................................................18
Section 7.2. Collection of Indebtedness and Suits for Enforcement by Trustee..................19
Section 7.3. Application of Moneys Collected..................................................20
Section 7.4. Limitation on Suits..............................................................21
Section 7.5. Rights and Remedies Cumulative; Delay or Omission Not Waiver.....................21
Section 7.6. Control by Debentureholders......................................................22
Section 7.7. Undertaking to Pay Costs.........................................................22
ARTICLE VIII.
FORM OF DEBENTURE AND ORIGINAL ISSUE
Section 8.1. Form of Debenture................................................................23
Section 8.2. Original Issue of Debentures.....................................................23
ARTICLE IX.
CONCERNING THE TRUSTEE
Section 9.1. Certain Duties and Responsibilities of the Trustee...............................23
Section 9.2. Notice of Defaults...............................................................24
Section 9.3. Certain Rights of Trustee........................................................24
Section 9.4. Trustee Not Responsible for Recitals, Etc........................................25
Section 9.5. May Hold Debentures..............................................................25
Section 9.6. Moneys Held in Trust.............................................................25
Section 9.7. Compensation and Reimbursement...................................................25
Section 9.8. Reliance on Officers' Certificate................................................26
Section 9.9. Disqualification: Conflicting Interests.........................................26
Section 9.10. Corporate Trustee Required; Eligibility.........................................26
Section 9.11. Resignation and Removal; Appointment of Successor...............................26
Section 9.12. Acceptance of Appointment by Successor..........................................27
Section 9.13. Merger, Conversion, Consolidation or Succession to Business.....................28
Section 9.14. Preferential Collection of Claims Against the Company...........................28
ARTICLE X.
CONCERNING THE DEBENTUREHOLDERS
Section 10.1. Evidence of Action by Holders...................................................28
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
Section 10.2. Proof of Execution by Debentureholders..........................................29
Section 10.3. Who May Be Deemed Owners........................................................29
Section 10.4. Certain Debentures Owned by Company Disregarded.................................29
Section 10.5. Actions Binding on Future Debentureholders......................................29
ARTICLE XI.
SUPPLEMENTAL INDENTURES
Section 11.1. Supplemental Indentures Without the Consent of Debentureholders.................30
Section 11.2. Supplemental Indentures with Consent of Debentureholders........................30
Section 11.3. Effect of Supplemental Indentures...............................................31
Section 11.4. Debentures Affected by Supplemental Indentures..................................31
Section 11.5. Execution of Supplemental Indentures............................................31
ARTICLE XII.
SUCCESSOR CORPORATION
Section 12.1. Company May Consolidate, Etc....................................................32
Section 12.2. Successor Corporation Substituted...............................................32
Section 12.3. Evidence of Consolidation, Etc. to Trustee......................................32
ARTICLE XIII.
SATISFACTION AND DISCHARGE
Section 13.1. Satisfaction and Discharge of Indenture.........................................33
Section 13.2. Discharge of Obligations........................................................33
Section 13.3. Deposited Moneys to Be Held in Trust............................................33
Section 13.4. Payment of Monies Held by Paying Agents.........................................33
Section 13.5. Repayment to Company............................................................33
ARTICLE XIV.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS
Section 14.1. No Recourse.....................................................................34
ARTICLE XV.
MISCELLANEOUS PROVISIONS
Section 15.1. Effect on Successors and Assigns................................................34
Section 15.2. Actions by Successor............................................................34
Section 15.3. Surrender of Company Powers.....................................................34
Section 15.4. Notices.........................................................................34
Section 15.5. Governing Law...................................................................35
Section 15.6. Treatment of Debentures as Debt.................................................35
Section 15.7. Compliance Certificates and Opinions............................................35
Section 15.8. Payments on Business Days.......................................................35
Section 15.9. Conflict with Trust Indenture Act...............................................35
Section 15.10. Counterparts....................................................................35
Section 15.11. Separability....................................................................35
Section 15.12. Assignment......................................................................36
Section 15.13. Acknowledgment of Rights........................................................36
</TABLE>
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<TABLE>
<S> <C>
ARTICLE XVI.
SUBORDINATION OF DEBENTURES
Section 16.1. Agreement to Subordinate........................................................36
Section 16.2. Default on Senior Debt, Subordinated Debt
or Additional Senior Obligations................................................36
Section 16.3. Liquidation; Dissolution; Bankruptcy............................................36
Section 16.4. Subrogation.....................................................................37
Section 16.5. Trustee to Effectuate Subordination.............................................38
Section 16.6. Notice by the Company...........................................................38
Section 16.7. Rights of the Trustee; Holders of Senior Indebtedness...........................39
Section 16.8. Subordination May Not Be Impaired...............................................39
</TABLE>
iv
<PAGE> 6
INDENTURE
INDENTURE, dated as of July , 1998, between EAGLE BANCSHARES, INC., a
unitary thrift holding company organized and existing under the laws of the
State of Georgia (the "Company") and SUNTRUST BANK, ATLANTA, a banking
corporation duly organized and existing under the laws of the state of Georgia,
as trustee (the "Trustee").
RECITALS
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of securities to be known as its ____% Subordinated Debentures due
December 31, 2028 (hereinafter referred to as the "Debentures"), the form and
substance of such Debentures and the terms, provisions and conditions thereof to
be set forth as provided in this Indenture;
WHEREAS, EBI CAPITAL TRUST I, a Delaware statutory business trust (the
"Trust"), has offered to the public $25 million (or $28,750,000 if the
underwriters' over-allotment option is exercised) aggregate liquidation amount
of its Preferred Securities (as defined herein) and proposes to invest the
proceeds from such offering, together with the proceeds of the issuance and sale
by the Trust to the Company of $773,196 (or $889,175 if the underwriters' over-
allotment option is exercised) aggregate liquidation amount of its Common
Securities (as defined herein), in $25,773,196 (or $29,639,175 if the
underwriters' over-allotment is exercised) aggregate principal amount of the
Debentures;
WHEREAS, the Company has requested that the Trustee execute and deliver
this Indenture;
WHEREAS, all requirements necessary to make this Indenture a valid
instrument in accordance with its terms, and to make the Debentures, when
executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been performed, and the execution and
delivery of this Indenture have been duly authorized in all respects;
WHEREAS, to provide the terms and conditions upon which the Debentures
are to be authenticated, issued and delivered, the Company has duly authorized
the execution of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the purchase of
the Debentures by the holders thereof, it is mutually covenanted and agreed as
follows for the equal and ratable benefit of the holders of the Debentures:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions of Terms. The terms defined in this Section
1.1 (except as in this Indenture otherwise expressly provided or unless the
context otherwise requires) for all purposes of this Indenture and of any
indenture supplemental hereto shall have the respective meanings specified in
this Section 1.1 and shall include the plural as well as the singular. All other
terms used in this Indenture that are defined in the Trust Indenture Act, or
that are by reference in the Trust Indenture Act defined in the Securities Act
(except as herein otherwise expressly provided or unless the context otherwise
requires), shall have the meanings assigned to such terms in the Trust Indenture
Act and in the Securities Act as in force at the date of the execution of this
<PAGE> 7
instrument. All accounting terms used herein and not expressly defined shall
have the meanings assigned to such terms in accordance with Generally Accepted
Accounting Principles.
"Additional Interest" shall have the meaning set forth in Section 2.4.
"Additional Senior Obligations" means all indebtedness of the Company
whether incurred on or prior to the date of this Indenture or thereafter
incurred, for claims in respect of derivative products such as interest and
foreign exchange rate contracts, commodity contracts and similar arrangements;
provided, however, that Additional Senior Obligations does not include claims in
respect of Senior Debt or Subordinated Debt or obligations which, by their
terms, are expressly stated to be not superior in right of payment to the
Debentures or to rank pari passu in right of payment with the Debentures. For
purposes of this definition, "claim" shall have the meaning assigned thereto in
Section 101(4) of the United States Bankruptcy Code of 1978, as amended.
"Administrative Trustees" shall have the meaning set forth in the Trust
Agreement.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person; (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person; (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person; (d) a partnership in which the specified Person is a
general partner; (e) any officer or director of the specified Person; and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"Applicable Bank Regulatory Authority" means the Office of Thrift
Supervision or other bank regulatory authority then having regulatory authority
over the Company.
"Authenticating Agent" means an authenticating agent with respect to
the Debentures appointed by the Trustee pursuant to Section 2.11.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
state law enacted for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or any
duly authorized committee of such Board or any other duly designated officers of
the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day" means, with respect to the Debentures, any day other
than a Saturday or a Sunday or a day on which federal or state banking
institutions in Atlanta, Georgia, are authorized or required by law, executive
order or regulation to close, or a day on which the Corporate Trust Office of
the Trustee or the Property Trustee is closed for business.
"Capital Event" means the receipt by the Trust of an Opinion of Counsel
experienced in such matters (which may be counsel to the Company) that the
Company cannot, or within 90 days after the date of the Opinion of such Counsel
will not, be permitted by the applicable regulatory authorities, due to a change
in law, regulation, policy or guideline or interpretation or application of law
or regulation, policy or guideline, to account for the
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<PAGE> 8
Preferred Securities as Tier 1 capital under the capital guidelines or policies
of the Applicable Bank Regulatory Authority.
"Certificate" means a certificate signed by the principal executive
officer, the principal financial officer, the principal accounting officer, the
treasurer or any vice president of the Company. The Certificate need not comply
with the provisions of Section 15.7.
"Change in 1940 Act Law" shall have the meaning set forth in the
definition of "Investment Company Event."
"Commission" means the Securities and Exchange Commission.
"Common Securities" means undivided beneficial interests in the assets
of the Trust which rank pari passu with the Preferred Securities; provided,
however, that upon the occurrence of an Event of Default, the rights of holders
of Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights of holders
of Preferred Securities.
"Company" means Eagle Bancshares, Inc., a savings and loan holding
company duly organized and existing under the laws of the State of Georgia, and,
subject to the provisions of Article XII, shall also include its successors and
assigns.
"Compounded Interest" shall have the meaning set forth in Section 4.1.
"Corporate Trust Office" means the office of the Trustee at which, at
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at 3495 Piedmont Road,
Suite 810, Atlanta, Georgia 30305.
"Coupon Rate" shall have the meaning set forth in Section 2.4.
"Custodian" means any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"Debentures" shall have the meaning set forth in the Recitals hereto.
"Debentureholder," "holder of Debentures," "registered holder," or
other similar term, means the Person or Persons in whose name or names a
particular Debenture shall be registered on the books of the Company or the
Trustee kept for that purpose in accordance with the terms of this Indenture.
"Debenture Register" shall have the meaning set forth in
Section 2.6(b).
"Debt" means with respect to any Person, whether recourse is to all or
a portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) every
obligation of the type referred to
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<PAGE> 9
in clauses (i) through (v) of another Person and all dividends of another Person
the payment of which, in either case, such Person has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise.
"Default" means any event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in Section 4.1.
"Dissolution Event" means that as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Trust Agreement and the Debentures held by the Property Trustee are to be
distributed to the holders of the Trust Securities issued by the Trust pro rata
in accordance with the Trust Agreement.
"Event of Default" means, with respect to the Debentures, any event
specified in Section 7.1, which has continued for the period of time, if any,
and after the giving of the notice, if any, therein designated.
"Exchange Act," means the Securities Exchange Act of 1934, as amended,
as in effect at the date of execution of this instrument.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 4.1.
"Generally Accepted Accounting Principles" means such accounting
principles as are generally accepted at the time of any computation required
hereunder.
"Governmental Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged; or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America that, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such Governmental
Obligation or a specific payment of principal of or interest on any such
Governmental Obligation held by such custodian for the account of the holder of
such depositary receipt; provided, however, that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.
"Herein," "hereof," and "hereunder," and other words of similar import,
refer to this Indenture as a whole and not to any particular Article, Section or
other subdivision.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into in accordance with the terms hereof.
"Interest Payment Date," when used with respect to any installment of
interest on the Debentures, means the date specified in the Debenture or in a
Board Resolution or in an indenture supplemental hereto with respect to the
Debentures as the fixed date on which an installment of interest with respect to
the Debentures is due and payable.
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<PAGE> 10
"Investment Company Act," means the Investment Company Act of 1940, as
amended, as in effect at the date of execution of this instrument.
"Investment Company Event" means the receipt by the Trust of an Opinion
of Counsel, rendered by a law firm experienced in such matters (which may be
counsel to the Company), to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), the Trust is or shall be considered an
"investment company" that is required to be registered under the Investment
Company Act, which Change in 1940 Act Law becomes effective on or after the date
of original issuance of the Preferred Securities under the Trust Agreement.
"Maturity Date" means the date on which the Debentures mature and on
which the principal shall be due and payable together with all accrued and
unpaid interest thereon including Compounded Interest and Additional Interest,
if any.
"Ministerial Action" shall have the meaning set forth in Section 3.2.
"Officers' Certificate" means a certificate signed by the President or
a Vice President and by the Treasurer or an Assistant Treasurer or the
Controller or an Assistant Controller or the Secretary or an Assistant Secretary
of the Company that is delivered to the Trustee in accordance with the terms
hereof. Each such certificate shall include the statements provided for in
Section 15.7, if and to the extent required by the provisions thereof.
"Opinion of Counsel" means an opinion in writing of legal counsel, who
may be an employee of or counsel for the Company, that is delivered to the
Trustee in accordance with the terms hereof. Each such opinion shall include the
statements provided for in Section 15.7, if and to the extent required by the
provisions thereof.
"Outstanding," when used with reference to the Debentures, means,
subject to the provisions of Section 10.4, as of any particular time, all
Debentures theretofore authenticated and delivered by the Trustee under this
Indenture, except (a) Debentures theretofore canceled by the Trustee or any
paying agent, or delivered to the Trustee or any paying agent for cancellation
or that have previously been canceled; (b) Debentures or portions thereof for
the payment or redemption of which moneys or Governmental Obligations in the
necessary amount shall have been deposited in trust with the Trustee or with any
paying agent (other than the Company) or shall have been set aside and
segregated in trust by the Company (if the Company shall act as its own paying
agent); provided, however, that if such Debentures or portions of such
Debentures are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as in Article III provided, or provision
satisfactory to the Trustee shall have been made for giving such notice; and (c)
Debentures in lieu of or in substitution for which other Debentures shall have
been authenticated and delivered pursuant to the terms of Section 2.6.
"Person" means any individual, corporation, partnership, joint-venture,
joint-stock company, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Debenture" means every previous Debenture evidencing all
or a portion of the same debt as that evidenced by such particular Debenture;
and, for the purposes of this definition, any Debenture authenticated and
delivered under Section 2.8 in lieu of a lost, destroyed or stolen Debenture
shall be deemed to evidence the same debt as the lost, destroyed or stolen
Debenture.
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<PAGE> 11
"Preferred Securities" means undivided beneficial interests in the
assets of the Trust which rank pari passu with Common Securities issued by the
Trust; provided, however, that upon the occurrence of an Event of Default, the
rights of holders of Common Securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.
"Preferred Securities Guarantee" means any guarantee that the Company
may enter into with the Trustee or other Persons that operate directly or
indirectly for the benefit of holders of Preferred Securities.
"Property Trustee" has the meaning set forth in the Trust Agreement.
"Responsible Officer" when used with respect to the Trustee means the
Chairman of the Board of Directors, the President, any Vice President, the
Secretary, the Treasurer, any trust officer, any corporate trust officer or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Scheduled Maturity Date" means December 31, 2028.
"Securities Act," means the Securities Act of 1933, as amended, as in
effect at the date of execution of this instrument.
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of this Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Debentures or to other Debt which is pari
passu with, or subordinated to, the Debentures; provided, however, that Senior
Debt shall not be deemed to include (i) any Debt of the Company which when
incurred and without respect to any election under section 1111(b) of the United
States Bankruptcy Code of 1978, as amended, was without recourse to the Company;
(ii) any Debt of the Company to any of its subsidiaries; (iii) any Debt to any
employee of the Company; (iv) any Debt which by its terms is subordinated to
trade accounts payable or accrued liabilities arising in the ordinary course of
business to the extent that payments made to the holders of such Debt by the
holders of the Debentures as a result of the subordination provisions of this
Indenture would be greater than they otherwise would have been as a result of
any obligation of such holders to pay amounts over to the obligees on such trade
accounts payable or accrued liabilities arising in the ordinary course of
business as a result of subordination provisions to which such Debt is subject;
and (v) any Debt which constitutes Subordinated Debt.
"Senior Indebtedness" shall have the meaning set forth in Section 16.1.
"Special Event" means a Tax Event, a Capital Event or an Investment
Company Event.
"Subordinated Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of this Indenture or thereafter
incurred, which is by its terms expressly provided to be junior and subordinate
to other Debt of the Company (other than the Debentures).
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<PAGE> 12
"Subsidiary" means, with respect to any Person, (i) any corporation at
least a majority of whose outstanding Voting Stock shall at the time be owned,
directly or indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries; (ii) any general
partnership, joint venture or similar entity, at least a majority of whose
outstanding partnership or similar interests shall at the time be owned by such
Person, or by one or more of its Subsidiaries, or by such Person and one or more
of its Subsidiaries; and (iii) any limited partnership of which such Person or
any of its Subsidiaries is a general partner.
"Tax Event" means the receipt by the Trust of an Opinion of Counsel,
rendered by a law firm experienced in such matters (which may be counsel to the
Company), to the effect that, as a result of any amendment to, or change
(including any announced prospective change) in the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which pronouncement or
decision is announced on or after the date of issuance of the Preferred
Securities under the Trust Agreement, there is more than an insubstantial risk
that (i) the Trust is, or shall be within 90 days after the date of such Opinion
of Counsel, subject to United States federal income tax with respect to income
received or accrued on the Debentures; (ii) interest payable by the Company on
the Debentures is not, or within 90 days after the date of such Opinion of
Counsel, shall not be, deductible by the Company, in whole or in part, for
United States federal income tax purposes; or (iii) the Trust is, or shall be
within 90 days after the date of such Opinion of Counsel, subject to more than a
de minimis amount of other taxes, duties, assessments or other governmental
charges. The Trust or the Company shall request and receive an Opinion of
Counsel with regard to such matters within a reasonable period of time after the
Trust or the Company shall have become aware of the possible occurrence of any
of the events described in clauses (i) through (iii) above.
"Trust" means EBI CAPITAL TRUST I, a Delaware statutory business trust.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
July , 1998, of the Trust.
"Trustee" means SunTrust Bank, Atlanta and, subject to the provisions
of Article IX, shall also include its successors and assigns, and, if at any
time there is more than one Person acting in such capacity hereunder, "Trustee"
shall mean each such Person.
"Trust Indenture Act," means the Trust Indenture Act of 1939, as
amended, subject to the provisions of Sections 11.1, 11.2, and 12.1, as in
effect at the date of execution of this Indenture.
"Trust Securities" means the Common Securities and Preferred
Securities, collectively.
"Voting Stock," as applied to stock of any Person, means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than shares,
interests, participations or other equivalents having such power only by reason
of the occurrence of a contingency.
ARTICLE II.
ISSUE, DESCRIPTION, TERMS, CONDITIONS
REGISTRATION AND EXCHANGE OF THE DEBENTURES
Section 2.1. Designation and Principal Amount. There is hereby
authorized Debentures designated the "___% Subordinated Debentures due December
31, 2028," limited in aggregate principal amount to
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<PAGE> 13
$25,773,196 (or $29,639,175 if the underwriters' over-allotment option is
exercised), which amount shall be as set forth in any written order of the
Company for the authentication and delivery of Debentures pursuant to Section
2.5.
Section 2.2. Maturity. The Maturity Date shall be the Scheduled
Maturity Date.
Section 2.3. Form and Payment. The Debentures shall be issued in fully
registered certificated form without interest coupons. Principal and interest on
the Debentures issued in certificated form shall be payable, the transfer of
such Debentures shall be registrable and such Debentures shall be exchangeable
for Debentures bearing identical terms and provisions at the office or agency of
the Trustee; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the holder at such address as shall
appear in the Debenture Register or by wire transfer to an account maintained by
the holder as specified in the Debenture Register, provided that the holder
provides proper transfer instructions by the regular record date.
Notwithstanding the foregoing, so long as the holder of any Debentures is the
Property Trustee, the payment of the principal of and interest (including
Compounded Interest and Additional Interest, if any) on such Debentures held by
the Property Trustee shall be made at such place and to such account as may be
designated by the Property Trustee.
Section 2.4. Interest. (a) Each Debenture shall bear interest at the
rate of ___% per annum (the "Coupon Rate") from the original date of issuance
until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon Rate,
compounded quarterly, payable (subject to the provisions of Article IV)
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year (each, an "Interest Payment Date") commencing on September 30, 1998, to the
Person in whose name such Debenture or any Predecessor Debenture is registered,
at the close of business on the regular record date for such interest
installment, which shall be the fifteenth day of the last month of the calendar
quarter.
(b) The amount of interest payable for any period shall be computed on
the basis of a 360-day year of twelve 30-day months. Except as provided in the
following sentence, the amount of interest payable for any period shorter than a
full quarterly period for which interest is computed, shall be computed on the
basis of the actual number of days elapsed in such period. In the event that any
date on which interest is payable on the Debentures is not a Business Day, then
payment of interest payable on such date shall be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the next succeeding day
which is a Business Day, in each case with the same force and effect as if made
on the date such payment was originally payable.
(c) If, at any time while the Property Trustee is the holder of any
Debentures, the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any case, the Company shall pay as additional interest ("Additional
Interest") on the Debentures held by the Property Trustee, such additional
amounts as shall be required so that the net amounts received and retained by
the Trust and the Property Trustee after paying such taxes, duties, assessments
or other governmental charges shall be equal to the amounts the Trust and the
Property Trustee would have received had no such taxes, duties, assessments or
other government charges been imposed.
Section 2.5. Execution and Authentications. (a) The Debentures shall be
signed on behalf of the Company by its Chairman, President or one of its Vice
Presidents, under its corporate seal attested by its Secretary or one of its
Assistant Secretaries. Signatures may be in the form of a manual or facsimile
signature.
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<PAGE> 14
The Company may use the facsimile signature of any Person who shall have been a
Chairman, President or Vice President thereof, or of any Person who shall have
been a Secretary or Assistant Secretary thereof, notwithstanding the fact that
at the time the Debentures shall be authenticated and delivered or disposed of
such Person shall have ceased to be the Chairman, President or a Vice President,
or the Secretary or an Assistant Secretary, of the Company. The seal of the
Company may be in the form of a facsimile of such seal and may be impressed,
affixed, imprinted or otherwise reproduced on the Debentures. The Debentures may
contain such notations, legends or endorsements required by law, stock exchange
rule or usage. Each Debenture shall be dated the date of its authentication by
the Trustee.
(b) A Debenture shall not be valid until authenticated manually by an
authorized signatory of the Trustee, or by an Authenticating Agent. Such
signature shall be conclusive evidence that the Debenture so authenticated has
been duly authenticated and delivered hereunder and that the holder is entitled
to the benefits of this Indenture.
(c) At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Debentures executed by the Company to
the Trustee for authentication, together with a written order of the Company for
the authentication and delivery of such Debentures signed by its Chairman,
President or any Vice President and its Treasurer or any Assistant Treasurer,
and the Trustee in accordance with such written order shall authenticate and
deliver such Debentures.
(d) In authenticating such Debentures and accepting the additional
responsibilities under this Indenture in relation to such Debentures, the
Trustee shall be entitled to receive, and (subject to Section 9.1) shall be
fully protected in relying upon, an Opinion of Counsel stating that the form and
terms thereof have been established in conformity with the provisions of this
Indenture.
(e) The Trustee shall not be required to authenticate such Debentures
if the issue of such Debentures pursuant to this Indenture shall affect the
Trustee's own rights, duties or immunities under the Debentures and this
Indenture or otherwise in a manner that is not reasonably acceptable to the
Trustee.
Section 2.6. Registration of Transfer and Exchange. (a) Debentures may
be exchanged upon presentation thereof at the office or agency of the Company
designated for such purpose in Atlanta, Georgia, for other Debentures and for a
like aggregate principal amount, upon payment of a sum sufficient to cover any
tax or other governmental charge in relation thereto, all as provided in this
Section 2.6. In respect of any Debentures so surrendered for exchange, the
Company shall execute, the Trustee shall authenticate and such office or agency
shall deliver in exchange therefor the Debenture or Debentures that the
Debentureholder making the exchange shall be entitled to receive, bearing
numbers not contemporaneously outstanding.
(b) The Company shall keep, or cause to be kept, at its office or
agency designated for such purpose in Atlanta, Georgia, or such other location
designated by the Company, a register or registers (herein referred to as the
"Debenture Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall register the Debentures and the transfers of
Debentures as in this Article II provided and which at all reasonable times
shall be open for inspection by the Trustee. The registrar for the purpose of
registering Debentures and transfer of Debentures as herein provided initially
will be the Trustee. The registrar thereafter may be appointed as authorized by
Board Resolution (the "Debenture Registrar"). Upon surrender for transfer of any
Debenture at the office or agency of the Company designated for such purpose,
the Company shall execute, the Trustee shall authenticate and such office or
agency shall deliver in the name of the transferee or transferees a new
Debenture or Debentures for a like aggregate principal amount. All Debentures
presented or surrendered for exchange or registration of transfer, as provided
in this Section 2.6, shall be accompanied (if so required by the Company or the
Debenture Registrar) by a written instrument or instruments of transfer, in form
satisfactory
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to the Company or the Debenture Registrar, duly executed by the registered
holder or by such holder's duly authorized attorney in writing.
(c) No service charge shall be made for any exchange or registration of
transfer of Debentures, or issue of new Debentures in case of partial
redemption, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge in relation thereto, other than exchanges
pursuant to Section 2.7, Section 3.5(b) and Section 11.4 not involving any
transfer.
(d) The Company shall not be required (i) to issue, exchange or
register the transfer of any Debentures during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
less than all the Outstanding Debentures and ending at the close of business on
the day of such mailing; nor (ii) to register the transfer of or exchange any
Debentures or portions thereof called for redemption.
Section 2.7. Temporary Debentures. Pending the preparation of
definitive Debentures, the Company may execute, and the Trustee shall
authenticate and deliver, temporary Debentures (printed, lithographed, or
typewritten). Such temporary Debentures shall be substantially in the form of
the definitive Debentures in lieu of which they are issued, but with such
omissions, insertions and variations as may be appropriate for temporary
Debentures, all as may be determined by the Company. Every temporary Debenture
shall be executed by the Company and be authenticated by the Trustee upon the
same conditions and in substantially the same manner, and with like effect, as
the definitive Debentures. Without unnecessary delay the Company shall execute
and shall furnish definitive Debentures and thereupon any or all temporary
Debentures may be surrendered in exchange therefor (without charge to the
holders), at the office or agency of the Company designated for the purpose in
Atlanta, Georgia, and the Trustee shall authenticate and such office or agency
shall deliver in exchange for such temporary Debentures an equal aggregate
principal amount of definitive Debentures, unless the Company advises the
Trustee to the effect that definitive Debentures need not be executed and
furnished until further notice from the Company. Until so exchanged, the
temporary Debentures shall be entitled to the same benefits under this Indenture
as definitive Debentures authenticated and delivered hereunder.
Section 2.8. Mutilated, Destroyed, Lost or Stolen Debentures. (a) In
case any temporary or definitive Debenture shall become mutilated or be
destroyed, lost or stolen, the Company (subject to the next succeeding sentence)
shall execute, and upon the Company's request the Trustee (subject as aforesaid)
shall authenticate and deliver, a new Debenture bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated
Debenture, or in lieu of and in substitution for the Debenture so destroyed,
lost or stolen. In every case the applicant for a substituted Debenture shall
furnish to the Company and the Trustee such security or indemnity as may be
required by them to save each of them harmless, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee evidence to their satisfaction of the destruction, loss or theft of
the applicant's Debenture and of the ownership thereof. The Trustee may
authenticate any such substituted Debenture and deliver the same upon the
written request or authorization of any officer of the Company. Upon the
issuance of any substituted Debenture, the Company may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith. In case any Debenture that has matured or is
about to mature shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Debenture, pay or authorize the
payment of the same (without surrender thereof except in the case of a mutilated
Debenture) if the applicant for such payment shall furnish to the Company and
the Trustee such security or indemnity as they may require to save them
harmless, and, in case of destruction, loss or theft, evidence to the
satisfaction of the Company and the Trustee of the destruction, loss or theft of
such Debenture and of the ownership thereof.
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(b) Every replacement Debenture issued pursuant to the provisions of
this Section 2.8 shall constitute an additional contractual obligation of the
Company whether or not the mutilated, destroyed, lost or stolen Debenture shall
be found at any time, or be enforceable by anyone, and shall be entitled to all
the benefits of this Indenture equally and proportionately with any and all
other Debentures duly issued hereunder. All Debentures shall be held and owned
upon the express condition that the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Debentures, and shall preclude (to the extent lawful) any and all other rights
or remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
Section 2.9. Cancellation. All Debentures surrendered for the purpose
of payment, redemption, exchange or registration of transfer shall, if
surrendered to the Company or any paying agent, be delivered to the Trustee for
cancellation, or, if surrendered to the Trustee, shall be canceled by it, and no
Debentures shall be issued in lieu thereof except as expressly required or
permitted by any of the provisions of this Indenture. On request of the Company
at the time of such surrender, the Trustee shall deliver to the Company canceled
Debentures held by the Trustee. In the absence of such request the Trustee may
dispose of canceled Debentures in accordance with its standard procedures and
deliver a certificate of disposition to the Company. If the Company shall
otherwise acquire any of the Debentures, however, such acquisition shall not
operate as a redemption or satisfaction of the indebtedness represented by such
Debentures unless and until the same are delivered to the Trustee for
cancellation.
Section 2.10. Benefit of Indenture. Nothing in this Indenture or in the
Debentures, express or implied, shall give or be construed to give to any
Person, other than the parties hereto and the holders of the Debentures (and,
with respect to the provisions of Article XVI, the holders of Senior
Indebtedness) any legal or equitable right, remedy or claim under or in respect
of this Indenture, or under any covenant, condition or provision herein
contained; all such covenants, conditions and provisions being for the sole
benefit of the parties hereto and of the holders of the Debentures (and, with
respect to the provisions of Article XVI, the holders of Senior Indebtedness).
Section 2.11. Authentication Agent. (a) So long as any of the
Debentures remain Outstanding there may be an Authenticating Agent for any or
all such Debentures, which the Trustee shall have the right to appoint. Said
Authenticating Agent shall be authorized to act on behalf of the Trustee to
authenticate Debentures issued upon exchange, transfer or partial redemption
thereof, and Debentures so authenticated shall be entitled to the benefits of
this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. All references in this Indenture to the
authentication of Debentures by the Trustee shall be deemed to include
authentication by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall be a corporation that has a combined capital
and surplus, as most recently reported or determined by it, sufficient under the
laws of any jurisdiction under which it is organized or in which it is doing
business to conduct a trust business, and that is otherwise authorized under
such laws to conduct such business and is subject to supervision or examination
by federal or state authorities. If at any time any Authenticating Agent shall
cease to be eligible in accordance with these provisions, it shall resign
immediately.
(b) Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time (and upon request by the Company shall) terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or
cessation of eligibility of any Authenticating Agent, the Trustee may appoint an
eligible successor Authenticating Agent acceptable to the Company. Any successor
Authenticating Agent, upon acceptance of its appointment hereunder, shall become
vested with all the rights, powers and duties of its predecessor hereunder as if
originally named as an Authenticating Agent pursuant hereto.
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ARTICLE III.
REDEMPTION OF DEBENTURES
Section 3.1. Redemption. Subject to the Company's having received prior
approval of the Applicable Bank Regulatory Authority, if then required under the
applicable capital guidelines or policies of the Applicable Bank Regulatory
Authority, the Company may redeem the Debentures issued hereunder on and after
the dates set forth in and in accordance with the terms of this Article III.
Section 3.2. Special Event Redemption. Subject to the Company's having
received the prior approval of the Applicable Bank Regulatory Authority, if then
required under the applicable capital guidelines or policies of the Applicable
Bank Regulatory Authority, if a Special Event has occurred and is continuing,
then, notwithstanding Section 3.3(a) but subject to Section 3.3(b), the Company
shall have the right upon not less than 30 days' nor more than 60 days' notice
to the holders of the Debentures to redeem the Debentures, in whole but not in
part, for cash within 180 days following the occurrence of such Special Event
(the "180-Day Period") at a redemption price equal to 100% of the principal
amount to be redeemed plus any accrued and unpaid interest thereon to the date
of such redemption (the "Redemption Price"), provided that if at the time there
is available to the Company the opportunity to eliminate, within the 180-Day
Period, a Tax Event by taking some ministerial action (a "Ministerial Action"),
such as filing a form or making an election, or pursuing some other similar
reasonable measure which has no adverse effect on the Company, the Trust or the
holders of the Trust Securities issued by the Trust, the Company shall pursue
such Ministerial Action in lieu of redemption. The Redemption Price shall be
paid prior to 12:00 noon, Atlanta, Georgia time, on the date of such redemption
or such earlier time as the Company determines, provided that the Company shall
deposit with the Trustee an amount sufficient to pay the Redemption Price by
10:00 a.m., Atlanta, Georgia time, on the date such Redemption Price is to be
paid.
Section 3.3. Optional Redemption by Company. (a) Subject to the
provisions of Section 3.3(b), except as otherwise may be specified in this
Indenture, the Company shall have the right to redeem the Debentures, in whole
or in part, from time to time, on or after September 30, 2003, at a Redemption
Price equal to 100% of the principal amount to be redeemed plus any accrued and
unpaid interest thereon to the date of such redemption. Any redemption pursuant
to this Section 3.3(a) shall be made upon not less than 30 days' nor more than
60 days' notice to the holder of the Debentures, at the Redemption Price. If the
Debentures are only partially redeemed pursuant to this Section 3.3, the
Debentures shall be redeemed pro rata or by lot or in such other manner as the
Trustee shall deem appropriate and fair in its discretion. The Redemption Price
shall be paid prior to 12:00 noon, Atlanta, Georgia time, on the date of such
redemption or at such earlier time as the Company determines provided that the
Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price by 10:00 a.m., Atlanta, Georgia time, on the date such
Redemption Price is to be paid.
(b) If a partial redemption of the Debentures would result in the
delisting of the Preferred Securities issued by the Trust from the American
Stock Exchange or any national securities exchange or other organization on
which the Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the Debentures
in whole.
Section 3.4. Notice of Redemption. (a) In case the Company shall desire
to exercise such right to redeem all or, as the case may be, a portion of the
Debentures in accordance with the right reserved so to do, the Company shall, or
shall cause the Trustee to upon receipt of 45 days' written notice from the
Company, give notice of such redemption to holders of the Debentures to be
redeemed by mailing, first class postage prepaid, a notice of such redemption
not less than 30 days and not more than 60 days before the date fixed for
redemption to such holders at their last addresses as they shall appear upon the
Debenture Register unless a shorter period is specified in the Debentures to be
redeemed. Any notice that is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the registered
holder receives the notice. In any
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case, failure duly to give such notice to the holder of any Debenture designated
for redemption in whole or in part, or any defect in the notice, shall not
affect the validity of the proceedings for the redemption of any other
Debentures. In the case of any redemption of Debentures prior to the expiration
of any restriction on such redemption provided in the terms of such Debentures
or elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with any such restriction. Each such
notice of redemption shall specify the date fixed for redemption and the
Redemption Price and shall state that payment of the Redemption Price shall be
made at the office or agency of the Company in Atlanta, Georgia or at the
Corporate Trust Office, upon presentation and surrender of such Debentures, that
interest accrued to the date fixed for redemption shall be paid as specified in
said notice and that from and after said date interest shall cease to accrue. If
less than all the Debentures are to be redeemed, the notice to the holders of
the Debentures shall specify the particular Debentures to be redeemed. If the
Debentures are to be redeemed in part only, the notice shall state the portion
of the principal amount thereof to be redeemed and shall state that on and after
the redemption date, upon surrender of such Debenture, a new Debenture or
Debentures in principal amount equal to the unredeemed portion thereof shall be
issued.
(b) If less than all the Debentures are to be redeemed, the Company
shall give the Trustee at least 45 days' notice in advance of the date fixed for
redemption as to the aggregate principal amount of Debentures to be redeemed,
and thereupon the Trustee shall select, by lot or in such other manner as it
shall deem appropriate and fair in its discretion, the portion or portions
(equal to $25.00 or any integral multiple thereof) of the Debentures to be
redeemed and shall thereafter promptly notify the Company in writing of the
numbers of the Debentures to be redeemed, in whole or in part. The Company may,
if and whenever it shall so elect pursuant to the terms hereof, by delivery of
instructions signed on its behalf by its Chairman, its President or any Vice
President, instruct the Trustee or any paying agent to call all or any part of
the Debentures for redemption and to give notice of redemption in the manner set
forth in this Section 3.4, such notice to be in the name of the Company or its
own name as the Trustee or such paying agent may deem advisable. In any case in
which notice of redemption is to be given by the Trustee or any such paying
agent, the Company shall deliver or cause to be delivered to, or permit to
remain with, the Trustee or such paying agent, as the case may be, such
Debenture Register, transfer books or other records, or suitable copies or
extracts therefrom, sufficient to enable the Trustee or such paying agent to
give any notice by mail that may be required under the provisions of this
Section 3.4.
Section 3.5. Payment upon Redemption. (a) If the giving of notice of
redemption shall have been completed as above provided, the Debentures or
portions of Debentures to be redeemed specified in such notice shall become due
and payable on the date and at the place stated in such notice at the applicable
Redemption Price, and interest on such Debentures or portions of Debentures
shall cease to accrue on and after the date fixed for redemption, unless the
Company shall default in the payment of such Redemption Price with respect to
any such Debenture or portion thereof. On presentation and surrender of such
Debentures on or after the date fixed for redemption at the place of payment
specified in the notice, said Debentures shall be paid and redeemed at the
Redemption Price (but if the date fixed for redemption is an interest payment
date, the interest installment payable on such date shall be payable to the
registered holder at the close of business on the applicable interest payment
date).
(b) Upon presentation of any Debenture that is to be redeemed in part
only, the Company shall execute and the Trustee shall authenticate and the
office or agency where the Debenture is presented shall deliver to the holder
thereof, at the expense of the Company, a new Debenture of authorized
denomination in principal amount equal to the unredeemed portion of the
Debenture so presented.
Section 3.6. No Sinking Fund. The Debentures are not entitled to the
benefit of any sinking fund.
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ARTICLE IV.
EXTENSION OF INTEREST PAYMENT PERIOD
Section 4.1. Extension of Interest Payment Period. The Company shall
have the right, at any time and from time to time during the term of the
Debentures, to defer payments of interest by extending the interest payment
period of such Debentures for a period not exceeding 20 consecutive quarters
(the "Extended Interest Payment Period"), during which Extended Interest Payment
Period no interest shall be due and payable; provided that no Extended Interest
Payment Period may extend beyond the Maturity Date. To the extent permitted by
applicable law, interest, the payment of which has been deferred because of the
extension of the interest payment period pursuant to this Section 4.1, shall
bear interest thereon at the Coupon Rate compounded quarterly for each quarter
of the Extended Interest Payment Period ("Compounded Interest"). At the end of
the Extended Interest Payment Period, the Company shall calculate (and deliver
such calculation to the Trustee) and pay all interest accrued and unpaid on the
Debentures, including any Additional Interest and Compounded Interest (together,
"Deferred Interest") that shall be payable to the holders of the Debentures in
whose names the Debentures are registered in the Debenture Register on the first
record date after the end of the Extended Interest Payment Period. Before the
termination of any Extended Interest Payment Period, the Company may further
extend such period, provided that such period together with all such further
extensions thereof shall not exceed 20 consecutive quarters, or extend beyond
the Maturity Date of the Debentures. Upon the termination of any Extended
Interest Payment Period and upon the payment of all Deferred Interest then due,
the Company may commence a new Extended Interest Payment Period, subject to the
foregoing requirements. No interest shall be due and payable during an Extended
Interest Payment Period, except at the end thereof, but the Company may prepay
at any time all or any portion of the interest accrued during an Extended
Interest Payment Period.
Section 4.2. Notice of Extension. (a) If the Property Trustee is the
only registered holder of the Debentures at the time the Company selects an
Extended Interest Payment Period, the Company shall give written notice to the
Administrative Trustees, the Property Trustee and the Trustee of its selection
of such Extended Interest Payment Period one Business Day before the earlier of
(i) the next succeeding date on which Distributions on the Trust Securities
issued by the Trust are payable; or (ii) the date the Trust is required to give
notice of the record date, or the date such Distributions are payable, to the
American Stock Exchange Inc. (AMEX) or other applicable self-regulatory
organization or to holders of the Preferred Securities issued by the Trust, but
in any event at least one Business Day before such record date.
(b) If the Property Trustee is not the only holder of the Debentures at
the time the Company selects an Extended Interest Payment Period, the Company
shall give the holders of the Debentures and the Trustee written notice of its
selection of such Extended Interest Payment Period at least one Business Day
before the earlier of (i) the next succeeding Interest Payment Date; or (ii) the
date the Company is required to give notice of the record or payment date of
such interest payment to the American Stock Exchange (AMEX) or other applicable
self-regulatory organization or to holders of the Debentures.
(c) The quarter in which any notice is given pursuant to paragraphs (a)
or (b) of this Section 4.2 shall be counted as one of the 20 quarters permitted
in the maximum Extended Interest Payment Period permitted under Section 4.1.
Section 4.3. Limitation on Transactions. If (i) the Company shall
exercise its right to defer payment of interest as provided in Section 4.1; or
(ii) there shall have occurred any Event of Default, then (a) the Company shall
not declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock (other than as a result of a reclassification of its capital
stock for another class of its capital stock) and (b) the Company shall not make
any payment of interest, principal or premium, if any, or repay, repurchase or
redeem any debt securities issued by the Company
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which rank pari passu with or junior to the Debentures; provided, however, that
notwithstanding the foregoing the Company may make payments pursuant to its
obligations under the Preferred Securities Guarantee; and (c) the Company shall
not redeem, purchase or acquire less than all of the outstanding Debentures or
any of the Preferred Securities.
ARTICLE V.
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1. Payment of Principal and Interest. The Company shall duly
and punctually pay or cause to be paid the principal of and interest on the
Debentures at the time and place and in the manner provided herein.
Section 5.2. Maintenance of Agency. So long as any of the Debentures
remain Outstanding, the Company shall maintain, or shall cause to be maintained,
an office or agency in Atlanta, Georgia, and at such other location or locations
as may be designated as provided in this Section 5.2, where (i) Debentures may
be presented for payment; (ii) Debentures may be presented as hereinabove
authorized for registration of transfer and exchange; and (iii) notices and
demands to or upon the Company in respect of the Debentures and this Indenture
may be given or served, such designation to continue with respect to such office
or agency until the Company shall, by written notice signed by its Chairman, its
President or a Vice President and delivered to the Trustee, designate some other
office or agency for such purposes or any of them. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, notices and
demands may be made or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all such
presentations, notices and demands. In addition to any such office or agency,
the Company may from time to time designate one or more offices or agencies
outside of Atlanta, Georgia, where the Debentures may be presented for
registration or transfer and for exchange in the manner provided herein, and the
Company may from time to time rescind such designation as the Company may deem
desirable or expedient; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
any such office or agency in Atlanta, Georgia, for the purposes above mentioned.
The Company shall give the Trustee prompt written notice of any such designation
or rescission thereof.
Section 5.3. Paying Agents. (a) The Trustee shall be the initial paying
agent. If the Company shall appoint one or more paying agents for the
Debentures, other than the Trustee, the Company shall cause each such paying
agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 5.3:
(i) that it shall hold all sums held by it as such
agent for the payment of the principal of or interest on the
Debentures (whether such sums have been paid to it by the
Company or by any other obligor of such Debentures) in trust
for the benefit of the Persons entitled thereto;
(ii) that it shall give the Trustee notice of any
failure by the Company (or by any other obligor of such
Debentures) to make any payment of the principal of or
interest on the Debentures when the same shall be due and
payable;
(iii) that it shall, at any time during the continuance
of any failure referred to in the preceding paragraph (a)(ii)
above, upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such paying agent;
and
(iv) that it shall perform all other duties of paying
agent as set forth in this Indenture.
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(b) If the Company shall act as its own paying agent with respect to
the Debentures, it shall on or before each due date of the principal of or
interest on such Debentures, set aside, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay such principal
or interest so becoming due on Debentures until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and shall promptly notify
the Trustee of such action, or any failure (by it or any other obligor on such
Debentures) to take such action. Whenever the Company shall have one or more
paying agents for the Debentures, it shall, prior to each due date of the
principal of or interest on any Debentures, deposit with the paying agent a sum
sufficient to pay the principal or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal or interest,
and (unless such paying agent is the Trustee) the Company shall promptly notify
the Trustee of this action or failure so to act.
(c) Notwithstanding anything in this Section 5.3 to the contrary, (i)
the agreement to hold sums in trust as provided in this Section 5.3 is subject
to the provisions of Section 13.3 and 13.4; and (ii) the Company may at any
time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, pay, or direct any paying agent to pay, to
the Trustee all sums held in trust by the Company or such paying agent, such
sums to be held by the Trustee upon the same terms and conditions as those upon
which such sums were held by the Company or such paying agent; and, upon such
payment by any paying agent to the Trustee, such paying agent shall be released
from all further liability with respect to such money.
Section 5.4. Appointment to Fill Vacancy in Office of Trustee. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
shall appoint, in the manner provided in Section 9.11, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 5.5. Compliance with Consolidation Provisions. The Company
shall not, while any of the Debentures remain outstanding, consolidate with, or
merge into, or merge into itself, or sell or convey all or substantially all of
its property to any other company unless the provisions of Article XII hereof
are complied with.
Section 5.6. Limitation on Transactions. If Debentures are issued to
the Trust or a trustee of the Trust in connection with the issuance of Trust
Securities by the Trust and (i) there shall have occurred any event that would
constitute an Event of Default; (ii) the Company shall be in default with
respect to its payment of any obligations under the Preferred Securities
Guarantee relating to the Trust; or (iii) the Company shall have given notice of
its election to defer payments of interest on such Debentures by extending the
interest payment period as provided in this Indenture and such period, or any
extension thereof, shall be continuing, then (a) the Company shall not declare
or pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock (other than as a result of a reclassification of its capital
stock) and (b) the Company shall not make any payment of interest, principal or
premium, if any, or repay, repurchase or redeem any debt securities issued by
the Company which rank pari passu with or junior to the Debentures; provided,
however, that the Company may make payments pursuant to its obligations under
the Preferred Securities Guarantee; and (c) the Company shall not redeem,
purchase or acquire less than all of the outstanding Debentures or any of the
Preferred Securities.
Section 5.7. Covenants as to the Trust. For so long as such Trust
Securities of the Trust remain outstanding, the Company shall (i) maintain 100%
direct or indirect ownership of the Common Securities of the Trust; provided,
however, that any permitted successor of the Company under this Indenture may
succeed to the Company's ownership of the Common Securities; (ii) not
voluntarily terminate, wind up or liquidate the Trust, except upon prior
approval of the Applicable Bank Regulatory Authority if then so required under
applicable capital guidelines or policies of the Applicable Bank Regulatory
Authority and use its reasonable efforts to cause the Trust (a) to remain a
business trust, except in connection with a distribution of Debentures, the
redemption
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of all of the Trust Securities of the Trust or certain mergers, consolidations
or amalgamations, each as permitted by the Trust Agreement; and (b) to otherwise
continue not to be treated as an association taxable as a corporation or
partnership for United States federal income tax purposes; and (iii) use its
reasonable efforts to cause each holder of Trust Securities to be treated as
owning an individual beneficial interest in the Debentures. In connection with
the distribution of the Debentures to the holders of the Preferred Securities
issued by the Trust upon a Dissolution Event, the Company shall use its best
efforts to list such Debentures on the American Stock Exchange (AMEX) or on such
other exchange as the Preferred Securities are then listed.
Section 5.8. Covenants as to Purchases. Prior to September 30, 2003,
the Company shall not purchase any Debentures, in whole or in part, from the
Trust, except if a Capital Event, a Tax Event or Investment Company Event has
occurred.
ARTICLE VI.
DEBENTUREHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
Section 6.1. Company to Furnish Trustee Names and Addresses of
Debentureholders. The Company shall furnish or cause to be furnished to the
Trustee (a) on a monthly basis on each regular record date a list, in such form
as the Trustee may reasonably require, of the names and addresses of the holders
of the Debentures as of such regular record date, provided that the Company
shall not be obligated to furnish or cause to furnish such list at any time that
the list shall not differ in any respect from the most recent list furnished to
the Trustee by the Company; and (b) at such other times as the Trustee may
request in writing within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished; provided, however, that, in either
case, no such list need be furnished if the Trustee shall be the Debenture
Registrar.
Section 6.2. Preservation of Information Communications with
Debentureholders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Debentures contained in the most recent list furnished to it as
provided in Section 6.1 and as to the names and addresses of holders of
Debentures received by the Trustee in its capacity as registrar for the
Debentures (if acting in such capacity).
(b) The Trustee may destroy any list furnished to it as provided in
Section 6.1 upon receipt of a new list so furnished.
(c) Debentureholders may communicate as provided in Section 312(b) of
the Trust Indenture Act with other Debentureholders with respect to their rights
under this Indenture or under the Debentures.
Section 6.3. Reports by the Company. (a) The Company covenants and
agrees to file with the Trustee, within 15 days after the Company is required to
file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) that the Company may be required to file with the Commission pursuant
to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not
required to file information, documents or reports pursuant to either of such
sections, then to file with the Trustee and the Commission, in accordance with
the rules and regulations prescribed from time to time by the Commission, such
of the supplementary and periodic information, documents and reports that may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations.
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(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from to time
by the Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants provided
for in this Indenture as may be required from time to time by such rules and
regulations.
(c) The Company covenants and agrees to transmit by mail, first class
postage prepaid, or reputable over-night delivery service that provides for
evidence of receipt, to the Debentureholders, as their names and addresses
appear upon the Debenture Register, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports required
to be filed by the Company pursuant to subsections (a) and (b) of this Section
6.3 as may be required by rules and regulations prescribed from time to time by
the Commission.
Section 6.4. Reports by the Trustee. (a) On or before July 15 in each
year in which any of the Debentures are Outstanding, the Trustee shall transmit
by mail, first class postage prepaid, to the Debentureholders, as their names
and addresses appear upon the Debenture Register, a brief report dated as of the
preceding May 15, if and to the extent required under Section 313(a) of the
Trust Indenture Act.
(b) The Trustee shall comply with Section 313(b) and 313(c) of the
Trust Indenture Act.
(c) A copy of each such report shall, at the time of such transmission
to Debentureholders, be filed by the Trustee with the Company, with each stock
exchange upon which any Debentures are listed (if so listed) and also with the
Commission. The Company agrees to notify the Trustee when any Debentures become
listed on any stock exchange.
ARTICLE VII.
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT
Section 7.1. Events of Default. (a) Whenever used herein with respect
to the Debentures, "Event of Default" means any one or more of the following
events that has occurred and is continuing:
(i) the Company defaults in the payment of any
installment of interest upon any of the Debentures, as and
when the same shall become due and payable, and continuance of
such default for a period of 30 days; provided, however, that
a valid extension of an interest payment period by the Company
in accordance with the terms of this Indenture shall not
constitute a default in the payment of interest for this
purpose;
(ii) the Company defaults in the payment of the
principal on the Debentures as and when the same shall become
due and payable whether at maturity, upon redemption, by
declaration or otherwise; provided, however, that a valid
extension of the maturity of such Debentures in accordance
with the terms of this Indenture shall not constitute a
default in the payment of principal;
(iii) the Company fails to observe or perform any other
of its covenants or agreements with respect to the Debentures
for a period of 90 days after the date on which written notice
of such failure, requiring the same to be remedied and stating
that such notice is a "Notice of Default" hereunder, shall
have been given to the Company by the Trustee, by registered
or certified mail, or to the Company and the Trustee by the
holders of at least 25% in principal amount of the Debentures
at the time Outstanding;
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(iv) the Company pursuant to or within the meaning of
any Bankruptcy Law (i) commences a voluntary case; (ii)
consents to the entry of an order for relief against it in an
involuntary case; (iii) consents to the appointment of a
Custodian of it or for all or substantially all of its
property; or (iv) makes a general assignment for the benefit
of its creditors;
(v) a court of competent jurisdiction enters an order
under any Bankruptcy Law that (i) is for relief against the
Company in an involuntary case; (ii) appoints a Custodian of
the Company for all or substantially all of its property; or
(iii) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for 90 days; or
(vi) the Trust shall have voluntarily or involuntarily
dissolved, wound-up its business or otherwise terminated its
existence except in connection with (i) the distribution of
Debentures to holders of Trust Securities in liquidation of
their interests in the Trust; (ii) the redemption of all of
the outstanding Trust Securities of the Trust; or (iii)
certain mergers, consolidations or amalgamations, each as
permitted by the Trust Agreement.
(b) In each and every such case, unless the principal of all the
Debentures shall have already become due and payable, either the Trustee or the
holders of not less than 25% in aggregate principal amount of the Debentures
then Outstanding hereunder, by notice in writing to the Company (and to the
Trustee if given by such Debentureholders) may declare the principal of all the
Debentures to be due and payable immediately, and upon any such declaration the
same shall become and shall be immediately due and payable, notwithstanding
anything contained in this Indenture or in the Debentures.
(c) At any time after the principal of the Debentures shall have been
so declared due and payable, and before any judgment or decree for the payment
of the moneys due shall have been obtained or entered as hereinafter provided,
the holders of a majority in aggregate principal amount of the Debentures then
Outstanding hereunder, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if: (i) the Company has
paid or deposited with the Trustee a sum sufficient to pay all matured
installments of interest upon all the Debentures and the principal of any and
all Debentures that shall have become due otherwise than by acceleration (with
interest upon such principal, and, to the extent that such payment is
enforceable under applicable law, upon overdue installments of interest, at the
rate per annum expressed in the Debentures to the date of such payment or
deposit) and the amount payable to the Trustee under Section 9.7; and (ii) any
and all Events of Default under this Indenture, other than the nonpayment of
principal on Debentures that shall not have become due by their terms, shall
have been remedied or waived as provided in Section 7.6. No such rescission and
annulment shall extend to or shall affect any subsequent default or impair any
right consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right with
respect to Debentures under this Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment or for any
other reason or shall have been determined adversely to the Trustee, then and in
every such case the Company and the Trustee shall be restored respectively to
their former positions and rights hereunder, and all rights, remedies and powers
of the Company and the Trustee shall continue as though no such proceedings had
been taken.
Section 7.2. Collection of Indebtedness and Suits for Enforcement by
Trustee. (a) The Company covenants that (i) in case it shall default in the
payment of any installment of interest on any of the Debentures, and such
default shall have continued for a period of 90 Business Days; or (ii) in case
it shall default in the payment of the principal of any of the Debentures when
the same shall have become due and payable, whether upon maturity of the
Debentures or upon redemption or upon declaration or otherwise, then, upon
demand of the
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Trustee, the Company shall pay to the Trustee, for the benefit of the holders of
the Debentures, the whole amount that then shall have become due and payable on
all such Debentures for principal or interest, or both, as the case may be, with
interest upon the overdue principal and (to the extent that payment of such
interest is enforceable under applicable law and, if the Debentures are held by
the Trust or a trustee of the Trust, without duplication of any other amounts
paid by the Trust or trustee in respect thereof) upon overdue installments of
interest at the rate per annum expressed in the Debentures; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, and the amount payable to the Trustee under Section 9.7.
(b) If the Company shall fail to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or other obligor upon the
Debentures and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or other obligor upon
the Debentures, wherever situated.
(c) In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, readjustment, arrangement, composition or judicial proceedings
affecting the Company or the creditors or property of either, the Trustee shall
have power to intervene in such proceedings and take any action therein that may
be permitted by the court and shall (except as may be otherwise provided by law)
be entitled to file such proofs of claim and other papers and documents as may
be necessary or advisable in order to have the claims of the Trustee and of the
holders of the Debentures allowed for the entire amount due and payable by the
Company under this Indenture at the date of institution of such proceedings and
for any additional amount that may become due and payable by the Company after
such date, and to collect and receive any moneys or other property payable or
deliverable on any such claim, and to distribute the same after the deduction of
the amount payable to the Trustee under Section 9.7; and any receiver, assignee
or trustee in bankruptcy or reorganization is hereby authorized by each of the
holders of the Debentures to make such payments to the Trustee, and, in the
event that the Trustee shall consent to the making of such payments directly to
such Debentureholders, to pay to the Trustee any amount due it under Section
9.7.
(d) All rights of action and of asserting claims under this Indenture,
or under any of the terms established with respect to Debentures, may be
enforced by the Trustee without the possession of any of such Debentures, or the
production thereof at any trial or other proceeding relative thereto, and any
such suit or proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for payment to the Trustee of any amounts due under Section 9.7, be
for the ratable benefit of the holders of the Debentures. In case of an Event of
Default hereunder, the Trustee may in its discretion proceed to protect and
enforce the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either at law or in equity or in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture,
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law. Nothing contained herein shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Debentureholder any plan of reorganization, arrangement, adjustment or
composition affecting the Debentures or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Debentureholder in
any such proceeding.
Section 7.3. Application of Moneys Collected. Any moneys collected by
the Trustee pursuant to this Article VII with respect to the Debentures shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such moneys on account of principal or interest,
upon presentation
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of the Debentures, and notation thereon the payment, if only partially paid, and
upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection and
of all amounts payable to the Trustee under Section 9.7;
SECOND: To the payment of all Senior Indebtedness of the
Company if and to the extent required by Article XVI; and
THIRD: To the payment of the amounts then due and unpaid upon
the Debentures for principal and interest, in respect of which
or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according
to the amounts due and payable on such Debentures for
principal and interest, respectively.
Section 7.4. Limitation on Suits. (a) No holder of any Debenture shall
have any right by virtue or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless (i) such holder previously shall have
given to the Trustee written notice of an Event of Default and of the
continuance thereof with respect to the Debentures specifying such Event of
Default, as hereinbefore provided; (ii) the holders of not less than 25% in
aggregate principal amount of the Debentures then Outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as trustee hereunder; (iii) such holder or holders shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby; and (iv) the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity, shall have failed to institute any such action, suit or proceeding;
and (v) during such 60 day period, the holders of a majority in principal amount
of the Debentures do not give the Trustee a direction inconsistent with the
request.
(b) Notwithstanding anything contained herein to the contrary or any
other provisions of this Indenture, the right of any holder of the Debentures to
receive payment of the principal of and interest on the Debentures, as therein
provided, on or after the respective due dates expressed in such Debenture (or
in the case of redemption, on the redemption date), or to institute suit for the
enforcement of any such payment on or after such respective dates or redemption
date, shall not be impaired or affected without the consent of such holder and
by accepting a Debenture hereunder it is expressly understood, intended and
covenanted by the taker and holder of every Debenture with every other such
taker and holder and the Trustee, that no one or more holders of Debentures
shall have any right in any manner whatsoever by virtue or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of the
holders of any other of such Debentures, or to obtain or seek to obtain priority
over or preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Debentures. For the protection and enforcement
of the provisions of this Section 7.4, each and every Debentureholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 7.5. Rights and Remedies Cumulative; Delay or Omission Not
Waiver. (a) Except as otherwise provided in Article XI, all powers and remedies
given by this Article VII to the Trustee or to the Debentureholders shall, to
the extent permitted by law, be deemed cumulative and not exclusive of any other
powers and remedies available to the Trustee or the holders of the Debentures,
by judicial proceedings or otherwise, to enforce the performance or observance
of the covenants and agreements contained in this Indenture or otherwise
established with respect to such Debentures.
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(b) No delay or omission of the Trustee or of any holder of any of the
Debentures to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or on acquiescence
therein; and, subject to the provisions of Section 7.4, every power and remedy
given by this Article VII or by law to the Trustee or the Debentureholders may
be exercised from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Debentureholders.
Section 7.6. Control by Debentureholders. The holders of a majority in
aggregate principal amount of the Debentures at the time Outstanding, determined
in accordance with Section 10.4, shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee; provided, however,
that such direction shall not be in conflict with any rule of law or with this
Indenture. Subject to the provisions of Section 9.1, the Trustee shall have the
right to decline to follow any such direction if the Trustee in good faith
shall, by a Responsible Officer or Officers of the Trustee, determine that the
proceeding so directed would involve the Trustee in personal liability. The
holders of a majority in aggregate principal amount of the Debentures at the
time Outstanding affected thereby, determined in accordance with Section 10.4,
may on behalf of the holders of all of the Debentures waive any past default in
the performance of any of the covenants contained herein and its consequences,
except (i) a default in the payment of the principal of or interest on, any of
the Debentures as and when the same shall become due by the terms of such
Debentures otherwise than by acceleration (unless such default has been cured
and a sum sufficient to pay all matured installments of interest and principal
has been deposited with the Trustee (in accordance with Section 7.1(c)); (ii) a
default in the covenants contained in Section 5.6; or (iii) in respect of a
covenant or provision hereof which cannot be modified or amended without the
consent of the holder of each Outstanding Debenture affected; provided, however,
that if the Debentures are held by the Trust or a trustee of the Trust, such
waiver or modification to such waiver shall not be effective until the holders
of a majority in liquidation preference of Trust Securities of the Trust shall
have consented to such waiver or modification to such waiver; provided further,
that if the consent of the holder of each Outstanding Debenture is required,
such waiver shall not be effective until each holder of the Trust Securities of
the Trust shall have consented to such waiver. Upon any such waiver, the default
covered thereby shall be deemed to be cured for all purposes of this Indenture
and the Company, the Trustee and the holders of the Debentures shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon.
Section 7.7. Undertaking to Pay Costs. All parties to this Indenture
agree, and each holder of any Debentures by such holder's acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 7.7 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Debentureholder, or group of Debentureholders holding more than 10% in aggregate
principal amount of the Outstanding Debentures, or to any suit instituted by any
Debentureholder for the enforcement of the payment of the principal of or
interest on the Debentures, on or after the respective due dates expressed in
such Debenture or established pursuant to this Indenture.
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ARTICLE VIII.
FORM OF DEBENTURE AND ORIGINAL ISSUE
Section 8.1. Form of Debenture. The Debenture and the Trustee's
Certificate of Authentication to be endorsed thereon are to be substantially in
the forms contained as Exhibit A to this Indenture, attached hereto and
incorporated herein by reference.
Section 8.2. Original Issue of Debentures. Debentures in the aggregate
principal amount of $25,773,196 (or $29,639,175 if the underwriters'
over-allotment option is exercised) may, upon execution of this Indenture or
following the exercise of underwriters' over- allotment option, be executed by
the Company and delivered to the Trustee for authentication, and the Trustee
shall thereupon authenticate and deliver said Debentures to or upon the written
order of the Company, signed by its Chairman, its Vice Chairman, its President,
or any Vice President and its Treasurer or an Assistant Treasurer, without any
further action by the Company.
ARTICLE IX.
CONCERNING THE TRUSTEE
Section 9.1. Certain Duties and Responsibilities of the Trustee. (a)
The Trustee, prior to the occurrence of an Event of Default and after the curing
of all Events of Default that may have occurred, shall undertake to perform with
respect to the Debentures such duties and only such duties as are specifically
set forth in this Indenture, and no implied covenants shall be read into this
Indenture against the Trustee. In case an Event of Default has occurred that has
not been cured or waived, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that
may have occurred: (1) the duties and obligations of the
Trustee shall with respect to the Debentures be determined
solely by the express provisions of this Indenture, and the
Trustee shall not be liable with respect to the Debentures
except for the performance of such duties and obligations as
are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and (2) in the absence of bad faith on
the part of the Trustee, the Trustee may with respect to the
Debentures conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture;
but in the case of any such certificates or opinions that by
any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Indenture;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the holders of not less than
a majority in principal amount of the Debentures at the time
Outstanding relating to the time,
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method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred upon the Trustee under this Indenture with respect
to the Debentures; and
(iv) none of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Indenture or
adequate indemnity against such risk is not reasonably assured
to it.
Section 9.2. Notice of Defaults. Within 90 days after actual knowledge
by a Responsible Officer of the Trustee of the occurrence of any default
hereunder with respect to the Securities, the Trustee shall transmit by mail to
all holders of the Debentures, as their names and addresses appear in the
Debenture Register, notice of such default, unless such default shall have been
cured or waived; provided, however, that, except in the case of default in the
payment of the principal or interest (including any Additional Interest) on any
Debenture, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
the directors and/or Responsible Officers of the Trustee determines in good
faith that the withholding of such notice is in the interests of the holders of
such Debentures; and provided, further, that in the case of any default of the
character specified in section 7.1(a)(iii), no such notice to holders of
Debentures need be sent until at least 30 days after the occurrence thereof. For
the purposes of this Section 9.2, the term "default" means any event which is,
or after notice or lapse of time or both, would become, an Event of Default with
respect to the Debentures.
Section 9.3. Certain Rights of Trustee. Except as otherwise provided in
Section 9.1:
(a) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond, security or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by a Board Resolution or an instrument
signed in the name of the Company by its Chairman, its President or any Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer thereof (unless other evidence in respect thereof is
specifically prescribed herein);
(c) The Trustee shall not be deemed to have knowledge of a default or
an Event of Default, other than an Event of Default specified in Section
7.1(a)(i); or (ii), unless and until it receives notification of such Event of
Default from the Company or by holders of at least 25% of the aggregate
principal amount of the Debentures at the time Outstanding;
(d) The Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted hereunder in
good faith and in reliance thereon;
(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Debentureholders, pursuant to the provisions of this
Indenture, unless such Debentureholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby; nothing contained herein shall,
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however, relieve the Trustee of the obligation, upon the occurrence of an Event
of Default (that has not been cured or waived) to exercise with respect to the
Debentures such of the rights and powers vested in it by this Indenture, and to
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs;
(f) The Trustee shall not be liable for any action taken or omitted to
be taken by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, security, or
other papers or documents, unless requested in writing so to do by the holders
of not less than a majority in principal amount of the Outstanding Debentures
(determined as provided in Section 10.4); provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such costs, expenses or liabilities as a condition
to so proceeding. The reasonable expense of every such examination shall be paid
by the Company or, if paid by the Trustee, shall be repaid by the Company upon
demand; and
(h) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 9.4. Trustee Not Responsible for Recitals, Etc. (a) The
Recitals contained herein and in the Debentures shall be taken as the statements
of the Company, and the Trustee assumes no responsibility for the correctness of
the same.
(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Debentures.
(c) The Trustee shall not be accountable for the use or application by
the Company of any of the Debentures or of the proceeds of such Debentures, or
for the use or application of any moneys paid over by the Trustee in accordance
with any provision of this Indenture, or for the use or application of any
moneys received by any paying agent other than the Trustee.
Section 9.5. May Hold Debentures. The Trustee or any paying agent or
registrar for the Debentures, in its individual or any other capacity, may
become the owner or pledgee of Debentures with the same rights it would have if
it were not Trustee, paying agent or Debenture Registrar.
Section 9.6. Moneys Held in Trust. Subject to the provisions of Section
13.5, all moneys received by the Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Trustee shall be under no liability for interest on any moneys received by
it hereunder except such as it may agree with the Company to pay thereon.
Section 9.7. Compensation and Reimbursement. (a) The Company covenants
and agrees to pay to the Trustee, and the Trustee shall be entitled to, such
reasonable compensation (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), as the Company and
the Trustee
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may from time to time agree in writing, for all services rendered by it in the
execution of the trusts hereby created and in the exercise and performance of
any of the powers and duties hereunder of the Trustee, and, except as otherwise
expressly provided herein, the Company shall pay or reimburse the Trustee upon
its request for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and disbursements of its
counsel and of all Persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify the Trustee (and its officers, agents,
directors and employees) for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on the part of the
Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim of liability in the premises.
(b) The obligations of the Company under this Section 9.7 to compensate
and indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Debentures upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular
Debentures.
Section 9.8. Reliance on Officers' Certificate. Except as otherwise
provided in Section 9.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting to take any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officers' Certificate delivered to the Trustee and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted to be taken by
it under the provisions of this Indenture upon the faith thereof.
Section 9.9. Disqualification: Conflicting Interests. If the Trustee
has or shall acquire any "conflicting interest" within the meaning of Section
310(b) of the Trust Indenture Act, the Trustee and the Company shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
Section 9.10. Corporate Trustee Required; Eligibility. There shall at
all times be a Trustee with respect to the Debentures issued hereunder which
shall at all times be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or other Person permitted to act as
trustee by the Commission, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000, and
subject to supervision or examination by federal, state, territorial, or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 9.10, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The Company may not, nor may any Person
directly or indirectly controlling, controlled by, or under common control with
the Company, serve as Trustee. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 9.10, the Trustee
shall resign immediately in the manner and with the effect specified in Section
9.11.
Section 9.11. Resignation and Removal; Appointment of Successor. (a)
The Trustee or any successor hereafter appointed, may at any time resign by
giving written notice thereof to the Company and by transmitting notice of
resignation by mail, first class postage prepaid, to the Debentureholders, as
their names and addresses
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appear upon the Debenture Register. Upon receiving such notice of resignation,
the Company shall promptly appoint a successor trustee with respect to
Debentures by written instrument, in duplicate, executed by order of the Board
of Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after the
mailing of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee with
respect to Debentures, or any Debentureholder who has been a bona fide holder of
a Debenture or Debentures for at least six months may, subject to the provisions
of Section 9.9, on behalf of himself and all others similarly situated, petition
any such court for the appointment of a successor trustee. Such court may
thereupon after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(b) In case at any time any one of the following shall occur (i) the
Trustee shall fail to comply with the provisions of Section 9.9 after written
request therefor by the Company or by any Debentureholder who has been a bona
fide holder of a Debenture or Debentures for at least six months; or (ii) the
Trustee shall cease to be eligible in accordance with the provisions of Section
9.10 and shall fail to resign after written request therefor by the Company or
by any such Debentureholder; or (iii) The Trustee shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or commence a voluntary
bankruptcy proceeding, or a receiver of the Trustee or of its property shall be
appointed or consented to, or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, the Company may remove the
Trustee with respect to all Debentures and appoint a successor trustee by
written instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the Trustee so removed and
one copy to the successor trustee, or, subject to the provisions of Section 9.9,
unless the Trustee's duty to resign is stayed as provided herein, any
Debentureholder who has been a bona fide holder of a Debenture or Debentures for
at least six months may, on behalf of that holder and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor trustee. Such court may thereupon
after such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Debentures at the time Outstanding may at any time remove the Trustee by so
notifying the Trustee and the Company and may appoint a successor Trustee with
the consent of the Company.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee with respect to the Debentures pursuant to any of the
provisions of this Section 9.11 shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 9.12.
(e) Any successor trustee appointed pursuant to this Section 9.11 may
be appointed with respect to the Debentures, and at any time there shall be only
one Trustee with respect to the Debentures.
Section 9.12. Acceptance of Appointment by Successor. (a) In case of
the appointment hereunder of a successor trustee with respect to the Debentures,
every successor trustee so appointed shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor trustee all the
rights, powers, and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such retiring Trustee hereunder.
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(b) Upon request of any successor trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor trustee all such rights, powers and trusts referred to in
paragraph (a) of this Section 9.12.
(c) No successor trustee shall accept its appointment unless at the
time of such acceptance such successor trustee shall be qualified and eligible
under this Article IX.
(d) Upon acceptance of appointment by a successor trustee as provided
in this Section 9.12, the Company shall transmit notice of the succession of
such trustee hereunder by mail, first class postage prepaid, to the
Debentureholders, as their names and addresses appear upon the Debenture
Register. If the Company fails to transmit such notice within ten days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be transmitted at the expense of the Company.
Section 9.13. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided that such corporation shall be
qualified under the provisions of Section 9.9 and eligible under the provisions
of Section 9.10, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. In case any Debentures shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Debentures so authenticated with the same effect as if such
successor Trustee had itself authenticated such Debentures.
Section 9.14. Preferential Collection of Claims Against the Company.
The Trustee shall comply with Section 311(a) of the Trust Indenture Act,
excluding any creditor relationship described in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent included therein.
ARTICLE X.
CONCERNING THE DEBENTUREHOLDERS
Section 10.1. Evidence of Action by Holders. (a) Whenever in this
Indenture it is provided that the holders of a majority or specified percentage
in aggregate principal amount of the Debentures may take any action (including
the making of any demand or request, the giving of any notice, consent or waiver
or the taking of any other action), the fact that at the time of taking any such
action the holders of such majority or specified percentage have joined therein
may be evidenced by any instrument or any number of instruments of similar tenor
executed by such holders of Debentures in Person or by agent or proxy appointed
in writing.
(b) If the Company shall solicit from the Debentureholders any request,
demand, authorization, direction, notice, consent, waiver or other action, the
Company may, at its option, as evidenced by an Officers' Certificate, fix in
advance a record date for the determination of Debentureholders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or other
action, but the Company shall have no obligation to do so. If such a record date
is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action may be given before or after the record date, but only
the Debentureholders of record at the close of business on the record date shall
be deemed to be Debentureholders for the purposes of determining whether
Debentureholders of the requisite proportion of Outstanding Debentures have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
Outstanding Debentures shall be computed as of the record date; provided,
however, that no such
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authorization, agreement or consent by such Debentureholders on the record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record date.
Section 10.2. Proof of Execution by Debentureholders. Subject to the
provisions of Section 9.1, proof of the execution of any instrument by a
Debentureholder (such proof shall not require notarization) or his agent or
proxy and proof of the holding by any Person of any of the Debentures shall be
sufficient if made in the following manner:
(a) The fact and date of the execution by any such Person of any
instrument may be proved in any reasonable manner acceptable to the Trustee.
(b) The ownership of Debentures shall be proved by the Debenture
Register of such Debentures or by a certificate of the Debenture Registrar
thereof.
(c) The Trustee may require such additional proof of any matter
referred to in this Section 10.2 as it shall deem necessary.
Section 10.3. Who May Be Deemed Owners. Prior to the due presentment
for registration of transfer of any Debenture, the Company, the Trustee, any
paying agent, any Authenticating Agent and any Debenture Registrar may deem and
treat the Person in whose name such Debenture shall be registered upon the books
of the Company as the absolute owner of such Debenture (whether or not such
Debenture shall be overdue and notwithstanding any notice of ownership or
writing thereon made by anyone other than the Debenture Registrar) for the
purpose of receiving payment of or on account of the principal of and interest
on such Debenture (subject to Section 2.3) and for all other purposes; and
neither the Company nor the Trustee nor any paying agent nor any Authenticating
Agent nor any Debenture Registrar shall be affected by any notice to the
contrary.
Section 10.4. Certain Debentures Owned by Company Disregarded. In
determining whether the holders of the requisite aggregate principal amount of
Debentures have concurred in any direction, consent or waiver under this
Indenture, the Debentures that are owned by the Company or any other obligor on
the Debentures or by any Person directly or indirectly controlling or controlled
by or under common control with the Company or any other obligor on the
Debentures shall be disregarded and deemed not to be Outstanding for the purpose
of any such determination, except that for the purpose of determining whether
the Trustee shall be protected in relying on any such direction, consent or
waiver, only Debentures that the Trustee actually knows are so owned shall be so
disregarded. The Debentures so owned that have been pledged in good faith may be
regarded as Outstanding for the purposes of this Section 10.4, if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Debentures and that the pledgee is not a Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any such other obligor. In case of a dispute as to
such right, any decision by the Trustee taken upon the advice of counsel shall
be full protection to the Trustee.
Section 10.5. Actions Binding on Future Debentureholders. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
10.1, of the taking of any action by the holders of the majority or percentage
in aggregate principal amount of the Debentures specified in this Indenture in
connection with such action, any holder of a Debenture that is shown by the
evidence to be included in the Debentures the holders of which have consented to
such action may, by filing written notice with the Trustee, and upon proof of
holding as provided in Section 10.2, revoke such action so far as concerns such
Debenture. Except as aforesaid any such action taken by the holder of any
Debenture shall be conclusive and binding upon such holder and upon all future
holders and owners of such Debenture, and of any Debenture issued in exchange
therefor, on registration of
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transfer thereof or in place thereof, irrespective of whether or not any
notation in regard thereto is made upon such Debenture. Any action taken by the
holders of the majority or percentage in aggregate principal amount of the
Debentures specified in this Indenture in connection with such action shall be
conclusively binding upon the Company, the Trustee and the holders of all the
Debentures.
ARTICLE XI.
SUPPLEMENTAL INDENTURES
Section 11.1. Supplemental Indentures Without the Consent of
Debentureholders. In addition to any supplemental indenture otherwise authorized
by this Indenture, the Company and the Trustee may from time to time and at any
time enter into an indenture or indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as then in effect), without
the consent of the Debentureholders, for one or more of the following purposes:
(a) to cure any ambiguity, defect, or inconsistency herein, in the
Debentures;
(b) to comply with Article X;
(c) to provide for uncertificated Debentures in addition to or in place
of certificated Debentures;
(d) to add to the covenants of the Company for the benefit of the
holders of all or any of the Debentures or to surrender any right or power
herein conferred upon the Company;
(e) to add to, delete from, or revise the conditions, limitations, and
restrictions on the authorized amount, terms, or purposes of issue,
authentication, and delivery of Debentures, as herein set forth;
(f) to make any change that does not adversely affect the rights of any
Debentureholder in any material respect;
(g) to provide for the issuance of and establish the form and terms and
conditions of the Debentures, to establish the form of any certifications
required to be furnished pursuant to the terms of this Indenture or of the
Debentures, or to add to the rights of the holders of the Debentures; or
(h) qualify or maintain the qualification of this Indenture under the
Trust Indenture Act. The Trustee is hereby authorized to join with the Company
in the execution of any such supplemental indenture, and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into any such supplemental indenture
that affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise. Any supplemental indenture authorized by the provisions of this
Section 11.1 may be executed by the Company and the Trustee without the consent
of the holders of any of the Debentures at the time Outstanding, notwithstanding
any of the provisions of Section 11.2.
Section 11.2. Supplemental Indentures with Consent of Debentureholders.
With the consent (evidenced as provided in Section 10.1) of the holders of not
less than a majority in aggregate principal amount of the Debentures at the time
Outstanding, the Company, when authorized by Board Resolutions, and the Trustee
may from time to time and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as then in effect) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner not covered by
Section 11.1 the rights of the holders of the Debentures under this Indenture;
provided, however, that no such supplemental indenture shall without the consent
of the
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holders of each Debenture then Outstanding and affected thereby, (i) extend the
fixed maturity of any Debentures, reduce the principal amount thereof, or reduce
the rate or extend the time of payment of interest thereon, without the consent
of the holder of each Debenture so affected; or (ii) reduce the aforesaid
percentage of principal amount of Debentures, the holders of which are required
to consent to any such supplemental indenture; provided further, that if the
Debentures are held by the Trust or a trustee of the Trust, such supplemental
indenture shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the Trust shall have consented to such
supplemental indenture; provided further, that if the consent of the holder of
each Outstanding Debenture is required, such supplemental indenture shall not be
effective until each holder of the Trust Securities of the Trust shall have
consented to such supplemental indenture. It shall not be necessary for the
consent of the Debentureholders affected thereby under this Section 11.2 to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such consent shall approve the substance thereof.
Section 11.3. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture pursuant to the provisions of this Article XI, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Debentures shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 11.4. Debentures Affected by Supplemental Indentures.
Debentures affected by a supplemental indenture, authenticated and delivered
after the execution of such supplemental indenture pursuant to the provisions of
this Article XI, may bear a notation in form approved by the Company, provided
such form meets the requirements of any exchange upon which the Debentures may
be listed, as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Debentures so modified as to conform, in the
opinion of the Board of Directors of the Company, to any modification of this
Indenture contained in any such supplemental indenture may be prepared by the
Company, authenticated by the Trustee and delivered in exchange for the
Debentures then Outstanding.
Section 11.5. Execution of Supplemental Indentures. (a) Upon the
request of the Company, accompanied by their Board Resolutions authorizing the
execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of Debentureholders required to consent
thereto as aforesaid, the Trustee shall join with the Company in the execution
of such supplemental indenture unless such supplemental indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion but shall not be obligated to enter
into such supplemental indenture. The Trustee, subject to the provisions of
Section 9.1, may receive an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article XI is authorized or
permitted by, and conforms to, the terms of this Article XI and that it is
proper for the Trustee under the provisions of this Article XI to join in the
execution thereof.
(b) Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 11.5, the
Trustee shall transmit by mail, first class postage prepaid, a notice, setting
forth in general terms the substance of such supplemental indenture, to the
Debentureholders as their names and addresses appear upon the Debenture
Register. Any failure of the Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
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ARTICLE XII.
SUCCESSOR CORPORATION
Section 12.1. Company May Consolidate, Etc. Nothing contained in this
Indenture or in any of the Debentures shall prevent any consolidation or merger
of the Company with or into any other corporation or corporations (whether or
not affiliated with the Company, as the case may be), or successive
consolidations or mergers in which the Company, as the case may be, or its
successor or successors shall be a party or parties, or shall prevent any sale,
conveyance, transfer or other disposition of the property of the Company, as the
case may be, or its successor or successors as an entirety, or substantially as
an entirety, to any other corporation (whether or not affiliated with the
Company, as the case may be, or its successor or successors) authorized to
acquire and operate the same; provided, however, the Company hereby covenants
and agrees that, (i) upon any such consolidation, merger, sale, conveyance,
transfer or other disposition, the due and punctual payment, in the case of the
Company, of the principal of and interest on all of the Debentures, according to
their tenor and the due and punctual performance and observance of all the
covenants and conditions of this Indenture to be kept or performed by the
Company as the case may be, shall be expressly assumed, by supplemental
indenture (which shall conform to the provisions of the Trust Indenture Act, as
then in effect) satisfactory in form to the Trustee executed and delivered to
the Trustee by the entity formed by such consolidation, or into which the
Company, as the case may be, shall have been merged, or by the entity which
shall have acquired such property; (ii) in case the Company consolidates with or
merges into another Person or conveys or transfers its properties and assets
substantially then as an entirety to any Person, the successor Person is
organized under the laws of the United States or any state or the District of
Columbia; and (iii) immediately after giving effect thereto, an Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing.
Section 12.2. Successor Corporation Substituted. (a) In case of any
such consolidation, merger, sale, conveyance, transfer or other disposition and
upon the assumption by the successor corporation, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of, in the case of the Company, the due and punctual payment of the principal of
and interest on all of the Debentures Outstanding and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Company, as the case may be, such successor corporation shall
succeed to and be substituted for the Company, with the same effect as if it had
been named as the Company herein, and thereupon the predecessor corporation
shall be relieved of all obligations and covenants under this Indenture and the
Debentures.
(b) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition such changes in phraseology and form (but not in
substance) may be made in the Debentures thereafter to be issued as may be
appropriate.
(c) Nothing contained in this Indenture or in any of the Debentures
shall prevent the Company from merging into itself or acquiring by purchase or
otherwise all or any part of the property of any other Person (whether or not
affiliated with the Company).
Section 12.3. Evidence of Consolidation, Etc. to Trustee. The Trustee,
subject to the provisions of Section 9.1, may receive an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, sale, conveyance,
transfer or other disposition, and any such assumption, comply with the
provisions of this Article XII.
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ARTICLE XIII.
SATISFACTION AND DISCHARGE
Section 13.1. Satisfaction and Discharge of Indenture. If at any time:
(a) the Company shall have delivered to the Trustee for cancellation all
Debentures theretofore authenticated (other than any Debentures that shall have
been destroyed, lost or stolen and that shall have been replaced or paid as
provided in Section 2.8) and Debentures for whose payment money or Governmental
Obligations have theretofore been deposited in trust or segregated and held in
trust by the Company (and thereupon repaid to the Company or discharged from
such trust, as provided in Section 13.5); or (b) all such Debentures not
theretofore delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption, and the Company shall
deposit or cause to be deposited with the Trustee as trust funds the entire
amount in moneys or Governmental Obligations sufficient or a combination
thereof, sufficient in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay at maturity or upon redemption all Debentures
not theretofore delivered to the Trustee for cancellation, including principal
and interest due or to become due to such date of maturity or date fixed for
redemption, as the case may be, and if the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company; then this Indenture shall
thereupon cease to be of further effect except for the provisions of Sections
2.3, 2.6, 2.8, 5.1, 5.2, 5.3 and 9.10, that shall survive until the date of
maturity or redemption date, as the case may be, and Sections 9.6 and 13.5, that
shall survive to such date and thereafter, and the Trustee, on demand of the
Company and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture.
Section 13.2. Discharge of Obligations. If at any time all Debentures
not heretofore delivered to the Trustee for cancellation or that have not become
due and payable as described in Section 13.1 shall have been paid by the Company
by depositing irrevocably with the Trustee as trust funds moneys or an amount of
Governmental Obligations sufficient to pay at maturity or upon redemption all
Debentures not theretofore delivered to the Trustee for cancellation, including
principal and interest due or to become due to such date of maturity or date
fixed for redemption, as the case may be, and if the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company, then after the
date such moneys or Governmental Obligations, as the case may be, are deposited
with the Trustee, the obligations of the Company under this Indenture shall
cease to be of further effect except for the provisions of Sections 2.3, 2.6,
2.8, 5.1, 5.2, 5.3, 9.6, 9.10 and 13.5 hereof that shall survive until such
Debentures shall mature and be paid. Thereafter, Sections 9.6 and 13.5 shall
survive.
Section 13.3. Deposited Moneys to Be Held in Trust. All monies or
Governmental Obligations deposited with the Trustee pursuant to Sections 13.1 or
13.2 shall be held in trust and shall be available for payment as due, either
directly or through any paying agent (including the Company acting as its own
paying agent), to the holders of the Debentures for the payment or redemption of
which such moneys or Governmental Obligations have been deposited with the
Trustee.
Section 13.4. Payment of Monies Held by Paying Agents. In connection
with the satisfaction and discharge of this Indenture, all moneys or
Governmental Obligations then held by any paying agent under the provisions of
this Indenture shall, upon demand of the Company, be paid to the Trustee and
thereupon such paying agent shall be released from all further liability with
respect to such moneys or Governmental Obligations.
Section 13.5. Repayment to Company. Any monies or Governmental
Obligations deposited with any paying agent or the Trustee, or then held by the
Company in trust, for payment of principal of or interest on the Debentures that
are not applied but remain unclaimed by the holders of such Debentures for at
least two years
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after the date upon which the principal of or interest on such Debentures shall
have respectively become due and payable, shall be repaid to the Company, as the
case may be, on December 31 of each year or (if then held by the Company) shall
be discharged from such trust; and thereupon the paying agent and the Trustee
shall be released from all further liability with respect to such moneys or
Governmental Obligations, and the holder of any of the Debentures entitled to
receive such payment shall thereafter, as an unsecured general creditor, look
only to the Company for the payment thereof.
ARTICLE XIV.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS
Section 14.1. No Recourse. No recourse under or upon any obligation,
covenant or agreement of this Indenture, or of the Debentures, or for any claim
based thereon or otherwise in respect thereof, shall be had against any
incorporator, stockholder, officer or director, past, present or future as such,
of the Company or of any predecessor or successor corporation, either directly
or through the Company or any such predecessor or successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that this
Indenture and the obligations issued hereunder are solely corporate obligations,
and that no such personal liability whatever shall attach to, or is or shall be
incurred by, the incorporators, stockholders, officers or directors as such, of
the Company or of any predecessor or successor corporation, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Debentures or implied therefrom; and that any and all such
personal liability of every name and nature, either at common law or in equity
or by constitution or statute, of, and any and all such rights and claims
against, every such incorporator, stockholder, officer or director as such,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Debentures or implied therefrom, are hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Indenture and the issuance of such Debentures.
ARTICLE XV.
MISCELLANEOUS PROVISIONS
Section 15.1. Effect on Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Indenture contained by or on
behalf of the Company shall bind their respective successors and assigns,
whether so expressed or not.
Section 15.2. Actions by Successor. Any act or proceeding by any
provision of this Indenture authorized or required to be done or performed by
any board, committee or officer of the Company shall and may be done and
performed with like force and effect by the corresponding board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
Section 15.3. Surrender of Company Powers. The Company by instrument in
writing executed by appropriate authority of its Board of Directors and
delivered to the Trustee may surrender any of the powers reserved to the
Company, and thereupon such power so surrendered shall terminate both as to the
Company, as the case may be, and as to any successor corporation.
Section 15.4. Notices. Except as otherwise expressly provided herein
any notice or demand that by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the holders of Debentures
to or on the Company may be given or served by being deposited first class
postage prepaid in a post-office letterbox addressed (until another address is
filed in writing by the Company with the Trustee), as follows:
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<PAGE> 40
Eagle Bancshares, Inc., 4305 Lynburn Drive, Tucker, Georgia 30084, Attn: C. Jere
Sechler, Jr. Any notice, election, request or demand by the Company or any
Debentureholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made in writing at the Corporate
Trust Office of the Trustee.
Section 15.5. Governing Law. This Indenture and each Debenture shall be
deemed to be a contract made under the internal laws of the State of Georgia and
for all purposes shall be construed in accordance with the laws of said State.
Section 15.6. Treatment of Debentures as Debt. It is intended that the
Debentures shall be treated as indebtedness and not as equity for federal income
tax purposes. The provisions of this Indenture shall be interpreted to further
this intention.
Section 15.7. Compliance Certificates and Opinions. (a) Upon any
application or demand by the Company to the Trustee to take any action under any
of the provisions of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent have been complied with, except that in the case of any such
application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
(b) Each certificate or opinion of the Company provided for in this
Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant in this Indenture shall include (1) a statement that the
Person making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion of such
Person, he has made such examination or investigation as, in the opinion of such
Person, is necessary to enable him to express an informed opinion as to whether
or not such covenant or condition has been complied with; and (4) a statement as
to whether or not, in the opinion of such Person, such condition or covenant has
been complied with.
Section 15.8. Payments on Business Days. In any case where the date of
maturity of interest or principal of any Debenture or the date of redemption of
any Debenture shall not be a Business Day, then payment of interest or principal
may (subject to Section 2.4) be made on the next succeeding Business Day with
the same force and effect as if made on the nominal date of maturity or
redemption, and no interest shall accrue for the period after such nominal date.
Section 15.9. Conflict with Trust Indenture Act. If and to the extent
that any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act,
such imposed duties shall control.
Section 15.10. Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 15.11. Separability. In case any one or more of the provisions
contained in this Indenture or in the Debentures shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this Indenture or
of the Debentures, but this Indenture and the Debentures shall be construed as
if such invalid or illegal or unenforceable provision had never been contained
herein or therein.
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Section 15.12. Assignment. The Company shall have the right at all
times to assign any of its respective rights or obligations under this Indenture
to a direct or indirect wholly owned Subsidiary of the Company, provided that,
in the event of any such assignment, the Company shall remain liable for all
such obligations. Subject to the foregoing, this Indenture is binding upon and
inures to the benefit of the parties thereto and their respective successors and
assigns. This Indenture may not otherwise be assigned by the parties thereto.
Section 15.13. Acknowledgment of Rights. The Company acknowledges that,
with respect to any Debentures held by the Trust or a trustee of the Trust, if
the Property Trustee fails to enforce its rights under this Indenture as the
holder of the Debentures held as the assets of the Trust, any holder of
Preferred Securities may institute legal proceedings directly against the
Company to enforce such Property Trustee's rights under this Indenture without
first instituting any legal proceedings against such Property Trustee or any
other person or entity. Notwithstanding the foregoing, if an Event of Default
has occurred and is continuing and such event is attributable to the failure of
the Company to pay interest or principal on the Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), the Company acknowledges that a holder of Preferred Securities
may directly institute a proceeding for enforcement of payment to such holder of
the principal of or interest on the Debentures having a principal amount equal
to the aggregate liquidation amount of the Preferred Securities of such holder
on or after the respective due date specified in the Debentures.
ARTICLE XVI.
SUBORDINATION OF DEBENTURES
Section 16.1. Agreement to Subordinate. The Company covenants and
agrees, and each holder of Debentures issued hereunder by such holder's
acceptance thereof likewise covenants and agrees, that all Debentures shall be
issued subject to the provisions of this Article XVI; and each holder of a
Debenture, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions. The payment by the Company of
the principal of and interest on all Debentures issued hereunder shall, to the
extent and in the manner hereinafter set forth, be subordinated and junior in
right of payment to the prior payment in full of all Senior Debt, Subordinated
Debt and Additional Senior Obligations (collectively, "Senior Indebtedness") to
the extent provided herein, whether outstanding at the date of this Indenture or
thereafter incurred. No provision of this Article XVI shall prevent the
occurrence of any default or Event of Default hereunder.
Section 16.2. Default on Senior Debt, Subordinated Debt or Additional
Senior Obligations. In the event and during the continuation of any default by
the Company in the payment of principal, premium, interest or any other payment
due on any Senior Indebtedness of the Company, or in the event that the maturity
of any Senior Indebtedness of the Company has been accelerated because of a
default, then, in either case, no payment shall be made by the Company with
respect to the principal (including redemption payments) of or interest on the
Debentures. In the event that, notwithstanding the foregoing, any payment shall
be received by the Trustee when such payment is prohibited by the preceding
sentence of this Section 16.2, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, but only to the extent
that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing within 90 days of
such payment of the amounts then due and owing on the Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of Senior Indebtedness.
Section 16.3. Liquidation; Dissolution; Bankruptcy. (a) Upon any
payment by the Company or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors
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upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company on
account of the principal or interest on the Debentures; and upon any such
dissolution or winding-up or liquidation or reorganization, any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the holders of the Debentures
or the Trustee would be entitled to receive from the Company, except for the
provisions of this Article XVI, shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the holders of the Debentures or by the Trustee
under this Indenture if received by them or it, directly to the holders of
Senior Indebtedness of the Company (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, as calculated by
the Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay such Senior Indebtedness in full, in
money or money's worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the holders of Debentures or to the Trustee.
(b) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, and their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness of the
Company, as the case may be, remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full in money in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the benefit of
the holders of such Senior Indebtedness.
(c) For purposes of this Article XVI, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XVI with respect
to the Debentures to the payment of all Senior Indebtedness of the Company, as
the case may be, that may at the time be outstanding, provided that (i) such
Senior Indebtedness is assumed by the new corporation, if any, resulting from
any such reorganization or readjustment; and (ii) the rights of the holders of
such Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment. The consolidation of the Company with,
or the merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article XII shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 16.3 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
XII. Nothing in Section 16.2 or in this Section 16.3 shall apply to claims of,
or payments to, the Trustee under or pursuant to Section 9.7.
Section 16.4. Subrogation. (a) Subject to the payment in full of all
Senior Indebtedness of the Company, the rights of the holders of the Debentures
shall be subrogated to the rights of the holders of such Senior Indebtedness to
receive payments or distributions of cash, property or securities of the
Company, as the
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case may be, applicable to such Senior Indebtedness until the principal of and
interest on the Debentures shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the holders of the
Debentures or the Trustee would be entitled except for the provisions of this
Article XVI, and no payment over pursuant to the provisions of this Article XVI
to or for the benefit of the holders of such Senior Indebtedness by holders of
the Debentures or the Trustee, shall, as between the Company, its creditors
other than holders of Senior Indebtedness of the Company, and the holders of the
Debentures, be deemed to be a payment by the Company to or on account of such
Senior Indebtedness. It is understood that the provisions of this Article XVI
are and are intended solely for the purposes of defining the relative rights of
the holders of the Debentures, on the one hand, and the holders of such Senior
Indebtedness on the other hand.
(b) Nothing contained in this Article XVI or elsewhere in this
Indenture or in the Debentures is intended to or shall impair, as between the
Company, its creditors (other than the holders of Senior Indebtedness of the
Company), and the holders of the Debentures, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Debentures the
principal of and interest on the Debentures as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the holders of the Debentures and creditors of the
Company, as the case may be, other than the holders of Senior Indebtedness of
the Company, as the case may be, nor shall anything herein or therein prevent
the Trustee or the holder of any Debenture from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article XVI of the holders of such Senior
Indebtedness in respect of cash, property or securities of the Company, as the
case may be, received upon the exercise of any such remedy.
(c) Upon any payment or distribution of assets of the Company referred
to in this Article XVI, the Trustee, subject to the provisions of Article IX,
and the holders of the Debentures shall be entitled to conclusively rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the holders of the Debentures, for the purposes of ascertaining
the Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, as the case may be, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article XVI.
Section 16.5. Trustee to Effectuate Subordination. Each holder of
Debentures by such holder's acceptance thereof authorizes and directs the
Trustee on such holder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article XVI and
appoints the Trustee such holder's attorney-in-fact for any and all such
purposes.
Section 16.6. Notice by the Company. (a) The Company shall give prompt
written notice to a Responsible Officer of the Trustee of any fact known to the
Company that would prohibit the making of any payment of monies to or by the
Trustee in respect of the Debentures pursuant to the provisions of this Article
XVI. Notwithstanding the provisions of this Article XVI or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment of monies
to or by the Trustee in respect of the Debentures pursuant to the provisions of
this Article XVI, unless and until a Responsible Officer of the Trustee shall
have received written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor; and before the receipt of any
such written notice, the Trustee, subject to the provisions of Section 9.1,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section 16.6 at least two Business Days prior to the date upon which by the
terms hereof any money may become payable
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for any purpose (including, without limitation, the payment of the principal of
or interest on any Debenture), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to apply the same to the purposes for which they were received, and
shall not be affected by any notice to the contrary that may be received by it
within two Business Days prior to such date.
(b) The Trustee, subject to the provisions of Section 9.1, shall be
entitled to conclusively rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness of the Company
(or a trustee on behalf of such holder) to establish that such notice has been
given by a holder of such Senior Indebtedness or a trustee on behalf of any such
holder or holders. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of such Senior Indebtedness to participate in any payment or distribution
pursuant to this Article XVI, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XVI, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 16.7. Rights of the Trustee; Holders of Senior Indebtedness.
(a) The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article XVI in respect of any Senior Indebtedness at any time
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder. The Trustee's right to compensation and reimbursement of expenses as set
forth in Section 9.7 shall not be subject to the subordination provisions of the
Article XVI.
(b) With respect to the holders of Senior Indebtedness of the Company,
the Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XVI, and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Section 9.1, the Trustee shall not be liable to any
holder of such Senior Indebtedness if it shall pay over or deliver to holders of
Debentures, the Company or any other Person money or assets to which any holder
of such Senior Indebtedness shall be entitled by virtue of this Article XVI or
otherwise.
Section 16.8. Subordination May Not Be Impaired. (a) No right of any
present or future holder of any Senior Indebtedness of the Company to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or otherwise
be charged with.
(b) Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee or the
holders of the Debentures, without incurring responsibility to the holders of
the Debentures and without impairing or releasing the subordination provided in
this Article XVI or the obligations hereunder of the holders of the Debentures
to the holders of such Senior Indebtedness, do any one or more of the following:
(i) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, such Senior Indebtedness, or otherwise amend or
supplement in any manner such Senior Indebtedness or any instrument evidencing
the same or any agreement under which such Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing such Senior Indebtedness;
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<PAGE> 45
(iii) release any Person liable in any manner for the collection of such Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
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.
EAGLE BANCSHARES, INC.
By:
-----------------------------------------------
C. Jere Sechler, Jr.
Chairman, President and Chief Executive Officer
Attest: [CORPORATE SEAL]
Richard B. Inman, Jr. Secretary
SUNTRUST BANK, ATLANTA, as Trustee
By:
-----------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
[BANK SEAL]
40
<PAGE> 46
STATE OF )
--------------------
) ss:
COUNTY OF )
-------------------
On the _______ day of June, 1998, before me personally came
______________________________ to me known, who, being by me duly sworn, did
depose and say that he is the _________________________ of Company, one of the
corporations described in and which executed the above instrument; that he knows
the corporate seal of said corporation; that the seal affixed to the said
instrument is such corporation seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that he signed his name thereto by
like authority.
-------------------------------------------------
Notary Public, ,
----------------------------------
[SEAL] My Commission expires:
STATE OF
---------
COUNTY OF
---------
On this _____ day of June 1998, before me appeared
____________________, to me personally known, who, being by me duly sworn (or
affirmed), did say that he is the _____________________ of SUNTRUST BANK,
ATLANTA and that the seal affixed to said instrument is the corporate seal of
said corporation, and that said instrument was signed and sealed on behalf of
said corporation by authority of its board of directors, and said
_______________________ acknowledged said instrument to be the free act and deed
of said corporation.
-------------------------------------------------
Notary Public, ,
----------------------------------
[SEAL] My Commission expires:
41
<PAGE> 1
EXHIBIT 4.6
TRUST AGREEMENT
This TRUST AGREEMENT, dated as of July ___, 1998 (this "Trust
Agreement"), among (i) EAGLE BANCSHARES, INC., a Georgia unitary thrift holding
company (the "Depositor"), (ii) WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as trustee, and (iii) C. JERE SECHLER, JR. and RICHARD B. INMAN,
JR., each an individual, as trustees (each of such trustees in (ii) and (iii) a
"Trustee" and collectively, the "Trustees"). The Depositor and the Trustees
hereby agree as follows:
1. The trust created hereby (the "Trust") shall be known as "EBI
Capital Trust I" in which name the Trustees, or the Depositor to the extent
provided herein, may engage in the transactions contemplated hereby, make and
execute contracts and sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of Ten Dollars ($10.00). The Trustees hereby acknowledge
receipt of such amount in trust from the Depositor, which amount shall
constitute the initial trust estate. The Trustees hereby declare that they will
hold the trust estate in trust for the Depositor. It is the intention of the
parties hereto that the Trust created hereby constitute a business trust under
Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Section 3801, et seq.
(the "Business Trust Act), and that this document constitute the governing
instrument of the Trust. The Trustees are hereby authorized and directed to
execute and file a certificate of trust with the Delaware Secretary of State in
accordance with the provisions of the Business Trust Act.
3. The Depositor and the Trustees will enter into an Amended and
Restated Trust Agreement, satisfactory to each such party and substantially in
the form included as an exhibit to the 1933 Act Registration Statement (as
defined below), to provide for the contemplated operation of the Trust created
hereby and the issuance of the Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such Amended and
Restated Trust Agreement, the Trustees shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery of any licenses, consents or approvals required by applicable law or
otherwise.
4. The Depositor and the Trustees hereby authorize and direct the
Depositor, as the sponsor of the Trust, (i) to file with the Securities and
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, the Registration Statement on Form S-3 (the "1933 Act Registration
Statement") (including any pre-effective or post-effective amendments to the
1933 Act Registration Statement) relating to the registration under the
Securities Act of 1933, as amended, of the Preferred Securities of the Trust and
possible certain other securities; (ii) to file with the American Stock Exchange
or a national stock exchange (each, an "Exchange") and execute on behalf of the
Trust one or more listing applications and all other applications, statements,
certificates, agreements and other instruments as shall be necessary or
desirable to cause the Preferred Securities to be listed on any of the
Exchanges; (iii) to file and execute on behalf of the Trust such applications,
reports, surety bonds, irrevocable consents, appointments of attorney for
service of process and other papers and documents as shall be necessary or
desirable to register the Preferred Securities under the securities or blue sky
laws of such jurisdictions as the Depositor, on behalf of the Trust, may deem
necessary or desirable; and (iv) to execute on behalf of the Trust an
Underwriting Agreement relating to the Preferred Securities, among the Trust,
the Depositor and the Underwriter(s) named therein, substantially in the form
included as an exhibit to the 1933 Act Registration Statement. In the event that
any filing referred to in clauses (i), (ii) and (iii) above is required by the
rules and regulations of the Commission, an Exchange or state securities or blue
sky laws, to be executed on behalf of the Trust by one or more of the Trustees,
each of the Trustees, in its or his capacity as a Trustee of
<PAGE> 2
the Trust, is hereby authorized and, to the extent so required, directed to join
in any such filing and to execute on behalf of the Trust any and all of the
foregoing, it being understood that Wilmington Trust Company in its capacity as
a Trustee or the Trust shall not be required to join in any such filing or
execute on behalf of the Trust any such document unless required by the rules
and regulations of the Commission, the Exchange or state securities or blue sky
laws. In connection with the filings referred to above, the Depositor and C.
Jere Sechler, Jr. and Richard B. Inman, Jr., each as Trustees and not in their
individual capacities, hereby constitutes and appoints C. Jere Sechler, Jr. and
Richard B. Inman, Jr., and each of them, as its true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the Depositor or such Trustee or in the Depositor's or such
Trustee's name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to the 1933 Act Registration
Statement and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Commission, the Exchange and administrators of
the state securities or blue sky laws, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as the Depositor or such Trustee might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their respective substitute or substitutes, shall do
or cause to be done by virtue hereof.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of Trustees initially shall be three and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by the Depositor which may increase or decrease the
number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any Trustee at any
time. The Trustees may resign upon 30 days' prior notice to the Depositor.
7. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws of principles).
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed as of the day and year first above written.
EAGLE BANCSHARES, INC., as Depositor
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
2
<PAGE> 3
WILMINGTON TRUST COMPANY, as Trustee
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-------------------------------------------
C. JERE SECHLER, JR., as Trustee
-------------------------------------------
RICHARD B. INMAN, JR., as Trustee
3
<PAGE> 1
EXHIBIT 4.7
===============================================================================
EBI CAPITAL TRUST I
AMENDED AND RESTATED TRUST AGREEMENT
AMONG
EAGLE BANCSHARES, INC., AS DEPOSITOR,
SUNTRUST BANK, ATLANTA, AS PROPERTY TRUSTEE,
WILMINGTON TRUST COMPANY, AS DELAWARE TRUSTEE,
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF JULY , 1998
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
RECITALS
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions........................................................................1
ARTICLE II
ESTABLISHMENT OF THE TRUST
Section 2.1 Name...............................................................................9
Section 2.2 Office of the Delaware Trustee, Principal Place of Business........................9
Section 2.3 Initial Contribution of Trust Property; Organizational Expenses....................9
Section 2.4 Issuance of the Preferred Securities...............................................9
Section 2.5 Issuance of the Common Securities;
Subscription and Purchase of Debentures............................................9
Section 2.6 Declaration of Trust..............................................................10
Section 2.7 Authorization to Enter into Certain Transactions..................................10
Section 2.8 Assets of Trust...................................................................13
Section 2.9 Title to Trust Property...........................................................13
ARTICLE III
PAYMENT ACCOUNT
Section 3.1 Payment Account...................................................................14
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
Section 4.1 Distributions.....................................................................14
Section 4.2 Redemption........................................................................14
Section 4.3 Subordination of Common Securities................................................16
Section 4.4 Payment Procedures................................................................16
Section 4.5 Tax Returns and Reports...........................................................17
Section 4.6 Payment of Taxes, Duties, Etc. of the Trust.......................................17
Section 4.7 Payments under Indenture..........................................................17
ARTICLE V
TRUST SECURITIES CERTIFICATES
Section 5.1 Initial Ownership.................................................................17
Section 5.2 The Trust Securities Certificates.................................................17
Section 5.3 Execution and Delivery of Trust Securities Certificates...........................18
Section 5.4 Global Preferred Security.........................................................18
Section 5.5 Registration of Transfer and Exchange Generally;
Certain Transfers and Exchanges; Preferred Securities Certificates................19
Section 5.6 Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates................20
Section 5.7 Persons Deemed Securityholders....................................................20
Section 5.8 Access to List of Securityholders' Names and Addresses............................20
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
Section 5.9 Maintenance of Office or Agency..................................................20
Section 5.10 Appointment of Paying Agent......................................................21
Section 5.11 Ownership of Common Securities by Depositor......................................21
Section 5.12 Notices to Clearing Agency.......................................................21
Section 5.13 Rights of Securityholders........................................................21
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
Section 6.1 Limitations on Voting Rights......................................................22
Section 6.2 Notice of Meetings................................................................23
Section 6.3 Meetings of Preferred Securityholders.............................................23
Section 6.4 Voting Rights.....................................................................23
Section 6.5 Proxies, Etc......................................................................23
Section 6.6 Securityholder Action by Written Consent..........................................24
Section 6.7 Record Date for Voting and Other Purposes.........................................24
Section 6.8 Acts of Securityholders...........................................................24
Section 6.9 Inspection of Records.............................................................25
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties of the Bank and the Property Trustee...............25
Section 7.2 Representations and Warranties of the Delaware Bank
and the Delaware Trustee..........................................................26
Section 7.3 Representations and Warranties of Depositor.......................................27
ARTICLE VIII
TRUSTEES
Section 8.1 Certain Duties and Responsibilities...............................................27
Section 8.2 Certain Notices...................................................................28
Section 8.3 Certain Rights of Property Trustee................................................28
Section 8.4 Not Responsible for Recitals or Issuance of Securities............................30
Section 8.5 May Hold Securities...............................................................30
Section 8.6 Compensation; Indemnity; Fees.....................................................30
Section 8.7 Corporate Property Trustee Required; Eligibility of Trustees......................31
Section 8.8 Conflicting Interests.............................................................31
Section 8.9 Co-trustees and Separate Trustee..................................................31
Section 8.10 Resignation and Removal; Appointment of Successor.................................32
Section 8.11 Acceptance of Appointment by Successor............................................33
Section 8.12 Merger, Conversion, Consolidation or Succession to Business.......................34
Section 8.13 Preferential Collection of Claims Against Depositor or Trust......................34
Section 8.14 Reports by Property Trustee.......................................................34
Section 8.15 Reports to the Property Trustee...................................................35
Section 8.16 Evidence of Compliance with Conditions Precedent..................................35
Section 8.17 Number of Trustees................................................................35
Section 8.18 Delegation of Power...............................................................35
Section 8.19 Voting............................................................................35
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER
Section 9.1 Termination upon Expiration Date.................................................36
Section 9.2 Early Termination................................................................36
Section 9.3 Termination......................................................................36
Section 9.4 Liquidation......................................................................36
Section 9.5 Mergers, Consolidations, Amalgamations or Replacements of the Trust..............37
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Limitation of Rights of Security holders.........................................38
Section 10.2 Amendment........................................................................38
Section 10.3 Separability.....................................................................39
Section 10.4 Governing Law....................................................................39
Section 10.5 Payments Due on Non-business Day.................................................39
Section 10.6 Successors.......................................................................39
Section 10.7 Headings.........................................................................40
Section 10.8 Reports, Notices and Demands.....................................................40
Section 10.9 Agreement Not to Petition........................................................40
Section 10.10 Trust Indenture Act; Conflict with Trust Indenture Act...........................40
Section 10.11 Acceptance of Terms of Trust Agreement, Guarantee and Indenture..................41
</TABLE>
iii
<PAGE> 5
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Section of
Trust Indenture Act of 1939, Section of
as amended Trust Agreement
- ------------------------------------------------------------------------------------------------------------
<S> <C>
310(a)(1).................................................................. 8.7
310(a)(2).................................................................. 8.7
310(a)(3).................................................................. 8.7
310(a)(4).................................................................. 2.7(a)(ii)
310(b)..................................................................... 8.8
311(a)..................................................................... 8.13
311(b)..................................................................... 8.13
312(a)..................................................................... 5.7
312(b)..................................................................... 5.7
312(c)..................................................................... 5.7
313(a)..................................................................... 8.14(a)
313(a)(4).................................................................. 8.14(b)
313(b)..................................................................... 8.14(b)
313(c)..................................................................... 10.8
313(d)..................................................................... 8.14(c)
314(a)..................................................................... 8.15
314(b)..................................................................... Not Applicable
314(c)..................................................................... 8.16
314(c)(2).................................................................. 8.16
314(c)(3).................................................................. Not Applicable
314(d)..................................................................... Not Applicable
314(e)..................................................................... 1.1, 8.16
315(a)..................................................................... 8.1(a), 8.3(a)
315(b)..................................................................... 8.2, 10.8
315(c)..................................................................... 8.1(a)
315(d)..................................................................... 8.1, 8.3
316(a)(2).................................................................. Not Applicable
316(b)..................................................................... Not Applicable
316(c)..................................................................... 6.7
317(a)(1).................................................................. Not Applicable
317(a)(2).................................................................. Not Applicable
317(b)..................................................................... 5.9
318(a)..................................................................... 10.10
</TABLE>
NOTE: This Cross-Reference Table does not constitute part of this Agreement
and shall not affect the interpretation of any of its terms or
provisions.
iv
<PAGE> 6
AMENDED AND RESTATED TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of July , 1998, among
(i) EAGLE BANCSHARES, INC., a Georgia unitary thrift holding company (including
any successors or assigns, the "Depositor"), (ii) SUNTRUST BANK, ATLANTA, a
banking corporation duly organized and existing under the laws of the State of
Georgia, as property trustee (the "Property Trustee" and, in its separate
corporate capacity and not in its capacity as Property Trustee, the "Bank"),
(iii) WILMINGTON TRUST COMPANY, a banking corporation duly organized and
existing under the laws of the State of Delaware, as Delaware trustee (the
"Delaware Trustee," and, in its separate corporate capacity and not in its
capacity as Delaware Trustee, the "Delaware Bank"), (iv) C. JERE SECHLER, JR.,
an individual, and RICHARD B. INMAN, JR., an individual, each of whose address
is c/o Company (each an "Administrative Trustee" and collectively the
"Administrative Trustees") (the Property Trustee, the Delaware Trustee and the
Administrative Trustees referred to collectively as the "Trustees"), and (v) the
several Holders (as hereinafter defined).
RECITALS
WHEREAS, the Depositor, the Delaware Trustee, the Property Trustee and
the Administrative Trustees desire to duly declare and establish a business
trust pursuant to the Delaware Business Trust Act to provide for, among other
things, (i) the issuance of the Common Securities (as defined herein) by the
Trust (as defined herein) to the Depositor; (ii) the issuance and sale of the
Preferred Securities (as defined herein) by the Trust pursuant to the
Underwriting Agreement (as defined herein); (iii) the acquisition by the Trust
from the Depositor of all of the right, title and interest in the Debentures (as
defined herein); and (iv) the appointment of the Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Securityholders (as defined herein),
hereby agrees as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions. For all purposes of this Trust Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings assigned to
them in this Article I and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.8.
1
<PAGE> 7
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of additional interest
accrued on interest in arrears and paid by the Depositor on a Like Amount of
Debentures for such period.
"Additional Interest" has the meaning specified in Section 1.1 of the
Indenture.
"Administrative Trustee" means each of C. Jere Sechler, Jr. and Richard
B. Inman, Jr. individually in his capacity as Administrative Trustee of the
Trust formed and continued hereunder and not in his individual capacity, or such
Administrative Trustee's successor in interest in such capacity, or any
successor Administrative Trustee appointed as herein provided.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with the power to vote by the specified Person; (c) any
Person directly or indirectly controlling, controlled by, or under common
control with the specified Person; (d) a partnership in which the specified
Person is a general partner; (e) any officer or director of the specified
Person; and (f) if the specified Person is an individual, any entity of which
the specified Person is an officer, director or general partner.
"Applicable Bank Regulatory Authority" means the Office of Thrift
Supervision or other bank regulatory authority then having regulatory authority
over the Company.
"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 adjudging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking liquidation or reorganization of or in respect
of such Person under the United States Bankruptcy Code of 1978, as amended, or
any other similar applicable federal or state law, and the continuance of any
such decree or order unvacated and unstayed for a period of 90 days; or the
commencement of an involuntary case under the United States Bankruptcy Code of
1978, as amended, in respect of such Person, which shall continue undismissed
for a period of 90 days or entry of an order for relief in such case; or the
entry of a decree or order of a court having jurisdiction in the premises for
the appointment on the ground of insolvency or bankruptcy of a receiver,
custodian, liquidator, trustee or assignee in bankruptcy or insolvency of such
Person or of its property, or for the winding up or liquidation of its affairs,
and such decree or order shall have remained in force unvacated and unstayed for
a period of 90 days; or
(b) the institution by such Person of proceedings to be adjudicated a
voluntary bankrupt, or the consent by such Person to the filing of a bankruptcy
proceeding against it, or the filing by such Person of a petition or answer or
consent seeking liquidation or reorganization under the United States Bankruptcy
Code of 1978, as amended, or other similar applicable Federal or State law, or
the consent by such Person to the filing of any such petition or to the
appointment on the ground of insolvency or bankruptcy of a receiver or custodian
or liquidator or trustee or assignee in bankruptcy or insolvency of such Person
or of its property, or if such Person shall make a general assignment for the
benefit of creditors.
2
<PAGE> 8
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board Resolution" means a copy of a resolution certified by the
Secretary of the Depositor to have been duly adopted by the Depositor's Board of
Directors, or such committee of the Board of Directors or officers of the
Depositor to which authority to act on behalf of the Board of Directors has been
delegated, and to be in full force and effect on the date of such certification,
and delivered to the appropriate Trustee.
"Business Day" means a day other than a Saturday or Sunday, a day on
which banking institutions in Atlanta, Georgia are authorized or required by
law, executive order or regulation to remain closed, or a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.
"Capital Event" means the receipt by the Trust of an Opinion of Counsel
experienced in such matters (which may be counsel to the Company) that the
Company cannot, or within 90 days after the date of the Opinion of such Counsel,
will not be permitted by the applicable regulatory authorities, due to a change
in law, regulation, policy or guideline or interpretation or application of law
or regulation, policy or guideline, to account for the Preferred Securities as
Tier 1 capital under the capital guidelines or policies of the Applicable Bank
Regulatory Authority.
"Certificate Depositary Agreement" means the agreement among the Trust,
the Depositor and the Depository Trust Company ("DTC"), as the initial Clearing
Agency, dated as of the Closing Date, as the same may be amended and
supplemented from time to time.
"Certificate of Trust" means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended or restated from time to time.
"Change in 1940 Act Law" shall have the meaning set forth in the
definition of "Investment Company Event."
"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.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the date of execution and delivery of this Trust
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, 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 hereto as
Exhibit B.
3
<PAGE> 9
"Common Security" means an undivided beneficial interest in the assets
of the Trust, having a Liquidation Amount of $25.00 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Company" means Eagle Bancshares, Inc.
"Corporate Trust Office" means the office at which, at any particular
time, the corporate trust business of the Property Trustee or the Debenture
Trustee, as the case may be, shall be principally administered, which office at
the date hereof, in each such case, is located at 3495 Piedmont Road, Suite 810,
Atlanta, Georgia 30305.
"Debenture Event of Default" means an "Event of Default" as defined in
Section 7.1 of the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption under the Indenture.
"Debenture Tax Event" means a "Tax Event" as specified in Section 1.1
of the Indenture.
"Debenture Trustee" means SunTrust Bank, Atlanta, a banking corporation
organized under the laws of the State of Georgia and any successor thereto, as
trustee under the Indenture.
"Debentures" means the $25,773,196 (or $29,639,175 if the underwriters
purchase the Option Securities), aggregate principal amount of the Depositor's
___% Subordinated Debentures due December 31, 2028, issued pursuant to the
Indenture.
"Delaware Bank" has the meaning specified in the Preamble to this Trust
Agreement.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Delaware Code Sections 3801 et seq. as it may be amended from
time to time.
"Delaware Trustee" means the commercial bank or trust company
identified as the "Delaware Trustee" in the Preamble to this Trust Agreement
solely in its capacity as Delaware Trustee of the Trust formed and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor trustee appointed as herein provided.
"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.
"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
4
<PAGE> 10
(b) default by the Trust in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of 30
days; or
(c) default by the 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 Trustees in this Trust Agreement (other than a
covenant or warranty a default in the performance of which or the breach of
which is dealt with in clause (b) or (c), above) and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the defaulting Trustee or Trustees by the
Holders of at least 25% in aggregate liquidation preference of the Outstanding
Preferred Securities a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee and the failure by the Depositor to appoint a successor Property Trustee
within 60 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
Exhibit C, as amended from time to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Extended Interest Payment Period" has the meaning specified in Section
4.1 of the Indenture.
"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" means the Preferred Securities Guarantee Agreement executed
and delivered by the Depositor and SunTrust Bank, Atlanta, 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.
"Indenture" means the Indenture, dated as of July , 1998, between the
Depositor and the Debenture Trustee, as trustee, as amended or supplemented from
time to time.
"Investment Company Act," means the Investment Company Act of 1940, as
amended, as in effect at the date of execution of this instrument.
"Investment Company Event" means the receipt by the Trust of an Opinion
of Counsel, experienced in such matters, to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), the Trust is or
shall be considered an "investment company" that is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of original issuance of the Preferred Securities under this
Trust Agreement.
5
<PAGE> 11
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Debentures to be contemporaneously redeemed in accordance with the
Indenture and the proceeds of which shall be used to pay the Redemption Price of
such Trust Securities; and (b) with respect to a distribution of Debentures to
Holders of Trust Securities in connection with a dissolution or liquidation of
the Trust, Debentures having a principal amount equal to the Liquidation Amount
of the Trust Securities of the Holder to whom such Debentures are distributed.
Each Debenture distributed pursuant to clause (b) above shall carry with it
accumulated interest in an amount equal to the accumulated and unpaid interest
then due on such Debentures.
"Liquidation Amount" means the stated amount of $25.00 per Trust
Security.
"Liquidation Date" means the date on which Debentures are to be
distributed to Holders of Trust Securities in connection with a dissolution or
liquidation of the Trust pursuant to Section 9.4(a).
"Liquidation Distribution" has the meaning specified in Section 9.4(d).
"Officers' Certificate" means a certificate signed by the President or
a Vice President and by the Treasurer or the Controller or the Secretary, of the
Depositor, and delivered to the appropriate Trustee. One of the officers signing
an Officers' Certificate given pursuant to Section 8.16 shall be the principal
executive, financial or accounting officer of the Depositor. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means an opinion in writing of legal counsel, who
may be counsel for the Trust, the Property Trustee, the Delaware Trustee or the
Depositor, but not an employee of any thereof, and who shall be reasonably
acceptable to the Property Trustee.
"Option Closing Date" shall have the meaning provided in the
Underwriting Agreement.
"Option Securities" means an aggregate Liquidation Amount of $3,750,000
of the 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.
6
<PAGE> 12
"Outstanding," when used with respect to Preferred Securities, means,
as of the date of determination, all Preferred Securities theretofore executed
and delivered under this Trust Agreement, except:
(a) Preferred Securities theretofore canceled by the Property Trustee
or delivered to the Property Trustee for cancellation;
(b) Preferred Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee or any
Paying Agent for the Holders of such Preferred Securities; provided that, if
such Preferred Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange for or in
lieu of which other Preferred Securities have been executed and delivered
pursuant to Sections 5.4 and 5.5; provided, however, that in determining whether
the Holders of the requisite Liquidation Amount of the Outstanding Preferred
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Preferred Securities owned by the Depositor, any
Trustee or any Affiliate of the Depositor or any Trustee shall be disregarded
and deemed not to be Outstanding, except that (a) in determining whether any
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Preferred Securities
that such Trustee knows to be so owned shall be so disregarded; and (b) the
foregoing shall not apply at any time when all of the outstanding Preferred
Securities are owned by the Depositor, one or more of the Trustees and/or any
such Affiliate. Preferred Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Administrative Trustees the pledgee's right so to 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 Bank.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures shall be held and from which the Property Trustee
shall make payments to the Securityholders in accordance with Sections 4.1 and
4.2.
"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in the
assets of the Trust, having a Liquidation Amount of $25.00 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 commercial bank or trust company
identified as the "Property Trustee," in the Preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust heretofore formed and
continued hereunder and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as herein
provided.
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"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated maturity
of the Debentures shall be a Redemption Date for a Like Amount of Trust
Securities.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, allocated on a pro rata basis (based on
Liquidation Amounts) among the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 8.10.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.5.
"Securityholder" or "Holder" means a Person in whose name a Trust
Security or 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.
"Trust" means the Delaware business trust created and continued hereby
and identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Trust Agreement, as the same may be
modified, amended or supplemented in accordance with the applicable provisions
hereof, including all exhibits hereto, including, for all purposes of this Trust
Agreement and any such modification, amendment or supplement, the provisions of
the Trust Indenture Act that are deemed to be a part of and govern this Trust
Agreement and any such modification, amendment or supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this instrument was executed;
provided, however, that in the event the Trust Indenture Act of 1939, as
amended, is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures; (b) the rights of the
Property Trustee under the Guarantee; (c) any cash on deposit in, or owing to,
the Payment Account; and (d) all proceeds and rights in respect of the foregoing
and any other property and assets for the time being held or deemed to be held
by the Property Trustee pursuant to the trusts of this Trust Agreement.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificate or the Global Preferred Securities Certificate.
"Trustees" means, collectively, the Property Trustee, the Delaware
Trustee and the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
June , 1998, among the Trust, the Depositor and the Underwriters named therein.
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ARTICLE II
ESTABLISHMENT OF THE TRUST
Section 2.1 Name. The Trust created and continued hereby shall be known
as EBI CAPITAL TRUST I, as such name may be modified from time to time by the
Administrative Trustees following written notice to the Holders of Trust
Securities and the other Trustees, in which name the Trustees may engage in the
transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
Section 2.2 Office of the Delaware Trustee, Principal Place of
Business. The address of the Delaware Trustee in the State of Delaware is
[ADDRESS OF DELAWARE TRUSTEE], or such other address in the State of Delaware as
the Delaware Trustee may designate by written notice to the Securityholders and
the Depositor. The principal executive office of the Trust is c/o Eagle
Bancshares, Inc., 4305 Lynburn Drive, Tucker, Georgia 30084.
Section 2.3 Initial Contribution of Trust Property; Organizational
Expenses. The Trustees acknowledge receipt in trust from the Depositor the sum
of $10.00, which constitutes the initial Trust Property. The Depositor shall pay
organizational expenses of the Trust as they arise or shall, upon request of any
Trustee, promptly reimburse such Trustee for any such expenses paid by such
Trustee. The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
Section 2.4 Issuance of the Preferred Securities. Prior to or
contemporaneously with the execution and delivery of this Trust Agreement, (a)
the Depositor and an Administrative Trustee, on behalf of the Trust shall have
executed and delivered the Underwriting Agreement, and (b) an Administrative
Trustee, on behalf of the Trust, shall execute in accordance with Section 5.2
and deliver in accordance with the Underwriting Agreement, the Preferred
Securities in registered global form (the "Global Preferred Securities") in an
aggregate amount of 1,000,000 Preferred Securities having an aggregate
Liquidation Amount of $25 million against receipt of the aggregate purchase
price of such Preferred Securities of $25,000,000, which amount such
Administrative Trustee shall promptly deliver to the Property Trustee. If the
underwriters purchase the Option Securities and there is an Option Closing Date,
then an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 5.2 and deliver in accordance with the Underwriting
Agreement, the Global Preferred Securities in registered, global form in an
aggregate amount of up to 150,000 Preferred Securities having an aggregate
Liquidation Amount of up to $3,750,000 against receipt of the aggregate purchase
price of such Preferred Securities of $3,750,000, which amount such
Administrative Trustee shall promptly deliver to the Property Trustee.
Section 2.5 Issuance of the Common Securities; Subscription and
Purchase of Debentures. (a) Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 5.2 and deliver to the Depositor, Common
Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of Common Securities having an aggregate Liquidation Amount of
$773,196 against payment by the Depositor of such amount. Contemporaneously
therewith, an Administrative Trustee, on behalf of the Trust, shall subscribe to
and purchase from the Depositor Debentures, registered in the name of the
Property Trustee on behalf of the Trust and having an aggregate principal amount
equal to $25,773,196 and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Depositor the sum of $25,773,196.
(b) If the underwriters purchase the Option Securities and there is an
Option Closing Date, then an Administrative Trustee, on behalf of the Trust,
shall 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 Common Securities having an aggregate Liquidation Amount of
up to $889,175 against payment by the
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Depositor of such amount. Contemporaneously therewith, an Administrative
Trustee, on behalf of the Trust, shall subscribe to and purchase from the
Depositor, Debentures, registered in the name of the Trust and having an
aggregate principal amount of up to $889,175, and, in satisfaction of the
purchase price of such Debentures, the Property Trustee, on behalf of the Trust,
shall deliver to the Depositor the sum of $889,175.
Section 2.6 Declaration of Trust. The exclusive purposes and functions
of the Trust are (a) to issue and sell Trust Securities and use the proceeds
from such sale to acquire the Debentures; and (b) to engage in those activities
necessary, advisable or incidental thereto. The Depositor hereby appoints the
Trustees as trustees of the Trust, to have all the rights, powers and duties to
the extent set forth herein, and the Trustees hereby accept such appointment.
The Property Trustee hereby declares that it shall hold the Trust Property in
trust upon and subject to the conditions set forth herein for the benefit of the
Securityholders. The Administrative Trustees shall have all rights, powers and
duties set forth herein and in accordance with applicable law with respect to
accomplishing the purposes of the Trust. The Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities, of the Property Trustee or the Administrative
Trustees set forth herein. The Delaware Trustee shall be one of the Trustees of
the Trust for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Delaware Business Trust Act.
Section 2.7 Authorization to Enter into Certain Transactions. (a) The
Trustees shall conduct the affairs of the Trust in accordance with the terms of
this Trust Agreement. Subject to the limitations set forth in paragraph (b) of
this Section 2.7 and Article VIII, and in accordance with the following
provisions (i) and (ii), the Administrative Trustees shall have the authority to
enter into all transactions and agreements determined by the Administrative
Trustees to be appropriate in exercising the authority, express or implied,
otherwise granted to the Administrative Trustees under this Trust Agreement, and
to perform all acts in furtherance thereof, including without limitation, the
following:
(i) As among the Trustees, each Administrative
Trustee, acting singly or jointly, shall have the power and
authority to act on behalf of the Trust with respect to the
following matters:
(A) the issuance and sale of the Trust
Securities;
(B) to cause the Trust to enter into, and to
execute, deliver and perform on behalf of
the Trust, the Expense Agreement, the
Certificate Depositary Agreement and such
other agreements or documents as may be
necessary or desirable in connection with
the purposes and function of the Trust;
(C) assisting in the registration of the
Preferred Securities under the Securities
Act of 1933, as amended, and under state
securities or blue sky laws, and the
qualification of this Trust Agreement as a
trust indenture under the Trust Indenture
Act;
(D) assisting in the listing of the Preferred
Securities upon the American Stock Exchange,
Inc. or such securities exchange or
exchanges as shall be determined by the
Depositor and the registration of the
Preferred Securities under the Exchange Act,
and the preparation and filing of all
periodic and other reports and other
documents pursuant to the foregoing;
(E) the sending of notices (other than notices
of default) and other information regarding
the Trust Securities and the Debentures to
the Securityholders in accordance with this
Trust Agreement;
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(F) the appointment of a Paying Agent,
authenticating agent and Securities
Registrar in accordance with this Trust
Agreement;
(G) to acquire as trust assets Debentures with
the proceeds of the sale of the Trust
Securities;
(H) to bring or defend, pay, collect,
compromise, arbitrate, resort to legal
action or otherwise adjust claims or demands
of or against the Trust ("Legal Action")
when the Property Trustee has the exclusive
power to bring such legal action;
(I) to cause the Trust to comply with its
obligations under the TIA;
(J) to employ or otherwise engage employees and
agents (who may be officers with titles) and
managers, contractors, advisors and
consultants and pay reasonable compensation
for their services;
(K) to the extent provided in this Trust
Agreement, the winding up of the affairs of
and liquidation of the Trust and the
preparation, execution and filing of the
certificate of cancellation with the
Secretary of State of the State of Delaware;
(L) to take all action that may be required to
be taken by the Administrative Trustees
hereunder or that may be necessary or
appropriate for the preservation and the
continuation of the Trust's valid existence,
rights, franchises and privileges as a
statutory business trust under the laws of
the State of Delaware and of each other
jurisdiction in which such existence is
necessary to protect the limited liability
of the Holders of the Preferred Securities
or to enable the Trust to effect the
purposes for which the Trust was created;
and
(M) the taking of any action incidental to the
foregoing as the Administrative Trustees may
from time to time determine is necessary or
advisable to give effect to the terms of
this Trust Agreement for the benefit of the
Securityholders (without consideration of
the effect of any such action on any
particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall
have the power, duty and authority to act on behalf of the
Trust with respect to the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and
any other payments made in respect of the
Debentures in the Payment Account;
(D) the distribution of amounts owed to the
Securityholders in respect of the Trust
Securities in accordance with the terms of
this Trust Agreement;
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(E) the exercise of all of the rights, powers
and privileges of a holder of the
Debentures;
(F) engaging in such ministerial activities as
shall be necessary or appropriate to effect
promptly the redemption of the Trust
Securities to the extent the Debentures are
redeemed or mature;
(G) taking all actions and performing such
duties as may be specifically required of
the Property Trustee pursuant to this Trust
Agreement;
(H) the sending of notices of default and other
information regarding the Trust Securities
and the Debentures to the Securityholders in
accordance with this Trust Agreement;
(I) the distribution of the Trust Property in
accordance with the terms of this Trust
Agreement;
(J) to the extent provided in this Trust
Agreement, the winding up of the affairs of
and liquidation of the Trust;
(K) after an Event of Default, the taking of any
legal action incidental to the foregoing as
the Property Trustee may from time to time
determine is necessary or advisable to give
effect to the terms of this Trust Agreement
and protect and conserve the Trust Property
for the benefit of the Securityholders
(without consideration of the effect of any
such action on any particular
Securityholder);
(L) registering transfers of the Trust
Securities in accordance with this Trust
Agreement; and
(M) except as otherwise provided in this Section
2.7(a)(ii), the Property Trustee shall have
none of the duties, liabilities, powers or
the authority of the Administrative Trustees
set forth in Section 2.7(a)(i).
(b) So long as this Trust Agreement remains in effect, the Trust (or
the Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transactions except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement; (ii) sell,
assign, transfer, exchange, mortgage, pledge, set- off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein; (iii) take any action that would cause the
Trust to fail or cease to qualify as a "grantor trust" for United States federal
income tax purposes; (iv) incur any indebtedness for borrowed money or issue any
other debt; or (v) take or consent to any action that would result in the
placement of a Lien on any of the Trust Property. The Administrative Trustees
shall defend all claims and demands of all Persons at any time claiming any Lien
on any of the Trust Property adverse to the interest of the Trust or the
Securityholders in their capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred Securities,
the Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any
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actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation and filing by the Trust with the
Commission and the execution on behalf of the Trust of a
registration statement on the appropriate form in relation to
the Preferred Securities and the Debentures, including any
amendments thereto;
(ii) the determination of the states in which to take
appropriate action to qualify or, register for sale all or
part of the Preferred Securities and to do any and all such
acts, other than actions which must be taken by or on behalf
of the Trust, and advise the Trustees of actions they must
take on behalf of the Trust, and prepare for execution and
filing any documents to be executed and filed by the Trust or
on behalf of the Trust, as the Depositor deems necessary or
advisable in order to comply with the applicable laws of any
such States;
(iii) the preparation for filing by the Trust and
execution on behalf of the Trust of an application to the
American Stock Exchange, Inc. or other organizations for
listing upon notice of issuance of any Preferred Securities
and to file or cause an Administrative Trustee to file
thereafter with such exchange such notifications and documents
as may be necessary from time to time;
(iv) the preparation for filing by the Trust with the
Commission and the execution on behalf of the Trust of a
registration statement on Form 8-A relating to the
registration of the Preferred Securities under Section 12(b)
or 12(g) of the Exchange Act, including any amendments
thereto;
(v) the negotiation of the terms of, and the execution
and delivery of, the Underwriting Agreement providing for the
sale of the Preferred Securities; and
(vi) the taking of any other actions necessary or
desirable to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and to
operate the Trust so that the Trust shall not be deemed to be an "investment
company" required to be registered under the Investment Company Act, shall be
classified as a "grantor trust" and not as an association taxable as a
corporation for United States federal income tax purposes and so that the
Debentures shall be treated as indebtedness of the Depositor for United States
federal income tax purposes. In this connection, subject to Section 10.2, the
Depositor and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law or this Trust Agreement, that each of the
Depositor and the Administrative Trustees determines in their discretion to be
necessary or desirable for such purposes.
Section 2.8 Assets of Trust. The assets of the Trust shall consist 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 Securityholders in accordance with this Trust Agreement.
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ARTICLE III
PAYMENT ACCOUNT
Section 3.1 Payment Account. (a) On or prior to the Closing Date, the
Property Trustee shall establish the Payment Account. The Property Trustee and
any agent of the Property Trustee shall have exclusive control and sole right of
withdrawal with respect to the Payment Account for the purpose of making
deposits and withdrawals from the Payment Account in accordance with this Trust
Agreement. All monies and other property deposited or held from time to time in
the Payment Account shall be held by the Property Trustee in the Payment Account
for the exclusive benefit of the Securityholders and for distribution as herein
provided, including (and subject to) any priority of payments provided for
herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
Section 4.1 Distributions. (a) Distributions on the Trust Securities
shall be cumulative, and shall accumulate whether or not there are funds of the
Trust available for the payment of Distributions. Distributions shall accumulate
from July , 1998, and, except during any Extended Interest Payment Period with
respect to the Debentures, shall be payable quarterly in arrears on the last
calendar day of March, June, September and December of each year, commencing on
September 30, 1998. If any date on which a Distribution is otherwise payable on
the Trust Securities is not a Business Day, then the payment of such
Distribution shall be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such delay), in
each case with the same force and effect as if made on such date (each date on
which distributions are payable in accordance with this Section 4.1(a), a
"Distribution Date").
(b) The Trust Securities represent undivided beneficial interests in
the Trust Property, and, as a practical matter, the Distributions on the Trust
Securities shall be payable at a rate of __% per annum of the Liquidation Amount
of the Trust Securities. The amount of Distributions payable for any full period
shall be computed on the basis of a 360-day year of twelve 30-day months. The
amount of Distributions for any partial period shall be computed on the basis of
the number of days elapsed in a 360-day year of twelve 30 day months. During any
Extended Interest Payment Period with respect to the Debentures, Distributions
on the Preferred Securities shall be deferred for a period equal to the Extended
Interest Payment Period. The amount of Distributions payable for any period
shall include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made by the Property
Trustee solely from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand and
immediately available in the Payment Account for the payment of such
Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the record holders thereof as they appear
on the Securities Register for the Trust Securities on the relevant record date,
which shall be the 15th day of the month in which the Distribution is payable.
Section 4.2 Redemption. (a) On each Debenture Redemption Date and on
the stated maturity of the Debentures, the Trust shall be required to redeem a
Like Amount of Trust Securities at the Redemption Price.
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(b) Notice of redemption shall be given by the Property Trustee by
first- class mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date to each Holder of Trust Securities to be
redeemed, at such Holder's address appearing in the Securities Register. The
Property Trustee shall have no responsibility for the accuracy of any CUSIP
number contained in such notice. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities
are to be redeemed, the identification and the aggregate
Liquidation Amount of the particular Trust Securities to be
redeemed; and
(v) that, on the Redemption Date, the Redemption
Price shall become due and payable upon each such Trust
Security to be redeemed and that Distributions thereon shall
cease to accumulate on and after said date.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Debentures. Redemptions of the Trust Securities shall be made and
the Redemption Price shall be payable on each Redemption Date only to the extent
that the Trust has immediately available funds then on hand and available in the
Payment Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of
any Preferred Securities, then, by 12:00 noon, Atlanta, Georgia time, on the
Redemption Date, subject to Section 4.2(c), the Property Trustee, subject to
Section 4.2(c), shall deposit with the Paying Agent funds sufficient to pay the
applicable Redemption Price and shall give the Paying Agent irrevocable
instructions and authority to pay the Redemption Price to the record holders
thereof upon surrender of their Preferred Securities Certificates.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Trust Securities called for redemption shall be payable
to the Holders of such Trust Securities as they appear on the Register for the
Trust Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of Securityholders
holding Trust Securities so called for redemption shall cease, except the right
of such Securityholders to receive the Redemption Price and any Distribution
payable on or prior to the Redemption Date, but without interest, and such
Securities shall cease to be Outstanding. In the event that any date on which
any Redemption Price is payable is not a Business Day, then payment of the
Redemption Price payable on such date shall be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case, with the same force and effect as if made on such date. In the event
that payment of the Redemption Price in respect of any Trust Securities called
for redemption is improperly withheld or refused and not paid either by the
Trust or by the Depositor pursuant to the Guarantee, Distributions on such Trust
Securities shall continue to accumulate, at the then applicable rate, from the
Redemption Date originally established by the Trust for such Trust Securities to
the date such Redemption Price is actually paid, in which case the actual
payment date shall be the date fixed for redemption for purposes of calculating
the Redemption Price.
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(e) Payment of the Redemption Price on the Trust Securities shall be
made to the record holders thereof as they appear on the Securities Register for
the Trust Securities on the relevant record date, which shall be the date 15
days prior to the relevant Redemption Date.
(f) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Preferred Securities. The particular Preferred Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Property Trustee from the outstanding Preferred Securities not previously called
for redemption, by such method (including, without limitation, by lot) as the
Property Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $25.00 or an integral multiple of
$25.00 in excess thereof) of the Liquidation Amount of Preferred Securities of a
denomination larger than $25.00. The Property Trustee shall promptly notify the
Securities Registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
this Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Preferred Securities shall relate, in the case of
any Preferred Securities redeemed or to be redeemed only in part, to the portion
of the Liquidation Amount of Preferred Securities which has been or is to be
redeemed.
Section 4.3 Subordination of Common Securities. (a) Payment of
Distributions (including Additional Amounts, if applicable) on, and the
Redemption Price of, the Trust Securities, as applicable, shall be made, subject
to Section 4.2(f), pro rata among the Common Securities and the Preferred
Securities based on the Liquidation Amount of the Trust Securities; provided,
however, that if on any Distribution Date or Redemption Date any Event of
Default resulting from a Debenture Event of Default shall have occurred and be
continuing, no payment of any Distribution (including Additional Amounts, if
applicable) on, or Redemption Price of, any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions (including Additional Amounts, if applicable) on all
Outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all Outstanding Preferred Securities then called for
redemption, shall have been made or provided for, and all funds immediately
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions (including Additional Amounts, if applicable) on,
or the Redemption Price of, Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default resulting
from a Debenture Event of Default, the record holder of Common Securities shall
be deemed to have waived any right to act with respect to any such Event of
Default under this Trust Agreement until the effect of all such Events of
Default with respect to the Preferred Securities shall have been cured, waived
or otherwise eliminated. Until any such Event of Default under this Trust
Agreement with respect to the Preferred Securities shall have been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on behalf
of the record holders of the Preferred Securities and not the record holder of
the Common Securities, and only the Holders of the Preferred Securities shall
have the right to direct the Property Trustee to act on their behalf.
Section 4.4 Payment Procedures. Payments of Distributions (including
Additional Amounts, if applicable) in respect of the Preferred Securities shall
be made by check mailed to the address of the Person entitled thereto as such
address shall appear on the Securities Register. Payments in respect of the
Common Securities shall be made in such manner as shall be mutually agreed
between the Property Trustee and the Common Securityholder.
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Section 4.5 Tax Returns and Reports. The Administrative Trustees shall
prepare (or cause to be prepared), at the Depositor's expense, and file all
United States federal, state and local tax and information returns and reports
required to be filed by or in respect of the Trust. In this regard, the
Administrative Trustees shall (a) prepare and file (or cause to be prepared and
filed) the appropriate Internal Revenue Service Form required to be filed in
respect of the Trust in each taxable year of the Trust; and (b) prepare and
furnish (or cause to be prepared and furnished) to each Securityholder the
appropriate Internal Revenue Service form required to be furnished to such
Securityholder or the information required to be provided on such form. The
Administrative Trustees shall provide the Depositor with a copy of all such
returns and reports promptly after such filing or furnishing. The Property
Trustee shall comply with United States federal withholding and backup
withholding tax laws and information reporting requirements with respect to any
payments to Securityholders under the Trust Securities.
Section 4.6 Payment of Taxes, Duties, Etc. of the Trust. Upon receipt
under the Debentures of Additional Interest (as defined in Section 1.1 of the
Indenture), the Property Trustee, at the direction of an Administrative Trustee
or the Depositor, shall promptly pay any taxes, duties or governmental charges
of whatsoever nature (other than withholding taxes) imposed on the Trust by the
United States or any other taxing authority.
Section 4.7 Payments under Indenture. Any amount payable hereunder to
any record holder of Preferred Securities shall be reduced by the amount of any
corresponding payment such Holder has directly received under the Indenture
pursuant to Section 5.13(c) hereof.
ARTICLE V
TRUST SECURITIES CERTIFICATES
Section 5.1 Initial Ownership. Upon the creation of the 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 Trust.
Section 5.2 The Trust Securities Certificates. (a) The Trust Securities
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of at least one Administrative Trustee 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 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 Certificates 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 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. On
the Closing Date and on the Option Closing Date, the Administrative Trustee
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 Trust by at
least one of the Administrative Trustees and delivered to the Property Trustee
and upon such delivery the Property Trustee shall authenticate such Trust
Securities Certificates and deliver such Trust Securities Certificates upon the
written order of the Trust 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 within ninety days of
receipt of such notice from the Depositary, (ii) the 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 canceled, 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 Register, whereupon the Property Trustee, in accordance with the
Applicable Procedures, shall instruct the Clearing Agency or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Preferred Security by the Clearing Agency,
accompanied by registration instructions, the Property Trustee shall, subject to
Section 5.4(b) and as otherwise provided in this Article V, authenticate and
deliver 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 authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Preferred Security or any portion thereof, whether pursuant to this Article V or
Article IV or otherwise, shall be authenticated and delivered in the form of,
and shall be, a Global Preferred Security, unless such Global Preferred Security
is registered in the name of a Person other than the Clearing Agency for such
Global Preferred Security or a nominee thereof.
(e) The Clearing Agency or its nominee, as the registered owner of the
Global Preferred Security, shall be considered the Holder of the Preferred
Security represented by such Global Preferred Security for all purposes under
this Trust Agreement and the Preferred Securities, and owners of beneficial
interests in such Global Preferred Security shall hold such interests pursuant
to the Applicable Procedures and, except as otherwise provided herein, shall not
be entitled to receive physical delivery of any such Preferred Securities in
definitive form and shall not be considered the Holders thereof under this Trust
Agreement. Accordingly, any such owner's beneficial interest in the Global
Preferred Security shall be shown only on, and the transfer of such interest
shall
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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 Register"), 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 Registrar." 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 Depositor shall execute and authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Preferred Securities of
the same series of any authorized 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 Property Trustee shall execute and authenticate and deliver the Preferred
Securities that the Holder making the exchange is entitled to receive.
All Preferred Securities issued upon any transfer or exchange of
Preferred Securities shall be the valid obligations of the 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.
Neither the 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
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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) 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) 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) Subject to this Section 5.5, Preferred Securities
shall be freely transferable.
(iii) 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 Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Trust shall execute and make available for delivery, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Trust Securities Certificate, a
new Trust Securities Certificate of like class, tenor and denomination. In
connection with the issuance of any new Trust Securities Certificate under this
Section, the Administrative Trustees or the Securities Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Trust Securities
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an undivided beneficial interest in the assets of the 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 Securityholders. The 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 Trustees, the Administrative Trustees, the Securities Registrar nor
the Depositor shall be bound by any notice to the contrary.
Section 5.8 Access to List of Securityholders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold the
Depositor, the Property Trustee, or the Administrative Trustees accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
Section 5.9 Maintenance of Office or Agency. The Property Trustee shall
designate, with the consent of the Administrative Trustees, 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 Trustees in
respect of the Trust Securities Certificates may be served. The Property Trustee
initially designates __________________ ______________
Attention:__________________________________, as its corporate trust office for
such purposes. The
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Property Trustee shall give prompt written notice to the Depositor, the
Administrative Trustees 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 Securityholders from the Payment Account and shall report the
amounts of such Distributions to the Property Trustee and the Administrative
Trustees. Any Paying Agent shall have the revocable power to withdraw funds from
the Payment Account 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 Administrative Trustees, the
Property Trustee and the Depositor. In the event that the Property Trustee shall
no longer be the Paying Agent or a successor Paying Agent shall resign or its
authority to act be revoked, the Property Trustee shall appoint a successor
(which shall be a bank or trust company) that is reasonably acceptable to the
Administrative Trustees to act as Paying Agent. Such successor Paying Agent or
any additional Paying Agent appointed by the Administrative Trustees shall
execute and deliver to the Trustees an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Trustees that as Paying
Agent, such successor Paying Agent or additional Paying Agent will hold all
sums, if any, held by it for payment to the 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
shall apply to the Property Trustee also in its role as Paying Agent, for so
long as the Property Trustee shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent 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 Administrative Trustees shall cause each
Common Securities Certificate issued to the Depositor to contain a legend
stating "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR IN INTEREST
TO THE DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE
LAW AND SECTION 5.11 OF THE TRUST AGREEMENT."
Section 5.12 Notices to Clearing Agency. To the extent that a notice or
other communication to the Holders is required under this Trust Agreement, for
so long as Preferred Securities are represented by a Global Preferred Securities
Certificate, the 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 Securityholders. (a) The legal title to the
Trust Property is vested exclusively in the Property Trustee (in its capacity as
such) in accordance with Section 2.9, and the Securityholders shall not have any
right or title therein other than the undivided beneficial interest in the
assets of the Trust conferred by their Trust Securities and they shall have no
right to call for any partition or division of property, profits or rights of
the Trust except as described below. The Trust Securities shall be personal
property giving only the rights specifically set forth therein and in this Trust
Agreement. The Trust Securities shall have no preemptive or similar rights and
when issued and delivered to Holders of the Preferred Securities against payment
of the purchase price therefor, the Preferred Securities shall be fully paid and
nonassessable interests in the Trust. The
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Holders of the Preferred Securities, in their capacities as such, shall be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if,
upon a Debenture Event of Default, the Debenture Trustee fails or the holders of
not less than 25% in principal amount of the outstanding Debentures fail to
declare the principal of all of the Debentures to be immediately due and
payable, the Holders of at least 25% in Liquidation Amount of the Preferred
Securities then Outstanding shall have such right by a notice in writing to the
Depositor and the Debenture Trustee; and upon any such declaration such
principal amount of and the accrued interest on all of the Debentures shall
become immediately due and payable, provided that the payment of principal and
interest on such Debentures shall remain subordinated to the extent provided in
the Indenture.
(c) For so long as any Preferred Securities remain outstanding, if,
upon a Debenture Event of Default arising from the failure to pay interest or
principal on the Debentures, the Holders of any Preferred Securities then
Outstanding shall, to the fullest extent permitted by law, have the right to
directly institute proceedings for enforcement of payment to such Holders of
principal of or interest on the Debentures having a principal amount equal to
the Liquidation Amount of the Preferred Securities of such Holders.
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
Section 6.1 Limitations on Voting Rights. (a) Except as provided in
this Section 6.1, in Sections 5.13, 8.10 and 10.2 and in the Indenture and as
otherwise required by law, no record holder of Preferred Securities shall have
any right to vote or in any manner otherwise control the administration,
operation and management of the Trust or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the Trust
Securities Certificates, be construed so as to constitute the Securityholders
from time to time as partners or members of an association.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Debenture Trustee with respect to such
Debentures; (ii) waive any past default which is waivable under Article VII of
the Indenture; (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable; or (iv) consent to
any amendment, modification or termination of the Indenture or the Debentures,
where such consent shall be required, without, in each case, obtaining the prior
approval of the Holders of at least a majority in Liquidation Amount of all
Outstanding Preferred Securities; provided, however, that where a consent under
the Indenture would require the consent of each Holder of Outstanding Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior written consent of each holder of Preferred Securities. The Trustees
shall not revoke any action previously authorized or approved by a vote of the
Holders of the Outstanding Preferred Securities, except by a subsequent vote of
the Holders of the Outstanding Preferred Securities. The Property Trustee shall
notify each Holder of the Outstanding Preferred Securities of any notice of
default received from the Debenture Trustee with respect to the Debentures. In
addition to obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Trustees shall, at
the expense of the Depositor, obtain an Opinion of Counsel experienced in such
matters to the effect that the Trust shall continue to be classified as a
grantor trust and not as an association taxable as a corporation for United
States federal income tax purposes on account of such action.
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(c) If any proposed amendment to the Trust Agreement provides for, or
the Trustees otherwise propose to effect, (i) any action that would adversely
affect in any material respect the powers, preferences, privileges or special
rights of the Preferred Securities, whether by way of amendment to the Trust
Agreement or otherwise; or (ii) the dissolution, winding-up or termination of
the Trust, other than pursuant to the terms of this Trust Agreement, then the
Holders of Outstanding Preferred Securities as a class shall be entitled to vote
on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of the Holders of at least 66 2/3 in
Liquidation Amount of the Outstanding Preferred Securities. No amendment to this
Trust Agreement may be made if, as a result of such amendment, the Trust would
cease to be classified as a grantor trust or would be classified as an
association taxable as a corporation for United States federal income tax
purposes.
(d) If any Distributions payable on the Preferred Securities are in
arrears for six quarterly periods, the Holders of the Preferred Securities,
voting separately, as a class with any other Holders having similar voting
rights, will be entitled to elect two directors to the Board of Directors of the
Depositor at the next special or annual meeting of the shareholders of
Depositor. Such voting rights continue until such time as the Distribution
arrearage on the Preferred Securities has been paid in full.
Section 6.2 Notice of Meetings. Notice of all meetings of the Preferred
Securityholders, stating the time, place and purpose of the meeting, shall be
given by the Property Trustee pursuant to Section 10.8 to each Preferred
Securityholder of record, at his registered address, at least 15 days and not
more than 90 days before the meeting. At any such meeting, any business properly
before the meeting may be so considered whether or not stated in the notice of
the meeting. Any adjourned meeting may be held as adjourned without further
notice.
Section 6.3 Meetings of Preferred Securityholders. (a) No annual
meeting of Securityholders is required to be held. The Administrative Trustees,
however, shall call a meeting of Securityholders to vote on any matter in
respect of which Preferred Securityholders are entitled to vote upon the written
request of the Preferred Securityholders of 25% of the Outstanding Preferred
Securities (based upon their aggregate Liquidation Amount) and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of Preferred Securityholders to vote on any matters
as to which the Preferred Securityholders are entitled to vote.
(b) Preferred Securityholders of record of 50% of the Outstanding
Preferred Securities (based upon their aggregate Liquidation Amount), present in
person or by proxy, shall constitute a quorum at any meeting of Securityholders.
(c) If a quorum is present at a meeting, an affirmative vote by the
Preferred Securityholders of record present, in person or by proxy, holding more
than a majority of the Preferred Securities (based upon their aggregate
Liquidation Amount) held by the Preferred Securityholders of record present,
either in person or by proxy, at such meeting shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
Section 6.4 Voting Rights. Securityholders shall be entitled to one
vote for each $25.00 of Liquidation Amount represented by their Trust Securities
in respect of any matter as to which such Securityholders are entitled to vote.
Section 6.5 Proxies, Etc. At any meeting of Securityholders, any
Securityholder entitled to vote thereat may vote by proxy, provided that no
proxy, shall be voted at any meeting unless it shall have been placed on file
with the Administrative Trustees, or with such other officer or agent of the
Trust as the Administrative Trustees may direct, for verification prior to the
time at which such vote shall be taken. When Trust Securities are held jointly
by several persons, any one of them may vote at any meeting in person or by
proxy in respect of such Trust
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Securities, but if more than one of them shall be present at such meeting in
person or by proxy, and such joint owners or their proxies so present disagree
as to any vote to be cast, such vote shall not be received in respect of such
Trust Securities. A proxy purporting to be executed by or on behalf of a
Securityholder shall be deemed valid unless challenged at or prior to its
exercise, and, the burden of proving invalidity shall rest on the challenger.
No proxy shall be valid more than three years after its date of execution.
Section 6.6 Securityholder Action by Written Consent. Any action which
may be taken by Securityholders at a meeting may be taken without a meeting if
Securityholders holding more than a majority of all Outstanding Trust Securities
(based upon their aggregate Liquidation Amount) entitled to vote in respect of
such action (or such larger proportion thereof as shall be required by any
express provision of this Trust Agreement) shall consent to the action in
writing (based upon their aggregate Liquidation Amount).
Section 6.7 Record Date for Voting and Other Purposes. For the purposes
of determining the Securityholders who are entitled to notice of and to vote at
any meeting or by written consent, or to participate in any Distribution on the
Trust Securities in respect of which a record date is not otherwise provided for
in this Trust Agreement, or for the purpose of any other action, the
Administrative Trustees may from time to time fix a date, not more than 90 days
prior to the date of any meeting of Securityholders or the payment of
Distribution or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes.
Section 6.8 Acts of Securityholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Trust Agreement to be given, made or taken by Securityholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Securityholders or owners in person or by an agent
duly appointed in writing; and, except as otherwise expressly provided herein,
such action shall become effective when such instrument or instruments are
delivered to an Administrative Trustee. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Securityholders 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 Trustees, if made in the manner
provided in this Section 6.8.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Trustee receiving the same deems sufficient.
(c) The ownership of Preferred Securities shall be proved by the
Securities Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Securityholder of any Trust Security shall bind every
future Securityholder of the same Trust Security and the Securityholder of every
Trust Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
(e) Without limiting the foregoing, a Securityholder entitled hereunder
to take any action hereunder with regard to any particular Trust Security may do
so with regard to all or any part of the Liquidation Amount
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of such Trust Security or by one or more duly appointed agents each of which may
do so pursuant to such appointment with regard to all or any part of such
liquidation amount.
(f) A Securityholder may institute a legal proceeding directly against
the Depositor under the Guarantee to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee (as
defined in the Guarantee), the Trust or any Person.
Section 6.9 Inspection of Records. Upon reasonable notice to the
Administrative Trustees and the Property Trustee, the records of the Trust shall
be open to inspection by Securityholders during normal business hours for any
purpose reasonably related to such Securityholder's interest as a
Securityholder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties of the Bank and the Property
Trustee. The Bank and the Property Trustee, each severally on behalf of and as
to itself, as of the date hereof, and each Successor Property Trustee at the
time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee hereunder (the term "Bank" being used to refer to such
Successor Property Trustee in its separate corporate capacity) hereby represents
and warrants (as applicable) for the benefit of the Depositor and the
Securityholders that:
(a) the Bank is a banking corporation duly organized, validly existing
and in good standing under the laws of the State of Georgia;
(b) the Bank has full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Trust Agreement and has
taken all necessary action to authorize the execution, delivery and performance
by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and
delivered by the Property Trustee and constitutes the valid and legally binding
agreement of the Property Trustee enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(d) the execution, delivery and performance by the Property Trustee of
this Trust Agreement has been duly authorized by all necessary corporate or
other action on the part of the Property Trustee and does not require any
approval of stockholders of the Bank and such execution, delivery and
performance shall not (i) violate the Bank's charter or by-laws; (ii) violate
any provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of, any Lien on any
properties included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or instrument
to which the Property Trustee or the Bank is a party or by which it is bound; or
(iii) violate any law, governmental rule or regulation of the United States or
the State of Georgia, as the case may be, governing the banking or trust powers
of the Bank or the Property Trustee (as appropriate in context) or any order,
judgment or decree applicable to the Property Trustee or the Bank;
(e) neither the authorization, execution or delivery by the Property
Trustee of this Trust Agreement nor the consummation of any of the transactions
by the Property Trustee contemplated herein or therein requires the consent or
approval of, the giving of notice to, the registration with or the taking of any
other action with respect to any governmental authority or agency under any
existing federal law governing the banking or trust
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powers of the Bank or the Property Trustee, as the case may be, under the laws
of the United States or the State of Georgia; and
(f) there are no proceedings pending or, to the best of the Property
Trustee's knowledge, threatened against or affecting the Bank or the Property
Trustee in any court or before any governmental authority, agency or arbitration
board or tribunal which, individually or in the aggregate, would materially and
adversely affect the Trust or would question the right, power and authority of
the Property Trustee to enter into or perform its obligations as one of the
Trustees under this Trust Agreement.
Section 7.2 Representations and Warranties of the Delaware Bank and the
Delaware Trustee. The Delaware Bank and the Delaware Trustee, each severally on
behalf of and as to itself, as of the date hereof, and each Successor Delaware
Trustee at the time of the Successor Delaware Trustee's acceptance of
appointment as Delaware Trustee hereunder (the term "Delaware Bank" being used
to refer to such Successor Delaware Trustee in its separate corporate capacity),
hereby represents and warrants (as applicable) for the benefit of the Depositor
and the Securityholders that:
(a) the Delaware Bank is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) the Delaware Bank has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and
delivered by the Delaware Trustee and constitutes the valid and legally binding
agreement of the Delaware Trustee enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(d) the execution, delivery and performance by the Delaware Trustee of
this Trust Agreement has been duly authorized by all necessary corporate or
other action on the part of the Delaware Trustee and does not require any
approval of stockholders of the Delaware Bank and such execution, delivery and
performance shall not (i) violate the Delaware Bank's charter or by-laws; (ii)
violate any provision of, or constitute, with or without notice or lapse of
time, a default under, or result in the creation or imposition of, any Lien on
any properties included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or instrument
to which the Delaware Bank or the Delaware Trustee is a party or by which it is
bound; or (iii) violate any law, governmental rule or regulation of the United
States or the State of Delaware, as the case may be, governing the banking or
trust powers of the Delaware Bank or the Delaware Trustee (as appropriate in
context) or any order, judgment or decree applicable to the Delaware Bank or the
Delaware Trustee;
(e) neither the authorization, execution or delivery by the Delaware
Trustee of this Trust Agreement nor the consummation of any of the transactions
by the Delaware Trustee contemplated herein or therein requires the consent or
approval of, the giving of notice to, the registration with or the taking of any
other action with respect to any governmental authority or agency governing the
banking or trust powers of the Delaware Bank or the Delaware Trustee, as the
case may be, under the federal laws of the United States or the laws of the
State of Delaware; and
(f) there are no proceedings pending or, to the best of the Delaware
Trustee's knowledge, threatened against or affecting the Delaware Bank or the
Delaware Trustee in any court or before any governmental
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authority, agency or arbitration board or tribunal which, individually or in the
aggregate, would materially and adversely affect the Trust or would question the
right, power and authority of the Delaware Trustee to enter into or perform its
obligations as one of the Trustees under this Trust Agreement.
Section 7.3 Representations and Warranties of Depositor. The Depositor
hereby represents and warrants for the benefit of the Securityholders that:
(a) the Trust Securities Certificates issued on the Closing Date or the
Option Closing Date, if applicable, on behalf of the Trust have been duly
authorized and, shall have been, duly and validly executed, issued and delivered
by the Administrative Trustees pursuant to the terms and provisions of, and in
accordance with the requirements of, this Trust Agreement and the
Securityholders shall be, as of such date, entitled to the benefits of this
Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by
the Trust (or the Trustees on behalf of the Trust) under the laws of the State
of Delaware or any political subdivision thereof in connection with the
execution, delivery and performance by the Bank, the Property Trustee or the
Delaware Trustee, as the case may be, of this Trust Agreement.
ARTICLE VIII
TRUSTEES
Section 8.1 Certain Duties and Responsibilities. (a) The duties and
responsibilities of the Trustees shall be as provided by this Trust Agreement
and, in the case of the Property Trustee, by the Trust Indenture Act.
Notwithstanding the foregoing, no provision of this Trust Agreement shall
require the Trustees to expend or risk their own funds or otherwise incur any
financial liability in the performance of any of their duties hereunder, or in
the exercise of any of their rights or powers, if they shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. No Administrative
Trustee nor the Delaware Trustee shall be liable for its act or omissions
hereunder except as a result of its own gross negligence or willful misconduct.
The Property Trustee's liability shall be determined under the Trust Indenture
Act. Whether or not therein expressly so provided, every provision of this Trust
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustees shall be subject to the provisions of this Section
8.1. To the extent that, at law or in equity, the Delaware Trustee or an
Administrative Trustee has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to the Securityholders, the Delaware Trustee or
such Administrative Trustee shall not be liable to the Trust or to any
Securityholder for such Trustee's good faith reliance on the provisions of this
Trust Agreement. The provisions of this Trust Agreement, to the extent that they
restrict the duties and liabilities of the Delaware Trustee or the
Administrative Trustees otherwise existing at law or in equity, are agreed by
the Depositor and the Securityholders to replace such other duties and
liabilities of the Delaware Trustee and the Administrative Trustees, as the case
may be.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only to the extent that there shall be sufficient
revenue or proceeds from the Trust Property to enable the Property Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each
Securityholder, by its acceptance of a Trust Security, agrees that it shall look
solely to the revenue and proceeds from the Trust Property to the extent legally
available for distribution to it as herein provided and that the Trustees are
not personally liable to it for any amount distributable in respect of any Trust
Security or for any other liability in respect of any Trust Security. This
Section 8.1(b) does not limit the liability of the Trustees expressly set forth
elsewhere in this Trust Agreement or, in the case of the Property Trustee, in
the Trust Indenture Act.
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(c) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) the Property Trustee shall not be liable for any
error of judgment made in good faith by an authorized officer
of the Property Trustee, unless it shall be proved that the
Property Trustee was negligent in ascertaining the pertinent
facts;
(ii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of
not less than a majority in Liquidation Amount of the Trust
Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the
Debentures and the Payment Account shall be to deal with such
Property in a similar manner as the Property Trustee deals
with similar property for its own account, subject to the
protections and limitations on liability afforded to the
Property Trustee under this Trust Agreement and the Trust
Indenture Act;
(iv) the Property Trustee shall not be liable for any
interest on any money received by it except as it may
otherwise agree with the Depositor and money held by the
Property Trustee need not be segregated from other funds held
by it except in relation to the Payment Account maintained by
the Property Trustee pursuant to Section 3.1 and except to the
extent otherwise required by law; and
(d) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Depositor with their respective
duties under this Trust Agreement, nor shall the Property Trustee be liable for
the negligence, default or misconduct of the Administrative Trustees or the
Depositor.
Section 8.2 Certain Notices. (a) Within five Business Days after the
occurrence of any Event of Default actually known to the Property Trustee, the
Property Trustee shall transmit, in the manner and to the extent provided in
Section 10.8, notice of such Event of Default to the Securityholders, the
Administrative Trustees and the Depositor, unless such Event of Default shall
have been cured or waived. For purposes of this Section 8.2 the term "Event of
Default" means any event that is, or after notice or lapse of time or both would
become, an Event of Default.
(b) The Administrative Trustees shall transmit, to the Securityholders
in the manner and to the extent provided in Section 10.8, notice of the
Depositor's election to begin or further extend an Extended Interest Payment
Period on the Debentures (unless such election shall have been revoked) within
the time specified for transmitting such notice to the holders of the Debentures
pursuant to the Indenture as originally executed.
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 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;
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(b) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action; or
(ii) in construing any of the provisions of this Trust Agreement the Property
Trustee finds the same ambiguous or inconsistent with other provisions contained
herein; or (iii) the Property Trustee is unsure of the application of any
provision of this Trust Agreement, then, except as to any matter as to which the
Preferred Securityholders are entitled to vote under the terms of this Trust
Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting written instructions of the Depositor as to the course of action to
be taken and the Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor within 10
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than 2 Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the Securityholders, in
which event the Property Trustee shall have no liability except for its own bad
faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the Administrative
Trustees contemplated by this Trust Agreement shall be sufficiently evidenced by
an Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the
Property Trustee shall deem it desirable that a matter be established before
undertaking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively rely upon an Officer's
Certificate which, upon receipt of such request, shall be promptly delivered by
the Depositor or the Administrative Trustees;
(e) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement, any filing under tax or securities laws or any filing
under tax or securities laws) or any rerecording, refiling or reregistration
thereof;
(f) the Property Trustee may consult with counsel of its choice (which
counsel may be counsel to the Depositor or any of its Affiliates) and the advice
of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon and, in accordance with such advice, such counsel may be
counsel to the Depositor or any of its Affiliates, and may include any of its
employees; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement, unless
such Securityholders shall have offered to the Property Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(h) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Securityholders, but the
Property Trustee may make such further inquiry or investigation into such facts
or matters as it may see fit;
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(i) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys, provided that the Property Trustee shall be responsible for
its own negligence or recklessness with respect to selection of any agent or
attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder the Property
Trustee (i) may request instructions from the Holders of the Trust Securities
which instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action; (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received; and (iii) shall
be protected in acting in accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement. No provision of this
Trust Agreement shall be deemed to impose any duty or obligation on the Property
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it, in any jurisdiction in which it shall be
illegal, or in which the Property Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts, or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Property Trustee shall be construed to be a duty.
Section 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 Trust, and the Trustees do not assume any
responsibility for their correctness. The Trustees shall not be accountable for
the use or application by the Depositor of the proceeds of the Debentures.
Section 8.5 May Hold Securities. Any Trustee or any other agent of any
Trustee or the Trust, in its individual or any other capacity, may become the
owner or pledgee of Trust Securities and, subject to Sections 8.8 and 8.13 and
except as provided in the definition of the term "Outstanding" in Article I, may
otherwise deal with the Trust with the same rights it would have if it were not
a Trustee or such other agent.
Section 8.6 Compensation; Indemnity; Fees. The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable compensation
for all services rendered by them hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to such Trustee's negligence, bad faith or
willful misconduct (or, in the case of the Administrative Trustees or the
Delaware Trustee, any such expense, disbursement or advance as may be
attributable to its, his or her gross negligence, bad faith or willful
misconduct); and
(c) to indemnify each of the Trustees or any predecessor Trustee for,
and to hold the Trustees harmless against, any loss, damage, claims, liability,
penalty or expense, arising out of or in connection with the acceptance or
administration of this Trust Agreement, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder,
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except any such loss, damage, claims, liability or penalty or expense, as may be
attributable to such Trustee's negligence, bad faith or willful misconduct for
(or, in the case of the Administrative Trustees or the Delaware Trustee, any
such expense, disbursement or advance as may be attributable to its, his or her
gross negligence, bad faith or willful misconduct).
No Trustee may claim any Lien or charge on any Trust Property as a
result of any amount due pursuant to this Section 8.6.
Section 8.7 Corporate Property Trustee Required; Eligibility of
Trustees. (a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this Section
8.7, the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of this
Section 8.7, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article VIII.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware; or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.
Section 8.8 Conflicting Interests. If the Property Trustee has or shall
acquire a conflicting interest within the meaning of the Trust Indenture Act,
the Property Trustee shall either eliminate such interest or resign, to the
extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Trust Agreement.
Section 8.9 Co-trustees and Separate Trustee. (a) Unless an Event of
Default shall have occurred and be continuing, at any time or times, for the
purpose of meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust Property may at the time be located,
the Depositor shall have power to appoint, and upon the written request of the
Property Trustee, the Depositor shall for such purpose join with the Property
Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to appoint, one or more Persons approved by the
Property Trustee either to act as co-trustee, jointly with the Property Trustee,
of all or any part of such Trust Property, or to the extent required by law to
act as separate trustee of any such property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section 8.9. If
the Depositor does not join in such appointment within 15 days after the receipt
by it of a request so to do, or in case a Debenture Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to make
such appointment. Any co-trustee or separate trustee appointed pursuant to this
Section 8.9 shall either be (i) a natural person who is at least 21 years of age
and a resident of the United States; or (ii) a legal entity with its principal
place of business in the United States that shall act through one or more
persons authorized to bind such entity.
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(b) Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged, and delivered
by the Depositor.
(c) Every co-trustee or separate trustee shall, to the extent permitted
by law, but to such extent only, be appointed subject to the following terms,
namely:
(i) The Trust Securities shall be executed and
delivered and all rights, powers, duties and obligations
hereunder in respect of the custody of securities, cash and
other personal property held by, or required to be deposited
or pledged with, the Trustees specified hereunder, shall be
exercised, solely by such Trustees and not by such co-trustee
or separate trustee.
(ii) The rights, powers, duties and obligations hereby
conferred or imposed upon the Property Trustee in respect of
any property covered by such appointment shall be conferred or
imposed upon and exercised or performed by the Property
Trustee or by the Property Trustee and such co-trustee or
separate trustee jointly, as shall be provided in the
instrument appointing such co- trustee or separate trustee,
except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such
act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such
co-trustee or separate trustee.
(iii) The Property Trustee at any time, by an instrument
in writing executed by it, with the written concurrence of the
Depositor, may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section
8.9, and, in case a Debenture Event of Default has occurred
and is continuing, the Property Trustee shall have the power
to accept the resignation of, or remove, any such co-trustee
or separate trustee without the concurrence of the Depositor.
Upon the written request of the Property Trustee, the
Depositor shall join with the Property Trustee in the
execution, delivery and performance of all instruments and
agreements necessary or proper to effectuate such resignation
or removal. A successor to any co-trustee or separate trustee
so resigned or removed may be appointed in the manner provided
in this Section 8.9.
(iv) No co-trustee or separate trustee hereunder shall
be personally liable by reason of any act or omission of the
Property Trustee or any other trustee hereunder.
(v) The Property Trustee shall not be liable by reason
of any act of a co-trustee or separate trustee.
(vi) Any Act of Holders delivered to the Property
Trustee shall be deemed to have been delivered to each such
co-trustee and separate trustee.
Section 8.10 Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Trustee pursuant to this Article VIII shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 8.11.
(b) Subject to the immediately preceding paragraph, the Relevant
Trustee may resign at any time with respect to the Trust Securities by giving
written notice thereof to the Securityholders. If the instrument of
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acceptance by the successor Trustee required by Section 8.11 shall not have been
delivered to the Relevant Trustee within 30 days after the giving of such notice
of resignation, the Relevant Trustee may petition, at the expense of the
Depositor, any court of competent jurisdiction for the appointment of a
successor Relevant Trustee with respect to the Trust Securities.
(c) Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative Trustee may
be removed by the Common Securityholder at any time.
(d) If any Trustee shall resign, be removed or become incapable of
acting as Trustee, or if a vacancy shall occur in the office of any Trustee for
any cause, at a time when no Debenture Event of Default shall have occurred and
be continuing, the Common Securityholder, by Act of the Common Securityholder
delivered to the retiring Trustee, shall promptly appoint a successor Trustee or
Trustees with respect to the Trust Securities and the Trust, and the successor
Trustee shall comply with the applicable requirements of Section 8.11. If the
Property Trustee or the Delaware Trustee shall resign, be removed or become
incapable of continuing to act as the Property Trustee or the Delaware Trustee,
as the case may be, at a time when a Debenture Event of Default shall have
occurred and is continuing, the Preferred Securityholders, by Act of the
Securityholders of a majority in Liquidation Amount of the Preferred Securities
then Outstanding delivered to the retiring Relevant Trustee, shall promptly
appoint a successor Relevant Trustee or Trustees with respect to the Trust
Securities and the Trust, and such successor Trustee shall comply with the
applicable requirements of Section 8.11. If an Administrative Trustee shall
resign, be removed or become incapable of acting as Administrative Trustee, at a
time when a Debenture Event of Default shall have occurred and be continuing,
the Common Securityholder, by Act of the Common Securityholder delivered to an
Administrative Trustee, shall promptly appoint a successor Administrative
Trustee or Administrative Trustees with respect to the Trust Securities and the
Trust, and such successor Administrative Trustee or Administrative Trustees
shall comply with the applicable requirements of Section 8.11. If no successor
Relevant Trustee with respect to the Trust Securities shall have been so
appointed by the Common Securityholder or the Preferred Securityholders and
accepted appointment in the manner required by Section 8.11, any Securityholder
who has been a Securityholder of Trust Securities on behalf of himself and all
others similarly situated may petition a court of competent jurisdiction for the
appointment of a Relevant Trustee with respect to the Trust Securities.
(e) The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 10.8 and shall give notice to
the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust office if it is the Property
Trustee.
(f) Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of remaining Administrative Trustees if
there are at least two of them; or (b) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees set forth in Section 8.7).
Section 8.11 Acceptance of Appointment by Successor. (a) In case of the
appointment hereunder of a successor Relevant Trustee with respect to the Trust
Securities and the Trust, the retiring Relevant Trustee and each successor
Relevant Trustee with respect to the Trust Securities shall execute and deliver
an instrument hereto
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wherein each successor Relevant Trustee shall accept such appointment and which
shall contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust and upon the execution and delivery of such
instrument the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee with
respect to the Trust Securities and the Trust; but, on request of the Trust or
any successor Relevant Trustee such retiring Relevant Trustee shall duly assign,
transfer and deliver to such successor Relevant Trustee all Trust Property, all
proceeds thereof and money held by such retiring Relevant Trustee hereunder with
respect to the Trust Securities and the Trust.
(b) Upon request of any such successor Relevant Trustee, the Trust
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the immediately preceding paragraph, as the case may be.
(c) No successor Relevant Trustee shall accept its appointment unless
at the time of such acceptance such successor Relevant Trustee shall be
qualified and eligible under this Article VIII.
Section 8.12 Merger, Conversion, Consolidation or Succession to
Business. Any Person into which any relevant Trustee may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Relevant Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of such Relevant Trustee, shall be the successor of such Relevant
Trustee hereunder, provided such Person shall be otherwise qualified and
eligible under this Article VIII, without the execution or filing of any paper
or any further act on the part of any of the parties hereto.
Section 8.13 Preferential Collection of Claims Against Depositor or
Trust. If and when the Property Trustee shall be or become a creditor of the
Depositor or the Trust (or any other obligor upon the Debentures or the Trust
Securities), the Property Trustee shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
Section 8.14 Reports by Property Trustee. (a) Not later than July 15 of
each year commencing with July 15, 1998, the Property Trustee shall transmit to
all Securityholders in accordance with Section 10.8, and to the Depositor, a
brief report dated as of such 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 Securityholders
such reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
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<PAGE> 40
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with the American Stock Exchange,
Inc. and each national securities exchange or other organization upon which the
Trust Securities are listed, and also with the Commission and the Depositor.
Section 8.15 Reports to the Property Trustee. The Depositor and the
Administrative Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as required by Section 314 of
the Trust Indenture Act (if any) and the compliance certificate required by
Section 314(a) of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
Section 8.16 Evidence of Compliance with Conditions Precedent. Each of
the Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Trust Agreement that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) of the Trust Indenture Act shall be given in the form of an Officers'
Certificate.
Section 8.17 Number of Trustees. (a) The number of Trustees shall be
four, provided that the Holder of all of the Common Securities by written
instrument may increase or decrease the number of Administrative Trustees. The
Property Trustee and the Delaware Trustee may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the
number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to annul the Trust. Whenever a vacancy in the number of Administrative Trustees
shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 8.10, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.
Section 8.18 Delegation of Power. (a) Any Administrative Trustee may,
by power of attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the purpose of executing
any documents contemplated in Section 2.7(a); and
(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.
Section 8.19 Voting. Except as otherwise provided in this Trust
Agreement, the consent or approval of the Administrative Trustees shall require
consent or approval by not less than a majority of the Administrative Trustees,
unless there are only two, in which case both must consent.
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<PAGE> 41
ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER
Section 9.1 Termination upon Expiration Date. Unless earlier dissolved,
the Trust shall automatically dissolve on, December 31, 2028 (the "Expiration
Date") subject to 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 a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) delivery of written direction to the Property Trustee by the
Depositor at any time (which direction is wholly optional and within the
discretion of the Depositor) to dissolve the Trust and distribute the Debentures
to Securityholders in exchange for the Preferred Securities in accordance with
Section 9.4;
(c) the redemption of all of the Preferred Securities in connection
with the redemption of all of the Debentures; and
(d) an order for dissolution of the Trust shall have been entered by a
court of competent jurisdiction.
Section 9.3 Termination. The respective obligations and
responsibilities of the Trustees and the Trust created and continued hereby
shall terminate upon the latest to occur of the following: (a) the distribution
by the Property Trustee to Securityholders upon the liquidation of the Trust
pursuant to Section 9.4, or upon the redemption of all of the Trust Securities
pursuant to Section 4.2, of all amounts required to be distributed hereunder
upon the final payment of the Trust Securities; (b) the payment of any expenses
owed by the Trust; (c) the discharge of all administrative duties of the
Administrative Trustees, including the performance of any tax reporting
obligations with respect to the Trust or the Securityholders; and (d) the filing
of a Certificate of Cancellation by the Administrative Trustee under the
Business Trust Act.
Section 9.4 Liquidation. (a) If an Early Termination Event specified in
clause (a), (b), or (d) of Section 9.2 occurs or upon the Expiration Date, the
Trust shall be liquidated by the Trustees as expeditiously as the Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to each Securityholder a
Like Amount of Debentures, subject to Section 9.4(d). Notice of liquidation
shall be given by the Property Trustee by first-class mail, postage prepaid,
mailed not later than 30 nor more than 60 days prior to the Liquidation Date to
each Holder of Trust Securities at such Holder's address appearing in the
Securities Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date,
the Trust Securities shall no longer be deemed to be
Outstanding and any Trust Securities Certificates not
surrendered for exchange shall be deemed to represent a Like
Amount of Debentures; and
(iii) provide such information with respect to the
mechanics by which Holders may exchange Trust Securities
Certificates for Debentures, or, if Section 9.4(d) applies,
receive a Liquidation Distribution, as the Administrative
Trustees or the Property Trustee shall deem appropriate.
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<PAGE> 42
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect
the liquidation of the Trust and distribution of the Debentures to
Securityholders, the Property Trustee shall establish a record date for such
distribution (which shall be not more than 45 days prior to the Liquidation
Date) and, either itself acting as exchange agent or through the appointment of
a separate exchange agent, shall establish such procedures as it shall deem
appropriate to effect the distribution of Debentures in exchange for the
Outstanding Trust Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities shall no longer be deemed to be
outstanding; (ii) certificates representing a Like Amount of Debentures shall be
issued to holders of Trust Securities Certificates upon surrender of such
certificates to the Administrative Trustees or their agent for exchange; (iii)
the Depositor shall use its reasonable efforts to have the Debentures listed on
the American Stock Exchange or on such other securities exchange or other
organization as the Preferred Securities are then listed or traded; (iv) any
Trust Securities Certificates not so surrendered for exchange shall be deemed to
represent a Like Amount of Debentures, accruing interest at the rate provided
for in the Debentures from the last Distribution Date on which a Distribution
was made on such Trust Securities Certificates until such certificates are so
surrendered (and until such certificates are so surrendered, no payments of
interest or principal shall be made to holders of Trust Securities Certificates
with respect to such Debentures); and (v) all rights of Securityholders holding
Trust Securities shall cease, except the right of such Securityholders to
receive Debentures upon surrender of Trust Securities Certificates.
(d) In the event that, notwithstanding the other provisions of this
Section 9.4, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Property Trustee in such manner as the
Property Trustee determines. In such event, on the date of the dissolution,
winding-up or other termination of the Trust, Securityholders shall be entitled
to receive out of the assets of the Trust available for distribution to
Securityholders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the Liquidation Amount per Trust
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If, upon any such
dissolution, winding- up or termination, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then, subject to the next
succeeding sentence, the amounts payable by the Trust on the Trust Securities
shall be paid on a pro rata basis (based upon Liquidation Amounts). The holder
of the Common Securities shall be entitled to receive Liquidation Distributions
upon any such dissolution, winding-up or termination pro rata (determined as
aforesaid) with Holders of Preferred securities, except that, if a Debenture
Event of Default has occurred and is continuing, the Preferred Securities shall
have a priority over the Common Securities.
Section 9.5 Mergers, Consolidations, Amalgamations or Replacements of
the Trust. The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except pursuant
to this Section 9.5. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the holders of the Preferred
Securities, the Property Trustee or the Delaware Trustee, the Trust may merge
with or into, consolidate, amalgamate, be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any state; provided, that (i) such successor
entity either (a) expressly assumes all of the obligations of the Trust with
respect to the Preferred Securities; or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "Successor Securities) so long as the Successor Securities rank
the same as the Preferred Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise; (ii) the
Depositor expressly appoints a trustee of such successor entity possessing
substantially the same powers and duties as the
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<PAGE> 43
Property Trustee as the holder of the Debentures; (iii) the Successor Securities
are listed or traded, or any Successor Securities shall be listed or traded upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed, if any; (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Preferred Securities (including any Successor Securities) in any
material respect; (v) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Depositor has received an
Opinion of Counsel to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect; and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Trust nor such successor entity shall be required
to register as an "investment company" under the Investment Company Act; and
(vi) the Depositor owns all of the common securities of such successor entity
and guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge
with or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other Person or permit any other
Person to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause the Trust or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Limitation of Rights of Securityholders. The death or
incapacity of any Person having an interest, beneficial or otherwise, in Trust
Securities shall not operate to terminate this Trust Agreement, nor entitle the
legal representatives or heirs of such Person or any Securityholder for such
Person, to claim an accounting, take any action or bring any proceeding in any
court for a partition or winding-up of the arrangements contemplated hereby, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Section 10.2 Amendment. (a) This Trust Agreement may be amended from
time to time by the Trustees and the Depositor, without the consent of any
Securityholders, (i) as provided in Section 8.11 with respect to acceptance of
appointment by a successor Trustee; (ii) to cure any ambiguity, correct or
supplement any provision herein which may be inconsistent with any other
provision herein or therein, or to make any other provisions with respect to
matters or questions arising under this Trust Agreement, that shall not be
inconsistent with the other provisions of this Trust Agreement; or (iii) to
modify, eliminate or add to any provisions of this Trust Agreement to such
extent as shall be necessary to ensure that the Trust shall be classified for
United States federal income tax purposes as a grantor trust at all times that
any Trust Securities are outstanding or to ensure that the Trust shall not be
required to register as an "investment company" under the Investment Company
Act; provided, however, that in the case of clause (ii), such action shall not
adversely affect in any material respect the interests of any Securityholder,
and any amendments of this Trust Agreement shall become effective when notice
thereof is given to the Securityholders.
(b) Except as provided in Section 6.1(c) or Section 10.2(c) hereof, any
provision of this Trust Agreement may be amended by the Trustees and the
Depositor (i) with the consent of Trust Securityholders representing not less
than a majority (based upon Liquidation Amounts) of the Trust Securities then
Outstanding; and (ii) upon receipt by the Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment shall not affect the Trust's status
as a
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<PAGE> 44
grantor trust for United States federal income tax purposes or the Trust's
exemption from status of an "investment company" under the Investment Company
Act.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Securityholder (such
consent being obtained in accordance with Section 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 Securityholder to institute suit
for the enforcement of any such payment on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the Securityholders
(such consent being obtained in accordance with Section 6.3 or 6.6 hereof), this
paragraph (c) of this Section 10.2 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption from
status of an "investment company" under the Investment Company Act or to fail or
cease to be classified as a grantor trust for United States federal income tax
purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended in
a manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust Agreement is made,
the Administrative Trustees shall promptly provide to the Depositor a copy of
such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
Section 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 SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH
RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF).
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 which is a Business Day (except as otherwise provided in Sections
4.1(a) and 4.2(d)), with the same force and effect as though made on the date
fixed for such payment, and no distribution shall accumulate thereon for the
period after such date.
Section 10.6 Successors. This Trust Agreement shall be binding upon and
shall inure to the benefit of any successor to the Depositor, the Trust or the
Relevant Trustee(s), including any successor by operation of law. Except in
connection with a consolidation, merger or sale involving the Depositor that is
permitted under Article
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<PAGE> 45
XII of the Indenture and pursuant to which the assignee agrees in writing to
perform the Depositor's obligations hereunder, the Depositor shall not assign
its obligations hereunder.
Section 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 which by any provision of this Trust Agreement is
required or permitted to be given or served to or upon any Securityholder or the
Depositor may be given or served in writing by deposit thereof, first-class
postage prepaid, in the United States mail, hand delivery or facsimile
transmission, in each case, addressed, (a) in the case of a Preferred
Securityholder, to such Preferred Securityholder as such Securityholder's name
and address may appear on the Securities Register; and (b) in the case of the
Common Securityholder or the Depositor, to Eagle Bancshares, Inc., 4305 Lynburn
Drive, Tucker, Georgia 30084, Attention: C. Jere Sechler, Jr., Chairman,
President and Chief Executive Officer. Any notice to Preferred Securityholders
shall also be given to such owners as have, within two years preceding the
giving of such notice, filed their names and addresses with the Property Trustee
for that purpose. Such notice, demand or other communication to or upon a
Securityholder shall be deemed to have been sufficiently given or made, for all
purposes, upon hand delivery, mailing or transmission.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee or the Administrative Trustees shall be given in
writing addressed (until another address is published by the Trust) as follows:
(a) with respect to the Property Trustee to SunTrust Bank, Atlanta, Corporate
Trust Division, 3495 Piedmont Road, Suite 810, Atlanta, Georgia 30305,
Attention: , Vice President; (b) with respect to the Delaware Trustee, to
Wilmington Trust Company, _______________________, Attention: ; and (c) with
respect to the Administrative Trustees, to them at the address above for notices
to the Depositor, marked "Attention: Administrative Trustees of Capital Trust."
Such notice, demand or other communication to or upon the Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Trust or the Property Trustee.
Section 10.9 Agreement Not to Petition. Each of the Trustees and the
Depositor agree for the benefit of the Securityholders that, until at least one
year and 1 day after the Trust has been terminated in accordance with Article
IX, they shall not file, or join in the filing of, a petition against the Trust
under any bankruptcy, insolvency, reorganization or other similar law
(including, without limitation, the United States Bankruptcy Code of 1978, as
amended) (collectively, "Bankruptcy Laws") or otherwise join in the commencement
of any proceeding against the Trust under any Bankruptcy Law. In the event the
Depositor takes action in violation of this Section 10.9, the Property Trustee
agrees, for the benefit of Securityholders, that at the expense of the Depositor
(which expense shall be paid prior to the filing), it shall file an answer with
the bankruptcy court or otherwise properly contest the filing of such petition
by the Depositor against the Trust or the commencement of such action and raise
the defense that the Depositor has agreed in writing not to take such action and
should be stopped and precluded therefrom. The provisions of this Section 10.9
shall survive the termination of this Trust Agreement.
Section 10.10 Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust Indenture Act
that are required to be part of this Trust Agreement and shall, to the extent
applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a trustee
for the purposes of the Trust Indenture Act.
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<PAGE> 46
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
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 SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND
THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH
SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND
SUCH SECURITYHOLDER AND SUCH OTHERS.
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, as applicable, all as of the day and
year first above written.
EAGLE BANCSHARES, INC.
By:
-------------------------------------------------
C. Jere Sechler, Jr.
Chairman, President and Chief Executive Officer
Attest:
- ---------------------------------
Richard B. Inman, Jr., Secretary
SUNTRUST BANK, ATLANTA, as Property Trustee
By:
------------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Attest:
[BANK SEAL]
- -----------------------------------
Name:
------------------------------
Its:
-------------------------------
41
<PAGE> 47
WILMINGTON TRUST COMPANY, as Delaware Trustee
By:
------------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Attest:
[CORPORATE SEAL]
- -----------------------------------
Name:
------------------------------
Its:
-------------------------------
---------------------------------------------------
C. Jere Sechler, Jr., as Administrative Trustee
---------------------------------------------------
Richard B. Inman, Jr., as Administrative Trustee
42
<PAGE> 48
EXHIBIT A
CERTIFICATE OF TRUST
OF
EBI CAPITAL TRUST I
THIS CERTIFICATE OF TRUST OF EBI CAPITAL TRUST I (the "Trust") is being
duly executed and filed by WILMINGTON TRUST COMPANY, a Delaware banking
corporation, and C. JERE SECHLER, JR. and RICHARD B. INMAN, JR., each an
individual, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. C. Section 3801 et seq.).
1. Name. The name of the business trust formed hereby is EBI CAPITAL
TRUST I.
2. Delaware Trustee. The name and business address of the trustee of
the Trust in the State of Delaware is [ADDRESS].
3. Effective Date. This Certificate of Trust shall be effective on July
, 1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, have executed this Certificate of Trust as of the effective date above
written.
WILMINGTON TRUST COMPANY, as Trustee
By:
------------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
---------------------------------------------------
C. JERE SECHLER, JR., as Trustee
---------------------------------------------------
RICHARD B. INMAN, JR., as Trustee
<PAGE> 49
EXHIBIT B
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 C-1 NUMBER OF COMMON SECURITIES ________
($_______ Aggregate Liquidation Amount)
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
EBI CAPITAL TRUST I
_____% COMMON SECURITIES
(LIQUIDATION AMOUNT $25 PER COMMON SECURITY)
EBI CAPITAL TRUST I, a statutory business trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that EAGLE BANCSHARES,
INC. (the "Holder") is the registered owner of _________________________
(_______) common securities of the Trust representing undivided beneficial
interests in the assets of the Trust and designated the Common Securities
(liquidation amount $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 thereof shall be void. The designations, rights, privileges,
restrictions, preferences, and other terms and provisions of the Common
Securities are set forth in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Trust Agreement of the Trust dated
as of July , 1998, as the same may be amended from time to time (the "Trust
Agreement") among Eagle Bancshares, Inc., as SUNTRUST BANK, ATLANTA, as Property
Trustee, WILMINGTON TRUST COMPANY, as Delaware Trustee and the Holders of the
Trust Securities, including the designation of the terms of the Common
Securities as set forth therein. The Trust will furnish a copy of the Trust
Agreement to the Holder without charge upon written request to the Trust at its
principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder. Terms used but not defined
herein have the meaning set forth in the Trust Agreement.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this th day of July, 1998.
EBI CAPITAL TRUST I
By:
--------------------------------------
C. Jere Sechler, Jr.
Administrative Trustee
<PAGE> 50
COUNTERSIGNED AND REGISTERED:
SUNTRUST BANK, ATLANTA,
as Securities Registrar
By:
------------------------------
Authorized Signatory
B-2
<PAGE> 51
EXHIBIT C
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") dated as of
July , 1998, between EAGLE BANCSHARES, INC., a Georgia savings and loan holding
company (the "Company"), and EBI CAPITAL TRUST I, a Delaware business trust (the
"Trust").
RECITALS
WHEREAS, the Trust intends to issue its common securities (the "Common
Securities") to, and receive Debentures from, the Company and to issue and sell
EBI Capital Trust I __% Cumulative Trust Preferred Securities (the "Preferred
Securities") with such powers, preferences and special rights and restrictions
as are set forth in the Amended and Restated Trust Agreement of the Trust dated
as of July , 1998, as the same may be amended from time to time (the "Trust
Agreement");
WHEREAS, the Company shall directly or indirectly own all of the Common
Securities of the Trust and shall issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase the Company hereby agrees shall benefit the
Company and which purchase the Company acknowledges shall be made in reliance
upon the execution and delivery of this Agreement, the Company, including in its
capacity as holder of the Common Securities, and the Trust hereby agree as
follows:
ARTICLE I
Section 1.1 Guarantee by the Company. Subject to the terms and
conditions hereof, the Company, including in its capacity as holder of the
Common Securities, hereby irrevocably and unconditionally guarantees to each
person or entity to whom the Trust is now or hereafter becomes indebted or
liable (the "Beneficiaries") the full payment when and as due, of any and all
Obligations (as hereinafter defined) to such Beneficiaries. As used herein,
"Obligations" means any costs, expenses or liabilities of the Trust other than
obligations of the Trust to pay to holders of any Preferred Securities or other
similar interests in the Trust the amounts due such holders pursuant to the
terms of the Preferred Securities or such other similar interests, as the case
may be. This Agreement is intended to be for the benefit of, and to be
enforceable by, all such Beneficiaries, whether or not such Beneficiaries have
received notice hereof.
Section 1.2 Term of Agreement. This Agreement shall terminate and be of
no further force and effect upon the later of (a) the date on which full payment
has been made of all amounts payable to all holders of all the Preferred
Securities (whether upon redemption, liquidation, exchange or otherwise); and
(b) the date on which there are no Beneficiaries remaining; provided, however,
that this Agreement shall continue to be effective or shall be reinstated, as
the case may be, if at any time any holder of Preferred Securities or any
Beneficiary must restore payment of any sums paid under the Preferred
Securities, under any obligation, under the Preferred Securities Guarantee
Agreement dated the date hereof by Company and SunTrust Bank, Atlanta, as
guarantee trustee, or under this Agreement for any reason whatsoever. This
Agreement is continuing, irrevocable, unconditional and absolute.
Section 1.3 Waiver of Notice. The Company hereby waives notice of
acceptance of this Agreement and of any obligation to which it applies or may
apply, and Company hereby waives presentment, demand for payment, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
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Section 1.4 No Impairment. The obligations, covenants, agreements and
duties of the Company under this Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or any
portion of the obligations or for the performance of any other obligation under,
arising out of, or in connection with, the obligations;
(b) any failure, omission, delay or lack of diligence on the part of
the Beneficiaries to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Beneficiaries with respect to the obligations or any
action on the part of the Trust granting indulgence or extension of any kind; or
(c) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust.
There shall be no obligation of the Beneficiaries to give notice to, or
obtain the consent of, the Company with respect to the happening of any of the
foregoing.
Section 1.5 Enforcement. A Beneficiary may enforce this Agreement
directly against the Company, and the Company waives any right or remedy to
require that any action be brought against the Trust or any other person or
entity before proceeding against the Company.
ARTICLE II
Section 2.1 Binding Effect. All guarantees and agreements contained in
this Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the
Beneficiaries.
Section 2.2 Amendment. So long as there remains any Beneficiary or any
Preferred Securities of any series are outstanding, this Agreement shall not be
modified or amended in any manner adverse to such Beneficiary or to the holders
of the Preferred Securities.
Section 2.3 Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be given in writing by
delivering the same by facsimile transmission (confirmed by mail), telex, or by
registered or certified mail, addressed as follows (and if so given, shall be
deemed given when mailed or upon receipt of an answer back, if sent by telex):
EAGLE BANCSHARES, INC.
4305 Lynburn Drive
Tucker, Georgia 30084
Facsimile No.: (404) 908-6685
Attention: C.J. Sechler, Jr.
EBI CAPITAL TRUST I
4305 Lynburn Drive
Tucker, Georgia 30084
Facsimile No.: (404) 908-6685
Attention: C.J. Sechler, Jr.
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Section 2.4 Governing Law. This agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of Georgia
(without regard to conflict of laws principles).
THIS AGREEMENT is executed as of the day and year first above written.
EAGLE BANCSHARES, INC.
By:
-----------------------------------------------
C. Jere Sechler, Jr.
Chairman, President and Chief Executive Officer
EBI CAPITAL TRUST I
By:
-----------------------------------------------
Richard B. Inman, Jr., Administrative Trustee
C-3
<PAGE> 1
===============================================================================
GUARANTEE AGREEMENT
PREFERRED SECURITIES GUARANTEE AGREEMENT
BY AND BETWEEN
EAGLE BANCSHARES, INC.
AND
SUNTRUST BANK, ATLANTA
JULY , 1998
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
RECITALS
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions and Interpretation....................................................1
ARTICLE II
TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application..................................................4
Section 2.2. Lists of Holders of Securities....................................................4
Section 2.3. Reports by the Preferred Guarantee Trustee........................................4
Section 2.4. Periodic Reports to Preferred Guarantee Trustee...................................4
Section 2.5. Evidence of Compliance with Conditions Precedent..................................4
Section 2.6. Events of Default; Waiver.........................................................4
Section 2.7. Event of Default; Notice..........................................................5
Section 2.8. Conflicting Interests.............................................................5
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
Section 3.1. Powers and Duties of the Preferred Guarantee Trustee..............................5
Section 3.2. Certain Rights of Preferred Guarantee Trustee.....................................6
Section 3.3. Not Responsible for Recitals or Issuance of Guarantee.............................8
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
Section 4.1. Preferred Guarantee Trustee; Eligibility..........................................8
Section 4.2. Appointment, Removal and Resignation of Preferred Guarantee Trustees..............9
ARTICLE V
GUARANTEE
Section 5.1. Guarantee.........................................................................9
Section 5.2. Waiver of Notice and Demand.......................................................9
Section 5.3. Obligations Not Affected.........................................................10
Section 5.4. Rights of Holders................................................................10
Section 5.5. Guarantee of Payment.............................................................11
Section 5.6. Subrogation......................................................................11
Section 5.7. Independent Obligations..........................................................11
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
Section 6.1. Limitation of Transactions.......................................................11
Section 6.2 Ranking..........................................................................11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VII
TERMINATION
Section 7.1. Termination......................................................................11
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Exculpation......................................................................12
Section 8.2. Indemnification..................................................................12
ARTICLE IX
MISCELLANEOUS
Section 9.1. Successors and Assigns...........................................................12
Section 9.2. Amendments.......................................................................12
Section 9.3. Notices..........................................................................12
Section 9.4. Benefit..........................................................................13
Section 9.5. Governing Law....................................................................13
</TABLE>
ii
<PAGE> 4
GUARANTEE AGREEMENT
PREFERRED SECURITIES GUARANTEE AGREEMENT
THIS PREFERRED SECURITIES GUARANTEE AGREEMENT (this "Preferred
Securities Guarantee"), dated as of July , 1998, is executed and delivered by
EAGLE BANCSHARES, INC., a Georgia unitary thrift holding company (the
"Guarantor"), and SUNTRUST BANK, ATLANTA, a banking corporation organized under
the laws of the state of Georgia, as trustee (the "Preferred Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Preferred Securities (as defined herein) of EBI CAPITAL TRUST I, a
Delaware statutory business trust (the "Trust").
RECITALS
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of July , 1998, among the trustees of the Trust
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, the Trust is issuing
on the date hereof preferred securities, having an aggregate liquidation amount
of $25.0 million, designated the ___% Cumulative Trust Preferred Securities (the
"Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions and Interpretation. In this Preferred
Securities Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Preferred Securities
Guarantee but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) terms defined in the Trust Agreement as at the date of
execution of this Preferred Securities Guarantee have the same meaning
when used in this Preferred Securities Guarantee;
(c) a term defined anywhere in this Preferred Securities
Guarantee has the same meaning throughout;
(d) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred Securities
Guarantee as modified, supplemented or amended from time to time;
(e) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this Preferred
Securities Guarantee, unless otherwise specified;
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(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Preferred Securities Guarantee, unless
otherwise defined in this Preferred Securities Guarantee or unless the
context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a day on which federal or state
banking institutions in Atlanta, Georgia are authorized or required by law,
executive order or regulation to close or a day on which the Corporate Trust
Office of the Preferred Guarantee Trustee is closed for business.
"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Agreement is located at 3495 Piedmont Road, Suite 810,
Atlanta, Georgia 30305, Attention: .
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the ___% Subordinated Debentures due September 30,
2028 of the Debenture Issuer held by the Property Trustee of the Trust.
"Debenture Issuer" means the Guarantor.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantor" means Eagle Bancshares, Inc., a Georgia savings and loan
holding company.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Trust: (i) any accrued and unpaid Distributions (as defined
in the Trust Agreement) that are required to be paid on such Preferred
Securities, to the extent the Trust shall have funds available therefor, (ii)
the redemption price, including all accrued and unpaid Distributions to the date
of redemption (the "Redemption Price"), to the extent the Trust has funds
available therefor, with respect to any Preferred Securities called for
redemption by the Trust, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Trust (other than in connection with the
distribution of Debentures to the Holders in exchange for Preferred Securities
as provided in the Trust Agreement), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid Distributions on the Preferred
Securities to the date of payment, to the extent the Trust shall have funds
available therefor (the "Liquidation Distribution"), and (b) the amount of
assets of the Trust remaining available for distribution to Holders in
liquidation of the Trust.
"Holder" shall mean any holder, as registered on the books and records
of the Trust, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
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<PAGE> 6
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of July , 1998, among the
Debenture Issuer and SunTrust Bank, Atlanta, as trustee, and any indenture
supplemental thereto pursuant to which certain subordinated debt securities of
the Debenture Issuer are to be issued to the Property Trustee of the Trust.
"Liquidation Distribution" has the meaning provided therefor in the
definition of Guarantee Payments.
"Majority in liquidation amount of the Preferred Securities" means the
holders of more than 50% of the liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all of the Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two authorized officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Guarantee Trustee" means SunTrust Bank, Atlanta, until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Redemption Price" has the meaning provided therefor in the definition
of Guarantee Payments.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant vice-president,
any assistant secretary, the treasurer, any assistant treasurer or other officer
of the Corporate Trust Office of the Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
3
<PAGE> 7
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application. (a) This Preferred
Securities Guarantee is subject to the provisions of the Trust Indenture Act
that are required to be part of this Preferred Securities Guarantee and shall,
to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
Section 2.2. Lists of Holders of Securities. (a) The Guarantor shall
provide the Preferred Guarantee Trustee with a list, in such form as the
Preferred Guarantee Trustee may reasonably require, of the names and addresses
of the Holders of the Preferred Securities ("List of Holders") as of the date
(i) within one Business Day after January 1 and June 30 of each year, and (ii)
at any other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 15 days before such List
of Holders is given to the Preferred Guarantee Trustee; provided, that the
Guarantor shall not be obligated to provide such List of Holders at any time the
List of Holders does not differ from the most recent List of Holders given to
the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
Section 2.3. Reports by the Preferred Guarantee Trustee. On or before
July 15 of each year, the Preferred Guarantee Trustee shall provide to the
Holders of the Preferred Securities such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
Section 2.4. Periodic Reports to Preferred Guarantee Trustee. The
Guarantor shall provide to the Preferred Guarantee Trustee such documents,
reports and information as required by Section 314 (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
Section 2.5. Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Preferred Guarantee Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this Preferred
Securities Guarantee that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
Section 2.6. Events of Default; Waiver. The Holders of a Majority in
liquidation amount of Preferred Securities may, by vote, on behalf of the
Holders of all of the Preferred Securities, waive any past Event of Default and
its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event
4
<PAGE> 8
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Preferred Securities Guarantee, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon.
Section 2.7. Event of Default; Notice. (a) The Preferred Guarantee
Trustee shall, within 90 days after the occurrence of an Event of Default,
transmit by mail, first class postage prepaid, to the Holders of the Preferred
Securities, notices of all Events of Default actually known to a Responsible
Officer of the Preferred Guarantee Trustee, unless such defaults have been cured
before the giving of such notice; provided, that the Preferred Guarantee Trustee
shall be protected in withholding such notice if and so long as a Responsible
Officer of the Preferred Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the Preferred
Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice, or of which a Responsible Officer of the Preferred
Guarantee Trustee charged with the administration of the Trust Agreement shall
have obtained actual knowledge.
Section 2.8. Conflicting Interests. The Trust Agreement shall be deemed
to be specifically described in this Preferred Securities Guarantee for the
purposes of clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
Section 3.1. Powers and Duties of the Preferred Guarantee Trustee. (a)
This Preferred Securities Guarantee shall be held by the Preferred Guarantee
Trustee for the benefit of the Holders of the Preferred Securities, and the
Preferred Guarantee Trustee shall not transfer this Preferred Securities
Guarantee to any Person except a Holder of Preferred Securities exercising his
or her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee
Trustee on acceptance by such Successor Preferred Guarantee Trustee of its
appointment to act as Successor Preferred Guarantee Trustee. The right, title
and interest of the Preferred Guarantee Trustee shall automatically vest in any
Successor Preferred Guarantee Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Preferred Guarantee
Trustee.
(b) If an Event of Default actually known to a Responsible Officer of
the Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Preferred Securities Guarantee, and no implied covenants shall be read into
this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) and is actually known to a Responsible Officer of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise such
of the rights and powers vested in it by this Preferred Securities Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
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<PAGE> 9
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of Default
that may have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the
express provisions of this Preferred Securities
Guarantee, and the Preferred Guarantee Trustee shall not
be liable except for the performance of such duties and
obligations as are specifically set forth in this
Preferred Securities Guarantee, and no implied covenants
or obligations shall be read into this Preferred
Securities Guarantee against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of
the Preferred Guarantee Trustee, the Preferred Guarantee
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to
the Preferred Guarantee Trustee and conforming to the
requirements of this Preferred Securities Guarantee; but
in the case of any such certificates or opinions that by
any provision hereof are specifically required to be
furnished to the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform
to the requirements of this Preferred Securities
Guarantee;
(ii) the Preferred Guarantee Trustee shall not be
liable for any error of judgment made in good faith by a
Responsible Officer of the Preferred Guarantee Trustee, unless
it shall be proved that the Preferred Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Preferred Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be taken
by it in good faith in accordance with the direction of the
Holders of not less than a Majority in liquidation amount of
the Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee, or exercising any trust or
power conferred upon the Preferred Guarantee Trustee under
this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities
Guarantee shall require the Preferred Guarantee Trustee to
expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Preferred
Securities Guarantee or indemnity, reasonably satisfactory to
the Preferred Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
Section 3.2. Certain Rights of Preferred Guarantee Trustee. (a) Subject
to the provisions of Section 3.1:
(i) the Preferred Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining
from acting upon, any resolution, certificate, statement,
instrument,
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<PAGE> 10
opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties;
(ii) Any direction or act of the Guarantor contemplated
by this Preferred Securities Guarantee shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall
deem it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder, the
Preferred Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be
promptly delivered by the Guarantor;
(iv) the Preferred Guarantee Trustee shall have no duty
to see to any recording, filing or registration of any
instrument (or any rerecording, refiling or registration
thereof);
(v) the Preferred Guarantee Trustee may consult with
counsel, and the written advice or opinion of such counsel
with respect to legal matters shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions
concerning the administration of this Preferred Securities
Guarantee from any court of competent jurisdiction;
(vi) the Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Preferred Securities Guarantee at the request or
direction of any Holder, unless such Holder shall have
provided to the Preferred Guarantee Trustee such security and
indemnity, reasonably satisfactory to the Preferred Guarantee
Trustee, against the costs, expenses (including attorneys'
fees and expenses and the expenses of the Preferred Guarantee
Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or
direction, including such reasonable advances as may be
requested by the Preferred Guarantee Trustee; provided that,
nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Preferred Guarantee Trustee, upon the occurrence
of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Preferred Securities
Guarantee;
(vii) the Preferred Guarantee Trustee shall not be bound
to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document, but the Preferred Guarantee Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit;
(viii) the Preferred Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians
or attorneys, and the Preferred Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
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(ix) any action taken by the Preferred Guarantee
Trustee or its agents hereunder shall bind the Holders of the
Preferred Securities, and the signature of the Preferred
Guarantee Trustee or its agents alone shall be sufficient and
effective to perform any such action. No third party shall be
required to inquire as to the authority of the Preferred
Guarantee Trustee to so act or as to its compliance with any
of the terms and provisions of this Preferred Securities
Guarantee, both of which shall be conclusively evidenced by
the Preferred Guarantee Trustee's or its agent's taking such
action;
(x) whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall
deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action
hereunder, the Preferred Guarantee Trustee (i) may request
instructions from the Holders of a Majority in liquidation
amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in accordance
with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be deemed
to impose any duty or obligation on the Preferred Guarantee Trustee to perform
any act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which the
Preferred Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Preferred Guarantee Trustee shall be construed to be a duty.
Section 3.3. Not Responsible for Recitals or Issuance of Guarantee. The
Recitals contained in this Guarantee shall be taken as the statements of the
Guarantor, and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Guarantee Trustee makes no
representation as to the validity or sufficiency of this Preferred Securities
Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
Section 4.1. Preferred Guarantee Trustee; Eligibility. (a) There shall
at all times be a Preferred Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus
of at least $50,000,000, and subject to supervision or
examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section
4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
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(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
Section 4.2. Appointment, Removal and Resignation of Preferred
Guarantee Trustees. (a) Subject to Section 4.2(b), the Preferred Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or removal
or resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2,
the Guarantor shall pay to the Preferred Guarantee Trustee all amounts accrued
to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
Section 5.1. Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by the Trust), as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Trust to pay such amounts to the Holders.
Section 5.2. Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of this Preferred Securities Guarantee and of any liability
to which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Trust or any other Person before
proceeding against
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the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
Section 5.3. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Preferred Securities Guarantee
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures or any extension of the maturity date of the Debentures permitted
by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) any failure or omission to receive any regulatory approval or
consent required in connection with the Preferred Securities (or the common
equity securities issued by the Trust), including the failure to receive any
approval of the Board of Governors of the Federal Reserve System required for
the redemption of the Preferred Securities;
(g) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(h) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
Section 5.4. Rights of Holders. (a) The Holders of a Majority in
liquidation amount of the Preferred Securities shall have the right to direct
the time, method and place of conducting of any proceeding for any remedy
available to the Preferred Guarantee Trustee in respect of this Preferred
Securities Guarantee or exercising any trust or power conferred upon the
Preferred Guarantee Trustee under this Preferred Securities Guarantee.
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<PAGE> 14
(b) Any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Preferred
Securities Guarantee, without first instituting a legal proceeding against the
Trust, the Preferred Guarantee Trustee or any other Person.
Section 5.5. Guarantee of Payment. This Preferred Securities Guarantee
creates a guarantee of payment and not of collection.
Section 5.6. Subrogation. The Guarantor shall be subrogated to all (if
any) rights of the Holders of Preferred Securities against the Trust in respect
of any amounts paid to such Holders by the Guarantor under this Preferred
Securities Guarantee; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Preferred Securities Guarantee, if, at the time of any such payment, any amounts
are due and unpaid under this Preferred Securities Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
Section 5.7. Independent Obligations. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Trust with
respect to the Preferred Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Preferred Securities Guarantee notwithstanding the occurrence of
any event referred to in subsections (a) through (h), inclusive, of Section 5.3
hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
Section 6.1. Limitation of Transactions. So long as any Preferred
Securities remain outstanding, if there shall have occurred an Event of Default
under this Preferred Securities Guarantee, an Event of Default under the Trust
Agreement or during an Extended Interest Payment Period (as defined in the
Indenture), then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than as a
result of a reclassification of its capital stock for another class of its
capital stock) and (b) the Guarantor shall not make any payment of interest or
principal on or repay, repurchase or redeem any debt securities issued by the
Guarantor which rank pari passu with or junior to the Debentures.
Section 6.2 Ranking. This Preferred Securities Guarantee will
constitute an unsecured obligation of the Guarantor and will rank (i)
subordinate and junior in right of payment to all other liabilities of the
Guarantor, (ii) pari passu with the most senior preferred securities or
preference stock now or hereafter issued by the Guarantor and with any guarantee
now or hereafter entered into by the Guarantor in respect of any preferred
securities or preference stock of any Affiliate of the Guarantor, and (iii)
senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
Section 7.1. Termination. This Preferred Securities Guarantee shall
terminate upon (i) full payment of the Redemption Price of all Preferred
Securities, (ii) upon full payment of the amounts payable in accordance with the
Trust Agreement upon liquidation of the Trust, or (iii) upon distribution of the
Debentures to the Holders of the Preferred Securities. Notwithstanding the
foregoing, this Preferred Securities Guarantee shall continue to be
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effective or shall be reinstated, as the case may be, if at any time any Holder
of Preferred Securities must restore payment of any sums paid under the
Preferred Securities or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Preferred Securities Guarantee and in a manner that such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Preferred Securities Guarantee or
by law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.
Section 8.2. Indemnification. The Guarantor agrees to indemnify each
Indemnified Person for, and to hold each Indemnified Person harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Successors and Assigns. All guarantees and agreements
contained in this Preferred Securities Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Preferred Securities then
outstanding.
Section 9.2. Amendments. Except with respect to any changes that do not
materially adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Preferred Securities Guarantee may only be
amended with the prior approval of the Holders of at least a Majority in
liquidation amount of the Preferred Securities. The provisions of Article VI of
the Trust Agreement with respect to meetings of Holders of the Preferred
Securities apply to the giving of such approval.
Section 9.3. Notices. All notices provided for in this Preferred
Securities Guarantee shall be in writing, duly signed by the party giving such
notice, and shall be delivered, telecopied or mailed by registered or certified
mail, as follows:
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(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
SunTrust Bank, Atlanta
3495 Piedmont Road, Suite 810
Atlanta, Georgia 30305
Attention:
------------------------------
------------------------------
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities):
Eagle Bancshares, Inc.
4305 Lynburn Drive
Tucker, Georgia 30084
Attention: C. Jere Sechler, Jr., Chairman, President
and Chief Executive Officer
(c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
Section 9.4. Benefit. This Preferred Securities Guarantee is solely for
the benefit of the Holders of the Preferred Securities and, subject to Section
3.1(a), is not separately transferable from the Preferred Securities.
Section 9.5. Governing Law. THIS PREFERRED SECURITIES GUARANTEE SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF GEORGIA.
This Preferred Securities Guarantee is executed as of the day and year
first above written.
EAGLE BANCSHARES, INC., as Guarantor
By:
------------------------------------------------
C. Jere Sechler, Jr.
Chairman, President and Chief Executive Officer
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SUNTRUST BANK, ATLANTA, as Preferred Guarantee
Trustee
By:
------------------------------------------------
Name:
Title:
14
<PAGE> 1
EXHIBIT 12.1
EAGLE BANCSHARES, INC.
Ratio of Earnings to Fixed Charges
(in thousands)
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------------------------------------------------------
1994 1995 1996 1997 1998
------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
RATIO 1 - INCLUDING DEPOSIT INTEREST
Earnings:
Income before taxes $ 8,954 $ 7,591 $ 9,189 $ 5,514 $10,250
Fixed charges 14,370 18,636 29,048 33,950 40,355
------- ------- ------- ------- -------
Total $23,324 $26,227 $38,237 $39,464 $50,605
======= ======= ======= ======= =======
Fixed Charges:
Interest on deposits $11,750 $14,434 $20,826 $25,177 $29,766
Interest on FHLB advances and other borrowings 2,526 4,068 7,995 8,452 10,241
Interest factor in rental expense 94 134 227 321 348
------- ------- ------- ------- -------
Total $14,370 $18,636 $29,048 $33,950 $40,355
======= ======= ======= ======= =======
Earnings to fixed charges 1.62 1.41 1.32 1.16 1.25
RATIO 2 - EXCLUDING DEPOSIT INTEREST
Earnings:
Income before taxes $ 8,954 $ 7,591 $ 9,189 $ 5,514 $10,250
Fixed charges 2,620 4,202 8,222 8,773 10,589
------- ------- ------- -------- -------
Total $11,574 $11,793 $17,411 $14,287 $20,839
======= ======= ======= ======= =======
Fixed Charges:
Interest on FHLB advances and other borrowings 2,526 4,068 7,995 8,452 10,241
Interest factor in rental expense 94 134 227 321 348
------- ------- ------- ------- -------
Total $ 2,620 $ 4,202 $ 8,222 $ 8,773 $10,589
======= ======= ====== ======= =======
Earnings to fixed charges 4.42 2.81 2.12 1.63 1.97
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made a part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
- -----------------------
ARTHUR ANDERSEN LLP
Atlanta, Georgia
July 2, 1998
