<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1997
REGISTRATION NO. 333-
REGISTRATION NO. 333- -01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------
PROGRESS FINANCIAL CORPORATION
(Exact name of Registrant
as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization
------------------------------
6712
(Primary Standard Industrial
Classification Code Number)
23-2413363
(I.R.S. Employer
Identification No.)
PROGRESS CAPITAL TRUST I
(Exact name of Registrant
as specified in its trust agreement)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
------------------------------
6719
(Primary Standard Industrial
Classification Code Number)
23-2905945
(I.R.S. Employer
Identification No.)
------------------------------
FOUR SENTRY PARKWAY
SUITE 200
BLUE BELL, PENNSYLVANIA 19422-2311
(610) 825-8800
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
------------------------------
W. KIRK WYCOFF
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
PROGRESS FINANCIAL CORPORATION
FOUR SENTRY PARKWAY
SUITE 200
BLUE BELL, PENNSYLVANIA 19422-2311
(610) 825-8800
(Name, address, including zip code, and telephone number, including area code,
of agents for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
RAYMOND A. TIERNAN, ESQ. JOHN R. HALL, ESQ.
JEFFREY D. HAAS, ESQ. MULDOON, MURPHY & FAUCETTE
ELIAS, MATZ, TIERNAN & HERRICK L.L.P. 5101 WISCONSIN AVENUE, N.W.
734 15TH STREET, N.W. WASHINGTON D.C. 20016
WASHINGTON, D.C. 20005
</TABLE>
------------------------------
Approximate Date of Commencement of Proposed Sale to the Public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
<S> <C> <C> <C> <C>
Series B Capital Securities of
Progress Capital Trust I.......... $15,000,000 100% $15,000,000 $4,545.45
Series B Junior Subordinated
Deferrable Interest Debentures of
Progress Financial Corporation.... $15,000,000 100% $15,000,000 N/A
Progress Financial Corporation
Series B Guarantee with respect to
Series B Capital Securities(3).... N/A N/A N/A
Total........................... $15,000,000(4) 100% $15,000,000(4) $4,545.45
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) No separate consideration will be received for the Series B Junior
Subordinated Deferrable Interest Debentures of Progress Financial
Corporation (the "Junior Subordinated Debentures") distributed upon any
liquidation of Progress Capital Trust I.
(3) No separate consideration will be received for the Progress Financial
Corporation Series B Guarantee.
(4) Such amount represents the liquidation amount of the Progress Capital Trust
I Series B Capital Securities to be exchanged hereunder and the principal
amount of Junior Subordinated Debentures that may be distributed to holders
of such Capital Securities upon any liquidation of Progress Capital Trust I.
------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 22, 1997
PROSPECTUS
PROGRESS CAPITAL TRUST I
OFFER TO EXCHANGE ITS
10.50% SERIES B CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
10.50% SERIES A CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
PROGRESS FINANCIAL CORPORATION
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON NOVEMBER __, 1997, UNLESS EXTENDED
-------------------
Progress Capital Trust I, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby offers, upon the terms
and subject to the conditions set forth in this Prospectus (as the same may
be amended or supplemented from time to time, the "Prospectus") and in the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange up to $15,000,000 aggregate Liquidation Amount of its
10.50% Series B Capital Securities (the "New Capital Securities") which have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to a Registration Statement (as defined herein) of which this
Prospectus constitutes a part, for a like Liquidation Amount of its
outstanding 10.50% Series A Capital Securities (the "Old Capital
Securities"), of which $15,000,000 aggregate Liquidation Amount is
outstanding. Pursuant to the Exchange Offer, Progress Financial Corporation,
a Delaware corporation ("Progress" or the "Corporation"), also is offering to
exchange (i) its guarantee of payments of cash distributions and payments on
liquidation of the Trust or redemption of the Old Capital Securities (the
"Old Guarantee") for a like guarantee in respect of the New Capital
Securities (the "New Guarantee") and (ii) all of its outstanding 10.50%
Series A Junior Subordinated Deferrable Interest Debentures due June 1, 2027
(the "Old Junior Subordinated Debentures") for a like aggregate principal
amount of its 10.50% Series B Junior Subordinated Deferrable Interest
Debentures due June 1, 2027 (the "New Junior Subordinated Debentures"), which
New Guarantee and New Junior Subordinated Debentures also have been
registered under the Securities Act. The Old Capital Securities, the Old
Guarantee and the Old Junior Subordinated Debentures are collectively
referred to herein as the "Old Securities" and the New Capital Securities,
the New Guarantee and the New Junior Subordinated Debentures are collectively
referred to herein as the "New Securities."
The terms of the New Securities are identical in all material respects to
the respective terms of the Old Securities, except that (i) the New
Securities have been registered under the Securities Act and therefore will
not be subject to certain restrictions on transfer under federal and state
securities laws applicable to the Old Securities, (ii) the New Capital
Securities will not provide for any increase in the Distribution rate thereon
and (iii) the New Junior Subordinated Debentures will not provide for any
increase in the interest rate thereon. See "Description of New Securities"
and "Description of Old Securities." The New Capital Securities are being
offered for exchange in order to satisfy certain obligations of the
Corporation and the Trust under a Registration Rights Agreement, dated as of
June 3, 1997 (the "Registration Rights Agreement"), among the Corporation,
the Trust and the Initial Purchaser (as defined herein). In the event that
the Exchange Offer is consummated, any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer and the New Capital
Securities issued in the Exchange Offer will vote together as a single class
for purposes of determining whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have taken certain actions or
exercised certain rights under the Trust Agreement (as defined herein).
(Continued on the following page)
This Prospectus and the Letter of Transmittal are first being mailed to
all registered holders of Old Capital Securities as of October __, 1997.
See "Risk Factors" commencing on page __ for certain information that
should be considered by holders in deciding whether to tender Old Capital
Securities in the Exchange Offer.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _______ __, 1997.
<PAGE>
(Continued from the previous page)
The New Capital Securities and the Old Capital Securities represent
beneficial interests in the assets of the Trust. The Corporation is the
owner of all of the beneficial interests represented by common securities of
the Trust (the "Common Securities"). The Trust exists for the sole purpose
of issuing the Capital Securities and the Common Securities and investing the
proceeds thereof in the Junior Subordinated Debentures (as defined herein).
The Junior Subordinated Debentures will mature on June 1, 2027 (the "Stated
Maturity Date"). The Capital Securities will have a preference over the
Common Securities under certain circumstances with respect to cash
distributions and amounts payable on liquidation, redemption or otherwise.
See "Description of New Securities--Description of Capital
Securities--Subordination of Common Securities."
As used herein, (i) the "Indenture" means the Indenture, dated as of
June 3, 1997, between the Corporation and The Bank of New York, as Debenture
Trustee (the "Debenture Trustee"), as amended and supplemented from time to
time, and (ii) the "Trust Agreement" means the Amended and Restated
Declaration of Trust relating to the Trust among the Corporation, as Sponsor,
The Bank of New York, as Property Trustee (the "Property Trustee"), The Bank
of New York (Delaware), as the Delaware Trustee (the "Delaware Trustee"), the
Administrative Trustees named therein (collectively, with the Property
Trustee and the Delaware Trustee, the "Issuer Trustees"), and the holders,
from time to time, of undivided beneficial interests in the assets of the
Trust, as amended and supplemented from time to time. In addition, as the
context may require, unless otherwise expressly stated, (i) the term "Capital
Securities" means the Old Capital Securities and the New Capital Securities,
(ii) the term "Trust Securities" means the Capital Securities and the Common
Securities, (iii) the term "Junior Subordinated Debentures" means the Old
Junior Subordinated Debentures and the New Junior Subordinated Debentures and
(iv) the term "Guarantee" means the Old Guarantee and the New Guarantee.
Except as provided below, the Capital Securities will be represented
by a global Capital Security in fully registered form, deposited with a
custodian for and registered in the name of a nominee of The Depository Trust
Company ("DTC"). Beneficial interests in the Capital Securities will be
shown on, and transfers thereof will be effected through, records maintained
by DTC and its participants. Beneficial interests in the Capital Securities
will trade in DTC's Same-Day Funds Settlement system and secondary market
trading activity in such interests will therefore settle in immediately
available funds. The Capital Securities will be issued, and may be
transferred, only in blocks having a Liquidation Amount of not less than
$100,000 (100 Capital Securities). See "Description of New Securities
- --Description of Capital Securities -- Form, Denomination, Book-Entry
Procedures and Transfer."
Holders of the Capital Securities will be entitled to receive
cumulative cash distributions arising from the payment of interest on the
Junior Subordinated Debentures, accruing from June 3, 1997, and payable
semi-annually in arrears on June 1 and December 1 of each year, commencing
December 1, 1997 at the annual rate of 10.50% of the Liquidation Amount of
$1,000 per Capital Security ("Distributions"). So long as no Debenture Event
of Default (as defined herein) has occurred and is continuing, the
Corporation has the right to defer payments of interest on the Junior
Subordinated Debentures at any time and from time to time for a period not
exceeding 10 consecutive semi-annual periods with respect to each deferral
period (each, an "Extension Period"), provided that no Extension Period may
end on a date other than an Interest Payment Date (as defined herein) or
extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all amounts then due, the Corporation may
elect to begin a new Extension Period, subject to the requirements set forth
in the Indenture. If and for so long as interest payments on the Junior
Subordinated Debentures are so deferred, Distributions on the Trust
Securities also will be deferred and the Corporation will not be permitted,
subject to certain exceptions described herein, to declare or pay any cash
distributions with respect to the Corporation's capital stock (which includes
common and preferred stock) or to make any payment with respect to debt
securities of the Corporation that rank pari passu with or junior to the
Junior Subordinated Debentures. During an Extension Period, interest on the
Junior Subordinated Debentures will continue to accrue (and the amount of
Distributions to which holders of the Trust Securities are entitled will
accumulate) at the rate of 10.50% per annum, compounded semi-annually, and
holders of Trust Securities will be required to accrue interest income for
United States federal income tax purposes. See "Description of New Securities
2
<PAGE>
(Continued from the previous page)
- --Description of Junior Subordinated Debentures--Option to Extend Interest
Payment Date" and "Certain United States Federal Income Tax
Considerations--Interest Income and Original Issue Discount."
The Corporation has, through the Guarantee, the guarantee agreement
of the Corporation relating to the Common Securities (the "Common
Guarantee"), the Trust Agreement, the Junior Subordinated Debentures and the
Indenture, taken together, fully, irrevocably and unconditionally guaranteed
all of the Trust's obligations under the Trust Securities. See "Relationship
Among the Capital Securities, the Junior Subordinated Debentures and the
Guarantee--Full and Unconditional Guarantee." The Guarantee and the Common
Guarantee guarantee payments of Distributions and payments on liquidation or
redemption of the Trust Securities, but in each case only to the extent that
the Trust holds funds on hand legally available therefor and has failed to
make such payments, as described herein. See "Description of New
Securities--Description of Guarantee." If the Corporation fails to make a
required payment on the Junior Subordinated Debentures, the Trust will not
have sufficient funds to make the related payments, including Distributions,
on the Trust Securities. The Guarantee and the Common Guarantee do not cover
any such payment when the Trust does not have sufficient funds on hand
legally available therefor. In such event, under the Indenture a holder of
Capital Securities may institute a legal proceeding directly against the
Corporation to enforce its rights in respect of such payment. See
"Description of New Securities--Description of Junior Subordinated
Debentures--Enforcement of Certain Rights By Holders of New Capital
Securities." The obligations of the Corporation under the Guarantee, the
Common Guarantee and the Junior Subordinated Debentures are unsecured and
rank subordinate and junior in right of payment to all Senior Indebtedness of
the Corporation to the extent and in the manner set forth in the Indenture.
See "Description of New Securities--Description of Junior Subordinated
Debentures--Subordination." In addition, because the Corporation is a
holding company, the Junior Subordinated Debentures and the Guarantee
effectively are subordinated to all existing and future liabilities,
including deposits, of the Corporation's subsidiaries.
The Trust Securities are subject to mandatory redemption in a Like
Amount (as defined herein), (i) in whole but not in part, on the Stated
Maturity Date upon repayment of the Junior Subordinated Debentures at a
redemption price equal to the principal amount of, plus accrued interest on,
the Junior Subordinated Debentures (the "Maturity Redemption Price"), (ii) in
whole but not in part, at any time before June 1, 2007 (the "Initial Optional
Prepayment Date"), contemporaneously with the optional redemption of the
Junior Subordinated Debentures, upon the occurrence and continuation of a
Special Event (as defined herein) at a redemption price equal to the Special
Event Prepayment Price (as defined below) (the "Special Event Redemption
Price") and (iii) in whole or in part, on or after the Initial Optional
Prepayment Date, contemporaneously with the optional redemption by the
Corporation of the Junior Subordinated Debentures, at a redemption price
equal to the Optional Prepayment Price (as defined below) (the "Optional
Redemption Price"). Any of the Maturity Redemption Price, the Special Event
Redemption Price and the Optional Redemption Price may be referred to herein
as the "Redemption Price." See "Description of New Securities--Description of
Capital Securities--Redemption."
Subject to the Corporation having received any required regulatory
approval, the Junior Subordinated Debentures are prepayable prior to the
Stated Maturity Date at the option of the Corporation (i) on or after the
Initial Optional Prepayment Date, in whole or in part, at a price (the
"Optional Prepayment Price") equal to 105.25% of the principal amount thereof
on the Initial Optional Prepayment Date, declining ratably on each June 1
thereafter to 100% on or after June 1, 2017, plus, in each case, accrued and
unpaid interest thereon to the date of prepayment, or (ii) at any time prior
to the Initial Optional Prepayment Date, in whole but not in part, upon the
occurrence and continuation of a Special Event, at a prepayment price (the
"Special Event Prepayment Price") equal to the Make-Whole Amount (as defined
below). The "Make-Whole Amount" shall be equal to the greater of (a) 100% of
the principal amount of the Junior Subordinated Debentures or (b) the sum, as
determined by a Quotation Agent (as defined herein), of the present values of
the remaining scheduled payments of principal and interest on the Junior
Subordinated Debentures, discounted to the prepayment date
3
<PAGE>
(Continued from the previous page)
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate (as defined herein) plus, in the case
of each of clauses (a) and (b), accrued and unpaid interest thereon to the
date of prepayment. Either of the Optional Prepayment Price or the Special
Event Prepayment Price may be referred to herein as the "Prepayment Price."
See "Description of New Securities -- Description of Junior Subordinated
Debentures --Optional Prepayment" and "-- Special Event Prepayment."
The Corporation has the right at any time (including without
limitation upon the occurrence of a Tax Event (as defined herein)) to
terminate the Trust and, after satisfaction of liabilities of creditors of
the Trust as required by applicable law, to cause a Like Amount of the Junior
Subordinated Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust, subject to (i) the Corporation having
received an opinion of counsel to the effect that such distribution will not
be a taxable event to holders of Capital Securities and (ii) the receipt of
any required regulatory approval. Unless the Junior Subordinated Debentures
are distributed to the holders of the Trust Securities, in the event of a
liquidation of the Trust as described herein, after satisfaction of
liabilities to creditors of the Trust as required by applicable law, the
holders of the Trust Securities generally will be entitled to receive a
Liquidation Amount of $1,000 per Trust Security plus accumulated and unpaid
Distributions thereon to the date of payment. See "Description of New
Securities -- Description of Capital Securities -- Liquidation of the Trust
and Distribution of Junior Subordinated Debentures."
----------------------
The Trust is making the Exchange Offer of the New Capital Securities
in reliance on the position of the staff of the Division of Corporation
Finance of the Securities and Exchange Commission (the "Commission") as set
forth in certain interpretive letters addressed to third parties in other
transactions. However, neither the Corporation nor the Trust has sought its
own interpretive letter and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance of the Commission, and subject
to the two immediately following sentences, the Corporation and the Trust
believe that New Capital Securities issued pursuant to this Exchange Offer in
exchange for Old Capital Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a holder who is a
broker-dealer) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an "affiliate" of the Corporation or
the Trust within the meaning of Rule 405 under the Securities Act (an
"Affiliate") or who intends to participate in the Exchange Offer for the
purpose of distributing New Capital Securities, or any broker-dealer who
purchased Old Capital Securities from the Trust to resell pursuant to Rule
144A under the Securities Act ("Rule 144A") or any other available exemption
under the Securities Act, (i) will not be able to rely on the interpretations
of the staff of the Division of Corporation Finance of the Commission set
forth in the above-mentioned interpretive letters, (ii) will not be entitled
to tender such Old Capital Securities in the Exchange Offer and (iii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or other transfer of such Old
Capital Securities (other than pursuant to the Exchange Offer) unless such
sale is made pursuant to an exemption from such requirements. In addition,
as described below, if any broker-dealer (a "Participating Broker-Dealer")
holds Old Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Capital
Securities for New Capital Securities, then such Participating Broker-Dealer
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old
Capital Securities for New Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an Affiliate of the Corporation
4
<PAGE>
(Continued from the previous page)
or the Trust, (ii) any New Capital Securities to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement
or understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities, and (iv) if
such holder is not a broker-dealer, such holder is not engaged in, and does
not intend to engage in, a distribution (within the meaning of the Securities
Act) of such New Capital Securities. The Letter of Transmittal contains the
foregoing representations. In addition, the Corporation and the Trust may
require such holder, as a condition to such holder's eligibility to
participate in the Exchange Offer, to furnish to the Corporation and the
Trust (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) on behalf of whom such
holder holds Old Capital Securities to be exchanged in the Exchange Offer.
Each Participating Broker-Dealer that receives New Capital Securities for its
own account pursuant to the Exchange Offer will be deemed to have
acknowledged by execution of the Letter of Transmittal or delivery of an
Agent's Message (as defined herein) that it acquired the Old Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale
of such New Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. Based on the position taken by the staff of the Division
of Corporation Finance of the Commission in the interpretive letters referred
to above, the Corporation and the Trust believe that Participating
Broker-Dealers may fulfill their prospectus delivery requirements with
respect to the New Capital Securities received upon exchange of such Old
Capital Securities (other than Old Capital Securities which represent an
unsold allotment from the original sale of the Old Capital Securities) with a
prospectus meeting the requirements of the Securities Act, which may be the
prospectus prepared for an exchange offer so long as it contains a
description of the plan of distribution with respect to the resale of such
New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales
of New Capital Securities received in exchange for Old Capital Securities
where such Old Capital Securities were acquired by such Participating
Broker-Dealer for its own account as a result of market-making or other
trading activities. Subject to certain provisions set forth in the
Registration Rights Agreement, the Corporation and the Trust have agreed that
this Prospectus, as it may be amended or supplemented from time to time, may
be used by a Participating Broker-Dealer in connection with resales of such
New Capital Securities for a period ending 90-days after the Expiration Date
(as defined herein) (subject to extension under certain limited circumstances
described below) or, if earlier, when all such New Capital Securities have
been disposed of by such Participating Broker-Dealer. See "Plan of
Distribution." However, a Participating Broker-Dealer who intends to use
this Prospectus in connection with the resale of New Capital Securities
received in exchange for Old Capital Securities pursuant to the Exchange
Offer must notify the Corporation or the Trust, or cause the Corporation or
the Trust to be notified, on or prior to the Expiration Date, that it is a
Participating Broker-Dealer. Such notice may be given in the space provided
for that purpose in the Letter of Transmittal or may be delivered to the
Exchange Agent at one of the addresses set forth herein under "The Exchange
Offer--Exchange Agent." Any person, including any Participating
Broker-Dealer, who is an Affiliate of the Corporation or the Trust may not
rely on such interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. See "The Exchange Offer--Resales of New Capital
Securities."
In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have
agreed, by execution of the Letter of Transmittal or delivery of an Agent's
Message, that, upon receipt of notice from the Corporation or the Trust of
the occurrence of any event or the discovery of any fact which makes any
statement contained or incorporated by reference in this Prospectus untrue in
any material respect or which causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which
they were made, not misleading or of the occurrence of certain other events
specified in the Registration Rights Agreement, such Participating
Broker-Dealer will suspend the sale of New Capital Securities (or the New
5
<PAGE>
(Continued from the previous page)
Guarantee or the New Junior Subordinated Debentures, as applicable) pursuant
to this Prospectus until the Corporation or the Trust has amended or
supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such
Participating Broker-Dealer or the Corporation or the Trust has given notice
that the sale of the New Capital Securities (or the New Guarantee or the New
Junior Subordinated Debentures, as applicable) may be resumed, as the case
may be. If the Corporation or the Trust gives such notice to suspend the
sale of the New Capital Securities (or the New Guarantee or the New Junior
Subordinated Debentures, as applicable), it shall extend the 90-day period
referred to above during which Participating Broker-Dealers are entitled to
use this Prospectus in connection with the resale of New Capital Securities
by the number of days during the period from and including the date of the
giving of such notice to and including the date when Participating
Broker-Dealers shall have received copies of the amended or supplemented
Prospectus necessary to permit resales of the New Capital Securities or to
and including the date on which the Corporation or the Trust has given notice
that the sale of New Capital Securities (or the New Guarantee or the New
Junior Subordinated Debentures, as applicable) may be resumed, as the case
may be.
Prior to the Exchange Offer, there has been only a limited secondary
market and no public market for the Old Capital Securities. The New Capital
Securities will be a new issue of securities for which there currently is no
market. There can be no assurance as to the development or liquidity of any
market for the New Capital Securities. The Corporation and the Trust
currently do not intend to apply for listing of the New Capital Securities on
any securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System.
Any Old Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to all the same rights and
will be subject to the same limitations applicable thereto under the Trust
Agreement (except for those rights which terminate upon consummation of the
Exchange Offer). Following consummation of the Exchange Offer, the holders
of Old Capital Securities will continue to be subject to all of the existing
restrictions upon transfer thereof and neither the Corporation nor the Trust
will have any further obligation to such holders (other than under certain
limited circumstances) to provide for registration under the Securities Act
of the Old Capital Securities held by them. To the extent that Old Capital
Securities are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered Old Capital Securities could be adversely
affected. See "Risk Factors--Consequences of a Failure to Exchange Old
Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on November __, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is
extended by the Corporation or the Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended). Tenders of Old Capital Securities may be withdrawn at any time on
or prior to the Expiration Date. The Exchange Offer is not conditioned upon
any minimum Liquidation Amount of Old Capital Securities being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Corporation or the Trust and to the
provisions of the Registration Rights Agreement. Old Capital Securities may
be tendered in whole or in part having an aggregate Liquidation Amount of not
less than $100,000 (100 Capital Securities) and/or any integral multiple of
$1,000 Liquidation Amount (one Capital Security) in excess thereof. The
Corporation has agreed to pay all expenses of the Exchange Offer. See "The
Exchange Offer--Fees and Expenses."
6
<PAGE>
(Continued from the previous page)
Holders of Old Capital Securities as of the November 15, 1997 record
date for the initial Distribution on December 1, 1997, including such holders
who tender their Old Capital Securities pursuant to the Exchange Offer, will
be entitled to receive such Distribution. See "The Exchange
Offer--Distributions on New Capital Securities."
Neither the Corporation nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. No
dealer-manager is being used in connection with this Exchange Offer. See
"Use of Proceeds" and "Plan of Distribution."
THE NEW CAPITAL SECURITIES WILL BE ISSUED, AND CAPITAL SECURITIES
MAY BE TRANSFERRED, ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS
THAN $100,000. ANY TRANSFER, SALE OR OTHER DISPOSITION OF CAPITAL SECURITIES
IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE
DEEMED NOT TO BE ENTITLED TO THE RECEIPT OF DISTRIBUTIONS ON SUCH CAPITAL
SECURITIES, AND SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST
WHATSOEVER IN SUCH CAPITAL SECURITIES.
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A
"PLAN"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF
ANY PLAN'S INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON
INVESTING "PLAN ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THE CAPITAL
SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR
84-14 WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF
THE CAPITAL SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT EITHER (I) IS NOT A
PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING SUCH SECURITIES ON BEHALF
OF OR WITH "PLAN ASSETS" OF ANY PLAN, OR (II) IS ELIGIBLE FOR THE EXEMPTIVE
RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT
TO SUCH PURCHASE OR HOLDING.
-------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE TRUST.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO
OR ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-------------------
7
<PAGE>
TABLE OF CONTENTS
Page
Available Information...............................................
Incorporation of Certain Documents by Reference.....................
Summary.............................................................
Risk Factors........................................................
The Trust...........................................................
The Corporation.....................................................
Selected Consolidated Financial Data of
the Corporation....................................................
Use of Proceeds.....................................................
Ratio of Earnings to Fixed Charges..................................
Accounting Treatment................................................
Capitalization......................................................
The Exchange Offer..................................................
Description of New Securities.......................................
Description of Old Securities.......................................
Relationship Among the Capital Securities, the
Junior Subordinated Debentures and the Guarantee...................
Certain Federal Income Tax Considerations...........................
ERISA Considerations................................................
Plan of Distribution................................................
Validity of New Securities..........................................
Experts.............................................................
8
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Exchange Act, and in accordance therewith files reports, proxy statements and
other information with the Commission. Such reports, proxy statements and
other information can be inspected and copied at the public reference
facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located
at 7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and
Citicorp Center, 14th Floor, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material also can be obtained at prescribed
rates by writing to the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Such information also may be
accessed through the Commission's electronic data gathering, analysis and
retrieval system ("EDGAR") via electronic means, including the Commission's
web site on the Internet (http://www.sec.gov). Such reports, proxy
statements and other information concerning the Corporation also can be
inspected at the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
No separate financial statements of the Trust have been included
herein. The Corporation and the Trust do not consider that such financial
statements would be material to holders of the Capital Securities because the
Trust is a newly-formed special purpose entity, has no operating history or
independent operations and is not engaged in and does not propose to engage
in any activity other than holding as trust assets the Junior Subordinated
Debentures and issuing the Trust Securities. See "The Trust" and
"Description of New Securities." In addition, the Corporation does not
expect that the Trust will file reports, proxy statements and other
information under the Exchange Act with the Commission.
This Prospectus constitutes a part of a registration statement on
Form S-4 (the "Registration Statement") filed by the Corporation and the
Trust with the Commission under the Securities Act. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of
the Commission, and reference is hereby made to the Registration Statement
and to the exhibits relating thereto for further information with respect to
the Corporation, the Trust and the New Securities. Any statements contained
herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission
are incorporated by reference in this Prospectus:
1. The Corporation's Annual Report on Form 10-K for the
year ended December 30, 1996;
2. The Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997;
3. The Corporation's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997; and
4. The following portions of the Corporation's Annual
Report to Stockholders for the year ended December 31,
1996: selected consolidated financial data (page 9);
management's discussion and analysis of financial condition
and results of operations (pages 10 to 18); and audited
consolidated financial statements and notes thereto (pages
19 to 38).
All documents subsequently filed by the Corporation pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof
and prior to the termination of the offering of the New Securities offered
9
<PAGE>
hereby shall be deemed to be incorporated by reference in this Prospectus and
to be a part of this Prospectus from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein (or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein) modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this
Prospectus, including the documents incorporated or deemed to be incorporated
herein by reference, as the same may be amended, supplemented or otherwise
modified from time to time. Statements contained in this Prospectus as to
the contents of any contract or other document referred to herein do not
purport to be complete, and where reference is made to the particular
provisions of such contract or other document, such provisions are qualified
in all respects by reference to all of the provisions of such contract or
other document.
This Prospectus is accompanied by the Company's 1996 Annual Report
to Stockholders and its Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997. Copies of the other documents incorporated by reference
herein are available from the Company without charge (other than exhibits to
such documents, unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates) to any
person to whom this Prospectus is delivered, upon written request of such
person. Requests for such copies should be directed to Frederick E. Schea,
Chief Financial Officer of the Company, at the Company's principal executive
offices located at Four Sentry Parkway, Suite 230, Blue Bell, Pennsylvania
19422-0764. The Company's telephone number is (610) 825-8800.
10
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere in
this Prospectus. Reference is made to, and this summary is qualified in its
entirety by, the more detailed information and financial statements,
including the notes thereto, contained elsewhere in this Prospectus.
Progress Financial Corporation
The Corporation is a Delaware-chartered, registered thrift holding
company headquartered in Blue Bell, Pennsylvania. The Corporation is the
sole stockholder of Progress Bank (the "Bank"), a federally chartered savings
bank, which has been engaged in the thrift business since 1878. The
Corporation was organized in 1986 in connection with the reorganization of
the Bank into a thrift holding company structure. The Bank conducts its
business through seven full-service offices located in Montgomery County, one
full-service office in Delaware County, one full-service office in Chester
County and one full-service office in the Andorra section of Philadelphia, in
southeastern Pennsylvania. At June 30, 1997, the Corporation had total
consolidated assets of $418.7 million, total consolidated liabilities of
$381.6 million, including total consolidated deposits of $301.9 million, and
total consolidated stockholders' equity of $22.0 million.
Progress Capital Trust I
The Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Secretary of State
of the State of Delaware. The Trust's affairs are conducted by the Issuer
Trustees: The Bank of New York as Property Trustee, The Bank of New York
(Delaware) as Delaware Trustee and three individual Administrative Trustees
who are employees or officers of or affiliated with the Corporation. The
Trust exists for the exclusive purposes of (i) issuing and selling the Trust
Securities, (ii) using the proceeds from the sale of the Trust Securities to
acquire the Junior Subordinated Debentures issued by the Corporation and
(iii) engaging in only those other activities necessary, advisable or
incidental thereto. Accordingly, the Junior Subordinated Debentures are the
sole assets of the Trust, and payments under the Junior Subordinated
Debentures are the sole revenue of the Trust. All of the Common Securities
are owned by the Corporation.
The Exchange Offer
The Exchange Offer . . . . . . . . . Up to $15,000,000 aggregate
Liquidation Amount of New Capital
Securities are being offered in
exchange for a like aggregate
Liquidation Amount of Old Capital
Securities. Old Capital Securities
may be tendered for exchange in whole
or in part in a Liquidation Amount of
$100,000 (100 Capital Securities) or
any integral multiple of $1,000 (one
Capital Security) in excess thereof.
The Corporation and the Trust are
making the Exchange Offer in order to
satisfy their obligations under the
Registration Rights Agreement relating
to the Old Capital Securities. For a
description of the procedures for
tendering Old Capital Securities, see
"The Exchange Offer--Procedures for
Tendering Old Capital Securities."
Expiration Date. . . . . . . . . . . 5:00 p.m., New York City time, on
November __, 1997, unless the Exchange
Offer is extended by the Corporation
or the Trust (in which case the
Expiration Date will be the latest
date and time to which the Exchange
Offer is extended). See "The Exchange
Offer--Terms of the Exchange Offer."
11
<PAGE>
Conditions to the Exchange Offer . . The Exchange Offer is subject to
certain conditions, which may be
waived by the Corporation and the
Trust in their sole discretion. The
Exchange Offer is not conditioned upon
any minimum Liquidation Amount of Old
Capital Securities being tendered.
See "The Exchange Offer--Conditions to
the Exchange Offer."
Terms of the Exchange Offer. . . . . The Corporation and the Trust reserve
the right in their sole and absolute
discretion, subject to applicable law,
at any time and from time to time, (i)
to delay the acceptance of the Old
Capital Securities for exchange, (ii)
to terminate the Exchange Offer if
certain specified conditions have not
been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer
and retain all Old Capital Securities
tendered pursuant to the Exchange
Offer, subject, however, to the right
of holders of Old Capital Securities
to withdraw their tendered Old Capital
Securities or (iv) to waive any
condition or otherwise amend the terms
of the Exchange Offer in any respect.
See "The Exchange Offer--Terms of the
Exchange Offer."
Withdrawal Rights. . . . . . . . . . Tenders of Old Capital Securities may
be withdrawn at any time on or prior
to the Expiration Date by delivering a
written notice of such withdrawal to
the Exchange Agent in conformity with
certain procedures set forth below
under "The Exchange Offer--Withdrawal
Rights."
Procedures for Tendering Old Capital
Securities. . . . . . . . . . . . Tendering holders of Old Capital
Securities must complete and sign a
Letter of Transmittal in accordance
with the instructions contained
therein and forward the same by mail,
facsimile or hand delivery, together
with any other required documents, to
the Exchange Agent, either with the
Old Capital Securities to be tendered
or in compliance with the specified
procedures for guaranteed delivery of
Old Capital Securities. Certain
brokers, dealers, commercial banks,
trust companies and other nominees
also may effect tenders by book-entry
transfer, including an Agent's Message
in lieu of a Letter of Transmittal.
Holders of Old Capital Securities
registered in the name of a broker,
dealer, commercial bank, trust company
or other nominee are urged to contact
such person promptly if they wish to
tender Old Capital Securities pursuant
to the Exchange Offer. See "The
Exchange Offer--Procedures for
Tendering Old Capital Securities."
Letters of Transmittal and
certificates representing Old Capital
Securities should not be sent to the
Corporation or the Trust. Such
documents should only be sent to the
Exchange Agent. See "The Exchange
Offer -- Exchange Agent."
12
<PAGE>
Resales of New Capital Securities. . The Corporation and the Trust are
making the Exchange Offer in reliance
on the position of the staff of the
Division of Corporation Finance of the
Commission as set forth in certain
interpretive letters addressed to
third parties in other transactions.
However, neither the Corporation nor
the Trust has sought its own
interpretive letter and there can be
no assurance that the staff of the
Division of Corporation Finance of the
Commission would make a similar
determination with respect to the
Exchange Offer as it has in such
interpretive letters to third parties.
Based on these interpretations by the
staff of the Division of Corporation
Finance of the Commission, and subject
to the two immediately following
sentences, the Corporation and the
Trust believe that New Capital
Securities issued pursuant to this
Exchange Offer in exchange for Old
Capital Securities may be offered for
resale, resold and otherwise
transferred by a holder thereof (other
than a holder who is a broker-dealer)
without further compliance with the
registration and prospectus delivery
requirements of the Securities Act,
provided that such New Capital
Securities are acquired in the
ordinary course of such holder's
business and that such holder is not
participating, and has no arrangement
or understanding with any person to
participate, in a distribution (within
the meaning of the Securities Act) of
such New Capital Securities. However,
any holder of Old Capital Securities
who is an Affiliate of the Corporation
or the Trust or who intends to
participate in the Exchange Offer for
the purpose of distributing the New
Capital Securities, or any
broker-dealer who purchased the Old
Capital Securities from the Trust to
resell pursuant to Rule 144A or any
other available exemption under the
Securities Act, (i) will not be able
to rely on the interpretations of the
staff of the Division of Corporation
Finance of the Commission set forth in
the above-mentioned interpretive
letters, (ii) will not be permitted or
entitled to tender such Old Capital
Securities in the Exchange Offer and
(iii) must comply with the
registration and prospectus delivery
requirements of the Securities Act in
connection with any sale or other
transfer of such Old Capital
Securities unless such sale is made
pursuant to an exemption from such
requirements. In addition, as
described below, if any broker-dealer
holds Old Capital Securities acquired
for its own account as a result of
market-making or other trading
activities and exchanges such Old
Capital Securities for New Capital
Securities, then such broker-dealer
must deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resales of such
New Capital Securities.
13
<PAGE>
Each holder of Old Capital Securities
who wishes to exchange Old Capital
Securities for New Capital Securities
in the Exchange Offer will be required
to represent in the Letter of
Transmittal or by transmission of an
Agent's Message that (i) it is not an
"affiliate" of the Corporation or the
Trust, (ii) any New Capital Securities
to be received by it are being
acquired in the ordinary course of its
business, (iii) it has no arrangement
or understanding with any person to
participate in a distribution (within
the meaning of the Securities Act) of
such New Capital Securities and (iv)
if such holder is not a broker-dealer,
such holder is not engaged in, and
does not intend to engage in, a
distribution (within the meaning of
the Securities Act) of such New
Capital Securities. The Letter of
Transmittal contains the foregoing
representations. Each Participating
Broker-Dealer that receives New
Capital Securities for its own account
pursuant to the Exchange Offer will be
deemed to have acknowledged by
execution of the Letter of Transmittal
or delivery of an Agent's Message (as
defined herein) that it acquired the
Old Capital Securities for its own
account as the result of market-making
activities or other trading activities
and must agree that it will deliver a
prospectus meeting the requirements of
the Securities Act in connection with
any resale of such New Capital
Securities. The Letter of Transmittal
states that, by so acknowledging and
by delivering a prospectus, a
Participating Broker-Dealer will not
be deemed to admit that it is an
"underwriter" within the meaning of
the Securities Act. Based on the
position taken by the staff of the
Division of Corporation Finance of the
Commission in the interpretive letters
referred to above, the Corporation and
the Trust believe that Participating
Broker-Dealers who acquired Old
Capital Securities for their own
accounts as a result of market-making
activities or other trading activities
may fulfill their prospectus delivery
requirements with respect to the New
Capital Securities received upon
exchange of such Old Capital
Securities (other than Old Capital
Securities which represent an unsold
allotment from the original sale of
the Old Capital Securities) with a
prospectus meeting the requirements of
the Securities Act, which may be the
prospectus prepared for an exchange
offer so long as it contains a
description of the plan of
distribution with respect to the
resale of such New Capital Securities.
Accordingly, this Prospectus, as it
may be amended or supplemented from
time to time, may be used by a
Participating Broker-Dealer in
connection with resales of New Capital
Securities received in exchange for
Old Capital Securities where such Old
Capital Securities were acquired by
such Participating Broker-Dealer for
its own account as a result of
market-making or other trading
activities.
14
<PAGE>
Subject to certain provisions set
forth in the Registration Rights
Agreement and to the limitations
described below under "The Exchange
Offer--Resales of New Capital
Securities," the Corporation and the
Trust have agreed that this
Prospectus, as it may be amended or
supplemented from time to time, may be
used by a Participating Broker-Dealer
in connection with resales of such New
Capital Securities for a period ending
90 days after the Expiration Date
(subject to extension under certain
limited circumstances) or, if earlier,
when all such New Capital Securities
have been disposed of by such
Participating Broker-Dealer. See
"Plan of Distribution." Any person,
including any Participating
Broker-Dealer, who is an Affiliate of
the Corporation or the Trust may not
rely on such interpretive letters and
must comply with the registration and
prospectus delivery requirements of
the Securities Act in connection with
any resale transaction. See "The
Exchange Offer--Resales of New Capital
Securities."
Exchange Agent . . . . . . . . . . . The exchange agent with respect to the
Exchange Offer is The Bank of New York
(the "Exchange Agent"). The
addresses, and telephone and facsimile
numbers, of the Exchange Agent are set
forth in "The Exchange Offer--Exchange
Agent" and in the Letter of
Transmittal.
Use of Proceeds. . . . . . . . . . . Neither the Corporation nor the Trust
will receive any cash proceeds from
the issuance of the New Capital
Securities offered hereby. See "Use
of Proceeds."
Certain Federal Income Tax
Considerations; ERISA
Considerations . . . . . . . . . Holders of Old Capital Securities
should review the information set
forth under "Certain Federal Income
Tax Considerations" and "ERISA
Considerations" prior to tendering Old
Capital Securities in the Exchange
Offer.
The New Capital Securities
Securities Offered . . . . . . . . . Up to $15,000,000 aggregate
Liquidation Amount of the Trust's New
Capital Securities which have been
registered under the Securities Act
(Liquidation Amount $1,000 per New
Capital Security). The New Capital
Securities will be issued and the Old
Capital Securities were issued under
the Trust Agreement. The New Capital
Securities and any Old Capital
Securities which remain outstanding
after consummation of the Exchange
Offer will vote together as a single
class for purposes of determining
whether holders of the requisite
percentage in outstanding Liquidation
Amount thereof have taken certain
actions or exercised certain rights
under the
15
<PAGE>
Trust Agreement. See "Description of
New Securities--Description of Capital
Securities--Voting Rights; Amendment
of the Trust Agreement." The terms of
the New Capital Securities are
identical in all material respects to
the terms of the Old Capital
Securities, except that the New
Capital Securities have been
registered under the Securities Act
and therefore will not be subject to
certain restrictions on transfer under
federal and state securities laws and
will not provide for any increase in
the Distribution rate thereon. See
"The Exchange Offer--Purpose of the
Exchange Offer," "Description of New
Securities" and "Description of Old
Securities."
Distribution Dates . . . . . . . . . June 1 and December 1 of each year.
Extension Periods. . . . . . . . . . Distributions on the Capital
Securities will be deferred for the
duration of any Extension Period
elected by the Corporation with
respect to the payment of interest on
the Junior Subordinated Debentures.
No Extension Period will exceed 10
consecutive semi-annual periods, end
on a date other than an Interest
Payment Date or extend beyond the
Stated Maturity Date. See
"Description of New
Securities--Description of Junior
Subordinated Debentures--Option to
Extend Interest Payment Date" and
"Certain United States Federal Income
Tax Considerations--Interest Income
and Original Issue Discount."
Ranking. . . . . . . . . . . . . . . The New Capital Securities will rank
pari passu, and payments thereon will
be made pro rata, with the Old Capital
Securities and the Common Securities
except as described under "Description
of New Securities --Description of
Capital Securities--Subordination of
Common Securities." The New Junior
Subordinated Debentures will rank pari
passu with the Old Junior Subordinated
Debentures, and all other junior
subordinated debentures issued by the
Corporation (the "Other Debentures")
and sold to other trusts established
or to be established by the
Corporation, in each case similar to
the Trust (the "Other Trusts"), and
will be unsecured and subordinate and
junior in right of payment to all
Senior Indebtedness of the Corporation
to the extent and in the manner set
forth in the Indenture. See
"Description of New Securities--
Description of Junior Subordinated
Debentures." The New Guarantee will
rank pari passu with the Old
Guarantee, and all other guarantees
issued by the Corporation with respect
to capital securities issued or to be
issued by Other Trusts (the "Other
Guarantees") and will constitute an
unsecured obligation of the
Corporation and will rank subordinate
and junior in right of payment to all
Senior Indebtedness of the Corporation
to the extent
16
<PAGE>
and in the manner set forth in the
Guarantee Agreement. See "Description
of New Securities--Description of
Guarantee."
Redemption . . . . . . . . . . . . . The Trust Securities are subject to
mandatory redemption in a Like Amount,
(i) in whole but not in part, on the
Stated Maturity Date upon repayment of
the Junior Subordinated Debentures,
(ii) in whole but not in part, at any
time before the Initial Optional
Prepayment Date contemporaneously with
the optional redemption of the Junior
Subordinated Debentures by the
Corporation upon the occurrence and
continuation of a Special Event (as
defined herein) and (iii) in whole or
in part, at any time on or after the
Initial Optional Prepayment Date
contemporaneously with the optional
redemption by the Corporation of the
Junior Subordinated Debentures, in
each case at the applicable Redemption
Price. See "Description of New
Securities--Description of Capital
Securities--Redemption."
Transfer . . . . . . . . . . . . . . The New Capital Securities will be
issued, and may be transferred, only
in blocks having a Liquidation Amount
of not less than $100,000 (100 New
Capital Securities). Any transfer,
sale or other disposition of New
Capital Securities resulting in a
block having a Liquidation Amount of
less than $100,000 shall be deemed to
be void and of no legal effect
whatsoever.
Absence of Market for the New Capital
Securities. . . . . . . . . . . The New Capital Securities will be a
new issue of securities for which
there currently is no market. Sandler
O'Neill & Partners, L.P. the initial
purchaser of the Old Capital
Securities (the "Initial Purchaser"),
has informed the Corporation and the
Trust that it intends to make a market
in the New Capital Securities.
However, the Initial Purchaser is not
obligated to make a market in the Old
Capital Securities or the New Capital
Securities, and any such market making
may be discontinued at any time
without notice. Accordingly, there
can be no assurance as to the
development or liquidity of any market
for the New Capital Securities. The
Trust and the Corporation do not
intend to apply for listing of the New
Capital Securities on any securities
exchange or for quotation through the
National Association of Securities
Dealers Automated Quotation System.
The New Capital Securities are
expected to be eligible for quotation
on PORTAL. See "Plan of
Distribution."
17
<PAGE>
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus, the following factors in connection
with the Exchange Offer and the New Capital Securities offered hereby.
Information contained in this Prospectus contains "forward-looking
statements" which can be identified by the use of forward-looking terminology
such as "believes," "expects," "may," "will," "should," "projected,"
"contemplates" or "anticipates" or the negative thereof or other variations
thereon or comparable terminology. No assurance can be given that the future
results covered by the forward-looking statements will be achieved. The
following matters constitute cautionary statements identifying important
factors with respect to such forward-looking statements, including certain
risks and uncertainties, that could cause actual results to vary materially
from the future results covered in such forward-looking statements. Other
factors, such as the general state of the economy, could also cause actual
results to vary materially from the future results covered in such
forward-looking statements.
Ranking of Subordinated Obligations under the Guarantee and the Junior
Subordinated Debentures; Limitations on Sources of Funds
The obligations of the Corporation under the Guarantee issued by it for
the benefit of holders of Capital Securities, as well as under the Junior
Subordinated Debentures are unsecured and rank subordinate and junior in
right of payment to all present and future Senior Indebtedness of the
Corporation to the extent and in the manner set forth in the Indenture and
the Guarantee, respectively. No payment may be made of the principal of, or
premium, if any, or interest on the Junior Subordinated Debentures, or in
respect of any redemption, retirement, purchase or other acquisition of any
of the Junior Subordinated Debentures, at any time when (i) there shall have
occurred and be continuing a default, in any payment in respect of any Senior
Indebtedness, or there has been an acceleration of the maturity thereof
because of a default, or (ii) in the event of the acceleration of the
maturity of the Junior Subordinated Debentures until payment has been made on
all Senior Indebtedness. At June 30, 1997, the Corporation had outstanding
Senior Indebtedness. Because the Corporation is a holding company, the right
of the Corporation to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization or otherwise
(and thus the ability of holders of the Capital Securities to benefit
indirectly from such distribution) is subject to the prior claims of
creditors of that subsidiary, except to the extent that the Corporation may
itself be recognized as a creditor of such subsidiary. At June 30, 1997, the
subsidiaries of the Corporation had total liabilities (excluding liabilities
owed to the Corporation) of approximately $378.3 million. Accordingly, the
Junior Subordinated Debentures effectively will be subordinated to all
existing and future liabilities of the Corporation's subsidiaries (including
the Bank's deposit liabilities, which aggregated $301.9 million at June 30,
1997), and holders of Junior Subordinated Debentures should look only to the
assets of the Corporation for payments on the Junior Subordinated Debentures.
The Guarantee constitutes an unsecured obligation of the Corporation and
ranks subordinate and junior in right of payment to all Senior Indebtedness
of the Corporation in the same manner as the Junior Subordinated Debentures.
None of the Indenture, the Guarantee or the Trust Agreement places any
limitation on the amount of secured or unsecured debt, including Senior
Indebtedness, that may be incurred by the Corporation or any of its
subsidiaries. See "Description of New Securities --Description of Guarantee
- -- Status of Guarantee" and "-- Description of Junior Subordinated Debentures
- -- Subordination."
The ability of the Trust to pay amounts due on the Capital Securities is
solely dependent upon the Corporation making payments on the Junior
Subordinated Debentures as and when required.
The Corporation is a holding company and almost all of the operating
assets of the Corporation are owned by the Corporation's subsidiaries. The
Corporation relies primarily on dividends from the Bank to meet its
obligations for payment of principal and interest on its outstanding debt
obligations and corporate expenses. There are regulatory limitations on the
payment of dividends directly or indirectly to the Corporation from the Bank.
As of June 30, 1997, under regulations of the Office of Thrift Supervision
("OTS"), the total capital available for payment of dividends by the Bank to the
Corporation was approximately $2.4 million. However, the
18
<PAGE>
OTS has the power to prohibit any act, including the payment of dividends, if
such act would reduce the Bank's capital to a point that, in its opinion,
would render the Bank undercapitalized and thus constitute an unsafe or
unsound banking practice. In addition to restrictions on the payment of
dividends, the Bank is subject to certain restrictions imposed by federal law
on any extensions of credit to, and certain other transactions with, the
Corporation and certain other affiliates, and on investments in stock or
other securities thereof. Such restrictions prevent the Corporation 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
Corporation and as to each of such other affiliates to 10% of the Bank's
capital and surplus and as to the Corporation and all of such other
affiliates to an aggregate of 20% of the Bank's capital and surplus.
Option to Extend Interest Payment Period; Tax Consequences; Market Price
Consequences
So long as no Debenture Event of Default (as defined herein) shall have
occurred and be continuing, the Corporation has the right under the Indenture
to defer payments of interest on the Junior Subordinated Debentures at any
time or from time to time for a period not exceeding 10 consecutive
semi-annual periods with respect to each Extension Period, provided that no
Extension Period shall end on a date other than an Interest Payment Date or
extend beyond the Stated Maturity Date. As a consequence of any such
deferral, semi-annual Distributions on the Trust 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 10.50% per annum, compounded semi-annually, but not exceeding the
interest rate then accruing on the Junior Subordinated Debentures) from the
relevant payment date for such Distributions during any such Extension
Period. During the pendency of any Extension Period, the Corporation
generally will be prohibited from declaring or paying dividends on the
Corporation's capital stock. See "Description of New Securities--Description
of Capital Securities--Distributions."
Prior to the termination of any Extension Period, the Corporation may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods to
end on a date other than an Interest Payment Date or to extend beyond the
Stated Maturity Date. Upon the termination of any Extension Period and the
payment of all interest then accrued and unpaid on the Junior Subordinated
Debentures (together with interest thereon at the annual rate of 10.50%,
compounded semi-annually, to the extent permitted by applicable law), the
Corporation may elect to begin a new Extension Period, subject to the above
requirements. There is no limitation on the number of times that the
Corporation may elect to begin an Extension Period. See "Description of New
Securities--Description of Capital Securities--Distributions" and "--
Description of Junior Subordinated Debentures--Option to Extend Interest
Payment Date."
The Corporation has no current plan to exercise its right to defer
payments of interest on the Junior Subordinated Debentures. However, should
the Corporation exercise its right to defer payments of interest on the
Junior Subordinated Debentures, each holder of Trust Securities will be
required to accrue income (as original issue discount ("OID")) in respect of
the deferred stated interest allocable to its Trust Securities for United
States federal income tax purposes, which will be allocated but not
distributed to holders of Trust Securities. As a result, each holder of
Capital Securities will recognize 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 Capital
Securities prior to the record date for the payment of Distributions
thereafter. See "Certain Federal Income Tax Considerations--Interest Income
and Original Issue Discount" and "--Sales of Capital Securities."
Should the Corporation elect to exercise its right to defer payments of
interest on the Junior Subordinated Debentures in the future, the market
price of the Capital Securities is likely to be affected. A holder that
disposes of its Capital Securities during an Extension Period, therefore,
might not receive the same
19
<PAGE>
return on its investment as a holder that continues to hold its Capital
Securities. In addition, the mere existence of the Corporation's right to
defer interest payments on the Junior Subordinated Debentures may cause the
market price of the Capital Securities to be more volatile than the market
prices of other securities on which OID accrues and that are not subject to
such deferrals.
SPECIAL EVENT REDEMPTION
Upon the occurrence and continuation of a Special Event (including a Tax
Event or a Regulatory Capital Event (in each case as defined under
"Description of New Securities--Description of Junior Subordinated
Debentures--Special Event Prepayment")) prior to the Initial Optional
Prepayment Date, the Corporation will have the right to prepay the Junior
Subordinated Debentures in whole (but not in part) at the Special Event
Prepayment Price within 90 days following the occurrence of such Special
Event and therefore cause a mandatory redemption of the Trust Securities at
the Special Event Redemption Price. The exercise of such right is subject to
the Corporation having received any required regulatory approval. See
"Description of New Securities--Description of Capital Securities--Redemption."
LIQUIDATION DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
The Corporation has the right at any time to terminate the Trust and,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause the Junior Subordinated Debentures to be distributed
to the holders of the Trust Securities in liquidation of the Trust. Such
right is subject to (i) the Corporation having received an opinion of counsel
to the effect that such distribution will not be a taxable event to the
holders of Capital Securities and (ii) receipt of any required regulatory
approval. Under current United States federal income tax law, a distribution
of Junior Subordinated Debentures upon the dissolution of the Trust would not
be a taxable event to holders of the Capital Securities. Upon the occurrence
of a Special Event, a dissolution of the Trust in which holders of the
Capital Securities receive cash would be a taxable event to such holders. See
"Certain Federal Income Tax Considerations--Receipt of Junior Subordinated
Debentures or Cash Upon Liquidation of the Trust."
POSSIBLE ADVERSE EFFECT ON MARKET PRICES
There can be no assurance as to the market prices for Capital Securities
or Junior Subordinated Debentures that may be distributed in exchange for
Capital Securities if a termination of the Trust were to occur. Accordingly,
the Capital Securities or the Junior Subordinated Debentures may trade at a
discount from the price that the investor paid to purchase the New Capital
Securities offered hereby. Because holders of Capital Securities may receive
Junior Subordinated Debentures in liquidation of the Trust and because
Distributions are otherwise limited to payments on the Junior Subordinated
Debentures, prospective purchasers of New Capital Securities are also making
an investment decision with regard to the Junior Subordinated Debentures and
should carefully review all the information regarding the New Junior
Subordinated Debentures contained herein. See "Description of New
Securities--Description of Junior Subordinated Debentures."
RIGHTS UNDER THE GUARANTEE
The Guarantee guarantees to the holders of the Capital Securities the
following payments, to the extent not paid by or on behalf of the Trust: (i)
any accumulated and unpaid Distributions required to be paid on the Capital
Securities, to the extent that the Trust has funds on hand legally available
therefor at such time, (ii) the applicable Redemption Price with respect to
the Capital Securities called for redemption, to the extent that the Trust
has funds on hand legally available therefor at such time, and (iii) upon a
voluntary or involuntary termination, winding up or liquidation of the Trust
(unless the Junior Subordinated Debentures are distributed to holders of the
Capital Securities), the lesser of (a) the aggregate of the Liquidation
Amount and all accumulated and unpaid Distributions to the date of payment,
to the extent that the Trust has funds on hand
20
<PAGE>
legally available therefor at such time, and (b) the amount of assets of the
Trust remaining available for distribution to holders of the Capital
Securities at such time, after the satisfaction of liabilities to creditors
of the Trust as provided by applicable law.
The holders of a majority in Liquidation Amount of the Capital Securities
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of
the Guarantee or to direct the exercise of any trust power conferred upon the
Guarantee Trustee under the Guarantee. Any holder of the Capital Securities
may institute a legal proceeding directly against the Corporation to enforce
its rights under the Guarantee without first instituting a legal proceeding
against the Trust, the Guarantee Trustee or any other person or entity. If
the Corporation defaults on its obligation to pay amounts payable under the
Junior Subordinated Debentures, the Trust will not have sufficient funds for
the payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital
Securities will not be able to rely upon the Guarantee for payment of such
amounts. Instead, in the event a Debenture Event of Default shall have
occurred and be continuing and such event is attributable to the failure of
the Corporation to pay the principal of (or premium, if any) or interest
(including Additional Sums (as defined below) and Compounded Interest (as
defined below), if any) or Liquidated Damages, if any, on the Junior
Subordinated Debentures on the payment date on which such payment is due and
payable, then a holder of Capital Securities may institute a legal proceeding
directly against the Corporation for enforcement of payment to such holder of
the principal of (or premium, if any) or interest (including Additional Sums
and Compounded Interest, if any) or Liquidated Damages, if any, on such
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Capital Securities of such holder (a "Direct
Action"). Notwithstanding any payments made to a holder of Capital Securities
by the Corporation in connection with a Direct Action, the Corporation shall
remain obligated to pay the principal of (and premium, if any) and interest
(including Additional Sums and Compounded Interest, if any) or Liquidated
Damages, if any, on the Junior Subordinated Debentures, and the Corporation
shall be subrogated to the rights of the holder of such Capital Securities
with respect to payments on the Capital Securities to the extent of any
payments made by the Corporation to such holder in any Direct Action. Except
as described herein, holders of Capital Securities will not be able to
exercise directly any other remedy available to the holders of the Junior
Subordinated Debentures or to assert directly any other rights in respect of
the Junior Subordinated Debentures. See "Description of New
Securities--Description of Junior Subordinated Debentures--Enforcement of
Certain Rights by Holders of Capital Securities," "--Debenture Events of
Default" and "--Description of Guarantee." The Trust Agreement provides that
each holder of Capital Securities by acceptance thereof agrees to the provisions
of the Indenture. The Bank of New York acts as Guarantee Trustee and holds the
Guarantee for the benefit of the holders of the Capital Securities. The Bank
of New York also acts as Property Trustee and as Debenture Trustee under the
Indenture. The Bank of New York (Delaware) acts as Delaware Trustee under the
Trust Agreement.
LIMITED VOTING RIGHTS
Holders of Capital Securities generally have limited voting rights
relating only to the modification of the Capital Securities and the exercise
of the Trust's rights as holder of Junior Subordinated Debentures. Holders of
Capital Securities will not be entitled to vote to appoint, remove or
replace, or to increase or decrease the number of, the Issuer Trustees, which
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 Corporation may amend the Trust
Agreement without the consent of holders of Capital 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. Holders of Capital Securities will have no voting rights with
respect to any matters submitted to a vote of the Corporation's stockholders.
See "Description of New Securities--Description of Capital Securities--
Voting Rights; Amendment of the Trust Agreement" and "--Removal of Issuer
Trustees."
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<PAGE>
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements
of the Securities Act and any other applicable securities laws, or pursuant
to an exemption therefrom or in a transaction not subject thereto, and in
each case in compliance with certain other conditions and restrictions. Old
Capital Securities which remain outstanding after consummation of the
Exchange Offer will continue to bear a legend reflecting such restrictions on
transfer. In addition, upon consummation of the Exchange Offer, holders of
Old Capital Securities which remain outstanding will not be entitled to any
rights to have such Old Capital Securities registered under the Securities
Act or to any similar rights under the Registration Rights Agreement. The
Corporation and the Trust do not intend to register under the Securities Act
any Old Capital Securities which remain outstanding after consummation of the
Exchange Offer.
To the extent that Old Capital Securities are tendered and accepted in
the Exchange Offer, a holder's ability to sell untendered Old Capital
Securities could be adversely affected. In addition, although the Old Capital
Securities have been designated for trading in the Private Offerings, Resale
and Trading through Automated Linkages ("PORTAL") market, to the extent that
Old Capital Securities are tendered and accepted in connection with the
Exchange Offer, any trading market for Old Capital Securities which remain
outstanding after the Exchange Offer could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will vote together as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain
actions or exercised certain rights under the Trust Agreement. See
"Description of New Securities--Description of Capital Securities--Voting
Rights; Amendment of the Trust Agreement."
The Old Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by
October 31, 1997 and declared effective by November 30, 1997, the
Distribution rate borne by the Old Capital Securities commencing on June 3,
1997 will increase by 0.25% per annum until the Exchange Offer is
consummated. Upon consummation of the Exchange Offer, holders of Old Capital
Securities will not be entitled to any increase in the Distribution rate
thereon or any further registration rights under the Registration Rights
Agreement. The New Capital Securities will not be entitled to any such
increase in the Distribution rate thereon. See "Description of Old Capital
Securities."
TRADING CHARACTERISTICS OF THE CAPITAL SECURITIES
The Capital Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debentures are deemed to have been issued with OID) and who
disposes of its Capital Securities between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest
on the Junior Subordinated Debentures through the date of disposition in
income as ordinary income (i.e., interest or, possibly, OID), and to add such
amount to its adjusted tax basis in its share of the underlying Junior
Subordinated Debentures deemed disposed of. To the extent the selling price
is less than the holder's adjusted tax basis (which will include 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. See "Certain
Federal Income Tax Considerations -- Interest Income and Original Issue
Discount" and "-- Sales of Capital Securities."
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<PAGE>
ABSENCE OF PUBLIC MARKET
The Old Capital Securities have not been registered under the Securities
Act and will continue to be subject to restrictions on transferability under
the Securities Act and applicable state securities laws if they are not
exchanged for New Capital Securities. Although the New Capital Securities
generally may be resold or otherwise transferred by the holders (who are not
Affiliates of the Corporation or the Trust) without compliance with the
registration requirements under the Securities Act, they will constitute a
new issue of securities with no established trading market. Capital
Securities may be transferred by the holders thereof only in blocks having a
Liquidation Amount of not less than $100,000 (100 Capital Securities). The
Corporation and the Trust were advised by the Initial Purchasers in
connection with the offering of the Old Capital Securities that the Initial
Purchasers intend to make a market in the Old Capital Securities. However,
neither Initial Purchaser is obligated to do so and any market-making
activity with respect to the New Capital Securities may be discontinued at
any time without notice. In addition, such market-making activity will be
subject to the limits imposed by the Securities Act and the Exchange Act and
may be limited during the Exchange Offer. Accordingly, no assurance can be
given that an active public or other market will develop for the New Capital
Securities or the Old Capital Securities or as to the liquidity of or the
trading market for the New Capital Securities or the Old Capital Securities.
If an active public market does not develop, the market price and liquidity
of the New Capital Securities may be adversely affected.
If a public trading market develops for the New Capital Securities,
future trading prices will depend on many factors, including, among other
things, prevailing interest rates, the Corporation's results of operations
and the market for similar securities. Depending on prevailing interest
rates, the market for similar securities and other factors, including the
financial condition of the Corporation, the New Capital Securities may trade
at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are Affiliates of the Corporation or the Trust
may publicly offer for sale or resell the New Capital Securities only in
compliance with the provisions of Rule 144 under the Securities Act.
Each Participating Broker-Dealer that receives New Capital Securities for
its own account in exchange for Old Capital Securities must acknowledge that
it will deliver a prospectus in connection with any resale of such New
Capital Securities. See "Plan of Distribution."
EXCHANGE OFFER PROCEDURES
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Trust of such Old Capital Securities, a properly completed and
duly executed Letter of Transmittal or Agent's Message in lieu thereof and
all other required documents. Therefore, holders of the Old Capital
Securities desiring to tender such Old Capital Securities in exchange for New
Capital Securities should allow sufficient time to ensure timely delivery.
None of the Corporation, the Trust or the Exchange Agent is under any duty to
give notification of defects or irregularities with respect to the tenders of
Old Capital Securities for exchange.
THE TRUST
The Trust is a statutory business trust created under Delaware law upon
the filing of a certificate of trust with the Secretary of State of the State
of Delaware. The Trust exists for the exclusive purposes of (i) issuing and
selling the Trust Securities, which represent undivided beneficial interests
in the assets of the Trust, (ii) investing the gross proceeds from the sale
of the Trust Securities in the Junior Subordinated Debentures and (iii)
engaging in only those other activities necessary, advisable or incidental
thereto. Accordingly, the Junior
23
<PAGE>
Subordinated Debentures will be the sole assets of the Trust and payments
under the Junior Subordinated Debentures will be the sole revenues of the
Trust. All of the Common Securities are owned directly by the Corporation.
The Common Securities rank PARI PASSU, and payments will be made thereon pro
rata, with the Capital Securities, except that upon the occurrence and during
the continuance of an Event of Default, the rights of the Corporation as
holder of the Common Securities to payments in respect of Distributions and
payments upon liquidation, redemption or otherwise will be subordinated and
rank junior to the rights of the holders of the Capital Securities. See
"Description of New Securities--Description of Capital Securities--
Subordination of Common Securities." The Corporation acquired Common
Securities in a Liquidation Amount equal to 3% of the total capital of the
Trust. The Trust has a term of 31 years, but may terminate earlier as
provided in the Trust Agreement. The Trust's business and affairs are
conducted by trustees (the "Issuer Trustees") appointed by the Corporation as
the direct holder of the Common Securities. The Issuer Trustees are The Bank
of New York as the Property Trustee (the "Property Trustee"), The Bank of New
York (Delaware) as the Delaware Trustee (the "Delaware Trustee") and three
individual trustees (the "Administrative Trustees"). The Bank of New York, as
Property Trustee, acts as sole indenture trustee under the Trust Agreement.
The Bank of New York also acts as indenture trustee under the Guarantee and
the Indenture. See "Description of New Securities--Description of Guarantee"
and "--Description of Junior Subordinated Debentures." The holder of the
Common Securities or, if an Event of Default under the Trust Agreement has
occurred and is continuing, the holders of not less than a majority in
Liquidation Amount of the Capital Securities, will be entitled to appoint,
remove or replace the Property Trustee and/or the Delaware Trustee. In no
event will the holders of the Capital Securities have the right to vote to
appoint, remove or replace the Administrative Trustees; such voting rights
will be vested exclusively in the holder of the Common Securities. The duties
and obligations of each Issuer Trustee are governed by the Trust Agreement.
The Corporation will pay directly all fees, expenses, debts and obligations
(other than the Trust Securities) related to the Exchange Offer, except as
provided herein, and will pay, directly or indirectly, all ongoing costs,
expenses and liabilities of the Trust. The principal executives office of the
Trust is c/o Progress Financial Corporation, Four Sentry Parkway, Suite 230,
Blue Bell, Pennsylvania 19422.
THE CORPORATION
The Corporation is a Delaware-chartered, registered thrift holding
company headquartered in Blue Bell, Pennsylvania. The Corporation is the sole
stockholder of the Bank, a federally chartered savings bank, which has been
engaged in the thrift business since 1878. The Corporation was organized in
1986 in connection with the reorganization of the Bank into a thrift holding
company structure. The Bank conducts its business through seven full-service
offices located in Montgomery County, one full-service office in Delaware
County, one full-service office in Chester County and one full-service office
in the Andorra section of Philadelphia, in southeastern Pennsylvania. At June
30, 1997, the Corporation had total consolidated assets of $418.7 million,
total consolidated liabilities of $381.6 million, including total
consolidated deposits of $301.9 million, and total consolidated stockholders'
equity of $22.0 million.
The principal business of the Corporation historically consisted of
attracting deposits from the general public through its offices and using
such deposits to originate loans secured by first mortgage liens on existing
single-family residential real estate and existing multi-family residential
and commercial real estate as well as the origination of construction loans
(which included land acquisition and development loans). To a significantly
lesser extent, the Bank also has originated commercial business loans,
consisting primarily of loans to small and medium-sized businesses, and
various types of consumer loans. Beginning in 1995, the Bank began to
increase its emphasis on construction lending, commercial real estate lending
and commercial business lending and, in 1996, the Bank purchased a $20.2
million equipment lease financing company. Commercial real estate, commercial
business and construction lending and lease financing are considered to
involve a higher degree of credit risk when compared to single-family
residential lending.
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<PAGE>
Through direct and indirect subsidiaries, the Corporation has sought to
diversify its business and provide a full range of services to its customers.
Through Progress Realty Advisors, L.P. and Progress Asset Management Company,
the Corporation conducts commercial mortgage banking and brokerage services
for institutional real estate investors and lenders as well as real estate
owners and developers and provides short-term asset management services to
middle market companies and municipalities. Another subsidiary, Progress
Capital, Inc. is the corporate general partner of a proposed venture fund
which will invest in debt and equity securities of small to mid-sized
technology based companies located in the mid-Atlantic region. In addition,
the Corporation has significantly diversified and expanded its loan portfolio
by offering lease financing through Quaker State Leasing Company and The
Equipment Leasing Company. Further, Procall Teleservices, Inc., an
interactive communications and marketing firm, provides a full range of
teleservices, including customer service, market research and telesales for
businesses and also provides these services to the Bank.
The Corporation also invests in mortgage-backed securities which are
insured or guaranteed by the U.S. Government and agencies thereof and other
similar investments permitted by applicable laws and regulations. In
addition, the Bank is involved in real estate development and related
activities, through its subsidiaries, primarily to facilitate the completion
and sale of certain property held as real estate owned.
The Corporation, as a registered thrift holding company, is subject to
examination and regulation by the OTS and is subject to various reporting and
other requirements of the Commission. The Bank, as a federally chartered
savings bank, is subject to comprehensive regulation and examination by the
OTS, as its chartering authority and primary regulator, and by the Federal
Deposit Insurance Corporation, which administers the Savings Association
Insurance Fund, which insures the Bank's deposits to the maximum extent
permitted by law. The Bank is a member of the Federal Home Loan Bank ("FHLB")
of Pittsburgh, which is one of the 12 regional banks which comprise the FHLB
System. The Bank is further subject to regulations of the Board of Governors
of the Federal Reserve System governing reserves required to be maintained
against deposits and certain other matters.
The Corporation's principal executive offices are located at Four Sentry
Parkway, Suite 230, Blue Bell, Pennsylvania 19422-0764, and its telephone
number is (610) 825-8800.
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF THE CORPORATION
(Dollars in Thousands, Except Per Share Data)
The selected consolidated financial data below should be read in
connection with the financial information included in the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1996 and its
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. See
"Available Information" and "Incorporation of Certain Documents by
Reference." Interim unaudited data for the six months ended June 30, 1997 and
1996 reflect, in the opinion of management of the Corporation, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of such data. Results for the six months ended June 30,
1997 are not necessarily indicative of results which may be expected for any
other interim period or for the year as a whole.
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------------------------------------------
1997 1996 1995 1994 1993 1992
---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Financial Condition Data:
Total assets...................................... $ 418,658 $ 383,649 345,394 $ 348,189 $ 333,209 $ 291,542
Loans and leases, net............................. 289,902 251,562 221,650 205,771 158,268 153,734
Loans held for sale(1)............................ 393 599 3,153 351 16,744 2,761
Investment securities:
Available for sale(1)........................... 3,561 3,462 5,504 4,627 -- --
Held to maturity................................ 1,717 1,937 2,149 12,867 4,632 5,260
Mortgage-backed securities:
Available for sale(1)........................... 46,160 42,738 36,842 9,103 8,893 25,072
Held to maturity................................ 43,782 47,334 52,833 93,673 117,054 60,939
Deposits.......................................... 301,909 306,248 297,260 283,958 273,583 245,015
Borrowings........................................ 64,532 50,270 28,400 47,052 40,536 36,071
Stockholders' equity.............................. 22,031 19,954 16,407 13,020 14,788 6,877
Delinquent loans(2)............................... 5,977 2,927 3,423 1,001 1,911 9,859
Non-performing assets(2).......................... 8,479 7,556 4,607 9,085 17,628 34,829
Allowance for possible loan and lease losses...... 3,167 3,177 1,720 1,503 2,113 2,703
Book value per share(3)........................... 5.83 5.33 5.00 3.98 4.52 6.81
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30 YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
Operations Data:
Interest income.................................. $ 16,198 $ 13,236 $ 28,121 26,569 $ 22,830 $ 20,824 $ 21,979
Interest expense................................. 7,942 6,891 14,682 15,335 12,505 11,465 13,737
--------- --------- --------- --------- --------- --------- ---------
Net interest income.............................. 8,256 6,345 13,439 11,234 10,325 9,359 8,242
Provision for possible loan and lease losses..... 391 400 687 625 521 368 275
--------- --------- --------- --------- --------- --------- ---------
Net interest income after provision for possible
loan and lease losses.......................... 7,865 5,945 12,752 10,609 9,804 8,991 7,967
Other income..................................... 2,946(4) 2,493(4) 4,859 2,265 1,545 2,226 5,617
Other expense.................................... 7,658 6,646 15,596 12,071 12,065 11,568 12,232
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes (benefit)...... 3,153 1,792 2,015 803 (716) (351) 1,352
Income tax expense (benefit)..................... 1,162 621 762 (1,868) -- (1,034) 74
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)................................ $ 1,991 $ 1,171 $ 1,253 $ 2,671 $ (716) $ 683 $ 1,278
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) per share...................... $ .47 $ .29 $ .30 $ .75 $ (.21) $.28...... $ 1.21
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Cash dividends per share......................... $ .04 $ -- $ .04 $ -- $ -- $ -- $ --
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>
(Footnotes on following page)
26
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR
THE
SIX MONTHS
ENDED
JUNE 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
------------ ------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994 1993 1992
----- ----- ----- ----- ----- ----- -----
Other Data(5):
Return (loss) on average
assets...................... 1.01% .68% .35% .76% (.21)% .21% .42%
Return (loss) on average
equity...................... 19.23 12.60 6.59 18.62 (5.24) 6.25 20.93
Average equity to average
assets...................... 5.24 5.44 5.29 4.08 4.01 3.42 1.99
Dividend payout ratio......... 8.51 -- 12.50 -- -- -- --
Net interest margin(6)........ 4.49 3.94 3.99 3.37 3.23 3.25 3.13
Interest rate spread(6)....... 4.04 3.55 3.60 3.07 3.04 3.26 3.47
Non-performing loans as a
percent of total loans at
end of period(2)............ 1.59 5.59 2.15 1.74 2.19 3.42 4.37
Non-performing assets as a
percent of total assets at
end of period(2)............ 2.03 3.62 1.97 1.33 2.61 5.29 11.95
Allowance for possible loan
losses as a percent of
non-performing loans at end
of period................... 68.87 17.65 58.78 44.34 33.03 34.92 38.83
Net charge-offs as a percent
of average loans............ .16 .00 .03 .19 .60 .64 1.69
Capital Ratios:
Tangible.................... 6.68 5.87 4.93 4.91 4.57 4.14 2.36
Core........................ 6.68 5.87 4.93 4.91 4.57 4.14 2.36
Risk-based.................. 10.56 10.25 8.51 8.68 9.47 9.39 5.37
Full service banking
offices..................... 10 10 10 9 8 8 7
</TABLE>
- ------------------------
(1) Loans classified as held for sale are carried at the lower of aggregate
cost or fair value while mortgage-backed securities and investment
securities classified as available for sale are carried at fair value.
(2) Delinquent loans consist of loans which are 30 to 89 days overdue.
Non-performing loans consist of non-accrual loans and accruing loans 90
days or more overdue; and non-performing assets consist of non-performing
loans and real estate owned, net of the related reserve.
(3) Book value per share represents stockholders' equity divided by the number
of shares of the Corporation's common stock issued and outstanding, net of
unallocated shares held by the Corporation's Employee Stock Ownership Plan.
(4) Includes gain on sale of mortgage servicing rights of $978,000 and $924,000
during the six months ended June 30, 1997 and 1996, respectively.
(5) With the exception of end of period ratios, all ratios are based on average
daily balances during the indicated periods.
(6) Interest rate spread represents the difference between the weighted average
yield on interest-earning assets and the weighted average cost of
interest-bearing liabilities (which do not include non-interest-bearing
accounts), and net interest margin represents net interest income as a
percent of average interest-earning assets.
<PAGE>
USE OF PROCEEDS
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. The Old Capital
Securities surrendered in exchange for the New Capital Securities will be
retired and cancelled.
The proceeds to the Trust from the offering of the Old Capital Securities
was $15,000,000 (before giving effect to approximately $540,000 of commissions
and expenses of the offering payable by the Corporation). All of the proceeds
from the sale of Old Capital Securities were invested by the Trust in the Junior
Subordinated Debentures. The Corporation invested approximately $6.0 million of
the net proceeds in equity of the Bank. The Bank intends to use such additional
capital to increase its regulatory capital ratios, seek to enhance core earnings
and support the growth of its business. Net proceeds retained by the Corporation
will be used by the Corporation for general corporate purposes, including the
investment of funds in the Corporation's subsidiaries and potential future
acquisitions. There currently are no agreements, arrangements or understandings
with respect to any potential acquisitions. Initially, the net proceeds will be
invested in short-term investment grade securities.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
the Corporation on a consolidated basis for the respective periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratios of Earnings to Fixed Charges:
Including interest on deposits.................... 1.40x 1.26x 1.14x 1.05x .94x .97x 1.10x
Excluding interest on deposits.................... 2.60x 3.06x 1.76x 1.26x .69x .83x 1.67x
</TABLE>
For purposes of computing the ratios of earnings to fixed charges, earnings
represent net income (loss) before extraordinary items and cumulative effect of
changes in accounting principles plus applicable income taxes and fixed charges.
Fixed charges, excluding interest on deposits, include gross interest expense
(other than on deposits) and the portion deemed representative of the interest
factor of rent expense, net of income from subleases. Fixed charges, including
gross interest on deposits, include all interest expense and the portion deemed
representative of the interest factor of rent expense, net of income from
subleases.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust is treated as a subsidiary of
the Corporation and, accordingly, the accounts of the Trust are included in the
consolidated financial statements of the Corporation. The Capital Securities are
presented as a separate line item in the consolidated balance sheets of the
Corporation, entitled "Corporation-obligated, mandatorily redeemable securities
of subsidiary trust holding solely junior subordinated debentures of the
Corporation," and appropriate disclosures about the Capital Securities, the
Guarantee and the Junior Subordinated Debentures are included in the notes to
the consolidated financial statements for financial reporting purposes. For
financial reporting purposes, the Corporation records Distributions payable on
the Capital Securities as a non-interest expense in the consolidated statements
of income.
28
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Corporation as of June 30, 1997, which reflects the consummation of the
offering of the Capital Securities. The following data should be read in
conjunction with the financial information included in documents incorporated
herein by reference or included herein. See "Incorporation of Certain Documents
by Reference."
<TABLE>
<CAPTION>
JUNE 30, 1997
--------------
(IN THOUSANDS)
<S> <C>
Deposits.......................................................................................... $ 301,909
Advances from the FHLB of Pittsburgh.............................................................. 28,600
Other borrowings.................................................................................. 35,932
--------------
Total deposits and borrowed funds................................................................. 366,441
--------------
Corporation-obligated mandatorily redeemable capital securities of subsidiary trust holding solely
junior subordinated debentures of the Corporation(1)............................................ 15,000
--------------
Stockholders' equity:
Serial preferred stock, par value $0.01 per share, 1,000,000 shares authorized, none issued..... --
Common stock, par value $1.00 per share, 6,000,000 shares authorized, 3,814,180 shares issued... 3,814
Capital surplus................................................................................. 17,751
Unearned employee stock ownership plan shares................................................... (187)
Retained earnings (deficit)..................................................................... 707
Unrealized loss on securities available for sale, net of deferred income taxes.................. (52)
--------------
Total stockholders' equity........................................................................ 22,031
--------------
Total deposits and borrowed funds, Corporation-obligated mandatorily redeemable capital
securities of subsidiary trust holding solely junior subordinated debentures of
the Corporation and stockholders' equity........................................................ $ 403,472
--------------
--------------
</TABLE>
- ------------------------
(1) Reflects the Capital Securities at their issue price. As described herein,
the sole assets of the Trust, which is a subsidiary of the Corporation, are
$15,464,000 aggregate principal amount of the Junior Subordinated Debentures
(including the amounts attributable to the issuance of the Common Securities
of the Trust), which will mature on June 1, 2027. The Corporation owns all
of the Common Securities issued by the Trust. The Corporation may in its
discretion determine to treat the Capital Securities as liabilities in its
consolidated statements of financial condition.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Corporation
and the Trust entered into the Registration Rights Agreement with the Initial
Purchasers, pursuant to which the Corporation and the Trust agreed to file and
to use their reasonable best efforts to cause to be declared effective by the
Commission a registration statement with respect to the exchange of the Old
Capital Securities for capital securities with terms identical in all material
respects to the terms of the Old Capital Securities. A copy of the Registration
Rights Agreement has been filed as an Exhibit to the Registration Statement of
which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Corporation and the Trust under the Registration Rights Agreement. The form
and terms of the New Capital Securities are the same as the form and terms of
the Old Capital Securities except that the New Capital Securities (i) have been
registered
29
<PAGE>
under the Securities Act and therefore will not be subject to certain
restrictions on transfer under federal and state securities laws and (ii)
will not provide for any increase in the Distribution rate thereon. In that
regard, the Old Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by
October 31, 1997 and declared effective by November 30, 1997, the
Distribution rate borne by the Old Capital Securities, commencing on June 3,
1997 will increase by 0.25% per annum until the Exchange Offer is
consummated. Upon consummation of the Exchange Offer, holders of Old Capital
Securities will not be entitled to any increase in the Distribution rate
thereon or any further registration rights under the Registration Rights
Agreement. See "Risk Factors--Consequences of a Failure to Exchange Old
Capital Securities" and "Description of Old Capital Securities."
The Exchange Offer is not being made to, nor will the Trust accept tenders
for exchange from, holders of Old Capital Securities in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to the
Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any participant in
the DTC system whose name appears on a security position listing as the holder
of such Old Capital Securities and who desires to deliver such Old Capital
Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will exchange as soon as
practicable after the date hereof, the Old Guarantee for the New Guarantee and
the Old Junior Subordinated Debentures, in an amount corresponding to the Old
Capital Securities accepted for exchange, for a like aggregate principal amount
of the New Junior Subordinated Debentures. The New Guarantee and the New Junior
Subordinated Debentures have been registered under the Securities Act.
TERMS OF THE EXCHANGE OFFER
The Trust hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $15,000,000 aggregate Liquidation Amount of New Capital
Securities for a like aggregate Liquidation Amount of Old Capital Securities
properly tendered on or prior to the Expiration Date and not properly withdrawn
in accordance with the procedures described below. The Trust will issue,
promptly after the Expiration Date, an aggregate Liquidation Amount of up to
$15,000,000 of New Capital Securities in exchange for a like aggregate
Liquidation Amount of outstanding Old Capital Securities tendered and accepted
in connection with the Exchange Offer. Holders may tender their Old Capital
Securities in whole or in part in a Liquidation Amount of not less than $100,000
(100 Capital Securities) or any integral multiple of $1,000 Liquidation Amount
(one Capital Security) in excess thereof, provided that if any Old Capital
Securities are tendered in exchange for part, the untendered Liquidation Amount
must be $100,000 or any integral multiple of $1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount of
Old Capital Securities being tendered. As of the date of this Prospectus,
$15,000,000 aggregate Liquidation Amount of the Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are
not tendered for or are tendered but not accepted in connection with the
Exchange Offer will remain outstanding and be entitled to the benefits of the
Trust Agreement, but will not be entitled to any further registration rights
under the Registration Rights Agreement. See "Risk Factors--Consequences of a
Failure to Exchange Old Capital Securities" and "Description of Old Securities."
30
<PAGE>
If any tendered Old Capital Securities are not accepted for exchange because
of an invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Capital Securities will be
returned, without expense, to the tendering holder thereof promptly after the
Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Corporation will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "--Fees and
Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE CORPORATION NOR ANY TRUSTEE OF THE
TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL SECURITIES AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD
CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER
AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO TENDER BASED ON
SUCH HOLDERS OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION, DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on November
, 1997 unless the Exchange Offer is extended by the Corporation or the
Trust (in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in their sole
and absolute discretion, subject to applicable law, at any time and from time
to time, (i) to delay the acceptance of the Old Capital Securities for
exchange, (ii) to terminate the Exchange Offer (whether or not any Old
Capital Securities have theretofore been accepted for exchange) if the
Corporation and the Trust determine, in their sole and absolute discretion,
that any of the events or conditions referred to under "--Conditions to the
Exchange Offer" have occurred or exist or have not been satisfied, (iii) to
extend the Expiration Date of the Exchange Offer and retain all Old Capital
Securities tendered pursuant to the Exchange Offer, subject, however, to the
right of holders of Old Capital Securities to withdraw their tendered Old
Capital Securities as described under "--Withdrawal Rights," and (iv) to
waive any condition or otherwise amend the terms of the Exchange Offer in any
respect. If the Exchange Offer is amended in a manner determined by the
Corporation and the Trust to constitute a material change, or if the
Corporation and the Trust waive a material condition of the Exchange Offer,
the Corporation and the Trust will promptly disclose such amendment by means
of a Prospectus supplement that will be distributed to the registered holders
of the Old Capital Securities, and the Corporation and the Trust will extend
the Exchange Offer to the extent required by Rule 14e-1 under the Exchange
Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Corporation and the Trust may choose to make any public
announcement and subject to applicable law, the Corporation and the Trust shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to an appropriate news
agency.
31
<PAGE>
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old Capital
Securities tendered and accepted for exchange pursuant to the Exchange Offer
will be made only after timely receipt by the Exchange Agent of (i) Old Capital
Securities or a book-entry confirmation of a book-entry transfer of Old Capital
Securities into the Exchange Agent's account at DTC, including an Agent's
Message if the tendering holder has not delivered a Letter of Transmittal, (ii)
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or (in the case of a
book-entry transfer) an Agent's Message in lieu of the Letter of Transmittal,
and (iii) any other documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgement from the tendering
participant, which acknowledgment states that such participant has received and
agrees to be bound by the Letter of Transmittal and that the Trust and the
Corporation may enforce such Letter of Transmittal against such participant.
Subject to the terms and conditions of the Exchange Offer, the
Corporation and the Trust will be deemed to have accepted for exchange, and
thereby exchanged, Old Capital Securities validly tendered and not withdrawn
as, if and when the Trust gives oral or written notice to the Exchange Agent
of the Corporation's and the Trust's acceptance of such Old Capital
Securities for exchange pursuant to the Exchange Offer. The Exchange Agent
will act as agent for the Trust for the purpose of receiving tenders of Old
Capital Securities, Letters of Transmittal and related documents, and as
agent for tendering holders for the purpose of receiving Old Capital
Securities, Letters of Transmittal and related documents and transmitting New
Capital Securities to validly tendering holders. Such exchange will be made
promptly after the Expiration Date. If, for any reason whatsoever, acceptance
for exchange or the exchange of any Old Capital Securities tendered pursuant
to the Exchange Offer is delayed (whether before or after the Trust's
acceptance for exchange of Old Capital Securities) or the Corporation and the
Trust extend the Exchange Offer or are unable to accept for exchange or
exchange Old Capital Securities tendered pursuant to the Exchange Offer,
then, without prejudice to the Corporation's and the Trust's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of the Corporation
and the Trust and subject to Rule 14e-1(c) under the Exchange Act, retain
tendered Old Capital Securities and such Old Capital Securities may not be
withdrawn except to the extent tendering holders are entitled to withdrawal
rights as described under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal or Agent's Message in lieu thereof, a
holder of Old Capital Securities will warrant and agree in the Letter of
Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer Old Capital Securities, that the Trust will acquire good,
marketable and unencumbered title to the tendered Old Capital Securities, free
and clear of all liens, restrictions, charges and encumbrances, and the Old
Capital Securities tendered for exchange are not subject to any adverse claims
or proxies. The holder also will warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by the Corporation, the
Trust or the Exchange Agent to be necessary or desirable to complete the
exchange, sale, assignment and transfer of the Old Capital Securities tendered
pursuant to the Exchange Offer.
32
<PAGE>
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees, or (in the case of a book-entry
transfer) an Agent's Message in lieu of a Letter of Transmittal, and any
other required documents, must be received by the Exchange Agent at one of
its addresses set forth under "--Exchange Agent," and (i) tendered Old
Capital Securities must be received by the Exchange Agent, or (ii) such Old
Capital Securities must be tendered pursuant to the procedures for book-entry
transfer set forth below and a book-entry confirmation, including an Agent's
Message if the tendering holder has not delivered a Letter of Transmittal,
must be received by the Exchange Agent, in each case on or prior to the
Expiration Date, or (iii) the guaranteed delivery procedures set forth below
must be complied with.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal or so indicate in an Agent's
Message in lieu of the Letter of Transmittal and the untendered Liquidation
Amount must be $100,000 or any integral multiple of $1,000 in excess thereof.
The entire amount of Old Capital Securities delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN-RECEIPT REQUESTED,
PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange
Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in DTC's book-entry transfer
facility system may make a book-entry delivery of the Old Capital Securities
by causing DTC to transfer such Old Capital Securities into the Exchange
Agent's account at DTC in accordance with DTC's procedures for transfers.
However, although delivery of Old Capital Securities may be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in lieu of the
Letter of Transmittal, and any other required documents, must in any case be
delivered to and received by the Exchange Agent at its address set forth
under "--Exchange Agent" on or prior to the Expiration Date, or the
guaranteed delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (i) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (ii) such holder completes the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" in the Letter of Transmittal. In the case of
(i) or (ii) above, such certificates for Old Capital Securities must be duly
endorsed or accompanied by a properly executed bond power, with the endorsement
or signature on the bond power and on the Letter of Transmittal guaranteed by a
firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an
"eligible guarantor institution," including (as such terms are defined therein):
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that
33
<PAGE>
is a participant in a Securities Transfer Association (an "Eligible
Institution"), unless surrendered on behalf of such Eligible Institution. See
Instruction 1 to the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or prior to the Expiration Date, or the
procedure for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to the
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), or Agent's Message in lieu thereof, with any required signature
guarantees and any other documents required by the Letter of Transmittal,
are received by the Exchange Agent within three New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), or Agent's Message in lieu thereof, together with any required
signature guarantees and any other documents required by the Letter of
Transmittal. Accordingly, the delivery of New Capital Securities might not be
made to all tendering holders at the same time, and will depend upon when Old
Capital Securities, book-entry confirmations with respect to Old Capital
Securities and other required documents are received by the Exchange Agent.
The Corporation's and the Trust's acceptance for exchange of Old Capital
Securities tendered pursuant to any of the procedures described above will
constitute a binding agreement between the tendering holder, the Corporation and
the Trust upon the terms and subject to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. The Corporation and the Trust reserve the absolute
right, in their sole and absolute discretion, to reject any and all tenders
determined by them not to be in proper form or the acceptance of which, or
exchange for, may, in the opinion of counsel to the Corporation and the Trust,
be unlawful. The Corporation and the Trust also reserve the absolute right,
subject to applicable law, to waive any of the conditions of the Exchange Offer
as set forth under "--Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Capital Securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders.
The interpretation by the Corporation and the Trust of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old
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Capital Securities will be deemed to have been validly made until all
irregularities with respect to such tender have been cured or waived. None of
the Corporation, the Trust, any affiliates or assigns of the Corporation or
the Trust, the Exchange Agent or any other person shall be under any duty to
give any notification of any irregularities in tenders or incur any liability
for failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person
should so indicate when signing, and unless waived by the Corporation and the
Trust, proper evidence satisfactory to the Corporation and the Trust, in their
sole discretion, of such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF NEW CAPITAL SECURITIES
The Trust is making the Exchange Offer for the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance
of the Commission as set forth in certain interpretive letters addressed to
third parties in other transactions. However, neither the Corporation nor the
Trust sought its own interpretive letter and there can be no assurance that
the staff of the Division of Corporation Finance of the Commission would make
a similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance of the Commission, and subject
to the two immediately following sentences, the Corporation and the Trust
believe that New Capital Securities issued pursuant to this Exchange Offer in
exchange for Old Capital Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a holder who is a
broker-dealer) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an Affiliate of the Corporation or
the Trust or who intends to participate in the Exchange Offer for the purpose
of distributing New Capital Securities, or any broker-dealer who purchased
Old Capital Securities from the Trust to resell pursuant to Rule 144A or any
other available exemption under the Securities Act (i) will not be able to
rely on the interpretations of the staff of the Division of Corporation
Finance of the Commission set forth in the above-mentioned interpretive
letters, (ii) will not be permitted or entitled to tender such Old Capital
Securities in the Exchange Offer and (iii) must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any sale or other transfer of such Old Capital Securities, unless such sale
is made pursuant to an exemption from such requirements. In addition, as
described below, Participating Broker-Dealers must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resales
of New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an Affiliate of the Corporation or the Trust, (ii)
any New Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and does not intend to engage in,
a distribution (within the meaning of the Securities Act) of such New Capital
Securities. The Letter of Transmittal contains the foregoing representations. In
addition, the Corporation and the Trust may require such holder, as a condition
to such holder's eligibility to participate in the Exchange Offer, to furnish to
the Corporation and the Trust (or an agent thereof) in writing information as to
the number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Exchange Act) on behalf of whom such holder holds the Capital Securities to be
exchanged in the Exchange Offer. Each
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Participating Broker-Dealer will be deemed to have acknowledged by execution
of the Letter of Transmittal or delivery of an Agent's Message that it
acquired the Old Capital Securities for its own account as the result of
market-making activities or other trading activities and must agree that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission
in the interpretive letters referred to above, the Corporation and the Trust
believe that Participating Broker-Dealers who acquired Old Capital Securities
for their own accounts as a result of market-making activities or other
trading activities may fulfill their prospectus delivery requirements with
respect to the New Capital Securities received upon exchange of such Old
Capital Securities (other than Old Capital Securities which represent an
unsold allotment from the original sale of the Old Capital Securities) with a
prospectus meeting the requirements of the Securities Act, which may be the
prospectus prepared for an exchange offer so long as it contains a
description of the plan of distribution with respect to the resale of such
New Capital Securities. Accordingly, this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its
own account as a result of market-making or other trading activities. Subject
to certain provisions set forth in the Registration Rights Agreement, the
Corporation and the Trust have agreed that this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such New Capital Securities for a
period ending 90-days after the Expiration Date (subject to extension under
certain limited circumstances described below) or, if earlier, when all such
New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." However, a Participating
Broker-Dealer who intends to use this Prospectus in connection with the
resale of New Capital Securities received in exchange for Old Capital
Securities pursuant to the Exchange Offer must notify the Corporation or the
Trust, or cause the Corporation or the Trust to be notified, on or prior to
the Expiration Date, that it is a Participating Broker-Dealer. Such notice
may be given in the space provided for that purpose in the Letter of
Transmittal or may be delivered to the Exchange Agent at one of the addresses
set forth herein under "--Exchange Agent." Any person, including any
Participating Broker-Dealer, who is an Affiliate of the Corporation or the
Trust may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an Agent's Message in lieu
thereof, that, upon receipt of notice from the Corporation or the Trust of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in light of the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the Registration
Rights Agreement, such Participating Broker-Dealer will suspend the sale of New
Capital Securities (or the New Guarantee or the New Junior Subordinated
Debentures, as applicable) pursuant to this Prospectus until the Corporation or
the Trust has amended or supplemented this Prospectus to correct such
misstatement or omission and has furnished copies of the amended or supplemented
Prospectus to such Participating Broker-Dealer or the Corporation or the Trust
has given notice that the sale of the New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as applicable) may be
resumed, as the case may be. If the Corporation or the Trust gives such notice
to suspend the sale of the New Capital Securities (or the New Guarantee or the
New Junior Subordinated Debentures, as applicable), it shall extend the 90-day
period referred to above during which Participating Broker-Dealers are entitled
to use this Prospectus in connection with the resale of New Capital Securities
by the number of days during the period from and including the date of the
giving of such notice to and including the date when Participating
Broker-Dealers shall have received copies of the amended or supplemented
Prospectus necessary to permit resales of the New Capital Securities or to and
including the date on which the Corporation or the Trust has given notice that
the sale of
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New Capital Securities (or the New Guarantee or the New Junior Subordinated
Debentures, as applicable) may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth under "-- Exchange Agent" on
or prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Capital Securities to be
withdrawn, the aggregate principal amount of Old Capital Securities to be
withdrawn, and (if certificates for such Old Capital Securities have been
tendered) the name of the registered holder of the Old Capital Securities as
set forth on the Old Capital Securities, if different from that of the person
who tendered such Old Capital Securities. If Old Capital Securities have been
delivered or otherwise identified to the Exchange Agent, then prior to the
physical release of such Old Capital Securities, the tendering holder must
submit the certificate numbers shown on the particular Old Capital Securities
to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old Capital
Securities tendered for the account of an Eligible Institution. If Old
Capital Securities have been tendered pursuant to the procedures for
book-entry transfer set forth in "--Procedures for Tendering Old Capital
Securities," the notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawal of Old Capital Securities,
in which case a notice of withdrawal will be effective if delivered to the
Exchange Agent by written or facsimile transmission. Withdrawals of tenders
of Old Capital Securities may not be rescinded. Old Capital Securities
properly withdrawn will not be deemed validly tendered for purposes of the
Exchange Offer, but may be retendered at any subsequent time on or prior to
the Expiration Date by following any of the procedures described above under
"--Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. None of the Corporation, the Trust, any affiliates or
assigns of the Corporation or the Trust, the Exchange Agent or any other person
shall be under any duty to give any notification of any irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification. Any Old Capital Securities which have been tendered but which are
withdrawn will be returned to the holder thereof promptly after withdrawal.
DISTRIBUTIONS ON NEW CAPITAL SECURITIES
Holders of Old Capital Securities as of November 15, 1997, the record date
for the initial Distribution on December 1, 1997, including such holders who
tender their Old Capital Securities pursuant to the Exchange Offer, will be
entitled to receive such Distribution. Distributions on the New Capital
Securities are payable semi-annually in arrears on June 1 and December 1 of each
year, commencing June 1, 1998, at the annual rate of 10.50% of the Liquidation
Amount to the holders of the New Capital Securities on the relevant record
dates. Distributions on the New Capital Securities will accumulate from December
1, 1997, the date of the initial Distribution on the Old Capital Securities.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any extension
of the Exchange Offer, the Corporation and the Trust will not be required to
accept for exchange, or to exchange, any Old Capital Securities for any New
Capital Securities, and, as described below, may terminate the Exchange Offer
(whether or not any Old Capital Securities have theretofore been accepted for
exchange) or may waive any conditions to
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or amend the Exchange Offer, if any of the following conditions have occurred
or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the staff of
the Commission which permits the New Capital Securities issued pursuant to the
Exchange Offer in exchange for Old Capital Securities to be offered for resale,
resold and otherwise transferred by holders thereof (other than broker-dealers
and any such holder which is an Affiliate of the Corporation or the Trust)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such New Capital Securities are acquired in
the ordinary course of such holders' business and such holders have no
arrangement or understanding with any person to participate in the distribution
of such New Capital Securities; or
(b) any law, statute, rule or regulation shall have been adopted or enacted
which, in the judgment of the Corporation or the Trust, would reasonably be
expected to impair its ability to proceed with the Exchange Offer;
(c) any action or proceeding shall have been instituted or threatened in any
court or by or before any governmental agency or body with respect to the
Exchange Offer which, in the Corporation's and the Trust's judgment, would
reasonably be expected to impair the ability of the Trust or the Corporation to
proceed with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States federal
or Pennsylvania or New York state authorities which, in the Corporation's and
the Trust's judgment, would reasonably be expected to impair the ability of the
Trust or the Corporation to proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the United States
over-the-counter market shall have been suspended by order of the Commission or
any other governmental authority which, in the Corporation's and the Trust's
judgment, would reasonably be expected to impair the ability of the Issuer or
the Corporation to proceed with the Exchange Offer; or
(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration Statement
or proceedings shall have been initiated or, to the knowledge of the Corporation
or the Trust, threatened for that purpose, or any governmental approval which
either the Corporation or the Trust shall, in its sole discretion, deem
necessary for the consummation of the Exchange Offer as contemplated hereby has
not been obtained.
If the Corporation and the Trust determine in their sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, the Corporation and the Trust may, subject to
applicable law, terminate the Exchange Offer (whether or not any Old Capital
Securities have theretofore been accepted for exchange) or may waive any such
condition or otherwise amend the terms of the Exchange Offer in any respect. If
such waiver or amendment constitutes a material change to the Exchange Offer,
the Corporation and the Trust will promptly disclose such waiver or amendment by
means of a Prospectus supplement that will be distributed to the registered
holders of the Old Capital Securities and will extend the Exchange Offer to the
extent required by Rule 14e-1 under the Exchange Act.
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EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letters of Transmittal and any other required documents,
questions, requests for assistance, and requests for additional copies of this
Prospectus or of the Letter of Transmittal should be directed to the Exchange
Agent as follows:
<TABLE>
<CAPTION>
BY REGISTERED OR BY HAND OR OVERNIGHT
CERTIFIED MAIL: DELIVERY:
- ------------------------------------ ------------------------------------
<S> <C> <C>
The Bank of New York The Bank of New York
101 Barclay Street -7E 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attention: Reorganization Section Confirm by Telephone or Ground Level
Odell Romeo for Information call: New York, New York 10286
(212) 815-6337 Attention: Reorganization Section
Odell Romeo
Facsimile Transmission:
(Eligible Institutions Only)
(212) 815-6339
</TABLE>
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Corporation will also pay
brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of
this Prospectus and related documents to the beneficial owners of Old Capital
Securities, and in handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the
exchange of Old Capital Securities in connection with the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder.
Neither the Corporation nor the Trust will make any payment to brokers,
dealers or other nominees soliciting acceptances of the Exchange Offer.
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DESCRIPTION OF NEW SECURITIES
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement, the Trust has issued the
Old Capital Securities and the Common Securities and will issue the New
Capital Securities. The New Capital Securities will represent undivided
beneficial interests in the Trust and the holders of the New Capital
Securities and the Old Capital Securities will be entitled to a preference
over the Common Securities in certain circumstances with respect to
Distributions and amounts payable on redemption of the Trust Securities or
liquidation of the Trust. See "--Subordination of Common Securities." The
Trust Agreement has been qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). This summary of certain provisions of
the Capital Securities, the Common Securities and the Trust Agreement
describes the material terms of the Capital Securities but does not purport
to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Trust Agreement, including the
definitions therein of certain terms.
GENERAL. The Capital Securities (including the Old Capital Securities
and the New Capital Securities) are limited to $15,000,000 aggregate
Liquidation Amount at any one time outstanding. The Capital Securities rank
PARI PASSU, and payments thereon will be made pro rata, with the Common
Securities except as described under "--Subordination of Common Securities."
Legal title to the Junior Subordinated Debentures is held by the Property
Trustee in trust for the benefit of the holders of the Capital Securities and
the holder of the Common Securities. The Guarantee is a guarantee on a
subordinated and junior basis with respect to the Capital Securities, but
does not guarantee payment of Distributions or amounts payable on redemption
of the Capital Securities or on liquidation of the Trust when the Trust does
not have funds on hand legally available for such payments. See
"--Description of Guarantee."
DISTRIBUTIONS. Distributions on the New Capital Securities are payable
semi-annually in arrears on June 1 and December 1 of each year, commencing
June 1, 1998, at the annual rate of 10.50% of the Liquidation Amount to the
holders of the New Capital Securities on the relevant record dates.
Distributions on the New Capital Securities will accumulate from December 1,
1997, the date of the initial Distribution on the Old Capital Securities. The
record dates are the fifteenth day of the month which proceeds the month in
which the relevant Distribution Date (as defined below) falls. The amount of
Distributions payable for any period will be computed on the basis of a
360-day year of twelve 30-day months and, for any period of less than one
calendar month, the number of days elapsed in such month. In the event that
any date on which Distributions are payable on the Capital Securities is not
a Business Day (as defined below), payment of the Distribution payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect to any such delay), with the
same force and effect as if made on the date such payment was originally
payable (each date on which Distributions are payable in accordance with the
foregoing, a "Distribution Date"). A "Business Day" shall mean any day other
than a Saturday or a Sunday, or a day on which banking institutions in New
York, New York or Blue Bell, Pennsylvania are authorized or required by law
or executive order to remain closed.
So long as no Event of Default (as defined in the Indenture) with respect
to the Junior Subordinated Debentures (a "Debenture Event of Default") shall
have occurred and be continuing, the Corporation has the right under the
Indenture to elect to defer the payment of interest on the Junior
Subordinated Debentures at any time or from time to time for a period not
exceeding 10 consecutive semi-annual periods with respect to each Extension
Period, provided that no Extension Period may extend beyond the Stated
Maturity Date. Upon any such election, semi-annual Distributions on the
Capital Securities will be deferred by the Trust during any such Extension
Period. Distributions to which holders of the Capital Securities are entitled
during any such Extension Period will accumulate additional Distributions
thereon at the rate per annum of 10.50% thereof, compounded semi-annually
from the relevant Distribution Date. The term "Distributions," as used
herein, shall include any such additional Distributions.
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Prior to the termination of any such Extension Period, the Corporation
may further extend such Extension Period, provided that such extension does
not cause such Extension Period to exceed 10 consecutive semi-annual periods,
to end on a date other than an Interest Payment Date or to extend beyond the
Stated Maturity Date. Upon the termination of any such Extension Period and
the payment of all amounts then due on any Interest Payment Date, the
Corporation may elect to begin a new Extension Period, subject to the above
requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. The Corporation must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of its
election of any such Extension Period (or an extension thereof) at least five
Business Days prior to the earlier of (i) the date the Distributions on the
Capital Securities would have been payable except for the election to begin
such Extension Period and (ii) the date the Administrative Trustees are
required to give notice to any securities exchange or automated quotation
system or to holders of the Capital Securities of the record date or the date
such Distributions are payable, but in any event not less than five Business
Days prior to such record date. There is no limitation on the number of times
that the Corporation may elect to begin an Extension Period. See
"--Description of Junior Subordinated Debentures--Option to Extend Interest
Payment Date" and "Certain Federal Income Tax Considerations--Interest Income
and Original Issue Discount."
During any such Extension Period, the Corporation 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 Corporation's capital
stock, (ii) make any payment of principal of or premium, if any, or interest
on or repay, repurchase or redeem any debt securities of the Corporation
(including any Other Debentures) that rank PARI PASSU with or junior in right
of payment to the Junior Subordinated Debentures or (iii) make any guarantee
payments with respect to any guarantee by the Corporation of the debt
securities of any subsidiary of the Corporation (including Other Guarantees)
if such guarantee ranks PARI PASSU with or junior in right of payment to the
Junior Subordinated Debentures (other than (a) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, common stock of the Corporation, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) as a result of a reclassification of the Corporation's capital
stock or the exchange or conversion of one class or series of the
Corporation's capital stock for another class or series of the Corporation's
capital stock, (e) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged and (f)
purchases of common stock related to the issuance of common stock or rights
under any of the Corporation's benefit plans for its directors, officers or
employees or any of the Corporation's dividend reinvestment plans). The
Corporation has no current intention to exercise its option to defer payments
of interest on the Junior Subordinated Debentures by extending the interest
payment period on the Junior Subordinated Debentures.
The revenue of the Trust available for distribution to holders of Capital
Securities will be limited to payments under the Junior Subordinated
Debentures in which the Trust has invested the proceeds from the issuance and
sale of the Trust Securities. See "--Description of Junior Subordinated
Debentures--General." If the Corporation does not make interest payments on
the Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the Capital Securities. The payment of
Distributions (if and to the extent the Trust has funds on hand legally
available for the payment of such Distributions) is guaranteed by the
Corporation on a limited basis as set forth herein under "-- Description of
Guarantee."
REDEMPTION. Upon repayment on the Stated Maturity Date or prepayment in
whole or in part prior to the Stated Maturity Date of the Junior Subordinated
Debentures (other than following the distribution of the Junior Subordinated
Debentures to the holders of the Trust Securities), the proceeds from such
repayment or prepayment shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 30
nor more than 60 days' notice of a date of redemption (the "Redemption
Date"), at the applicable Redemption Price, which shall be equal to (i) in
the case of the repayment of the Junior
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Subordinated Debentures on the Stated Maturity Date, the Maturity Redemption
Price (equal to the principal of, and interest on, the Junior Subordinated
Debentures), (ii) in the case of the optional redemption of the Junior
Subordinated Debentures before the Initial Optional Prepayment Date upon the
occurrence and continuation of a Special Event, the Special Event Redemption
Price (equal to the Special Event Prepayment Price in respect of the Junior
Subordinated Debentures) and (iii) in the case of the optional prepayment of
the Junior Subordinated Debentures on or after the Initial Optional
Prepayment Date, the Optional Redemption Price (equal to the Optional
Prepayment Price in respect of the Junior Subordinated Debentures). See
"--Description of Junior Subordinated Debentures--Optional Prepayment" and
"--Special Event Prepayment." If less than all of the Junior Subordinated
Debentures are to be prepaid on a Redemption Date, then the proceeds of such
redemption shall be allocated to the redemption pro rata of the Capital
Securities and the Common Securities.
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the
principal amount of Junior Subordinated Debentures to be paid in accordance
with their terms and (ii) with respect to a distribution of Junior
Subordinated Debentures upon the liquidation of the Trust, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the holder to whom such Junior Subordinated
Debentures are distributed.
The Corporation has the option to prepay the Junior Subordinated
Debentures, (i) in whole or in part, on or after the Initial Optional
Prepayment Date, at the applicable Optional Prepayment Price and (ii) in
whole but not in part, at any time before the Initial Optional Prepayment
Date, upon the occurrence of a Special Event, at the Special Event Prepayment
Price, in each case subject to the receipt of any required regulatory
approval. See "Description of Junior Subordinated Debentures--Optional
Prepayment" and "--Special Event Prepayment."
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED
DEBENTURES. The Corporation has the right at any time to terminate the Trust
and, after satisfaction of liabilities to creditors of the Trust as required
by applicable law, to cause the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities in liquidation of the
Trust. Such right is subject to (i) the Corporation having received an
opinion of counsel to the effect that such distribution will not be a taxable
event to holders of Capital Securities and (ii) the receipt of any required
regulatory approval.
The Trust shall automatically terminate upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Junior Subordinated Debentures
to the holders of the Trust Securities, if the Corporation, as Sponsor, has
given written direction to the Property Trustee to terminate the Trust (which
direction is optional and, except as described above, wholly within the
discretion of the Corporation, as Sponsor); (iii) redemption of all of the
Trust Securities as described under "--Redemption;" (iv) expiration of the
term of the Trust; and (v) the entry of an order for the dissolution of the
Trust by a court of competent jurisdiction.
If a termination occurs as described in clause (i), (ii), (iv), or (v)
above, the Trust shall be liquidated by the Issuer Trustees as expeditiously
as the Issuer 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 the Trust Securities a Like Amount of the
Junior Subordinated Debentures, unless such distribution is determined by the
Property Trustee not to be practicable, in which event such holders will be
entitled to receive out of the assets of the Trust legally available for
distribution to holders, after satisfaction of liabilities to creditors of
the Trust as provided by applicable law, an amount equal to the aggregate of
the Liquidation Amount plus accumulated and unpaid Distributions thereon to
the date of payment (such amount being the "Liquidation Distribution"). If
such Liquidation Distribution can be paid only in part because the Trust has
insufficient assets on hand legally available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on
the Trust Securities shall be paid on a pro rata basis, except that if a
Debenture Event of Default has
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occurred and is continuing, the Capital Securities shall have a priority over
the Common Securities. See "--Subordination of Common Securities."
If the Corporation elects not to prepay the Junior Subordinated
Debentures prior to maturity in accordance with their terms and either elects
not to or is unable to liquidate the Trust and distribute the Junior
Subordinated Debentures to holders of the Trust Securities, the Trust
Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures on the Stated Maturity Date.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Trust Securities, (i) the Trust
Securities will no longer be deemed to be outstanding, (ii) DTC or its
nominee will receive, in respect of each registered global certificate, if
any, representing Trust Securities and held by it, a registered global
certificate or certificates representing the Junior Subordinated Debentures
to be delivered upon such distribution and (iii) any certificates
representing Trust Securities not held by DTC or its nominee will be deemed
to represent Junior Subordinated Debentures having a principal amount equal
to the Liquidation Amount of such Trust Securities, and bearing accrued and
unpaid interest in an amount equal to the accumulated and unpaid
Distributions on such Trust Securities until such certificates are presented
to the Administrative Trustees or their agent for cancellation, whereupon the
Corporation will issue to such holder, and the Debenture Trustee will
authenticate, a certificate representing such Junior Subordinated Debentures.
There can be no assurance as to the market prices for the Capital
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Trust Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Capital Securities that an investor may
purchase, or the Junior 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 Capital Securities offered
hereby.
REDEMPTION PROCEDURES. If applicable, Trust Securities shall be redeemed
at the applicable Redemption Price with the proceeds from the contemporaneous
repayment or prepayment of the Junior Subordinated Debentures. Any redemption
of Trust Securities shall be made and the applicable Redemption Price shall
be payable on the Redemption Date only to the extent that the Trust has funds
legally available for the payment of such applicable Redemption Price. See
also "--Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date,
to the extent funds are legally available, with respect to the Capital
Securities held by DTC or its nominees, the Property Trustee will deposit or
cause the Paying Agent (as defined herein) to deposit irrevocably with DTC
funds sufficient to pay the applicable Redemption Price. See "--Form,
Denomination, Book-Entry Procedures and Transfer." With respect to the
Capital Securities held in certificated form, the Property Trustee, to the
extent funds are legally available, will irrevocably deposit with the paying
agent for the Capital Securities funds sufficient to pay the applicable
Redemption Price and will give such paying agent irrevocable instructions and
authority to pay the applicable Redemption Price to the holders thereof upon
surrender of their certificates evidencing the Capital Securities. See
"--Payment and Paying Agency." Notwithstanding the foregoing, Distributions
payable on or prior to the Redemption Date shall be payable to the holders of
such Capital Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of the
holders of the Capital Securities called for redemption will cease, except
the right of the holders of such Capital Securities to receive the applicable
Redemption Price, but without interest on such Redemption Price, and such
Capital Securities will cease to be outstanding. In the event that any
Redemption Date of Capital Securities is not a Business Day, then the
applicable Redemption Price payable on such date will be paid 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 next succeeding
Business Day falls in the next calendar year, such payment shall be made on
the immediately preceding Business Day. In the event that payment of the
applicable Redemption Price is improperly withheld or refused and not paid
either by the Trust or by the Corporation pursuant to the
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Guarantee as described under "Description of Guarantee," (i) Distributions on
Capital Securities will continue to accumulate at the then applicable rate,
from the Redemption Date originally established by the Trust to the date such
applicable Redemption Price is actually paid and (ii) the actual payment date
will be the Redemption Date for purposes of calculating the applicable
Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or its subsidiaries may at any time
and from time to time purchase outstanding Capital Securities by tender, in
the open market or by private agreement.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days prior to the Redemption Date to each holder of Trust Securities
at its registered address. Unless the Corporation defaults in payment of the
applicable Redemption Price on, or in the repayment of, the Junior
Subordinated Debentures, on and after the Redemption Date Distributions will
cease to accrue on the Trust Securities called for redemption.
SUBORDINATION OF COMMON SECURITIES. Payment of Distributions on, and the
Redemption Price of, the Trust Securities, as applicable, shall be made pro
rata based on the Liquidation Amount of the Trust Securities; provided,
however, that if on any Distribution Date or Redemption Date a Debenture
Event of Default shall have occurred and be continuing, no payment of any
Distribution on, or applicable Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of the Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
outstanding Capital Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the applicable Redemption Price
the full amount of such Redemption Price, shall have been made or provided
for, and all funds available to the Property Trustee shall first be applied
to the payment in full in cash of all Distributions on, or Redemption Price
of, the Capital Securities then due and payable.
In the case of any Event of Default, the Corporation as holder of the
Common Securities will be deemed to have waived any right to act with respect
to such Event of Default until the effect of such Event of Default shall have
been cured, waived or otherwise eliminated. Until any such Event of Default
has been so cured, waived or otherwise eliminated, the Property Trustee shall
act solely on behalf of the holders of the Capital Securities and not on
behalf of the Corporation as holder of the Common Securities, and only the
holders of the Capital Securities will have the right to direct the Property
Trustee to act on their behalf.
EVENTS OF DEFAULT; NOTICE. The occurrence of a Debenture Event of Default
(see "Description of Junior Subordinated Debentures--Debenture Events of
Default") constitutes an "Event of Default" under the Trust Agreement.
Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and the Corporation, as Sponsor, unless such Event of
Default shall have been cured or waived. The Corporation, as Sponsor, 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
Capital Securities shall have a preference over the Common Securities as
described under "--Liquidation of the Trust and Distribution of Junior
Subordinated Debentures" and "--Subordination of Common Securities."
REMOVAL OF ISSUER TRUSTEES. Unless a Debenture Event of Default shall
have occurred and be continuing, any Issuer Trustee may be removed at any
time by the holder of the Common Securities. If a
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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 Capital Securities. In
no event will the holders of the Capital Securities have the right to vote to
appoint, remove or replace the Administrative Trustees, which voting rights
are vested exclusively in the Corporation as the holder of the Common
Securities. No resignation or removal of an Issuer Trustee and no appointment
of a successor trustee shall be effective until the acceptance of appointment
by the successor trustee in accordance with the provisions of the Trust
Agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES. Any 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 Issuer Trustee shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of such
Issuer Trustee, shall be the successor of such Issuer Trustee under the Trust
Agreement, provided such Person shall be 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 as an entirety or
substantially as an entirety to any corporation or other Person, except as
described below or as otherwise described under "--Liquidation of the Trust
and Distribution of Junior Subordinated Debentures." The Trust may, at the
request of the Corporation, as Sponsor, with the consent of the
Administrative Trustees but without the consent of the holders of the Capital
Securities, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets as an entirety or
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 Trust
Securities or (b) substitutes for the Trust Securities other securities
having substantially the same terms as the Trust Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Trust
Securities rank in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Corporation expressly
appoints a trustee of such successor entity possessing the same powers and
duties as the Property Trustee with respect to the Junior 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 Trust Securities are
then listed or quoted, if any, (iv) if the Capital Securities (including any
Successor Securities) are rated by any nationally recognized statistical
rating organization prior to such transaction, such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Capital Securities (including any Successor Securities) or, if the Junior
Subordinated Debentures are so rated, the Junior Subordinated Debentures, to
be downgraded by any such nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including
any Successor Securities) in any material respect, (vi) such successor entity
has a purpose identical to that of the Trust, (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Corporation has received an opinion from independent counsel to the Trust
experienced in such matters to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect (other than any dilution of such holders' interests in the new
entity), 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 of 1940, as amended (the "Investment Company
Act"), and (viii) the Corporation or any permitted successor or assignee 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 and the Common Guarantee.
Notwithstanding the foregoing, the Trust shall not, except with the consent
of holders of 100% in Liquidation Amount of the Trust Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets as an entirety or substantially
as an entirety to, any other
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entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity
not to be classified as a grantor trust for United States federal income tax
purposes. In addition, the Property Trustee will be required pursuant to the
Indenture to exchange, as part of the Exchange Offer, the Junior Subordinated
Debentures for the Exchange Debentures, which will have terms substantially
identical to the Junior Subordinated Debentures. See "Exchange Offer;
Registration Rights."
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT. Except as provided below
and under "--Mergers, Consolidations, Amalgamations or Replacements of the
Trust" and "--Description of Guarantee-- Amendments and Assignment" and as
otherwise required by law and the Trust Agreement, the holders of the Capital
Securities have no voting rights.
The Trust Agreement may be amended from time to time by the Corporation,
the Property Trustee and the Administrative Trustees, without the consent of
the holders of the Trust Securities (i) to cure any ambiguity, correct or
supplement any provisions in the Trust Agreement that may be inconsistent
with any other provision, or to make any other provisions with respect to
matters or questions arising under the Trust Agreement, which shall not be
inconsistent with the other provisions of the Trust Agreement, (ii) to
modify, eliminate or add to any provisions of the Trust Agreement to such
extent as shall be 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 or (iii) to modify, eliminate or add any provisions of the Trust
Agreement to such extent as shall be necessary to enable the Trust or the
Corporation to conduct an Exchange Offer in the manner contemplated by the
Registration Rights Agreement; provided, however, that in each such case such
action shall not adversely affect in any material respect the interests of
the holders of the Trust Securities. Any amendments of the Trust Agreement
pursuant to the foregoing shall become effective when notice thereof is given
to the holders of the Trust Securities. The Trust Agreement may be amended by
the Issuer Trustees and the Corporation (i) with the consent of holders
representing a majority (based upon Liquidation Amount) of the outstanding
Trust Securities and (ii) upon receipt by the Issuer Trustees of an opinion
of counsel experienced in such matters to the effect that such amendment or
the exercise of any power granted to the Issuer Trustees in accordance with
such amendment will not affect the 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, provided
that, without the consent of each holder of Trust Securities, the Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount
of any Distribution required to be made in respect of the Trust Securities as
of a specified date or (ii) restrict the right of a holder of Trust
Securities to institute suit for the enforcement of any such payment on or
after such date.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Issuer Trustees shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the Debenture
Trustee, or execute any trust or power conferred on the Debenture Trustee
with respect to the Junior Subordinated Debentures, (ii) waive certain past
defaults under the Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the Junior
Subordinated Debentures or (iv) consent to any amendment, modification or
termination of the Indenture or the Junior Subordinated Debentures, where
such consent shall be required, without, in each case, obtaining the prior
approval of the holders of a majority in Liquidation Amount of all
outstanding Capital Securities; provided, however, that where a consent under
the Indenture would require the consent of each holder of Junior Subordinated
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior approval of each holder of the Capital Securities.
The Issuer Trustees shall not revoke any action previously authorized or
approved by a vote of the holders of the Capital Securities except by
subsequent vote of such holders. The Property Trustee shall notify each
holder of Capital Securities of any notice of default with respect to the
Junior Subordinated Debentures. In addition to obtaining the foregoing
approvals of such holders of the Capital
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Securities, prior to taking any of the foregoing actions, the Issuer Trustees
shall obtain an opinion of counsel experienced in such matters to the effect
that the Trust will not be classified as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.
Any required approval of holders of Capital Securities may be given at a
meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be given
to each holder of record of Capital Securities in the manner set forth in the
Trust Agreement.
No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel the Capital Securities in accordance with
the Trust Agreement.
Notwithstanding that holders of the Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Corporation, the Issuer Trustees or
any affiliate of the Corporation or any Issuer Trustees, shall, for purposes
of such vote or consent, be treated as if they were not outstanding.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER. New Capital
Securities initially will be represented by one or more Capital Securities in
registered, global form (collectively, the "Global Capital Securities"). The
Global Capital Securities will be deposited upon issuance with the Property
Trustee as custodian for DTC, in New York, New York, 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 Capital 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 and only in amounts that would not cause a
holder to own less than 100 Capital Securities. Beneficial interests in the
Global Capital Securities may not be exchanged for Capital Securities in
certificated form except in the limited circumstances described below.
DTC has advised the Trust and the Corporation that DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was
created to hold securities for its 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, thereby eliminating the
need for physical movement of certificates. Participants include securities
brokers and dealers (including the Initial Purchaser), banks, trust
companies, clearing corporations and certain other organizations. Indirect
access to DTC's system also is 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 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 also has advised the Trust and the Corporation that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital
Securities, DTC will credit the accounts of Participants designated by the
Initial Purchaser with portions of the Liquidation Amount of the Global
Capital Securities and (ii) ownership of such interests in the Global Capital
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 Capital
Securities).
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Except as described below, owners of beneficial interests in the Global
Capital Securities will not have Capital Securities registered in their name,
will not receive physical delivery of Capital Securities in certificated form
and will not be considered the registered owners or holders thereof under the
Trust Agreement for any purpose.
Payments in respect of the Global Capital 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 Capital Securities, including the Global Capital 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 Capital 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
interests in the Global Capital 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 Corporation that its current
practice, upon receipt of any payment in respect of securities such as the
Capital 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 New
Capital 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 Corporation. None of the Trust, the Corporation or the
Property Trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the Capital Securities,
and the Trust, the Corporation and the Property Trustee may conclusively rely
on and will be protected in relying on instructions from DTC or its nominee
for all purposes.
Beneficial interests in the Global Capital Securities will trade in DTC's
Same-Day Funds Settlement System and secondary market trading activity in
such interests will therefore settle in immediately available funds, subject
in all cases to the rules and procedures of DTC and its participants.
DTC has advised the Trust and the Corporation that it will take any
action permitted to be taken by a holder of Capital Securities (including,
without limitation, the presentation of Old Capital Securities for exchange
pursuant to the Exchange Offer) only at the direction of one or more
Participants to whose account with DTC interests in the Global Capital
Securities are credited and only in respect of such portion of the
Liquidation Amount of the Capital Securities as to which such Participant or
Participants has or have given such direction. However, if there is an Event
of Default under the Trust Agreement, DTC reserves the right to exchange the
Global Capital Securities for Capital Securities in certificated form and to
distribute such Capital Securities to its Participants.
So long as DTC or its nominee is the registered owner of the Global
Capital Securities, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the Capital Securities represented by
the Global Capital Securities for all purposes under the Trust Agreement.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Trust and the Corporation believe to
be reliable, but neither the Trust nor the Corporation takes responsibility
for the accuracy thereof.
A Global Capital Security is exchangeable for Capital Securities in
registered certificated form if (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as Depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary within 90
days or (y) has ceased to be a clearing agency registered under the Exchange
Act, (ii) the Corporation in its sole discretion elects to cause the issuance
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of the Capital Securities in certificated form or (iii) there shall have
occurred and be continuing an Event of Default or any event which after
notice or lapse of time or both would be an Event of Default under the Trust
Agreement.
PAYMENT AND PAYING AGENCY. Payments in respect of the Capital Securities
held in global form shall be made to the Depositary, which shall credit the
relevant accounts at the Depositary on the applicable Distribution Dates.
Payments in respect of Capital Securities that are not held by the Depositary
shall be made by check mailed to the address of the holder entitled thereto
as such address shall appear on the register maintained by the Securities
Registrar appointed under the Trust Agreement. The paying agent (the "Paying
Agent") shall initially be the Property Trustee and any co-paying agent
chosen by the Property Trustee and acceptable to the Administrative Trustees
and the Corporation. The Paying Agent shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Property Trustee, the
Administrative Trustees and the Corporation. In the event that the Property
Trustee shall no longer be the Paying Agent, the Administrative Trustees
shall appoint a successor (which shall be a bank or trust company acceptable
to the Administrative Trustees and the Corporation) to act as Paying Agent.
RESTRICTIONS ON TRANSFER. The Capital Securities will be issued and may
be transferred only in blocks having a Liquidation Amount of not less than
$100,000 (100 Capital Securities) and multiples of $1,000 in excess thereof.
Any attempted sale, transfer or other disposition of Capital Securities in a
block having a Liquidation Amount of less than $100,000 shall be deemed to be
void and of no legal effect whatsoever. Any such transferee shall be deemed
not to be the holder of such Capital Securities for any purpose, including
but not limited to the receipt of Distributions on such Capital Securities,
and such transferee shall be deemed to have no interest whatsoever in such
Capital Securities.
REGISTRAR AND TRANSFER AGENT. The Property Trustee acts as registrar and
transfer agent for the Capital Securities. Registration of transfers of
Capital 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 the Capital
Securities after they have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE. The Property Trustee, other
than during the occurrence and continuance of an Event of Default, undertakes
to perform only such duties as are specifically set forth in the Trust
Agreement and, during the existence of an Event of Default, must exercise the
same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the
Property Trustee is under no obligation to exercise any of the powers vested
in it by the Trust Agreement at the request of any holder of Trust Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby. If no Event of Default has
occurred and is continuing and the Property Trustee is required to decide
between alternative courses of action, construe ambiguous provisions in the
Trust Agreement or is unsure of the application of any provision of the Trust
Agreement, and the matter is not one on which holders of the Capital
Securities or the Common Securities are entitled under the Trust Agreement to
vote, then the Property Trustee shall take such action as is directed by the
Corporation and, if not so directed, shall take such action as it deems
advisable and in the best interests of the holders of the Trust Securities
and will have no liability except for its own bad faith, negligence or
willful misconduct.
MISCELLANEOUS. The Administrative Trustees are authorized and directed
to conduct the affairs of and to operate the Trust in such a way that the
Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or classified as an association
or publicly-traded partnership taxable as a corporation for United States
federal income tax purposes and so that the Junior Subordinated Debentures
will be treated as indebtedness of the Corporation for United States federal
income tax purposes. In this connection, the Corporation and the
Administrative Trustees are authorized to take any action, not
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inconsistent with applicable law, the certificate of trust of the Trust or
the Trust Agreement, that the Corporation and the Administrative Trustees
determine in their discretion to be necessary or desirable for such purposes,
as long as such action does not materially adversely affect the interests of
the holders of the Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge
any of its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued and the New Junior
Subordinated Debentures will be issued as a separate issue under the
Indenture. The Indenture has been qualified under the Trust Indenture Act.
This summary of certain terms and provisions of the Junior Subordinated
Debentures and the Indenture describes the material terms thereof, but does
not purport to be complete, and where reference is made to particular
provisions of the Indenture, such provisions, including the definitions of
certain terms, some of which are not otherwise defined herein, are qualified
in their entirety by reference to all of the provisions of the Indenture and
those terms made a part of the Indenture by the Trust Indenture Act.
GENERAL. Concurrently with the issuance of the Old Capital Securities,
the Trust invested the proceeds thereof, together with the consideration paid
by the Corporation for the Common Securities, in Old Junior Subordinated
Debentures issued by the Corporation. Pursuant to the Exchange Offer, the
Corporation will exchange the Old Junior Subordinated Debentures, in an
amount corresponding to the Old Capital Securities accepted for exchange, for
a like aggregate principal amount of New Junior Subordinated Debentures as
soon as practicable after the date hereof.
The Junior Subordinated Debentures bear interest from June 3, 1997 at the
annual rate of 10.50% of the principal amount thereof, payable semi-annually
in arrears on June 1 and December 1 of each year (each, an "Interest Payment
Date"), commencing December 1, 1997, to the person in whose name each Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the 15th day of the month preceding the month in which
the relevant payment date falls. The Junior Subordinated Debentures will
mature on June 1, 2027. It is anticipated that, until the liquidation, if
any, of the Trust, each Junior Subordinated Debenture 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 and, for any
period of less than a full calendar month, the number of days elapsed in such
month. In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any
such delay), except that if such next succeeding Business Day falls in the
next succeeding calendar year, then 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. 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 10.50%
thereof, compounded semi-annually. The term "interest," as used herein, shall
include semi-annual interest payments, interest on semi-annual interest
payments not paid on the applicable Interest Payment Date and Additional Sums
(as defined below), as applicable.
The New Junior Subordinated Debentures will rank PARI PASSU with the Old
Junior Subordinated Debentures and with all Other Debentures and are
unsecured and are subordinate and junior in right of payment to all Senior
Indebtedness to the extent and in the manner set forth in the Indenture. See
"-- Subordination."
The Corporation is a holding company and almost all of the operating
assets of the Corporation are owned by the Corporation's subsidiaries. The
Corporation is a legal entity separate and distinct from its
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subsidiaries. Holders of Junior Subordinated Debentures should look only to
the Corporation for payments on the Junior Subordinated Debentures. The
principal sources of the Corporation's income are dividends, interest and
fees from its subsidiaries. The Corporation relies primarily on dividends
from the Bank to meet its obligations for payment of principal and interest
on its outstanding debt obligations and corporate expenses. There are
regulatory limitations on the payment of dividends directly or indirectly to
the Corporation from the Bank. As of June 30, 1997, under OTS regulations,
the total capital available for payment of dividends by the Bank to the
Corporation was approximately $2.4 million. However, the OTS has the power to
prohibit any act, including the payment of dividends, if such act would
reduce bank capital to a point that, in its opinion, would render the Bank
undercapitalized and thus constitute an unsafe or unsound banking practice.
In addition, the Bank is subject to certain restrictions imposed by federal
law on any extensions of credit to, and certain other transactions with, the
Corporation and certain other affiliates, and on investments in stock or
other securities thereof. Such restrictions prevent the Corporation 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
Corporation and as to each of such other affiliates to 10% of the Bank's
capital and surplus and as to the Corporation and all of such other
affiliates to an aggregate of 20% of the Bank's capital and surplus.
Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary
upon such subsidiary's liquidation or reorganization or otherwise (and thus
the ability of holders of the Capital Securities to benefit indirectly from
such distribution), is subject to the prior claims of creditors of that
subsidiary (including depositors, in the case of the Bank), except to the
extent the Corporation may itself be recognized as a creditor of that
subsidiary. At June 30, 1997, the subsidiaries of the Corporation had total
liabilities (excluding liabilities owed to the Corporation) of $378.3
million. Accordingly, the Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries (including the Bank's deposit liabilities) and all liabilities
of any future subsidiaries of the Corporation. The Indenture does not limit
the incurrence or issuance of other secured or unsecured debt of the
Corporation or any subsidiary, including Senior Indebtedness. See
"--Subordination."
FORM, REGISTRATION AND TRANSFER. If the Junior Subordinated Debentures
are distributed to the holders of the Trust Securities, the Junior
Subordinated Debentures may be represented by one or more global certificates
registered in the name of Cede & Co. as the nominee of DTC. The depositary
arrangements for such Junior Subordinated Debentures are expected to be
substantially similar to those in effect for the Capital Securities. For a
description of DTC and the terms of the depositary arrangements relating to
payments, transfers, voting rights, redemptions and other notices and other
matters, see "Description of Capital Securities--Form, Denomination,
Book-Entry Procedures and Transfer."
The Junior Subordinated Debentures will be issuable only in registered
form without coupons in minimum denominations of $100,000 (100 Junior
Subordinated Debentures) and integral multiples of $1,000 in excess thereof.
PAYMENT AND PAYING AGENTS. Payment of principal of (and premium, if any)
and interest on Junior Subordinated Debentures will be made at the office of
the Debenture Trustee in the City of New York or at the office of such Paying
Agent or Paying Agents as the Corporation may designate from time to time,
except that at the option of the Corporation payment of any interest may be
made, except in the case of Junior Subordinated Debentures in global form,
(i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the register for Junior Subordinated Debentures or
(ii) by transfer to an account maintained by the Person entitled thereto as
specified in such register, provided that proper transfer instructions have
been received by the relevant Record Date. Payment of any interest on any
Junior Subordinated Debenture will be made to the Person in whose name such
Junior Subordinated Debenture is registered at the close of business on the
Record Date for such interest, except in the case of defaulted interest. The
Corporation may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent; however the Corporation will
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at all times be required to maintain a Paying Agent in each place of payment
for the Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by the Corporation in trust, for the payment of the principal of
(and premium, if any) or interest on any Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any)
or interest has become due and payable shall, at the request of the
Corporation, be repaid to the Corporation and the holder of such Junior
Subordinated Debenture shall thereafter look, as a general unsecured
creditor, only to the Corporation for payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE. So long as no Debenture Event of
Default has occurred and is continuing, the Corporation will have the right
under the Indenture to defer the payment of interest on the Junior
Subordinated Debentures at any time and from time to time for a period not
exceeding 10 consecutive semi-annual periods with respect to each Extension
Period, provided that no Extension Period shall end on a date other than an
Interest Payment Date or extend beyond the Stated Maturity Date. At the end
of such Extension Period, the Corporation must pay all interest then accrued
and unpaid (together with interest thereon at the annual rate of 10.50%,
compounded semi-annually, to the extent permitted by applicable law
("Compounded Interest")). During an Extension Period, interest will continue
to accrue and, if the Junior Subordinated Debentures have been distributed to
holders of the Trust Securities, holders of Junior Subordinated Debentures
(or holders of the Trust Securities while Trust Securities are outstanding)
will be required to accrue such deferred interest income for United States
federal income tax purposes prior to the receipt of cash attributable to such
income. See "Certain Federal Income Tax Considerations--Interest Income and
Original Issue Discount."
During any such Extension Period, the Corporation 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 Corporation's capital
stock, (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Corporation (including
any Other Debentures) that rank PARI PASSU with or junior in right of payment
to the Junior Subordinated Debentures or (iii) make any guarantee payments
with respect to any guarantee by the Corporation of the debt securities of
any subsidiary of the Corporation (including any Other Guarantees) if such
guarantee ranks pari passu with or junior in right of payment to the Junior
Subordinated Debentures (other than (a) dividends or distributions in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
common stock of the Corporation, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) as a result of a reclassification of the Corporation's capital
stock or the exchange or conversion of one class or series of the
Corporation's capital stock for another class or series of the Corporation's
capital stock, (e) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged, and (f)
purchases of common stock related to the issuance of common stock or rights
under any of the Corporation's benefit plans for its directors, officers or
employees or any of the Corporation's dividend reinvestment plans).
Prior to the termination of any such Extension Period, the Corporation
may further extend such Extension Period, provided that such extension does
not cause such Extension Period to exceed 10 consecutive semi-annual periods,
end on a date other than an Interest Payment Date or extend beyond the Stated
Maturity Date. Upon the termination of any such Extension Period and the
payment of all amounts then due on any Interest Payment Date, the Corporation
may elect to begin a new Extension Period, subject to the above requirements.
No interest shall be due and payable during an Extension Period, except at
the end thereof. The Corporation must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election of
any Extension Period (or an extension thereof) at least five Business Days
prior to the earlier of
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<PAGE>
(i) the date the Distributions on the Trust Securities would have been
payable except for the election to begin or extend such Extension Period or
(ii) the date the Administrative Trustees are required to give notice to any
securities exchange or to holders of Capital Securities of the record date or
the date such Distributions are payable, but in any event not less than five
Business Days prior to such record date. The Debenture Trustee shall give
notice of the Corporation's election to begin or extend a new Extension
Period to the holders of the Capital Securities. There is no limitation on
the number of times that the Corporation may elect to begin an Extension
Period.
OPTIONAL PREPAYMENT. The Junior Subordinated Debentures will be
prepayable, in whole or in part, at the option of the Corporation on or after
the Initial Optional Prepayment Date, subject to the Corporation having
received any required regulatory approval, at a prepayment price (the
"Optional Prepayment Price") equal to the percentage of the outstanding
principal amount of the Junior Subordinated Debentures specified below, plus,
in each case, accrued and unpaid interest thereon to the date of prepayment
if prepaid during the 12-month period beginning June 1 of the years indicated
below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---------------------- -----------
<S> <C>
2007................................... 105.250%
2008................................... 104.725%
2009................................... 104.200%
2010................................... 103.675%
2011................................... 103.150%
2012................................... 102.625%
2013................................... 102.100%
2014................................... 101.575%
2015................................... 101.050%
2016................................... 100.525%
2017 and thereafter.................... 100.000%
</TABLE>
SPECIAL EVENT PREPAYMENT. If a Special Event shall occur and be
continuing prior to the Initial Prepayment Date, the Corporation may, at its
option and subject to receipt of any required regulatory approval, prepay the
Junior Subordinated Debentures in whole (but not in part) at any time (i)
within 90 days of the occurrence of such Special Event and (ii) prior to June
1, 2007, at a prepayment price (the "Special Event Prepayment Price") equal
to the Make-Whole Amount (as defined below). The "Make-Whole Amount" shall be
equal to the greater of (x) 100% of the principal amount of the Junior
Subordinated Debentures to be prepaid or (y) the sum, as determined by a
Quotation Agent (as defined herein), of the present values of the scheduled
payments of principal and interest on the Junior Subordinated Debentures from
the prepayment date to the Maturity Date discounted to the prepayment date on
a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate, plus, in the case of each of clauses
(x) and (y), accrued and unpaid interest thereon to the date of prepayment.
If, following the occurrence of a Special Event, the Corporation exercises
its option to prepay the Junior Subordinated Debentures, then the proceeds of
that prepayment must be applied to redeem a Like Amount of Trust Securities
at the Special Event Redemption Price (equal to the Special Event Prepayment
Price in respect of the Junior Subordinated Debentures). See "Description of
Capital Securities -- Redemption."
A "Special Event" means a Tax Event or a Regulatory Capital Event, as the
case may be.
A "Tax Event" means the receipt by the Corporation and the Trust of an
opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced prospective
change) in, the laws or any regulations thereunder of the United States or
any political subdivision or taxing authority thereof or therein, or as a
result of any official administrative pronouncement 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
Issue Date, there is more than an insubstantial risk that
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<PAGE>
(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 Junior Subordinated Debentures, (ii) interest payable by
the Corporation on the Junior Subordinated Debentures is not, or within 90
days of the date of such opinion will not be, deductible by the Corporation,
in whole or in part, for United States federal income tax purposes or (iii)
the Trust is, or will be within 90 days of the date of such opinion, subject
to more than a De Minimis amount of other taxes, duties or other governmental
charges.
A "Regulatory Capital Event" means that the Corporation shall have
become, or pursuant to law or regulation will become within 180 days, subject
to capital requirements under which, in the written opinion of independent
bank regulatory counsel experienced in such matters, the Capital Securities
would not constitute Tier 1 Capital (as that concept is used in the
guidelines or regulations issued by the Board of Governors of the Federal
Reserve System) applied as if the Corporation (or its successor) were a bank
holding company, or the then-equivalent of such Tier 1 Capital.
"Adjusted Treasury Rate" means, with respect to any prepayment date, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such prepayment date plus (i) 3.49% if such prepayment
date occurs prior to June 1, 1998 and (ii) 2.95% in all other cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the
remaining term to maturity of the Junior Subordinated Debentures (the
"Remaining Life") to be prepaid that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining
Life. If no United States Treasury security has a maturity which is within a
period from three months before to three months after the Remaining Life, the
two most closely corresponding United States Treasury securities as selected
by the Quotation Agent shall be used as the Comparable Treasury Issue, and
the Treasury Rate shall be interpolated or extrapolated on a straight-line
basis, rounding to the nearest month.
"Treasury Rate" means (i) the yield, under the heading which represents
the average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities" for the maturity corresponding to the Remaining Life (if no
maturity is within three months before or after the Remaining Life, yields
for the two published maturities most closely corresponding to the Remaining
Life shall be determined and the Treasury Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding to the
nearest month), or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated equal to the Comparable
Treasury Price for such prepayment date. The Treasury Rate shall be
calculated on the third Business Day preceding the prepayment date.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Corporation. "Reference Treasury Dealer" means a nationally-recognized U.S.
Government securities dealer in New York City selected by the Corporation.
"Comparable Treasury Price" means, with respect to any prepayment date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any successor
release) is not published or does not contain such prices on such Business
Day, (A) the average of the Reference Treasury Dealer
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<PAGE>
Quotations for such prepayment date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations, or (B) if the Debenture Trustee
obtains fewer than three such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined
by the Debenture Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Debenture Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third Business Day preceding
such prepayment date.
Notice of any prepayment will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of Junior Subordinated
Debentures to be prepaid at its registered address. Unless the Corporation
defaults in payment of the prepayment price, on and after the prepayment date
interest ceases to accrue on such Junior Subordinated Debentures called for
prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the Junior Subordinated Debentures such amounts as
shall be necessary in order that the amount of Distributions then due and
payable by the Trust on the outstanding Trust Securities shall not be reduced
as a result of any additional taxes, duties and other governmental charges to
which the Trust has become subject as a result of a Tax Event ("Additional
Sums").
CERTAIN COVENANTS OF THE CORPORATION. The Corporation has agreed that it
will not, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Corporation's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of
the Corporation (including Other Debentures) that rank pari passu with or
junior in right of payment to the Junior Subordinated Debentures or (iii)
make any guarantee payments with respect to any guarantee by the Corporation
of the debt securities of any subsidiary of the Corporation (including under
Other Guarantees) if such guarantee ranks PARI PASSU or junior in right of
payment to the Junior Subordinated Debentures (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for
or purchase shares of, common stock of the Corporation, (b) any declaration
of a dividend in connection with the implementation of a stockholders' rights
plan, or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, (c) payments
under the Guarantee, (d) as a result of a reclassification of the
Corporation's capital stock or the exchange or conversion of one class or
series of the Corporation's capital stock for another class or series of the
Corporation's capital stock, (e) the purchase of fractional interests in
shares of the Corporation's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, and (f) purchases of common stock related to the issuance of
common stock or rights under any of the Corporation's benefit plans for its
directors, officers or employees or any of the Corporation's dividend
reinvestment plans) if at such time (1) there shall have occurred any event
of which the Corporation has actual knowledge that (a) is, or with the giving
of notice or the lapse of time, or both, would be, a Debenture Event of
Default and (b) in respect of which the Corporation shall not have taken
reasonable steps to cure, (2) the Corporation shall be in default with
respect to its payment of any obligations under the Guarantee or (3) the
Corporation shall have given notice of its election of an Extension Period as
provided in the Indenture and shall not have rescinded such notice, and such
Extension Period, or any extension thereof, shall have commenced and be
continuing.
So long as the Trust Securities remain outstanding, the Corporation also
has agreed (i) to directly or indirectly maintain 100% direct or indirect
ownership of the Common Securities, provided, however, that any permitted
successor of the Corporation under the Indenture may succeed to the
Corporation's ownership of such Common Securities, (ii) to use its reasonable
efforts to cause the Trust (a) to remain a business trust, except in
connection with the distribution of Junior Subordinated Debentures to the
holders of Trust Securities in
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<PAGE>
liquidation of the Trust, the redemption of all of the Trust Securities of
the Trust, or certain mergers, consolidations or amalgamations, each as
permitted by the Trust Agreement, and (b) to otherwise continue to be
classified as a grantor trust for United States federal income tax purposes
and (iii) to use its reasonable efforts to cause each holder of Trust
Securities to be treated as owning an undivided beneficial interest in the
Junior Subordinated Debentures.
MODIFICATION OF INDENTURE. From time to time the Corporation and the
Debenture Trustee may, without the consent of the holders of Junior
Subordinated Debentures, amend, waive or supplement the Indenture for
specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies or enabling the Corporation and the Trust to
conduct an Exchange Offer as contemplated by the Registration Rights
Agreement, provided that any such action does not materially adversely affect
the interest of the holders of Junior Subordinated Debentures), and
qualifying, or maintaining the qualification of, the Indenture under the
Trust Indenture Act. The Indenture contains provisions permitting the
Corporation and the Debenture Trustee, with the consent of the holders of a
majority in principal amount of Junior Subordinated Debentures, to modify the
Indenture in a manner affecting the rights of the holders of Junior
Subordinated Debentures; provided that no such modification may, without the
consent of the holders of each outstanding Junior Subordinated Debenture so
affected, (i) change the Stated Maturity Date, or reduce the principal amount
of the Junior Subordinated Debentures or reduce the amount payable on
redemption thereof or reduce the rate or extend the time of payment of
interest thereon except pursuant to the Corporation's right under the
Indenture to defer the payment of interest as provided therein (see "--Option
to Extend Interest Payment Date") or make the principal of, or interest or
premium on, the Junior Subordinated Debentures payable in any coin or
currency other than that provided in the Junior Subordinated Debentures, or
impair or affect the right of any holder of Junior Subordinated Debentures to
institute suit for the payment thereof, or (ii) reduce the percentage of
principal amount of Junior Subordinated Debentures, the holders of which are
required to consent to any such modification of the Indenture.
DEBENTURE EVENTS OF DEFAULT. The Indenture provides that any one or more
of the following described events with respect to the Junior Subordinated
Debentures constitutes a "Debenture Event of Default" (whatever the reason
for such Debenture 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): (i) failure for 30 days to pay any
interest (including Compounded Interest and Additional Sums, if any) or
Liquidated Damages, if any, on the Junior Subordinated Debentures or any
Other Debentures, when due (subject to the deferral of any due date in the
case of an Extension Period); (ii) failure to pay any principal or premium,
if any, on the Junior Subordinated Debentures or any Other Debentures when
due whether at maturity, upon redemption, by declaration of acceleration of
maturity or otherwise; (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 Corporation from the Debenture Trustee or the holders
of at least 25% in aggregate outstanding principal amount of Junior
Subordinated Debentures; or (iv) certain events in bankruptcy, insolvency or
reorganization of the Corporation.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures have, subject to certain exceptions, 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
Junior 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 Junior Subordinated Debentures
may annul such declaration and waive the default if the default (other than
the non-payment of the principal of the Junior 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.
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The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders of
all the Junior Subordinated Debentures, waive any past default, except a default
in the payment of principal (or premium, if any) on or interest (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest (and premium, if any) and principal due otherwise than by acceleration
has been deposited with the Debenture Trustee) or a default in respect of a
covenant or provision which under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Junior Subordinated
Debenture.
The Indenture requires the annual filing by the Corporation with the
Debenture Trustee of a certificate as to the absence of certain defaults under
the Indenture.
The Indenture provides that the Debenture Trustee may withhold notice of a
Debenture Event of Default from the holders of the Junior Subordinated
Debentures if the Debenture Trustee considers it in the interest of such holders
to do so.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES. If a
Debenture Event of Default shall have occurred and be continuing and shall be
attributable to the failure of the Corporation to pay the principal of (or
premium, if any), or interest (including Compounded Interest and Additional
Sums, if any) or Liquidated Damages, if any, on the Junior Subordinated
Debentures on the due date, a holder of Capital Securities may institute a
Direct Action. The Corporation 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 Capital Securities. Notwithstanding any payments made
to a holder of Capital Securities by the Corporation in connection with a Direct
Action, the Corporation shall remain obligated to pay the principal of (or
premium, if any) or interest (including Compounded Interest and Additional Sums,
if any) or Liquidated Damages, if any, on the Junior Subordinated Debentures,
and the Corporation shall be subrogated to the rights of the holder of such
Capital Securities with respect to payments on the Capital Securities to the
extent of any payments made by the Corporation to such holder in any Direct
Action.
The holders of the Capital 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 Junior Subordinated Debentures unless there shall have
been an Event of Default under the Trust Agreement. See "Description of Capital
Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS. The Indenture
provides that the Corporation shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties as an entirety or
substantially as an entirety to any Person, and no Person shall consolidate with
or merge into the Corporation or convey, transfer or lease its properties as an
entirety or substantially as an entirety to the Corporation, unless: (i) in case
the Corporation consolidates with or merges into another Person or conveys or
transfers its properties substantially as an entirety to any Person, the
successor Person is organized under the laws of the United States or any State
or the District of Columbia, and such successor Person expressly assumes the
Corporation's obligations on the Junior Subordinated Debentures; (ii)
immediately after giving effect thereto, no Debenture Event of Default, and no
event which, after notice or lapse of time or both, would become a Debenture
Event of Default, shall have occurred and be continuing; and (iii) certain other
conditions as prescribed in the Indenture are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Corporation that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE. The Indenture provides that when, among other
things, all Junior Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation (i) have become
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<PAGE>
due and payable or (ii) will become due and payable at maturity or called for
redemption within one year, and the Corporation deposits or causes to be
deposited with the Debenture Trustee funds, in trust, for the purpose and in
an amount sufficient to pay and discharge the entire indebtedness on the
Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation, for the principal (and premium, if any) and
interest to the date of the deposit or to the Stated Maturity Date, as the
case may be, then the Indenture will cease to be of further effect (except as
to the Corporation's obligations to pay all other sums due pursuant to the
Indenture and to provide the officers' certificates and opinions of counsel
described therein), and the Corporation will be deemed to have satisfied and
discharged the Indenture.
SUBORDINATION. In the Indenture, the Corporation has covenanted and
agreed that any Junior Subordinated Debentures issued thereunder will be
subordinate and junior in right of payment to all Senior Indebtedness to the
extent provided in the Indenture. Upon any payment or distribution of assets
to creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshaling of assets or any bankruptcy,
insolvency, debt restructuring or similar proceedings in connection with any
insolvency or bankruptcy proceeding of the Corporation, all Senior Indebtedness
must be paid in full before the holders of Junior Subordinated Debentures will
be entitled to receive or retain any payment in respect thereof.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of such
Senior Indebtedness before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect of the Junior Subordinated
Debentures.
No payments on account of principal, or premium, if any, or interest, if
any, in respect of the Junior Subordinated Debentures may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
"Indebtedness" means (i) every obligation of the Corporation for money
borrowed; (ii) every obligation of the Corporation evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses; (iii)
every reimbursement obligation of the Corporation with respect to letters of
credit, banker's acceptances or similar facilities issued for the account of the
Corporation; (iv) every obligation of the Corporation issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business); (v)
every capital lease obligation of the Corporation; (vi) all indebtedness of the
Corporation whether incurred on or prior to the date of the Indenture or
thereafter incurred, for claims in respect of derivative products, including
interest rate, foreign exchange rate and commodity forward contracts, options
and swaps and similar arrangements; and (vii) every obligation of the type
referred to in clauses (i) through (vi) of another Person and all dividends of
another Person the payment of which, in either case, the Corporation has
guaranteed or is responsible or liable, directly or indirectly, as obligor or
otherwise.
"Indebtedness Ranking on a Parity with the Junior Subordinated Debentures"
means (i) Indebtedness, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, to the extent such
indebtedness by its terms ranks equally with and not prior to the Junior
Subordinated Debentures in the right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of the Corporation
and (ii) all other debt securities, and guarantees in respect of those debt
securities, issued to any other trust, or a trustee of such trust, partnership
or other entity affiliated with the Corporation that is a financing vehicle of
the Corporation (a "financing entity") in connection with the issuance by such
financing entity of equity securities or other securities guaranteed by the
Corporation pursuant to an instrument that ranks PARI PASSU with or junior in
right of payment to the Guarantee. The securing of any Indebtedness, otherwise
constituting Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures, shall not be deemed
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to prevent such Indebtedness from constituting Indebtedness Ranking on a
Parity with the Junior Subordinated Debentures.
"Indebtedness Ranking Junior to the Junior Subordinated Debentures" means
any Indebtedness, whether outstanding on the date of execution of the Indenture
or thereafter created, assumed or incurred, to the extent such indebtedness by
its terms ranks junior to and not equally with or prior to the Junior
Subordinated Debentures (and any other Indebtedness Ranking on a Parity with the
Junior Subordinated Debentures) in right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of the Corporation.
The securing of any Indebtedness, otherwise constituting Indebtedness Ranking
Junior to the Junior Subordinated Debentures, shall not be deemed to prevent
such Indebtedness from constituting Indebtedness Ranking Junior to the Junior
Subordinated Debentures.
"Senior Indebtedness" means all Indebtedness, whether outstanding on the
date of execution of the Indenture or thereafter created, assumed or incurred,
except Indebtedness Ranking on a Parity with the Junior Subordinated Debentures
or Indebtedness Ranking Junior to the Junior Subordinated Debentures, and any
deferrals, renewals or extensions of such Senior Indebtedness.
The Corporation is a holding company and almost all of the operating assets
of the Corporation are owned by the Corporation's subsidiaries. The Corporation
relies primarily on dividends from the Bank to meet its obligations for payment
of principal and interest on its outstanding debt obligations and corporate
expenses. The Corporation is a legal entity separate and distinct from its
subsidiaries. Holders of Junior Subordinated Debentures should look only to the
Corporation for payments on the Junior Subordinated Debentures. There are
regulatory limitations on the payment of dividends directly or indirectly to the
Corporation from the Bank. See "--General." In addition, the Bank is subject to
certain restrictions imposed by federal law on any extensions of credit to, and
certain other transactions with, the Corporation and certain other affiliates,
and on investments in stock or other securities thereof. Such restrictions
prevent the Corporation 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 Corporation and as to each of such other affiliates
to 10% of the Bank's capital and surplus and as to the Corporation and all of
such other affiliates to an aggregate of 20% of the Bank's capital and surplus.
Accordingly, the Junior Subordinated Debentures will be effectively subordinated
to all existing and future liabilities of the Corporation's subsidiaries.
Because the Corporation is a holding company, the right of the Corporation
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Capital Securities to benefit indirectly from such distribution),
is subject to the prior claims of creditors of that subsidiary (including
depositors, in the case of the Bank), except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary. At June 30, 1997, the
subsidiaries of the Corporation had total liabilities (excluding liabilities
owed to the Corporation) of $378.3 million. Accordingly, the Junior Subordinated
Debentures will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries (including the subsidiaries'
deposit liabilities) and all liabilities of any future subsidiaries of the
Corporation. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation or any subsidiary, including Senior
Indebtedness. See "--Subordination."
RESTRICTIONS ON TRANSFER. The Junior Subordinated Debentures will be
issued, and may be transferred, only in blocks having an aggregate principal
amount of not less than $100,000 (100 Junior Subordinated Debentures) and
multiples of $1,000 in excess thereof. Any such transfer of Junior Subordinated
Debentures in a block having an aggregate principal amount of less than $100,000
shall be deemed to be void and of no legal effect whatsoever. Any such
transferee shall be deemed not to be the holder of such Junior Subordinated
Debentures for any purpose, including but not limited to the receipt of payments
on such Junior Subordinated Debentures, and such transferee shall be deemed to
have no interest whatsoever in such Junior Subordinated Debentures.
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GOVERNING LAW. The Indenture and the Junior Subordinated Debentures are
governed by and will be construed in accordance with the laws of the State of
New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE. Following the Exchange
Offer and the qualification of the Indenture under the Trust Indenture Act,
the Debenture Trustee shall have and be 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 Junior 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.
DESCRIPTION OF GUARANTEE
The Old Guarantee was executed and delivered by the Corporation concurrently
with the issuance by the Trust of the Old Capital Securities for the benefit of
the holders from time to time of the Old Capital Securities. As soon as
practicable after the date hereof, the Old Guarantee will be exchanged by the
Corporation for the New Guarantee for the benefit of the holders from time to
time of the New Capital Securities. The Guarantee Agreement has been qualified
under the Trust Indenture Act. This summary of certain provisions of the
Guarantee Agreement describes the material terms of the Guarantee, but 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 Agreement, including the
definitions therein of certain terms, and the Trust Indenture Act. The Guarantee
Trustee will hold the Guarantee for the benefit of the holders of the Capital
Securities.
GENERAL. The Corporation has agreed to pay in full on a subordinated basis,
to the extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the Capital 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 Capital
Securities, to the extent not paid by or on behalf of the Trust (the "Guarantee
Payments"), are subject to the Guarantee: (i) any accumulated and unpaid
Distributions required to be paid on the Capital Securities, to the extent that
the Trust has funds on hand legally available therefor at such time, (ii) the
Redemption Price with respect to any Capital Securities called for redemption,
to the extent that the Trust has funds on hand legally available therefor at
such time, or (iii) upon a voluntary or involuntary dissolution, winding-up or
liquidation of the Trust (other than in connection with the distribution of the
Junior Subordinated Debentures to holders of the Capital Securities or the
redemption of all Capital Securities), the lesser of (a) the Liquidation
Distribution, to the extent the Trust has funds legally available therefor at
the time, and (b) the amount of assets of the Trust remaining available for
distribution to holders of Capital Securities upon liquidation of the Trust
after satisfaction of liabilities to creditors of the Trust as required by
applicable law. The Corporation's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Corporation to the
holders of the Capital Securities or by causing the Trust to pay such amounts to
such holders.
The Guarantee ranks subordinate and junior in right of payment to all Senior
Indebtedness to the extent provided therein. See "--Status of the Guarantee."
Because the Corporation is a holding company, the right of the Corporation to
participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise is subject to the prior
claims of creditors of that subsidiary, except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary. Accordingly, the
Corporation's obligations under the Guarantee effectively are subordinated to
all existing and future liabilities, including deposits, of the Corporation's
subsidiaries, and claimants should look only to the assets of the Corporation
for payments thereunder. See "--Description of Junior Subordinated
Debentures--General." The Guarantee does not limit the incurrence or issuance of
other secured or unsecured debt of the Corporation, including Senior
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Indebtedness, whether under the Indenture, any other indenture that the
Corporation may enter into in the future or otherwise.
The Corporation has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Indenture, taken together, fully, irrevocably
and unconditionally guaranteed all of the Trust's obligations under the Capital
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
Capital Securities. See "Relationship Among the Capital Securities, the Junior
Subordinated Debentures and the Guarantee."
STATUS OF GUARANTEE. The Guarantee constitutes an unsecured obligation of
the Corporation and ranks subordinate and junior in right of payment to all
Senior Indebtedness in the same manner as Junior Subordinated Debentures.
The New Guarantee ranks PARI PASSU with the Old Guarantee and with all Other
Guarantees issued by the Corporation. The Guarantee constitutes a guarantee of
payment and not of collection (i.e., the guaranteed party may institute a legal
proceeding directly against the Corporation to enforce its rights under the
Guarantee without first instituting a legal proceeding against any other person
or entity). The Guarantee will be held for the benefit of the holders of the
Capital Securities. 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 to the holders of the Capital Securities of the Junior Subordinated
Debentures. The Guarantee does not place a limitation on the amount of
additional Senior Indebtedness that may be incurred by the Corporation.
EVENTS OF DEFAULT. An event of default under the Guarantee will occur upon
the failure of the Corporation to perform any of its payment or other
obligations thereunder, provided, however, that except with respect to a default
in payment of any Guarantee Payment, the Corporation shall have received notice
of default and shall not have cured such default within 60 days after receipt of
such notice. The holders of not less than a majority in Liquidation Amount of
the Capital Securities will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee Trustee
in respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
Any holder of the Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity.
The Corporation, as guarantor, will be required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
AMENDMENTS AND ASSIGNMENT. Except with respect to any changes that do not
materially adversely affect the rights of holders of the Capital Securities (in
which case no vote will be required), the Guarantee may not be amended without
the prior approval of the holders of a majority of the Liquidation Amount of
outstanding Capital Securities. The manner of obtaining any such approval is as
set forth under "--Description of Capital Securities--Voting Rights; Amendment
of the Trust Agreement." All guarantees and agreements contained in the
Guarantee Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit of the holders
of the Capital Securities then outstanding.
TERMINATION. The Guarantee will terminate and be of no further force and
effect upon full payment of the applicable Redemption Price of the Capital
Securities, upon full payment of the Liquidation Amount
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payable upon liquidation of the Trust or upon distribution of Junior
Subordinated Debentures to the holders of the Capital 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 Capital Securities must restore
payment of any sums paid under the Capital Securities or the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE. The Guarantee Trustee, other
than during the occurrence and continuance of a default by the Corporation in
performance of the Guarantee, will undertake to perform only such duties as are
specifically set forth in the Guarantee and, after default with respect to the
Guarantee, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Guarantee Trustee will be under no obligation to exercise any of
the powers vested in it by the Guarantee at the request of any holder of the
Capital Securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
GOVERNING LAW. The Guarantee is governed by and will be construed in
accordance with the laws of the State of New York.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities have not been registered under the
Securities Act, are subject to restrictions on transfer under federal and
state securities laws and are entitled to certain rights under the
Registration Rights Agreement (which rights will terminate upon consummation
of the Exchange Offer), (ii) the New Capital Securities will not provide for
any increase in the Distribution rate thereon and (iii) the New Junior
Subordinated Debentures will not provide for any increase in the interest
rate thereon. The Old Securities provide that, in the event that a
registration statement relating to the Exchange Offer has not been filed by
October 31, 1997 and declared effective by November 30, 1997, or, in certain
limited circumstances, in the event a shelf registration statement (the
"Shelf Registration Statement") with respect to the resale of the Old Capital
Securities is not declared effective by November 30, 1997, then interest will
accrue (in addition to the stated interest rate on the Old Junior
Subordinated Debentures) at the rate of 0.25% per annum on the principal
amount of the Old Junior Subordinated Debentures and Distributions will
accrue (in addition to the stated Distribution rate on the Old Capital
Securities) at the rate of 0.25% per annum on the Liquidation Amount of the
Old Capital Securities, for the period from the occurrence of such event
until such time as such required Exchange Offer is consummated or any
required Shelf Registration Statement is effective. The New Securities are
not, and upon consummation of the Exchange Offer the Old Securities will not
be, entitled to any such additional interest or Distributions. Accordingly,
holders of Old Capital Securities should review the information set forth
under "Risk Factors--Consequences of a Failure to Exchange Old Capital
Securities" and "Description of New Securities."
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Trust has funds on hand legally available for the payment of
such Distributions) are irrevocably guaranteed by the Corporation as and to the
extent set forth under "Description of New Securities--Description of
Guarantee." Taken together, the Corporation's obligations under the Junior
Subordinated Debentures, the Indenture, the Trust Agreement and the Guarantee
provide, in the aggregate, a full, irrevocable and unconditional guarantee of
payments of Distributions and other amounts due on the Capital Securities. No
single document standing
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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 Capital
Securities. If and to the extent that the Corporation does not make the
required payments on the Junior Subordinated Debentures, the Trust will not
have sufficient funds to make the related payments, including Distributions,
on the Capital Securities. The Guarantee does not cover any such payment when
the Trust does not have sufficient funds on hand legally available therefor.
In such event, the remedy of a holder of Capital Securities is to institute a
Direct Action. The obligations of the Corporation under the Guarantee are
subordinate and junior in right of payment to all Senior Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Capital Securities, primarily
because: (i) the aggregate principal amount or Prepayment Price of the Junior
Subordinated Debentures will be equal to the sum of the Liquidation Amount or
Redemption Price, as applicable, of the Trust Securities, (ii) the interest rate
and interest and other payment dates on the Junior Subordinated Debentures will
match the Distribution rate and Distribution and other payment dates for the
Trust Securities; (iii) the Corporation, as Sponsor, shall pay for all and any
costs, expenses and liabilities of the Trust except the Trust's obligations to
holders of Trust Securities under such Trust Securities; and (iv) the Trust
Agreement provides that the Trust is not authorized to engage in any activity
that is not consistent with the limited purposes thereof.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of any Capital Security may institute a legal proceeding directly
against the Corporation to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Trust or any
other person or entity.
A default or event of default under any Senior Indebtedness would not
constitute a default or an Event of Default under the Trust Agreement. However,
in the event of payment defaults under, or acceleration of, Senior Indebtedness,
the subordination provisions of the Indenture provide that no payments may be
made in respect of the Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on Junior Subordinated
Debentures would constitute an Event of Default under the Trust Agreement.
LIMITED PURPOSE OF THE TRUST
The Trust exists for the sole purpose of issuing and selling the Trust
Securities, using the proceeds from the sale of the Trust Securities to acquire
the Junior Subordinated Debentures and engaging in only those other activities
necessary, advisable or incidental thereto. The Capital Securities represent
beneficial ownership interests in the Trust. A principal difference between the
rights of a holder of Capital Securities and a holder of Junior Subordinated
Debentures is that a holder of Junior Subordinated Debentures is entitled to
receive from the Corporation the principal amount of (and premium, if any) and
interest on Junior Subordinated Debentures held, while a holder of Capital
Securities is entitled to receive Distributions from the Trust (or, in certain
circumstances, from the Corporation under the Guarantee) if and to the extent
the Trust has funds on hand legally available for the payment of such
Distributions.
RIGHTS UPON TERMINATION
Unless the Junior Subordinated Debentures are distributed to holders of the
Trust Securities, upon any voluntary or involuntary termination, winding-up or
liquidation of the Trust, after satisfaction of the liabilities of creditors of
the Trust as required by applicable law, the holders of the Trust Securities
will be entitled to
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receive, out of assets held by the Trust, the Liquidation Distribution in
cash. See "Description of New Securities--Description of Capital
Securities--Liquidation of the Trust and Distribution of Junior Subordinated
Debentures." Upon any voluntary or involuntary liquidation or bankruptcy of
the Corporation, the Property Trustee, as holder of the Junior Subordinated
Debentures, would be a subordinated creditor of the Corporation, subordinated
in right of payment to all Senior Indebtedness as set forth in the Indenture,
but entitled to receive payment in full of principal (and premium, if any)
and interest, before any stockholders of the Corporation receive payments or
distributions. Since the Corporation is the guarantor under the Guarantee and
has agreed to pay for all costs, expenses and liabilities of the Trust (other
than the Trust's obligations to the holders of its Trust Securities), the
positions of a holder of Capital Securities and a holder of Junior
Subordinated Debentures relative to other creditors and to stockholders of
the Corporation in the event of liquidation or bankruptcy of the Corporation
are expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In the opinion of Elias, Matz, Tiernan & Herrick L.L.P., special federal
income tax counsel to the Corporation and the Trust ("Tax Counsel"), the
following is a summary of certain of the material United States federal income
tax consequences of the purchase, ownership and disposition of Capital
Securities held as capital assets by a holder. This summary does not deal with
special classes of holders such as 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
Capital 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. This 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 Capital 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
Capital Securities. This summary is based on the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury regulations thereunder, the administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change, possibly on a retroactive basis. An opinion of Tax Counsel is
not binding on the Internal Revenue Service (the "IRS") or the courts. No
rulings have been or are expected to be sought from the IRS with respect to any
of the transactions described herein and no assurance can be given that the IRS
will not take contrary positions. Moreover, no assurance can be given that any
of the opinions expressed herein will not be challenged by the IRS or, if
challenged, that such a challenge would not be successful.
EXCHANGE OF CAPITAL SECURITIES
The exchange of Old Capital Securities for New Capital Securities should not
be a taxable event to holders for United States federal income tax purposes. The
exchange of Old Capital Securities for New Capital Securities pursuant to the
Exchange Offer should not be treated as an "exchange" for United States federal
income tax purposes because the New Capital Securities should not be considered
to differ materially in kind or extent from the Old Capital Securities and
because the exchange will occur by operation of the terms of the Old Capital
Securities. If, however, the exchange of the Old Capital Securities for the New
Capital Securities were treated as an exchange for United States federal income
tax purposes, such exchange should constitute a recapitalization for federal
income tax purposes. Accordingly, the New Capital Securities should have the
same issue price as the Old Capital Securities, and a holder should have the
same adjusted tax basis and holding period in the New Capital Securities as the
holder had in the Old Capital Securities immediately before the exchange.
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CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Old Junior Subordinated Debentures,
Tax Counsel has rendered its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Indenture (and
certain other documents), and based on certain facts and assumptions contained
in such opinion, the Old Junior Subordinated Debentures will be classified for
United States federal income tax purposes as indebtedness of the Corporation.
The Corporation, the Trust and the holders of the Capital Securities (by
acceptance of a beneficial interest in a Capital Security) will agree to treat
the Junior Subordinated Debentures as indebtedness for all United States federal
income tax purposes.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Old Capital Securities, Tax
Counsel 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 the Indenture (and certain other documents), and based on
certain facts and assumptions contained in such opinion, 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 Capital Securities
generally will be considered the owner of an undivided interest in the Junior
Subordinated Debentures, and each holder will be required to include in its
gross income any interest (or OID accrued) with respect to its allocable
share of those Junior Subordinated Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations (the "Regulations") applicable to
debt instruments issued on or after August 13, 1996, a "remote" contingency that
stated interest will not be timely paid will be ignored in determining whether a
debt instrument is issued with OID. The Corporation believes that the likelihood
of its exercising its option to defer payments of interest is "remote" since
exercising that option would prevent the Corporation from declaring dividends on
any class of its equity securities. Accordingly, the Corporation intends to take
the position, based on the advice of Tax Counsel, that the Junior Subordinated
Debentures will not be considered to be issued with OID and, accordingly, stated
interest on the Junior Subordinated Debentures generally will be taxable to a
holder as ordinary income at the time it is paid or accrued in accordance with
such holder's method of accounting.
Under the Regulations, if the Corporation were to exercise its option to
defer payments of interest, the Junior Subordinated Debentures would at that
time be treated as issued with OID, and all stated interest on the Junior
Subordinated Debentures would thereafter be treated as OID as long as the Junior
Subordinated Debentures remain outstanding. In such event, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures would
thereafter be accounted for on an economic accrual basis regardless of such
holder's method of tax accounting, and actual distributions of stated interest
would not be reported as taxable income. Consequently, a holder of Capital
Securities would be required to include in gross income OID even though the
Corporation would not make actual cash payments during an Extension Period.
Moreover, under the Regulations, if the option to defer the payment of interest
was determined not to be "remote," the Junior Subordinated Debentures would be
treated as having been originally issued with OID. In such event, all of a
holder's taxable interest income with respect to the Junior Subordinated
Debentures would be accounted for on an economic accrual basis regardless of
such holder's method of tax accounting, and actual distributions of stated
interest would not be reported as taxable income.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to Tax Counsel's interpretation herein.
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Because income on the Capital Securities will constitute interest or OID,
corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
The Corporation will have the right at any time to liquidate the Trust
and cause the Junior Subordinated Debentures to be distributed to the holders
of the Trust Securities. Under current law, such a distribution, for United
States federal income tax purposes, would be treated as a nontaxable event to
each holder, and each holder would receive an aggregate tax basis in the
Junior Subordinated Debentures equal to such holder's aggregate tax basis in
its Capital Securities. A holder's holding period in the Junior Subordinated
Debentures so received in liquidation of the Trust would include the period
during which the Capital Securities were held by such holder. If, however,
the Trust is characterized for United States federal income tax purposes as
an association taxable as a corporation at the time of its dissolution, the
distribution of the Junior Subordinated Debentures may constitute a taxable
event to holders of Capital Securities and a holder's holding period in
Junior Subordinated Debentures would begin on the date such Junior
Subordinated Debentures were received.
Under certain circumstances described herein (see "Description of New
Securities--Description of New Capital Securities"), the Junior Subordinated
Debentures may be redeemed for cash and the proceeds of such redemption
distributed to holders in redemption of their Capital Securities. Under current
law, such a redemption would, for United States federal income tax purposes,
constitute a taxable disposition of the redeemed Capital Securities, and a
holder could recognize gain or loss as if it sold such redeemed Capital
Securities for cash. See "--Sales of Capital Securities."
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities (including a redemption of the
Capital Securities either on the Stated Maturity Date or upon an optional
redemption of the Junior Subordinated Debentures by the Corporation) will
recognize gain or loss equal to the difference between its adjusted tax basis in
the Capital Securities and the amount realized on the sale of such Capital
Securities (other than with respect to accrued and unpaid interest which has not
yet been included in income, which will be treated as ordinary income). A
holder's adjusted tax basis in the Capital Securities generally will be its
initial purchase price increased by OID (if any) previously includable in such
holder's gross income to the date of disposition and decreased by payments (if
any) received on the Capital Securities in respect of OID. Such gain or loss
generally will be a capital gain or loss and generally will be a long-term
capital gain or loss if the Capital Securities have been held for more than one
year.
The Capital Securities may trade at a price that does not accurately reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who uses the accrual method of accounting for
tax purposes (and a cash method holder, if the Junior Subordinated Debentures
are deemed to have been issued with OID) who disposes of his Capital Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Junior Subordinated Debentures
through the date of disposition in income as ordinary income (i.e., interest or,
possibly, OID), and to add such amount to his adjusted tax basis in his pro rata
share of the underlying Junior Subordinated Debentures deemed disposed of. To
the extent the selling price is less than the holder's adjusted tax basis (which
will include 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.
66
<PAGE>
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes.
A "U.S. Holder" is a holder of Capital Securities who or which is a citizen
or individual resident (or is treated as a citizen or individual resident) of
the United States for federal income tax purposes, a corporation or partnership
created or organized (or treated as created or organized for federal income tax
purposes) in or under the laws of the United States or any political subdivision
thereof, or a trust or estate the income of which is includible in its gross
income for federal income tax purposes without regard to its source. (For
taxable years beginning after December 31, 1996 (or for the immediately
preceding taxable year, if the trustee of a trust so elects), a trust is a U.S.
Holder for federal income tax purposes if, and only if, (i) a court within the
United States is able to exercise primary supervision over the administration of
the trust and (ii) one or more United States trustees have the authority to
control all substantial decisions of the trust.)
Under present United States federal income tax laws: (i) payments by the
Trust or any of its paying agents to any holder of a Capital Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the
Capital Security does not actually or constructively own 10 percent or more
of the total combined voting power of all classes of stock of the Corporation
entitled to vote, (b) the beneficial owner of the Capital Security is not a
controlled foreign corporation that is related to the Corporation through
stock ownership, and (c) either (A) the beneficial owner of the Capital
Security certifies to the Trust or its agent, under penalties of perjury,
that it is not a United States holder and provides its name and address or
(B) a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business (a "Financial Institution"), and holds the Capital Security in such
capacity, certifies to the Trust or its agent, under penalties of perjury,
that such statement has been received from the beneficial owner by it or by a
Financial Institution between it and the beneficial owner and furnishes the
Trust or its agent with a copy thereof; and (ii) a United States Alien Holder
of a Capital Security will not be subject to United States federal
withholding tax on any gain realized upon the sale or other disposition of a
Capital Security.
As discussed above, changes in legislation affecting the United States
federal income tax treatment of the Junior Subordinated Debentures are possible,
and could adversely affect the ability of the Corporation to deduct the interest
payable on the Junior Subordinated Debentures. Moreover, any such legislation
could, as the Proposed Legislation would have, adversely affect United States
Alien Holders by characterizing income derived from the Junior Subordinated
Debentures as dividends, generally subject to a 30% income tax (on a withholding
basis) when paid to a United States Alien Holder, rather than as interest which,
as discussed above, is generally exempt from income tax in the hands of a United
States Alien Holder.
A United States Alien Holder that holds Capital Securities in connection
with the active conduct of a United States trade or business will be subject to
income tax on all income and gains recognized with respect to its proportionate
share of the Junior Subordinated Debentures.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Capital Securities will be reported to holders on
Forms 1099, which forms should be mailed to holders of Capital Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld
67
<PAGE>
amounts will be allowed as a credit against the holder's United States
federal income tax, provided the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF
THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
The Corporation, the obligor with respect to the Junior Subordinated
Debentures held by the Trust, and its affiliates and the Property Trustee may
be considered a "party in interest" (within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to many employee benefit plans ("Plans") that are subject to ERISA.
Any purchaser proposing to acquire Capital Securities with assets of any Plan
should consult with its counsel. The purchase and/or holding of Capital
Securities by a Plan that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of Section 4975
of the Code (including individual retirement arrangements and other plans
described in Section 4975(e)(1) of the Code) and with respect to which the
Corporation, the Property Trustee or any affiliate is a service provider (or
otherwise is a party in interest or a disqualified person) may constitute or
result in a prohibited transaction under ERISA or Section 4975 of the Code,
unless such Capital 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 95-23 (an
exemption for certain transactions determined by an in-house manager). In
addition, as described below, a Plan fiduciary considering the acquisition of
Capital Securities should be aware that the assets of the Trust may be
considered "plan assets" for ERISA purposes. In such event, service providers
with respect to the assets of the Trust may become parties in interest or
disqualified persons with respect to investing Plans, and any discretionary
authority exercised with respect to the Junior Subordinated Debentures by
such persons could be deemed to constitute a prohibited transaction under
ERISA or the Code. In order to avoid such prohibited transactions, each
investing Plan, by acquiring the Capital Securities, will be deemed to have
directed the Trust to invest in the Junior Subordinated Debentures and to
have consented to the appointment of the Property Trustee. In this regard, it
should be noted that, in an Event of Default, the Corporation may not remove
the Property Trustee without the approval of a majority of the holders of the
Capital Securities.
A Plan fiduciary should consider whether the acquisition of Capital
Securities could result in a delegation of fiduciary authority to the Property
Trustee, and, if so, whether such a delegation of authority is permissible under
the Plan's governing instrument or any investment management agreement with the
Plan. In making such determination, a Plan fiduciary should note that the
Property Trustee is a U.S. bank qualified to be an investment manager (within
the meaning of section 3(38) of ERISA) to which such a delegation of authority
generally would be permissible under ERISA. Further, prior to an Event of
Default with respect to the Junior Subordinated Debentures, the Property Trustee
will have only limited custodial and ministerial authority with respect to Trust
assets.
Under the U.S. Department of Labor regulations defining "plan assets" for
ERISA purposes (the "Plan Assets Regulations"), the assets of the Trust will be
considered plan assets of Plans owning Capital Securities
68
<PAGE>
unless the aggregate investment in Capital Securities by "benefit plan
investors" is not deemed "significant" or another exception in the Plan
Assets Regulations was applicable. For this purpose, equity participation by
benefit plan investors will not be considered "significant" on any date only
if, immediately after the most recent acquisition of Capital Securities, the
aggregate interest in the Capital Securities held by benefit plan investors
will be less than 25% of the value of the Capital Securities. Although it is
possible that the equity participation by benefit plan investors in Capital
Securities on any date will not be "significant" for purposes of the Plan
Assets Regulations, such result cannot be assured.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own
account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Capital
Securities. This Prospectus, as it may be amended or supplemented from time
to time, may be used by Participating Broker-Dealers during the period
referred to below in connection with resales of New Capital Securities
received in exchange for Old Capital Securities if such Old Capital
Securities were acquired by such Participating Broker-Dealers for their own
accounts as a result of market-making activities or other trading activities.
The Corporation and the Trust have agreed that this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such New Capital Securities for a
period ending 90 days after the Expiration Date (subject to extension under
certain limited circumstances described herein) or, if earlier, when all such
New Capital Securities have been disposed of by such Participating
Broker-Dealer. However, a Participating Broker-Dealer who intends to use this
Prospectus in connection with the resale of New Capital Securities received
in exchange for Old Capital Securities pursuant to the Exchange Offer must
notify the Corporation or the Trust, or cause the Corporation or the Trust to
be notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that
purpose in the Letter of Transmittal or may be delivered to the Exchange
Agent at one of the addresses set forth herein under "The Exchange
Offer--Exchange Agent." See "The Exchange Offer--Resales of New Capital
Securities."
The Corporation or the Trust will not receive any cash proceeds from the
issuance of the New Capital Securities offered hereby. New Capital Securities
received by broker-dealers for their own accounts in connection with the
Exchange Offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the New Capital Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Capital Securities.
Any broker-dealer that resells New Capital Securities that were received by
it for its own account in connection with the Exchange Offer and any broker or
dealer that participates in a distribution of such New Capital Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act, and any
profit on any such resale of New Capital Securities and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
69
<PAGE>
VALIDITY OF NEW SECURITIES
Certain matters of Delaware law relating to the validity of the New Capital
Securities and the creation of the Trust will be passed upon on behalf of the
Trust by Richards, Layton & Finger, special Delaware counsel to the Trust and
the Corporation. The validity of the New Guarantee and the New Junior
Subordinated Debentures will be passed upon for the Corporation by Elias, Matz,
Tiernan & Herrick L.L.P., Washington, D.C. Certain matters relating to United
States federal income tax considerations will be passed upon for the Corporation
by Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C.
EXPERTS
The audited consolidated financial statements of the Corporation
incorporated by reference in the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 and incorporated by reference herein
have been incorporated by reference herein in reliance upon the report of
Coopers & Lybrand L.L.P., independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing.
70
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law ("DGCL") sets forth
circumstances under which directors, officers, employees and agents may be
insured or indemnified against liability which they may incur in their
capacity as such. The Certificate of Incorporation and Bylaws of the Company
provide that the directors, officers, employees and agents of the Company
shall be indemnified to the full extent permitted by law. Such indemnity
shall extend to expenses, including attorney's fees, judgments, fines and
amounts paid in the settlement, prosecution or defense of the foregoing
actions. Section 102(b)(7) of the DGCL sets forth circumstances under which a
director's personal liability to a corporation or its stockholders for money
damages for breach of fiduciary duty as a director may be eliminated or
limited. The Certificate of Incorporation provides for the limitation of
personal liability of directors to stockholders for monetary damages to the
Company or its stockholders for such director's breach of fiduciary duty as a
director of the Company to the full extent permitted by law.
The Company carries a liability insurance policy for its officers and
directors.
Under the Declaration of Trust of Progress Capital Trust I, the
Corporation has agreed to indemnify each of the Trustees of the Trust, and to
hold each Trustee harmless against any loss, damage, claim, 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 Declaration of
Trust, 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 under the Trust.
II-1
<PAGE>
Item 21. Exhibits and Financial Statement Schedules
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
4.1 Indenture of the Corporation relating to the Junior Subordinated Debentures
4.2 Form of Certificate of New Junior Subordinated Debenture
4.3 Certificate of Trust of Progress Capital Trust I
4.4 Amended and Restated Declaration of Trust of Progress Capital Trust I
4.5 Form of New Capital Security Certificate for Progress Capital Trust I
4.6 Form of New Guarantee of the Corporation relating to the New Capital Securities
4.7 Registration Rights Agreement
5.1 Opinion and consent of Elias, Matz, Tiernan & Herrick L.L.P. as to legality of the New Junior
Subordinated Debentures and the New Guarantee to be issued by the Corporation*
5.2 Opinion and consent of Richards, Layton & Finger as to the legality of the New Capital Securities to
be issued by Progress Capital Trust I*
8 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. as to certain federal income tax matters*
12.1 Computation of ratio of earnings to fixed charges (excluding interest on deposits)
12.2 Computation of ratio of earnings to fixed charges (including interest on deposits)
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included in Exhibit 5.1)*
23.2 Consent of Richards, Layton & Finger (included in Exhibit 5.2)*
24 Power of Attorney of certain officers and directors of the Corporation (located on the signature page
hereto)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Declaration of
Trust of Progress Capital Trust I
25.3 Form T-1 Statement of Eligibility of The Bank of New York under the New Guarantee for the benefit of
the holders of New Capital Securities of Progress Capital Trust I
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
- ------------------------
* To be filed by amendment.
II-2
<PAGE>
Item 22. Undertakings
Each of the undersigned Registrants hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, as amended,
each filing of a Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Each of the undersigned Registrants hereby also undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereto) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
this Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by a Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in this Registration Statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) to deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X are not
set forth in the prospectus, to deliver, or cause to be delivered to each
person to whom the prospectus is sent or given, the latest quarterly report
that is specifically incorporated by reference in the prospectus to provide
such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of each undersigned Registrant pursuant to the provisions, or otherwise, each
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such
II-3
<PAGE>
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by each undersigned
Registrant of expenses incurred or paid by a director, officer of controlling
person of each Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, each Registrant will, unless
in the opinion of its counsel the matter has been settled by the controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Each of the undersigned Registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the
Prospectus pursuant to Item 4, 10(b), 11 or 13 of this Form within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the request.
Each of the undersigned Registrants hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and
the company being acquired or involved therein, that was not the subject of
and included in the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Progress
Financial Corporation certifies that it has reasonable grounds that it meets
all of the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Township of Whitpain, Commonwealth of
Pennsylvania on the 21st day of October 1997.
PROGRESS FINANCIAL CORPORATION
By: /S/ W. Kirk Wycoff
-----------------------------------------
W. Kirk Wycoff
Chairman, President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each of the directors and/or officers
of Progress Financial Corporation whose signature appears below hereby
appoints W. Kirk Wycoff, as his or her attorney-in-fact to sign in his or her
name and behalf, in any and all capacities stated below and to file with the
Securities and Exchange Commission any and all amendments, including
post-effective amendments, to this Registration Statement on Form S-4, making
such changes in the Registration Statement as appropriate, and generally to
do all such things in their behalf in their capacities as directors and/or
officers to enable Progress Financial Corporation to comply with the
provisions of the Securities Act of 1933, and all requirements of the
Securities and Exchange Commission.
/s/ W. Kirk Wycoff Date: October 21, 1997
- ---------------------------
W. Kirk Wycoff
Chairman, President and Chief Executive
Officer (principal executive officer)
/s/ Frederick E. Schea Date: October 21, 1997
- ---------------------------
Frederick E. Schea
Senior Vice President and
Chief Financial Officer
(principal financial and
accounting officer)
/s/ William O. Daggett, Jr. Date: October 21, 1997
- ---------------------------
William O. Daggett, Jr.
Director
/s/ Joseph R. Klinger Date: October 21, 1997
- ---------------------------
Joseph R. Klinger
Director
II-5
<PAGE>
/s/ John E. F. Corson Date: October 21, 1997
- ---------------------------
John E. F. Corson
Director
/s/ Donald F. U. Goebert Date: October 21, 1997
- ---------------------------
Donald F. U. Goebert
Director
/s/ Paul M LaNoce Date: October 21, 1997
- ---------------------------
Paul M. LaNoce
Director
/s/ William L. Mueller Date: October 21, 1997
- ---------------------------
William L. Mueller
Director
/s/ Charles J. Tornetta Date: October 21, 1997
- ---------------------------
Charles J. Tornetta
Director
/s/ Janet E. Paroo Date: October 21, 1997
- ---------------------------
Janet E. Paroo
Director
/s/ H. Wayne Griest Date: October 21, 1997
- ---------------------------
H. Wayne Griest
Director
/s/ A. John May, III Date: October 21, 1997
- ---------------------------
A. John May, III
Director
II-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, Progress
Capital Trust I certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Township of Whitpain, Commonwealth of
Pennsylvania, on the 21st day of October 1997.
PROGRESS CAPITAL TRUST I
By: /s/ W. Kirk Wycoff
------------------------------
W. Kirk Wycoff
Administrative Trustee
By: /s/ Frederick E. Schea
------------------------------
Frederick E. Schea
Administrative Trustee
By: /s/ Eric J. Morgan
------------------------------
Eric J. Morgan
Administrative Trustee
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
4.1 Indenture of the Corporation relating to the Junior Subordinated Debentures
4.2 Form of Certificate of New Junior Subordinated Debenture
4.3 Certificate of Trust of Progress Capital Trust I
4.4 Amended and Restated Declaration of Trust of Progress Capital Trust I
4.5 Form of New Capital Security Certificate for Progress Capital Trust I
4.6 Form of New Guarantee of the Corporation relating to the New Capital Securities
4.7 Registration Rights Agreement
5.1 Opinion and consent of Elias, Matz, Tiernan & Herrick L.L.P. as to legality of the New Junior
Subordinated Debentures and the New Guarantee to be issued by the Corporation*
5.2 Opinion and consent of Richards, Layton & Finger as to legality of the New Capital Securities to
be issued by Progress Capital Trust I*
8 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. as to certain federal income tax matters*
12.1 Computation of ratio of earnings to fixed charges (excluding interest on deposits)
12.2 Computation of ratio of earnings to fixed charges (including interest on deposits)
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included in Exhibit 5.1)*
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2)*
24 Power of Attorney of certain officers and directors of the Corporation (located on the signature
page hereto)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Declaration
of Trust of Progress Capital Trust I
25.3 Form T-1 Statement of Eligibility of The Bank of New York under the New Guarantee for the benefit
of the holders of New Capital Securities of Progress Capital Trust I
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
- ------------------------
* To be filed by amendment.
<PAGE>
EXHIBIT 4.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PROGRESS FINANCIAL CORPORATION
------------------------------
------------------------------
INDENTURE
Dated as of June 3, 1997
------------------------------
THE BANK OF NEW YORK
as Trustee
------------------------------
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of
June 3, 1997 between Progress Financial Corporation and The Bank of New York,
Trustee:
ACT SECTION INDENTURE SECTION
310(a)(1)...................................................................6.09
310(a)(2) ..................................................................6.09
310(a)(3)....................................................................N/A
310(a)(4)....................................................................N/A
310(a)(5).............................................................6.10, 6.11
310(b).......................................................................N/A
310(c)......................................................................6.13
311(a) and (b)...............................................................N/A
311(c).............................................................4.01, 4.02(a)
312(a)......................................................................4.02
312(b) and (c)..............................................................4.04
313(a)......................................................................4.04
313(b)(1)...................................................................4.04
313(b)(2)...................................................................4.04
313(c)......................................................................4.04
313(d)......................................................................4.04
314(a)......................................................................4.03
314(b).......................................................................N/A
314(c)(1) and (2)...........................................................6.07
314(c)(3)....................................................................N/A
314(d) ......................................................................N/A
314(e)......................................................................6.07
314(f) ......................................................................N/A
315(a)(c) and (d)...........................................................6.01
315(b) .....................................................................5.08
315(e) .....................................................................5.09
316(a)(1) ..................................................................5.07
316(a)(2) ...................................................................N/A
316(a) last sentence .......................................................2.09
316(b) .....................................................................9.02
317(a) .....................................................................5.05
317(b) .....................................................................6.05
318(a) ....................................................................13.08
- -----------------------
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE>
TABLE OF CONTENTS*
Page
ARTICLE I
DEFINITIONS............................... 1
SECTION 1.01. Definitions.............................................. 1
Additional Sums......................................................... 1
Adjusted Treasury Rate.................................................. 1
Affiliate............................................................... 2
Authenticating Agent.................................................... 2
Bankruptcy Law.......................................................... 2
Board of Directors...................................................... 2
Board Resolution........................................................ 2
Business Day............................................................ 2
Capital Securities...................................................... 2
Capital Securities Guarantee............................................ 2
Commission.............................................................. 2
Common Securities....................................................... 3
Common Securities Guarantee............................................. 3
Common Stock............................................................ 3
Company................................................................. 3
Company Request......................................................... 3
Comparable Treasury Issue............................................... 3
Comparable Treasury Price............................................... 3
Compounded Interest..................................................... 4
Custodian............................................................... 4
Declaration............................................................. 4
Default................................................................. 4
Defaulted Interest....................................................... 4
Deferred Interest....................................................... 4
Definitive Securities................................................... 4
Depositary.............................................................. 4
Dissolution Event....................................................... 4
Event of Default........................................................ 4
Exchange Act............................................................ 4
Exchange Offer.......................................................... 5
Extended Interest Payment Period........................................ 5
- -----------------------
* THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A
PART OF THE INDENTURE.
i
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Page
Federal Reserve......................................................... 5
Global Security......................................................... 5
Indebtedness............................................................. 5
Indebtedness Ranking on a Parity with the Securities.................... 5
Indebtedness Ranking Junior to the Securities........................... 6
Indenture............................................................... 6
Initial Optional Redemption Date........................................ 6
Interest Payment Date................................................... 6
Liquidated Damages...................................................... 6
Make Whole Amount....................................................... 6
Maturity Date........................................................... 6
Progress Capital Trust.................................................. 6
Mortgage................................................................ 6
Non Book-Entry Capital Securities....................................... 6
Officers................................................................ 7
Officers' Certificate................................................... 7
Opinion of Counsel...................................................... 7
Optional Redemption Price............................................... 7
Other Debentures........................................................ 7
Other Guarantees........................................................ 7
outstanding............................................................. 7
Person.................................................................. 8
Predecessor Security.................................................... 8
Principal Office of the Trustee......................................... 8
Purchase Agreement...................................................... 8
Property Trustee........................................................ 8
Quotation Agent......................................................... 8
Redemption Price........................................................ 8
Reference Treasury Dealer............................................... 8
Reference Treasury Dealer Quotations.................................... 8
Registration Rights Agreement........................................... 8
Regulatory Capital Event..................................................8
Responsible Officer..................................................... 9
Restricted Security..................................................... 9
Rule 144A............................................................... 9
Securities.............................................................. 9
Securities Act.......................................................... 9
Securityholder.......................................................... 9
holder of Securities.................................................... 9
Security Register....................................................... 9
Senior Indebtedness..................................................... 9
Series A Securities..................................................... 9
ii
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Page
Series B Securities.................................................... 10
Special Event.......................................................... 10
Special Event Redemption Price......................................... 10
Subsidiary.............................................................. 10
Tax Event............................................................... 10
Treasury Rate........................................................... 10
Trustee................................................................. 11
Trust Indenture Act of 1939..............................................11
Trust Securities........................................................ 11
U.S. Government Obligations............................................. 11
ARTICLE II
SECURITIES..................................... 12
SECTION 2.01. Forms Generally.......................................... 12
SECTION 2.02. Execution and Authentication............................. 12
SECTION 2.03. Form and Payment......................................... 12
SECTION 2.04. Legends.................................................. 13
SECTION 2.05. Global Security.......................................... 13
SECTION 2.06 Interest................................................. 15
SECTION 2.07. Transfer and Exchange.................................... 15
SECTION 2.08. Replacement Securities................................... 17
SECTION 2.09. Temporary Securities..................................... 18
SECTION 2.10. Cancellation............................................. 18
SECTION 2.11. Defaulted Interest....................................... 19
SECTION 2.12. CUSIP Numbers............................................ 20
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY.......................... 20
SECTION 3.01. Payment of Principal, Premium and Interest............... 20
SECTION 3.02. Offices for Notices and Payments, etc.................... 20
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office....... 21
SECTION 3.04. Provision as to Paying Agent............................. 21
SECTION 3.05. Certificate to Trustee................................... 22
SECTION 3.06. Compliance with Consolidation Provisions................. 22
SECTION 3.07. Limitation on Dividends.................................. 22
SECTION 3.08. Covenants as to Progress Capital Trust................... 23
SECTION 3.09. Payment of Expenses...................................... 23
SECTION 3.10. Payment Upon Resignation or Removal...................... 24
iii
<PAGE>
Page
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE.................................. 25
SECTION 4.01. Securityholders' Lists................................... 25
SECTION 4.02. Preservation and Disclosure of Lists..................... 25
SECTION 4.03. Reports by Company....................................... 27
SECTION 4.04. Reports by the Trustee................................... 28
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT...................................... 28
SECTION 5.01. Events of Default........................................ 28
SECTION 5.02. Payment of Securities on Default; Suit Therefor.......... 30
SECTION 5.03. Application of Moneys Collected by Trustee............... 32
SECTION 5.04. Proceedings by Securityholders........................... 33
SECTION 5.05. Proceedings by Trustee................................... 34
SECTION 5.06. Remedies Cumulative and Continuing....................... 34
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by Majority
of Securityholders....................................... 34
SECTION 5.08. Notice of Defaults....................................... 35
SECTION 5.09. Undertaking to Pay Costs................................. 35
ARTICLE VI
CONCERNING THE TRUSTEE................................... 36
SECTION 6.01. Duties and Responsibilities of Trustee................... 36
SECTION 6.02. Reliance on Documents, Opinions, etc..................... 37
SECTION 6.03. No Responsibility for Recitals, etc...................... 39
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents or Registrar May Own Securities................... 39
SECTION 6.05. Moneys to be Held in Trust............................... 40
SECTION 6.06. Compensation and Expenses of Trustee..................... 40
SECTION 6.07. Officers' Certificate as Evidence........................ 41
SECTION 6.08. Conflicting Interest of Trustee.......................... 41
SECTION 6.09. Eligibility of Trustee................................... 41
SECTION 6.10. Resignation or Removal of Trustee........................ 41
SECTION 6.11. Acceptance by Successor Trustee.......................... 43
SECTION 6.12. Succession by Merger, etc................................ 44
SECTION 6.13. Limitation on Rights of Trustee as a Creditor............ 44
SECTION 6.14. Authenticating Agents.................................... 44
iv
<PAGE>
Page
ARTICLE VII
CONCERNING THE SECURITYHOLDERS.............................. 46
SECTION 7.01. Action by Securityholders................................ 46
SECTION 7.02. Proof of Execution by Securityholders.................... 46
SECTION 7.03. Who Are Deemed Absolute Owners........................... 47
SECTION 7.04. Securities Owned by Company Deemed Not Outstanding....... 47
SECTION 7.05. Revocation of Consents; Future Holders Bound............. 47
ARTICLE VIII
SECURITYHOLDERS' MEETINGS.................................. 48
SECTION 8.01. Purposes of Meetings..................................... 48
SECTION 8.02. Call of Meetings by Trustee.............................. 48
SECTION 8.03. Call of Meetings by Company or Securityholders........... 49
SECTION 8.04. Qualifications for Voting................................ 49
SECTION 8.05. Regulations.............................................. 49
SECTION 8.06. Voting................................................... 50
ARTICLE IX
AMENDMENTS............................................. 50
SECTION 9.01. Without Consent of Securityholders....................... 50
SECTION 9.02. With Consent of Securityholders.......................... 52
SECTION 9.03. Compliance with Trust Indenture Act; Effect of Supplemental
Indentures............................................... 53
SECTION 9.04. Notation on Securities................................... 53
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished Trustee........................................ 54
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE................ 54
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.......... 54
SECTION 10.02. Successor Corporation to be Substituted for Company...... 55
SECTION 10.03. Opinion of Counsel to be Given Trustee................... 55
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE........................ 55
SECTION 11.01. Discharge of Indenture................................... 55
v
<PAGE>
Page
SECTION 11.02. Deposited Moneys and U.S. Government Obligations to
be Held in Trust by Trustee.............................. 56
SECTION 11.03. Paying Agent to Repay Moneys Held........................ 57
SECTION 11.04. Return of Unclaimed Moneys............................... 57
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S. Government
Obligations.............................................. 57
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS......................... 59
SECTION 12.01. Indenture and Securities Solely Corporate Obligations.... 59
ARTICLE XIII
MISCELLANEOUS PROVISIONS................................. 59
SECTION 13.01. Successors............................................... 59
SECTION 13.02. Official Acts by Successor Corporation................... 59
SECTION 13.03. Surrender of Company Powers.............................. 60
SECTION 13.04. Addresses for Notices, etc............................... 60
SECTION 13.05. Governing Law............................................ 60
SECTION 13.06. Evidence of Compliance with Conditions Precedent......... 60
SECTION 13.07. Business Days............................................ 61
SECTION 13.08. Trust Indenture Act to Control........................... 61
SECTION 13.09. Table of Contents, Headings, etc......................... 61
SECTION 13.10. Execution in Counterparts................................ 61
SECTION 13.11. Separability............................................. 61
SECTION 13.12. Assignment............................................... 62
SECTION 13.13. Acknowledgement of Rights................................ 62
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND.................................. 62
SECTION 14.01. Special Event Redemption................................. 62
SECTION 14.02. Optional Redemption by Company........................... 63
SECTION 14.03. No Sinking Fund.......................................... 64
SECTION 14.04. Notice of Redemption; Selection of Securities............ 64
SECTION 14.05. Payment of Securities Called for Redemption.............. 65
vi
<PAGE>
Page
ARTICLE XV
SUBORDINATION OF SECURITIES................................ 66
SECTION 15.01. Agreement to Subordinate................................. 66
SECTION 15.02. Default on Senior Indebtedness........................... 66
SECTION 15.03. Liquidation; Dissolution; Bankruptcy..................... 67
SECTION 15.04. Subrogation.............................................. 68
SECTION 15.05. Trustee to Effectuate Subordination...................... 69
SECTION 15.06. Notice by the Company.................................... 69
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness.... 70
SECTION 15.08. Subordination May Not Be Impaired........................ 71
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD.................. 72
SECTION 16.01. Extension of Interest Payment Period..................... 72
SECTION 16.02. Notice of Extension...................................... 72
EXHIBIT A....................................................................A-1
Testimonium
Signatures
Acknowledgements
vii
<PAGE>
THIS INDENTURE, dated as of June 3, 1997, between Progress Financial
Corporation, a Delaware corporation (hereinafter sometimes called the
"Company"), and The Bank of New York, a New York banking corporation, as
trustee (hereinafter sometimes called the "Trustee"),
W I T N E S E T H :
In consideration of the premises, and the purchase of the Securities
by the holders thereof, the Company covenants and agrees with the Trustee for
the equal and proportionate benefit of the respective holders from time to
time of the Securities, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes
of this Indenture shall have the respective meanings specified in this
Section 1.01. All other terms used in this Indenture which are defined in
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or
which are by reference therein defined in the Securities Act, shall (except
as herein otherwise expressly provided or unless the context otherwise
requires) have the meanings assigned to such terms in said Trust Indenture
Act and in said Securities Act as in force at the date of this Indenture as
originally executed. The following terms have the meanings given to them in
the Declaration: (i) Clearing Agency; (ii) Delaware Trustee; (iii) Property
Trustee; (iv) Administrative Trustees; (v) Series A Capital Securities; (vi)
Series B Capital Securities; (vii) Direct Action; and (viii) Distributions.
All accounting terms used herein and not expressly defined shall have the
meanings assigned to such terms in accordance with generally accepted
accounting principles and the term "generally accepted accounting principles"
means such accounting principles as are generally accepted at the time of any
computation. The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. Headings are used for convenience of
reference only and do not affect interpretation. The singular includes the
plural and vice versa.
"Additional Sums" shall have the meaning set forth in Section
2.06(c).
"Adjusted Treasury Rate" means, with respect to any redemption date
pursuant to Section 14.01, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue, assuming a
price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price
<PAGE>
for such redemption date plus (i) 3.49% if such redemption date occurs on or
prior to June 1, 1998 and (ii) 2.95% in all other cases.
"Affiliate" shall have the meaning given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Authenticating Agent" shall mean any agent or agents of the Trustee
which at the time shall be appointed and acting pursuant to Section 6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors of the
Company or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Business Day" shall mean, with respect to any series of Securities,
any day other than a Saturday or a Sunday or a day on which banking
institutions in The City of New York or Blue Bell, Pennsylvania are
authorized or required by law or executive order to close.
"Capital Securities" shall mean undivided beneficial interests in
the assets of Progress Capital Trust which rank pari passu with the Common
Securities issued by Progress Capital Trust; provided, however, that if an
Event of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the
Capital Securities shall be paid in full the Distributions and the
liquidation, redemption and other payments to which they are entitled.
References to "Capital Securities" shall include collectively any Series A
Capital Securities and Series B Capital Securities.
"Capital Securities Guarantee" shall mean any guarantee that the
Company may enter into with The Bank of New York or other Persons that
operates directly or indirectly for the benefit of holders of Capital
Securities of Progress Capital Trust and shall include a Series A Capital
Securities Guarantee and a Series B Capital Securities Guarantee with respect
to the Series A Capital Securities and the Series B Capital Securities,
respectively.
"Commission" shall mean 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 Indenture such Commission is not existing
and performing the duties now
2
<PAGE>
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Common Securities" shall mean undivided beneficial interests in the
assets of Progress Capital Trust which rank pari passu with Capital
Securities issued by Progress Capital Trust; provided, however, that if an
Event of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the
Capital Securities shall be paid in full the Distributions and the
liquidation, redemption and other payments to which they are entitled.
"Common Securities Guarantee" shall mean any guarantee that the
Company may enter into with any Person or Persons that operates directly or
indirectly for the benefit of holders of Common Securities of Progress
Capital Trust.
"Common Stock" shall mean the Common Stock, par value $1.00 per
share, of the Company or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Company" shall mean Progress Financial Corporation, a Delaware
corporation, and, subject to the provisions of Article X, shall include its
successors and assigns.
"Company Request" or "Company Order" shall mean a written request or
order signed in the name of the Company by the Chairman, the Chief Executive
Officer, the President, a Vice Chairman, a Vice President, the Comptroller,
the Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Comparable Treasury Issue" means the United States Treasury
security selected by the Quotation Agent as having a maturity comparable to
the remaining term to maturity of the Junior Subordinated Debentures (the
"Remaining Life") to be prepaid that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining.
If no United States Treasury security has a maturity which is within a period
from three months before to three months after the Remaining Life, the two
most closely corresponding United States Treasury securities as selected by
the Quotation Agent shall be used as the Comparable Treasury Issue, and the
Treasury Rate shall be interpolated or extrapolated on a straight-line basis,
rounding to the nearest month.
"Comparable Treasury Price" means, with respect to any redemption
date pursuant to Section 14.01, (i) the average of the bid and asked prices
for the Comparable
3
<PAGE>
Treasury Issue (expressed in each case as a percentage of its principal
amount) on the third Business Day preceding such redemption date, as set
forth in the daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
Business Day, (A) the average of the Reference Treasury Dealer Quotations for
such redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three
such Reference Treasury Dealer Quotations, the average of all such Quotations.
"Compounded Interest" shall have the meaning set forth in Section
16.01.
"Custodian" shall mean any receiver, trustee, assignee, liquidator,
or similar official under any Bankruptcy Law.
"Declaration" means the Amended and Restated Declaration of Trust of
Progress Capital Trust, dated as of June 3, 1997, as amended from time to
time.
"Default" means any event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulted Interest" shall have the same meaning set forth in
Section 2.11.
"Deferred Interest" shall have the meaning set forth in Section
16.01.
"Definitive Securities" shall mean those securities issued in fully
registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to Securities, for which the
Company shall determine that such Securities will be issued as a Global
Security, The Depository Trust Company, New York, New York, another clearing
agency, or any successor registered as a clearing agency under the Exchange
Act or other applicable statute or regulation, which, in each case, shall be
designated by the Company pursuant to Section 2.05(d).
"Dissolution Event" means the liquidation of Progress Capital Trust
pursuant to the Declaration, and the distribution of the Securities held by
the Property Trustee to the holders of the Trust Securities issued by
Progress Capital Trust pro rata in accordance with the Declaration.
"Event of Default" shall mean any event specified in Section 5.01,
continued for the period of time, if any, and after the giving of the notice,
if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
4
<PAGE>
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Company to exchange Series B
Securities for Series A Securities and to exchange a Series B Capital
Securities Guarantee for a Series A Capital Securities Guarantee and (ii) by
Progress Capital Trust to exchange Series B Capital Securities for Series A
Capital Securities.
"Extended Interest Payment Period" shall have the meaning set forth
in Section 16.01.
"Federal Reserve" shall mean the Board of Governors of the Federal
Reserve System.
"Global Security" means, with respect to the Securities, a Security
executed by the Company and delivered by the Trustee to the Depositary or
pursuant to the Depositary's instruction, all in accordance with the
Indenture, which shall be registered in the name of the Depositary or its
nominee.
"Indebtedness" shall mean (i) every obligation of the Company for
money borrowed; (ii) every obligation of the Company evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses; (iii) every reimbursement obligation of the Company with respect
to letters of credit, bankers' acceptances or similar facilities issued for
the account of the Company; (iv) every obligation of the Company issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course
of business); (v) every capital lease obligation of the Company; (vi) all
indebtedness of the Company whether incurred on or prior to the date of the
Indenture or thereafter incurred, for claims in respect of derivative
products, including interest rate, foreign exchange rate and commodity
forward contracts, options and swaps and similar arrangements; and (vii)
every obligation of the type referred to in clauses(i) through (vi) of
another Person and all dividends of another Person the payment of which, in
either case, the Company has guaranteed or is responsible or liable, directly
or indirectly, as obligor or otherwise.
"Indebtedness Ranking on a Parity with the Securities" shall mean
(i) Indebtedness, whether outstanding on the date of execution of this
Indenture or hereafter created, assumed or incurred, to the extent such
indebtedness specifically by its terms ranks equally with and not prior to
the Securities in the right of payment upon the happening of any dissolution
or winding up or liquidation or reorganization of the Company, and (ii) all
other debt securities, and guarantees in respect of those debt securities,
issued to any trust other than Progress Capital Trust, or a trustee of such
trust, partnership or other entity affiliated with the Company that is a
financing vehicle of the Company (a "financing entity") in connection with
the issuance by such financing entity of equity securities or other
securities guaranteed by the Company pursuant to an instrument that ranks
pari passu with or junior in right of payment to the Capital Securities
Guarantee. The securing of any
5
<PAGE>
Indebtedness, otherwise constituting Indebtedness Ranking on a Parity with
the Securities, shall not be deemed to prevent such Indebtedness from
constituting Indebtedness Ranking on a Parity with the Securities.
"Indebtedness Ranking Junior to the Securities" shall mean any
Indebtedness, whether outstanding on the date of execution of this Indenture
or hereafter created, assumed or incurred, to the extent such indebtedness
specifically by its terms ranks junior to and not equally with or prior to
the Securities (and any other Indebtedness Ranking on a Parity with the
Securities) in right of payment upon the happening of any dissolution or
winding up or liquidation or reorganization of the Company. The securing of
any Indebtedness, otherwise constituting Indebtedness Ranking Junior to the
Securities, shall not be deemed to prevent such Indebtedness from
constituting Indebtedness Ranking Junior to the Securities.
"Indenture" shall mean this instrument as originally executed or, if
amended as herein provided, as so amended.
"Initial Optional Redemption Date" means June 1, 2007.
"Interest Payment Date" shall have the meaning set forth in Section
2.06(a).
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Make Whole Amount" shall mean an amount equal to the greater of (i)
100% of the principal amount of the Securities to be redeemed or (ii) the
sum, as determined by a Quotation Agent, of the present values of remaining
scheduled payments of principal and interest on the Securities, discounted to
the prepayment date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in
the case of each of clauses (i) and (ii), accrued and unpaid interest
thereon, including Compounded Interest and Additional Sums, if any, to the
date of such redemption.
"Maturity Date" shall mean June 1, 2027.
"Progress Capital Trust" or the "Trust" shall mean Progress Capital
Trust I, a Delaware business trust created for the purpose of issuing its
undivided beneficial interests in connection with the issuance of Securities
under this Indenture.
"Mortgage" shall mean and include any mortgage, pledge, lien,
security interest, conditional sale or other title retention agreement or
other similar encumbrance.
"Non Book-Entry Capital Securities" shall have the meaning set forth
in Section 2.05(a)(ii).
6
<PAGE>
"Officers" shall mean any of the Chairman, a Vice Chairman, the
Chief Executive Officer, the President, a Vice President, the Comptroller,
the Secretary or an Assistant Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed by two
Officers and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who
may be an employee of the Company, and who shall be acceptable to the Trustee.
"Optional Redemption Price" shall have the meaning set forth in
Section 14.02(a).
"Other Debentures" means all junior subordinated debentures issued
by the Company from time to time and sold to trusts to be established by the
Company (if any), in each case similar to the Trust.
"Other Guarantees" means all guarantees to be issued by the Company
with respect to capital securities (if any) and issued to other trusts to be
established by the Company (if any), in each case similar to the Trust.
The term "outstanding" when used with reference to Securities,
shall, subject to the provisions of Section 7.04, mean, as of any particular
time, all Securities authenticated and delivered by the Trustee or the
Authenticating Agent under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or the
Authenticating Agent or delivered to the Trustee for
cancellation;
(b) Securities, or portions thereof, for the payment or redemption
of which moneys in the necessary amount shall have been
deposited in trust with the Trustee or with any paying agent
(other than the Company) or shall have been set aside and
segregated in trust by the Company (if the Company shall act as
its own paying agent); provided that, if such Securities, or
portions thereof, are to be redeemed prior to maturity thereof,
notice of such redemption shall have been given as in Article
XIV provided or provision satisfactory to the Trustee shall
have been made for giving such notice; and
(c) Securities in lieu of or in substitution for which other
Securities shall have been authenticated and delivered pursuant
to the terms of Section 2.08 unless proof satisfactory to the
Company and the Trustee is presented that any such Securities
are held by bona fide holders in due course.
7
<PAGE>
"Person" shall mean any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt and as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 2.08 in
lieu of a lost, destroyed or stolen Security shall be deemed to evidence the
same debt as the lost, destroyed or stolen Security.
"Principal Office of the Trustee", or other similar term, shall mean
the office of the Trustee, at which at any particular time its corporate
trust business shall be administered.
"Purchase Agreement" shall mean the Purchase Agreement dated May 30,
1997 among the Company, Progress Capital Trust and the Initial Purchaser
named therein.
"Property Trustee" shall have the same meaning as set forth in the
Declaration.
"Quotation Agent" means the Reference Treasury Dealer appointed by
the Company.
"Redemption Price" means the Special Event Redemption Price or the
Optional Redemption Price, as the context requires.
"Reference Treasury Dealer" means a nationally recognized U.S.
Government securities dealer in New York City selected by the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date pursuant to Section 14.01,
the average, as determined by the Trustee, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m. New York City time on the third Business Day preceding
such redemption date.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of June 3, 1997, by and among the Company, the Trust and
the Initial Purchaser named therein, as such agreement may be amended,
modified or supplemented from time to time.
A "Regulatory Capital Event" means that the Company shall have
received an opinion of independent bank regulatory counsel experienced in
such matters to the effect that, as a result of (a) any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any rules,
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guidelines or policies of the Federal Reserve or (b) 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 June 3, 1997, the Capital
Securities do not constitute, or within 90 days of the date thereof, will not
constitute, Tier I Capital (or its then equivalent); provided, however, that
the distribution of the Junior Subordinated Debentures in connection with a
termination of the Trust by the Company shall not in and of itself constitute
a Regulatory Capital Event.
"Responsible Officer" shall mean any officer of the Trustee with
direct responsibility for the administration of the Indenture and also means,
with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Restricted Security" shall mean Securities that bear or are
required to bear the legends relating to transfer restrictions under the
Securities Act set forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or under any similar rule or regulation
hereafter adopted by the Commission.
"Securities" means, collectively, the Series A Securities and the
Series B Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securityholder", "holder of Securities", or other similar terms,
shall mean any Person in whose name at the time a particular Security is
registered on the register kept by the Company or the Trustee for that
purpose in accordance with the terms hereof.
"Security Register" shall mean (i) prior to a Dissolution Event, the
list of holders provided to the Trustee pursuant to Section 4.01 and (ii)
following a Dissolution Event, any security register maintained by a security
registrar for the Securities appointed by the Company following the execution
of a supplemental indenture providing for transfer procedures as provided for
in Section 2.07(a).
"Senior Indebtedness" shall mean all Indebtedness, whether
outstanding on the date of execution of this Indenture or hereafter created,
assumed or incurred, except Indebtedness Ranking on a Parity with the
Securities or Indebtedness Ranking Junior to the Securities, and any
deferrals, renewals or extensions of such Senior Indebtedness.
"Series A Securities" means the Company's Series A 10.50% Junior
Subordinated Deferrable Interest Debentures due June 1, 2027, as
authenticated and issued under this Indenture.
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"Series B Securities" means the Company's Series B 10.50% Junior
Subordinated Deferrable Interest Debentures due June 1, 2027, as
authenticated and issued under this Indenture.
"Special Event" means either a Regulatory Capital Event or a Tax
Event.
"Special Event Redemption Price" shall mean, with respect to any
redemption of the Securities following a Special Event, an amount in cash
equal to the Make Whole Amount.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
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. For the
purposes of this definition, "voting stock" means shares, interests,
participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than
shares, interests, participations or other equivalents having such power only
by reason of the occurrence of a contingency.
"Tax Event" shall mean the receipt by Progress Capital Trust and the
Company of an opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws or any regulations thereunder of the United
States or any political subdivision or taxing authority thereof or therein or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change
is effective or which pronouncement or decision is announced on or after June
3, 1997, there is more than an insubstantial risk that (i) Progress Capital
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 Securities, (ii) interest payable by the Company on the Securities is
not, or within 90 days of the date of such opinion, will not be, deductible
by the Company, in whole or in part, for United States Federal income tax
purposes or (iii) Progress Capital Trust is, or will be within 90 days of the
date of such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
"Treasury Rate" means (i) the yield, under the heading which
represents the average for the immediately prior week, appearing in the most
recently published statistical release designated "H.15(519)" or successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities" for the maturity corresponding to the Remaining Life (if no
maturity is within three months
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before or after the Remaining Life, yields for the two published maturities
most closely corresponding to the Remaining Life shall be determined and the
Treasury Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month), or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury
Issue, calculated equal to the Comparable Treasury Price for such prepayment
date. The Treasury Rate shall be calculated on a third Business Day
preceding the prepayment date.
"Trustee" shall mean the Person identified as "Trustee" in the first
paragraph hereof, and, subject to the provisions of Article VI hereof, shall
also include its successors and assigns as Trustee hereunder. The term
"Trustee" as used with respect to a particular series of the Securities shall
mean the trustee with respect to that series.
"Trust Indenture Act of 1939" shall mean the Trust Indenture Act of
1939 as in force at the date of execution of this Indenture; provided,
however, that, in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act of 1939" shall mean, to the extent required
by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Securities" shall mean the Capital Securities and the Common
Securities, collectively.
"U.S. Government Obligations" shall mean 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, which,
in either case under clauses (i) or (ii) are not callable or redeemable at
the option of the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such custodian for the account of
the holder of a depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by
the custodian in respect of the U.S. Government Obligation or the specific
payment of interest on or principal of the U.S. Government Obligation
evidenced by such depository receipt.
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ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally.
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be issued in
denominations of $1,000 and integral multiples thereof.
SECTION 2.02. Execution and Authentication.
The Securities shall be executed on behalf of the Company by a duly
authorized officer and attested by a Secretary or an Assistant Secretary.
The signature of any such person on the Securities may be manual or
facsimile. If an Officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Security has been authenticated under this Indenture. The
form of Trustee's certificate of authentication to be borne by the Securities
shall be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a Company Order, authenticate for original
issue up to, and the aggregate principal amount of Securities outstanding at
any time may not exceed $15,464,000 aggregate principal amount of the
Securities, except as provided in Sections 2.07, 2.08, 2.09 and 14.05. The
series of Securities to be initially issued hereunder shall be the Series A
Securities.
SECTION 2.03. Form and Payment.
Except as provided in Section 2.05, the Securities shall be issued
in fully registered certificated form without interest coupons. Principal
of, premium, if any, and interest on the Securities issued in certificated
form will be payable, the transfer of such Securities will be registrable and
such Securities will be exchangeable for Securities bearing identical terms
and provisions at the office or agency of the Company maintained for such
purpose under Section 3.02; provided, however, that payment of interest with
respect to Securities (other than a Global Security) may be made at the
option of the Company (i) by check mailed to the holder at such address as
shall appear in the Security Register or (ii) by transfer to an account
maintained by the Person entitled thereto, provided that proper transfer
instructions have been received in writing by the relevant record date.
Notwith-
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standing the foregoing, so long as the holder of any Securities is the
Property Trustee, the payment of the principal of, premium, if any, and
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on such Securities held by the Property Trustee
will be made at such place and to such account as may be designated by the
Property Trustee.
SECTION 2.04. Legends.
(a) Except as permitted by subsection (b) of this Section 2.04 or
as otherwise determined by the Company in accordance with applicable law,
each Security shall bear the applicable legends relating to restrictions on
transfer pursuant to the securities laws in substantially the form set forth
on Exhibit A hereto.
(b) In the event of an Exchange Offer, the Company shall issue and
the Trustee, upon Company Order, shall authenticate Series B Securities in
exchange for Series A Securities accepted for exchange in the Exchange Offer,
which Series B Securities shall not bear the legends required by subsection
(a) above (other than the legend dealing with the restriction referred to in
Section 2.07(a)(ii) of this Indenture), in each case unless the holder of
such Series A Securities is either (A) a broker dealer who purchased such
Series A Securities directly from the Company for resale pursuant to Rule
144A or any other available exemption under the Securities Act, (B) a Person
participating in the distribution of the Series A Securities or (C) a Person
who is an Affiliate of the Company.
SECTION 2.05. Global Security.
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-entry form, the
related Definitive Securities shall be presented to the Trustee (if an
arrangement with the Depositary has been maintained) by the Property
Trustee in exchange for one or more Global Securities (as may be required
pursuant to Section 2.07) in an aggregate principal amount equal to the
aggregate principal amount of all outstanding Securities, to be
registered in the name of the Depositary, or its nominee, and delivered
by the Trustee to the Depositary for crediting to the accounts of its
participants pursuant to the instructions of the Administrative Trustees;
the Company upon any such presentation shall execute one or more Global
Securities in such aggregate principal amount and deliver the same to the
Trustee for authentication and delivery in accordance with this
Indenture; and payments on the Securities issued as a Global Security
will be made to the Depositary; and
(ii) if any Capital Securities are held in certificated form,
the related Definitive Securities may be presented to the Trustee by the
Property Trustee and any Capital Security certificate which represents
Capital Securities other than Capital Securities in book-entry form ("Non
Book-Entry Capital Securities") will be deemed
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to represent beneficial interests in Securities presented to the Trustee
by the Property Trustee having an aggregate principal amount equal to the
aggregate liquidation amount of the Non Book-Entry Capital Securities
until such Capital Security certificates are presented to the Security
Registrar for transfer or reissuance, at which time such Capital Security
certificates will be cancelled and a Security, registered in the name of
the holder of the Capital Security certificate or the transferee of the
holder of such Capital Security certificate, as the case may be, with an
aggregate principal amount equal to the aggregate liquidation amount of
the Capital Security certificate cancelled, will be executed by the
Company and delivered to the Trustee for authentication and delivery in
accordance with this Indenture. Upon the issuance of such Securities,
Securities with an equivalent aggregate principal amount that were
presented by the Property Trustee to the Trustee will be cancelled.
(b) The Global Securities shall represent the aggregate amount of
outstanding Securities from time to time endorsed thereon; provided, that the
aggregate amount of outstanding Securities represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Security to reflect the amount of
any increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee, in accordance with instructions given
by the Company as required by this Section 2.05.
(c) The Global Securities may be transferred, in whole but not in
part, only to the Depositary, another nominee of the Depositary, or to a
successor Depositary selected or approved by the Company or to a nominee of
such successor Depositary.
(d) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or the Depositary has ceased to
be a clearing agency registered under the Exchange Act, and a successor
Depositary is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, as the case may be,
the Company will execute, and the Trustee, upon receipt of a Company Order,
will authenticate and make available for delivery the Definitive Securities,
in authorized denominations, and in an aggregate principal amount equal to
the principal amount of the Global Security in exchange for such Global
Security. If there is an Event of Default, the Depositary shall have the
right to exchange the Global Securities for Definitive Securities. In
addition, the Company may at any time determine that the Securities shall no
longer be represented by a Global Security. In the event of such an Event of
Default or such a determination, the Company shall execute, and subject to
Section 2.07, the Trustee, upon receipt of an Officers' Certificate
evidencing such determination by the Company and a Company Order, will
authenticate and make available for delivery the Definitive Securities, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Security in exchange for such Global Security.
Upon the exchange of the Global Security for such Definitive Securities, in
authorized denominations, the Global Security shall be cancelled by the
Trustee. Such Definitive Securities issued in exchange for the Global
Security shall be registered in such names and
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in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Definitive Securities to the
Depositary for delivery to the Persons in whose names such Definitive
Securities are so registered.
SECTION 2.06 Interest.
(a) Each Security will bear interest at the rate of 10.50% per
annum (the "Coupon Rate") from the most recent date to which interest has
been paid or duly provided for or, if no interest has been paid or duly
provided for, from June 1, 1997, until the principal thereof becomes due and
payable, and at the Coupon Rate on any overdue principal (and premium, if
any) and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest, compounded
semi-annually, payable (subject to the provisions of Article XVI)
semi-annually in arrears on June 1 and December 1 of each year (each, an
"Interest Payment Date") commencing on December 1, 1997, to the Person in
whose name such Security or any predecessor Security is registered, at the
close of business on the regular record date for such interest installment,
which shall be the fifteenth day of the month immediately preceding the month
in which the relevant Interest Payment Date falls.
(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period of less than a full
calendar month, the number of days lapsed in such month based on a 30-day
month. In the event that any Interest Payment Date falls on a day that is
not a Business Day, then payment of interest payable on such date will 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
next succeeding Business Day falls in the next succeeding calendar year, then
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.
(c) During such time as the Property Trustee is the holder of any
Securities, the Company shall pay any additional amounts on the Securities as
may be necessary in order that the amount of Distributions then due and
payable by Progress Capital Trust on the outstanding Trust Securities shall
not be reduced as a result of any additional taxes, duties and other
governmental charges to which Progress Capital Trust has become subject as a
result of a Tax Event ("Additional Sums").
SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. (i) The Series A Securities, and those
Series B Securities with respect to which any Person described in Section
2.04(b)(A), (B) or (C) is the beneficial owner, may not be transferred except
in compliance with the legends contained in Exhibit A unless otherwise
determined by the Company in accordance with applicable law. Upon any
distribution of the Securities following a Dissolution Event, the
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Company and the Trustee shall enter into a supplemental indenture pursuant to
Section 9.01 to provide for the transfer restrictions and procedures with
respect to the Securities substantially similar to those contained in the
Declaration to the extent applicable in the circumstances existing at such
time.
(ii) The Securities will be issued and may be transferred only
in blocks having an aggregate principal amount of not less than $100,000.
Any such transfer of the Securities in a block having an aggregate principal
amount of less than $100,000 shall be deemed to be voided and of no legal
effect whatsoever. Any such transferee shall be deemed not to be a holder of
such Securities for any purpose, including, but not limited to the receipt of
payments on such Securities, and such transferee shall be deemed to have no
interest whatsoever in such Securities.
(b) General Provisions Relating to Transfers and Exchanges. To
permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Definitive Securities and Global
Securities at the Security Registrar's request. All Definitive Securities
and Global Securities issued upon any registration of transfer or exchange of
Definitive Securities or Global Securities shall be the valid obligations of
the Company, evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Definitive Securities or Global Securities
surrendered upon such registration of transfer or exchange.
No service charge shall be made to a holder for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in
connection therewith.
The Company shall not be required to (i) issue, register the
transfer of or exchange Securities during a period beginning at the opening
of business 15 days before the day of mailing of a notice of redemption or
any notice of selection of Securities for redemption under Article XIV hereof
and ending at the close of business on the day of such mailing; or (ii)
register the transfer of or exchange any Security so selected for redemption
in whole or in part, except the unredeemed portion of any Security being
redeemed in part.
Prior to due presentment for the registration of a transfer of any
Security, the Trustee, the Company and any agent of the Trustee or the
Company may deem and treat the Person in whose name any Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and premium, if any, and interest on such
Securities, neither the Trustee, nor the Company nor any agent of the Trustee
or the Company shall be affected by notice to the contrary.
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(c) Exchange of Series A Securities for Series B Securities. The
Series A Securities may be exchanged for Series B Securities pursuant to the
terms of the Exchange Offer. The Trustee shall make the exchange as follows:
The Company shall present the Trustee with an Officers' Certificate
certifying the following:
(A) upon issuance of the Series B Securities, the transactions
contemplated by the Exchange Offer have been consummated; and
(B) the principal amount of Series A Securities properly tendered
in the Exchange Offer that are represented by a Global Security
and the principal amount of Series A Securities properly
tendered in the Exchange Offer that are represented by
Definitive Securities, the name of each holder of such
Definitive Securities, the principal amount properly tendered
in the Exchange Offer by each such holder and the name and
address to which Definitive Securities for Series B Securities
shall be registered and sent for each such holder.
The Trustee, upon receipt of (i) such Officers' Certificate, (ii) an
Opinion of Counsel (x) to the effect that the Series B Securities have been
registered under Section 5 of the Securities Act and the Indenture has been
qualified under the Trust Indenture Act and (y) with respect to the matters
set forth in Section 3(p) of the Registration Rights Agreement and (iii) a
Company Order, shall authenticate (A) a Global Security representing Series B
Securities in aggregate principal amount equal to the aggregate principal
amount of Series A Securities represented by a Global Security indicated in
such Officers' Certificate as having been properly tendered and (B)
Definitive Securities representing Series B Securities registered in the
names of, and in the principal amounts indicated in, such Officers'
Certificate.
If the principal amount of the Global Security for the Series B
Securities is less than the principal amount of the Global Security for the
Series A Securities, the Trustee shall make an endorsement on such Global
Security for Series A Securities indicating a reduction in the principal
amount represented thereby.
The Trustee shall deliver such Definitive Securities representing
Series B Securities to the holders thereof as indicated in such Officers'
Certificate.
SECTION 2.08. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's
requirements for replacements of Securities are met. An indemnity bond
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must be supplied by the holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any agent
thereof or any authenticating agent from any loss that any of them may suffer
if a Security is replaced. The Company or the Trustee may charge for its
expenses in replacing a Security.
Every replacement Security is an obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
SECTION 2.09. Temporary Securities.
Pending the preparation of Definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the Definitive Securities in lieu
of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities
may determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company shall cause
Definitive Securities to be prepared without unreasonable delay. The
Definitive Securities shall be printed, lithographed or engraved, or provided
by any combination thereof, or in any other manner permitted by the rules and
regulations of any applicable securities exchange, all as determined by the
officers executing such Definitive Securities. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at the
office or agency maintained by the Company for such purpose pursuant to
Section 3.02 hereof, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall
execute, and the Trustee shall authenticate and make available for delivery,
in exchange therefor the same aggregate principal amount of Definitive
Securities of authorized denominations. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as Definitive Securities.
SECTION 2.10. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Trustee and no one else shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall retain or dispose of cancelled Securities in
accordance with its normal practices (subject to the record retention
requirement of the Exchange Act) unless the Company directs them to be
returned to it. The Company may not issue new Securities to replace
Securities that have been redeemed or paid or that have been delivered to the
Trustee for cancellation.
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SECTION 2.11. Defaulted Interest.
Any interest on any Security that is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the holder on
the relevant regular record date by virtue of having been such holder; and
such Defaulted Interest shall be paid by the Company, at its election, as
provided in clause (a) or clause (b) below:
(a) The Company may make payment of any Defaulted Interest on
Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Company shall
notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each such Security and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a special record date
for the payment of such Defaulted Interest which shall not be more than
15 nor less than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Company of
such special record date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the special record date therefor to be mailed, first class
postage prepaid, to each Securityholder at his or her address as it
appears in the Security Register, not less than 10 days prior to such
special record date. Notice of the proposed payment of such Defaulted
Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names such Securities (or their respective Predecessor Securities) are
registered on such special record date and shall be no longer payable
pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest on any
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
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SECTION 2.12. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Securityholders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any
notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption
shall not be affected by any defect in or omission of such numbers. The
Company will promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the holders of
the Securities that it will duly and punctually pay or cause to be paid the
principal of, premium, if any, and interest on the Securities at the place,
at the respective times and in the manner provided herein. Except as
provided in Section 2.03, each installment of interest on the Securities may
be paid by mailing checks for such interest payable to the order of the
holder of Security entitled thereto as they appear in the Security Register.
The Company further covenants to pay any and all amounts, including, without
limitation, Additional Sums, as may be required pursuant to Section 2.06(c),
Liquidated Damages, if any, on the dates and in the manner required under the
Registration Rights Agreement and Compounded Interest, as may be required
pursuant to Section 16.01.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remain outstanding, the Company
will maintain in the Borough of Manhattan, The City of New York, an office or
agency where the Securities may be presented for payment, an office or agency
where the Securities may be presented for registration of transfer and for
exchange as in this Indenture provided and an office or agency where notices
and demands to or upon the Company in respect of the Securities or of this
Indenture may be served. The Company will give to the Trustee written notice
of the location of any such office or agency and of any change of location
thereof. Until otherwise designated from time to time by the Company in a
notice to the Trustee, any such office or agency for all of the above
purposes shall be the Principal Office of the Trustee. In case the Company
shall fail to maintain any such office or agency in the Borough of Manhattan,
The City of New York, or shall fail to give such notice of the location or of
any change in the location thereof, presentations and demands may be made and
notices may be served at the Principal Office of the Trustee.
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In addition to any such office or agency, the Company may from time
to time designate one or more offices or agencies outside the Borough of
Manhattan, The City of New York, where the Securities may be presented for
payment, registration of transfer and for exchange in the manner provided in
this Indenture, and the Company may from time to time rescind such
designation, as the Company may deem desirable or expedient; provided,
however, that no such designation or rescission shall in any manner relieve
the Company of its obligation to maintain any such office or agency in the
Borough of Manhattan, The City of New York, for the purposes above mentioned.
The Company will give to the Trustee prompt written notice of any such
designation or rescission thereof.
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee with respect to the Securities, it will cause such
paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the Trustee,
subject to the provision of this Section 3.04,
(1) that it will hold all sums held by it as such agent for
the payment of the principal of and premium, if any, or
interest on the Securities (whether such sums have been
paid to it by the Company or by any other obligor on the
Securities) in trust for the benefit of the holders of the
Securities; and
(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Securities) to
make any payment of the principal of and premium or
interest (including Additional Sums and Compounded
Interest, if any) and Liquidated Damages, if any, on the
Securities when the same shall be due and payable.
(b) If the Company shall act as its own paying agent, it will, on
or before each due date of the principal of and premium, if
any, or interest on the Securities, set aside, segregate and
hold in trust for the benefit of the holders of the Securities
a sum sufficient to pay such principal, premium or interest so
becoming due and will notify the Trustee of any failure to take
such action and of any failure by the Company (or by any other
obligor under the Securities) to make any payment of the
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principal of and premium, if any, or interest on the Securities
when the same shall become due and payable.
(c) Anything in this Section 3.04 to the contrary notwithstanding,
the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge with respect to the Securities
hereunder, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust for such Securities by the
Trustee or any paying agent hereunder, as required by this
Section 3.04, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 3.04 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section
3.04 is subject to Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days after
the end of each fiscal year in each year, commencing with the first fiscal
year ending after the date hereof, so long as Securities are outstanding
hereunder, an Officers' Certificate, one of the signers of which shall be the
principal executive, principal financial or principal accounting officer of
the Company, stating that in the course of the performance by the signers of
their duties as officers of the Company they would normally have knowledge of
any default by the Company in the performance of any covenants contained
herein, stating whether or not they have knowledge of any such default and,
if so, specifying each such default of which the signers have knowledge and
the nature thereof.
SECTION 3.06. Compliance with Consolidation Provisions.
The Company will not, while any of the Securities remain
outstanding, consolidate with, or merge into, or merge into itself, or sell
or convey all or substantially all of its property to any other Person unless
the provisions of Article X hereof are complied with.
SECTION 3.07. Limitation on Dividends.
The Company will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common
and preferred stock), (ii) make any payment of principal, premium, if any, or
interest on or repay or repurchase or redeem any debt securities of the
Company (including Other Debentures) that rank pari passu with or junior in
right of payment to the Securities or (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any
Subsidiary of the Company (including Other Guarantees) if such guarantee
ranks pari passu or junior in right
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of payment to the Securities (other than (a) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Common Stock of the Company, (b) any declaration of a dividend in
connection with the implementation of a stockholder's rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Capital Securities Guarantee, (d) as a result of a reclassification of the
Company's capital stock or the exchange or the conversion of one class or
series of the Company's capital stock for another class or series of the
Company's capital stock, (e) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged
and (f) purchases of Common Stock related to the issuance of Common Stock or
rights under any of the Company's benefit plans for its directors, officers
or employees or any of the Company's dividend reinvestment plans) if at such
time (1) there shall have occurred any event of which the Company has actual
knowledge that (a) is or, with the giving of notice or the lapse of time, or
both, would constitute an Event of Default and (b) in respect of which the
Company shall not have taken reasonable steps to cure, (2) if such Securities
are held by the Property Trustee, the Company shall be in default with
respect to its payment obligations under the Capital Securities Guarantee or
(3) the Company shall have given notice of its election of the exercise of
its right to extend the interest payment period pursuant to Section 16.01 and
any such extension shall be continuing.
SECTION 3.08. Covenants as to Progress Capital Trust
In the event Securities are issued to Progress Capital Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
Progress Capital Trust, for so long as such Trust Securities remain
outstanding, the Company (i) will maintain 100% direct or indirect ownership
of the Common Securities of Progress Capital Trust; provided, however, that
any successor of the Company, permitted pursuant to Article X, may succeed to
the Company's ownership of such Common Securities, (ii) will use its
reasonable efforts to cause Progress Capital Trust (a) to remain a business
trust, except in connection with a distribution of Securities to the holders
of Trust Securities in liquidation of the Trust, the redemption of all of the
Trust Securities of Progress Capital Trust or certain mergers, consolidations
or amalgamations, each as permitted by the Declaration of Progress Capital
Trust, and (b) to otherwise continue to be treated as a grantor trust and not
an association taxable as a corporation 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 undivided beneficial interest in the
Securities.
SECTION 3.09. Payment of Expenses.
In connection with the offering, sale and issuance of the Securities
to Progress Capital Trust and in connection with the sale of the Trust
Securities by Progress Capital Trust, the Company, in its capacity as
borrower with respect to the Securities, shall:
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(a) pay all costs and expenses relating to the offering, sale and
issuance of the Securities, including commissions and expenses and
indemnification obligations, if any, to or for the benefit of the Initial
Purchaser (as defined in the Purchase Agreement) payable pursuant to the
Purchase Agreement, fees and expenses in connection with any exchange offer,
filing of a shelf registration statement or other action to be taken pursuant
to the Registration Rights Agreement and compensation of the Trustee in
accordance with the provisions of Section 6.06;
(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of Progress
Capital Trust, the offering, sale and issuance of the Trust Securities
(including commissions to the initial purchasers in connection therewith),
the fees and expenses of the Property Trustee and the Delaware Trustee, the
costs and expenses relating to the operation of Progress Capital Trust,
including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the acquisition,
financing, and disposition of assets of Progress Capital Trust;
(c) be primarily and fully liable for any indemnification
obligations arising with respect to the Declaration;
(d) pay any and all taxes (other than United States withholding
taxes attributable to Progress Capital Trust or its assets) and all
liabilities, costs and expenses with respect to such taxes of the Trust; and
(e) pay all other fees, expenses, debts and obligations (other than
in respect of principal, interest and premium, if any, on the Trust
Securities) related to Progress Capital Trust.
SECTION 3.10. Payment Upon Resignation or Removal.
Upon termination of this Indenture or the removal or resignation of
the Trustee, unless otherwise stated, the Company shall pay to the Trustee
all amounts accrued and owing to the date of such termination, removal or
resignation. Upon termination of the Declaration or the removal or
resignation of the Delaware Trustee or the Property Trustee, as the case may
be, pursuant to Section 5.7 of the Declaration, the Company shall pay to the
Delaware Trustee or the Property Trustee, as the case may be, all amounts
accrued and owing to the date of such termination, removal or resignation.
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ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish or cause to be
furnished to the Trustee:
(a) on a semi-annual basis on each regular record date for the
Securities, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Securityholders as
of such record date; and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company, of any such
request, a list of similar form and content as of a date not
more than 15 days prior to the time such list is furnished,
except that, no such lists need be furnished so long as the Trustee is
in possession thereof by reason of its acting as Security registrar.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and
addresses of the holders of the Securities (1) contained in the
most recent list furnished to it as provided in Section 4.01 or
(2) received by it in the capacity of Securities registrar (if
so acting) hereunder. The Trustee may destroy any list
furnished to it as provided in Section 4.01 upon receipt of a
new list so furnished.
(b) In case three or more holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee
and furnish to the Trustee reasonable proof that each such
applicant has owned a Security for a period of at least six
months preceding the date of such application, and such
application states that the applicants desire to communicate
with other holders of Securities or with holders of all
Securities with respect to their rights under this Indenture
and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then
the Trustee shall within five Business Days after the receipt
of such application, at its election, either:
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(1) afford such applicants access to the information preserved at
the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 4.02, or
(2) inform such applicants as to the approximate number of holders
of all Securities, whose names and addresses appear in the
information preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section 4.02, and
as to the approximate cost of mailing to such Securityholders
the form of proxy or other communication, if any, specified in
such application.
If the Trustee shall elect not to afford such applicants
access to such information, the Trustee shall, upon the written
request of such applicants, mail to each Securityholder whose
name and address appear in the information preserved at the
time by the Trustee in accordance with the provisions of
subsection (a) of this Section 4.02 a copy of the form of proxy
or other communication which is specified in such request with
reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of mailing, unless within
five days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy
of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be
contrary to the best interests of the holders of Securities of
such series or all Securities, as the case may be, or would be
in violation of applicable law. Such written statement shall
specify the basis of such opinion. If the Commission, after
opportunity for a hearing upon the objections specified in the
written statement so filed, shall enter an order refusing to
sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing, that all
the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such
material to all such Securityholders with reasonable promptness
after the entry of such order and the renewal of such tender;
otherwise the Trustee shall be relieved of any obligation or
duty to such applicants respecting their application.
(c) Each and every holder of Securities, by receiving and holding
the same, agrees with the Company and the Trustee that neither
the Company nor the Trustee nor any paying agent shall be held
accountable by reason of the disclosure of any such information
as to the names and addresses of the holders of Securities in
accordance with the provisions of subsection (b) of this
Section 4.02, regardless of the
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source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under said subsection (b).
SECTION 4.03. Reports by Company.
(a) The Company covenants and agrees to file with the Trustee,
within 15 days after the date on which 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 said
Commission may from time to time by rules and regulations
prescribe) which 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 rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required
pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules
and regulations.
(b) The Company covenants and agrees to file with the Trustee and
the Commission, in accordance with the rules and regulations
prescribed from time to time by said 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 to all
holders of Securities, as the names and addresses of such
holders appear upon the Security 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
4.03 as may be required by rules and regulations prescribed
from time to time by the Commission.
(d) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information
contained therein, including the Company's compliance with any
of its covenants hereunder (as to
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which the Trustee is entitled to rely exclusively on Officers'
Certificates).
(e) So long as is required for an offer or sale of the Securities
to qualify for an exemption under Rule 144A under the
Securities Act, the Company shall, upon request, provide the
information required by clause (d)(4) thereunder to each
Securityholder and to each beneficial owner and prospective
purchaser of Securities identified by each Securityholder of
Restricted Securities, unless such information is furnished to
the Commission pursuant to Section 13 or 15(d) of the Exchange
Act.
SECTION 4.04. Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such reports
concerning the Trustee and its actions under this Indenture as
may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant thereto. If required
by Section 313(a) of the Trust Indenture Act, the Trustee
shall, within sixty days after each May 15 following the date
of this Indenture, commencing May 15, 1998, deliver to
Securityholders a brief report, dated as of such May 15, which
complies with the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with
each stock exchange, if any, upon which the Securities are
listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when the Securities are listed
on any stock exchange.
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default.
One or more of the following events of default shall constitute an
Event of Default hereunder:
(a) default in the payment of any interest (including Compounded
Interest or Additional Sums, if any) or Liquidated Damages, if
any, upon any Security or any Other Debentures when it becomes
due and payable, and continuance of such default for a period
of 30 days; provided,
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however, that a valid extension of an interest payment period
by the Company in accordance with the terms hereof shall not
constitute a default in the payment of interest for this
purpose; or
(b) default in the payment of all or any part of the principal of
(or premium, if any, on) any Security or any Other Debentures
as and when the same shall become due and payable either at
maturity, upon redemption, by declaration of acceleration of
maturity or otherwise; or
(c) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a period of 90
days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the
Trustee by the holders of at least 25% in aggregate principal
amount of the outstanding Securities a written notice
specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(d) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an
involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or for any
substantial part of its property, or ordering the winding-up or
liquidation of its affairs and such decree or order shall
remain unstayed and in effect for a period of 90 consecutive
days; or
(e) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall
consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or of
any substantial part of its property, or shall make any general
assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due.
If an Event of Default with respect to Securities at the time
outstanding occurs and is continuing, then in every such case the Trustee or
the holders of not less than 25% in aggregate principal amount of the
Securities then outstanding may declare the principal amount of all
Securities to be due and payable immediately, by a notice in writing to the
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Company (and to the Trustee if given by the holders of the outstanding
Securities), and upon any such declaration the same shall become immediately
due and payable.
The foregoing provisions, however, are subject to the condition that
if, at any time after the principal of the Securities shall have been so
declared due and payable, and before any judgment or decree for the payment
of the moneys due shall have been obtained or entered as hereinafter
provided, (i) the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay (A) all matured installments of interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if
any, upon all the Securities and the principal of and premium, if any, on any
and all Securities which shall have become due otherwise than by acceleration
(with interest upon such principal and premium, if any, and, to the extent
that payment of such interest is enforceable under applicable law, on overdue
installments of interest, at the same rate as the rate of interest specified
in the Securities to the date of such payment or deposit) and (B) such amount
as shall be sufficient to cover compensation due to the Trustee and each
predecessor Trustee, their respective agents, attorneys and counsel, pursuant
to Section 6.06, and (ii) any and all Events of Default under the Indenture,
other than the non-payment of the principal of the Securities which shall
have become due solely by such declaration of acceleration, shall have been
cured, waived or otherwise remedied as provided herein, then, in every such
case, the holders of a majority in aggregate principal amount of the
Securities then outstanding, by written notice to the Company and to the
Trustee, may rescind and annul such declaration and its consequences, but no
such waiver or rescission and annulment shall extend to or shall affect any
subsequent default or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the Trustee and the holders of the Securities shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the Trustee and the holders of the
Securities shall continue as though no such proceeding had been taken.
SECTION 5.02. Payment of Securities on Default; Suit Therefor.
The Company covenants that (a) in case default shall be made in the
payment of any installment of interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, upon any of the
Securities as and when the same shall become due and payable, and such
default shall have continued for a period of 30 days, or (b) in case default
shall be made in the payment of the principal of or premium, if any, on any
of the Securities as and when the same shall have become due and payable,
whether at maturity of the Securities or upon redemption or by declaration or
otherwise, then, upon demand of the Trustee, the Company will pay to the
Trustee, for the benefit of the holders of the Securities, the whole amount
that then shall have become due and payable on all such Securities for
principal and premium, if any, or interest (including Compounded
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Interest and Additional Sums, if any) and Liquidated Damages, if any, or
both, as the case may be, with interest upon the overdue principal and
premium, if any, and (to the extent that payment of such interest is
enforceable under applicable law and, if the Securities are held by Progress
Capital Trust or a trustee of such trust, without duplication of any other
amounts paid by Progress Capital Trust or a trustee in respect thereof) upon
the overdue installments of interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, at the rate borne by
the Securities; and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including a
reasonable compensation to the Trustee, its agents, attorneys and counsel,
and any other amount due to the Trustee pursuant to Section 6.06.
In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any actions or proceedings at
law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or any other
obligor on the Securities and collect in the manner provided by law out of
the property of the Company or any other obligor on the Securities wherever
situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Securities
under Title 11, United States Code, or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Company
or such other obligor, or in the case of any other similar judicial
proceedings relative to the Company or other obligor upon the Securities, or
to the creditors or property of the Company or such other obligor, the
Trustee, irrespective of whether the principal of the Securities shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to
the provisions of this Section 5.02, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal and interest owing and unpaid in
respect of the Securities and, in case of any judicial proceedings, to file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
amounts due to the Trustee pursuant to 6.06) and of the Securityholders
allowed in such judicial proceedings relative to the Company or any other
obligor on the Securities, or to the creditors or property of the Company or
such other obligor, unless prohibited by applicable law and regulations, to
vote on behalf of the holders of the Securities in any election of a trustee
or a standby trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or person performing similar functions
in comparable proceedings, and to collect and receive any moneys or other
property payable or deliverable on any such claims, and to distribute the
same after the deduction of its charges and expenses; and any receiver,
assignee or trustee in bankruptcy or reorganization is hereby authorized by
each of the Securityholders to make such payments to the Trustee, and, in the
event that the Trustee shall consent to the making of
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such payments directly to the Securityholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the
Trustee, each predecessor Trustee and their respective agents, attorneys and
counsel, and all other amounts due to the Trustee pursuant to Section 6.06.
Nothing herein contained shall be construed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any holder thereof or to authorize the
Trustee to vote in respect of the claim of any Securityholder in any such
proceeding.
All rights of action and of asserting claims under this Indenture,
or under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof on 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 be for the ratable benefit
of the holders of the Securities.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the
holders of the Securities, and it shall not be necessary to make any holders
of the Securities parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee shall be applied in the order
following, at the date or dates fixed by the Trustee for the distribution of
such moneys, upon presentation of the Securities in respect of which moneys
have been collected, and stamping thereon the payment, if only partially
paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection
applicable to the Securities and all other amounts due to the Trustee under
Section 6.06;
Second: To the payment of all Senior Indebtedness of the Company if
and to the extent required by Article XV;
Third: In case the principal of the outstanding Securities in
respect of which moneys have been collected shall not have become due and be
unpaid, to the payment of the amounts then due and unpaid upon Securities for
principal of (and premium, if any) and interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, on the
Securities, in respect of which or for the benefit of which money has been
collected, ratably, without preference of priority of any kind, according to
the amounts due on such Securities for principal (and premium, if any) and
interest, respectively; and
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Fourth: To the Company.
SECTION 5.04. Proceedings by Securityholders.
No holder of any Security shall have any right by virtue of 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 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 Securities specifying such Event of Default, as
hereinbefore provided, and unless also the holders of not less than 25% in
aggregate principal amount of the Securities then outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding
in its own name as Trustee hereunder and 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 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, it being understood
and intended, and being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Trustee, that no one or
more holders of Securities shall have any right in any manner whatever by
virtue of or by availing of any provision of this Indenture to affect,
disturb or prejudice the rights of any other holder of Securities, 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 Securities.
Notwithstanding any other provisions in this Indenture, however, the
right of any holder of any Security to receive payment of the principal of
(premium, if any) and interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on such Security, on or after
the same shall have become due and payable, or to institute suit for the
enforcement of any such payment, shall not be impaired or affected without
the consent of such holder and by accepting a Security hereunder it is
expressly understood, intended and covenanted by the taker and holder of
every Security with every other such taker and holder and the Trustee, that
no one or more holders of Securities 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
Securities, 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 Securities. For the protection and enforcement of the
provisions of this Section, each and every Securityholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
The Company and the Trustee acknowledge that pursuant to the
Declaration, the holders of Capital Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to commence a
Direct Action with respect to any Event of Default under this Indenture and
the Securities.
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SECTION 5.05. Proceedings by Trustee.
In case an Event of Default occurs with respect to Securities and is
continuing, the Trustee may in its discretion proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any of such rights, either by suit in equity or by action at law or by
proceeding in bankruptcy or otherwise, whether for the specific enforcement
of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
All powers and remedies given by this Article V to the Trustee or to
the Securityholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other powers and remedies available to
the Trustee or the holders of the Securities, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture or otherwise established with respect
to the Securities, and no delay or omission of the Trustee or of any holder
of any of the Securities to exercise any right or power accruing upon any
Event of Default occurring and continuing as aforesaid shall impair any such
right or power, or shall be construed to be a waiver of any such default or
an acquiescence therein; and, subject to the provisions of Section 5.04,
every power and remedy given by this Article V or by law to the Trustee or to
the Securityholders may be exercised from time to time, and as often as shall
be deemed expedient, by the Trustee or by the Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders.
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee;
provided, however, that (subject to the provisions of Section 6.01) the
Trustee shall have the right to decline to follow any such direction if the
Trustee shall determine that the action so directed would be unjustly
prejudicial to the holders not taking part in such direction or if the
Trustee being advised by counsel determines that the action or proceeding so
directed may not lawfully be taken or if the Trustee in good faith by its
board of directors or trustees, executive committee, or a trust committee of
directors or trustees and/or Responsible Officers shall determine that the
action or proceedings so directed would involve the Trustee in personal
liability. Prior to any declaration accelerating the maturity of the
Securities, the holders of a majority in aggregate principal amount of the
Securities at the time outstanding may on behalf of the holders of all of the
Securities waive any past default or Event of Default and its consequences
except a default (a) in the payment of principal of or premium, if any, or
interest (including Compounded
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Interest and Additional Sums, if any) or Liquidated Damages, if any, on any
of the Securities or (b) in respect of covenants or provisions hereof which
cannot be modified or amended without the consent of the holder of each
Security affected; provided, however, that if the Securities are held by the
Property Trustee, such waiver or modification to such waiver shall not be
effective until the holders of a majority in aggregate liquidation amount of
Trust Securities shall have consented to such waiver or modification to such
waiver; provided further, that if the consent of the holder of each
outstanding Security is required, such waiver shall not be effective until
each holder of the Trust Securities 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 Securities shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon. Whenever
any default or Event of Default hereunder shall have been waived as permitted
by this Section 5.07, said default or Event of Default shall for all purposes
of the Securities and this Indenture be deemed to have been cured and to be
not continuing.
SECTION 5.08. Notice of Defaults.
The Trustee shall, within 90 days after the occurrence of a default
with respect to the Securities known to a Responsible Officer of the Trustee,
mail to all Securityholders, as the names and addresses of such holders
appear upon the Security Register, notice of all defaults known to the
Trustee, unless such defaults shall have been cured before the giving of such
notice (the term "defaults" for the purpose of this Section 5.08 being hereby
defined to be the events specified in clauses (a), (b), (c), (d) and (e) of
Section 5.01, not including periods of grace, if any, provided for therein,
and irrespective of the giving of written notice specified in clause (c) of
Section 5.01); and provided that, except in the case of default in the
payment of the principal of or premium, if any, or interest (including
Compounded Interest or Additional Sums, if any) or Liquidated Damages, if
any, on any of the Securities, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or Responsible Officers of
the Trustee in good faith determines that the withholding of such notice is
in the interests of the Securityholders; and provided further, that in the
case of any default of the character specified in Section 5.01(c) no such
notice to Securityholders shall be given until at least 60 days after the
occurrence thereof but shall be given within 90 days after such occurrence.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such
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court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 5.09 shall not apply
to any suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders, holding in the aggregate more
than 10% in aggregate principal amount of the Securities outstanding, or to
any suit instituted by any Securityholder for the enforcement of the payment
of the principal of (or premium, if any) or interest (including Compounded
Interest and Additional Sums, if any) or Liquidated Damages, if any, on any
Security against the Company on or after the same shall have become due and
payable.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of the Securities issued hereunder, the
Trustee, prior to the occurrence of an Event of Default and after the curing
or waiving of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in
this Indenture. In case an Event of Default has occurred (which has not been
cured or waived) the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have
occurred,
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any
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certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but, in
the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform
to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Officers, unless it
shall be proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith, in accordance
with the direction of the Securityholders pursuant to Section
5.07, relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under
this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any
of its rights or powers, 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 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(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, bond, note, debenture or other paper or
document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein may be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any Board Resolution may be
evidenced to the Trustee by a copy thereof certified by the
Secretary or an Assistant Secretary of the Company;
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(c) the Trustee may consult with counsel of its selection and any
advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request,
order or direction of any of the Securityholders, pursuant to
the provisions of this Indenture, unless such Securityholders
shall have offered to the Trustee reasonable and sufficient
security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by
this Indenture; nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the occurrence of
an Event of Default (that has not been cured or waived), to
exercise such of the rights and powers vested in it by this
Indenture, and to use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, debenture, coupon or other
paper or document, unless requested in writing to do so by the
holders of a majority in aggregate principal amount of the
outstanding Securities; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to
it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expense or liability as a
condition to so proceeding;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or
through agents (including any Authenticating Agent) or
attorneys, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent or
attorney appointed by it with due care;
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(h) the Trustee shall not be charged with knowledge of any Default
or Event of Default with respect to the Securities unless (1)
such default is a default under Sections 5.01(a) (other than a
default with respect to the payment of Compounded Interest,
Liquidated Damages or Additional Sums) and 5.01(b) of the
Indenture, (2) a Responsible Officer shall have actual
knowledge of such Default or Event of Default or (3) written
notice of such Default or Event of Default shall have been
given to the Trustee by the Company or any other obligor on the
Securities or by any holder of the Securities; and
(i) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith, without negligence or willful
misconduct and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this
Indenture.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in the
certificate of authentication of the Trustee or the Authenticating Agent)
shall be taken as the statements of the Company and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the
same. The Trustee and the Authenticating Agent make no representations as to
the validity or sufficiency of this Indenture or of the Securities. The
Trustee and the Authenticating Agent shall not be accountable for the use or
application by the Company of any Securities or the proceeds of any
Securities authenticated and delivered by the Trustee or the Authenticating
Agent in conformity with the provisions of this Indenture. The Trustee shall
not be charged with knowledge of any default or Event of Default under
Section 5.01 (a) or (b) relating to Other Debentures unless (i) a Responsible
Officer of the Trustee assigned to its Principal Office shall have actual
knowledge thereof or (ii) the Corporation, any Securityholder or the holder
of any Other Debenture shall have given the Trustee written notice thereof in
accordance with Section 13.04.
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents or Registrar May Own Securities.
The Trustee or any Authenticating Agent or any paying agent or any
transfer agent or any Security registrar, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights
it would have if it were not Trustee, Authenticating Agent, paying agent,
transfer agent or Security registrar.
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SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys received by
the Trustee or any paying agent shall, until used or applied as herein
provided, be held in trust for the purpose for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Trustee and any paying agent shall be under no liability for interest on
any money received by it hereunder except as otherwise agreed in writing with
the Company. So long as no Event of Default shall have occurred and be
continuing, all interest allowed on any such moneys shall be paid from time
to time upon the written order of the Company, signed by the Chairman of the
Board of Directors, the President, a Vice President, the Treasurer or an
Assistant Treasurer of the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company, as issuer of Securities under this Indenture, covenants
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, such compensation as shall be agreed to in writing between the
Company and the Trustee (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust), and the
Company will pay or reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify each of the Trustee or any predecessor
Trustee (and its officers, agents, directors and employees) for, and to hold
it harmless against, any and all loss, damage, claim, liability or expense
including taxes (other than taxes based on the income of the Trustee)
incurred without negligence or bad faith on the part of the Trustee and
arising out of or in connection with the acceptance or administration of this
trust, including the costs and expenses of defending itself against any claim
of liability in the premises. The obligations of the Company under this
Section 6.06 to compensate and indemnify the Trustee and to pay or reimburse
the Trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder. Such additional indebtedness shall be
secured by a lien prior to that of the Securities upon all property and funds
held or collected by the Trustee as such, except funds held in trust for the
benefit of the holders of particular Securities.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.01(d) or Section 5.01(e), the
expenses (including the reasonable charges and expenses of its counsel) and
the compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency
or other similar law.
The provisions of this Section shall survive the resignation or
removal of the Trustee and the defeasance or other termination of this
Indenture.
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SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02, whenever in
the administration of the provisions of this Indenture the Trustee shall deem
it necessary or desirable that a matter be proved or established prior to
taking or omitting any action hereunder, such matter (unless other evidence
in respect thereof is herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to
the Trustee, and such certificate, in the absence of negligence or bad faith
on the part of the Trustee, shall be full warrant to the Trustee for any
action taken or omitted by it under the provisions of this Indenture upon the
faith thereof.
SECTION 6.08. Conflicting Interest of Trustee.
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 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation organized
and doing business under the laws of the United States of America or any
state or territory thereof or of the District of Columbia or a corporation or
other Person 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 million U.S. dollars ($50,000,000) and subject to
supervision or examination by federal, state, territorial, or District of
Columbia authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section
6.09 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 6.09, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter appointed,
may at any time resign by giving written notice of such
resignation to the Company and by mailing notice thereof to the
holders of the Securities at their
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addresses as they shall appear on the Security register. Upon
receiving such notice of resignation, the Company shall
promptly appoint a successor trustee or trustees by written
instrument, in duplicate, 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 60 days after
the mailing of such notice of resignation to the affected
Securityholders, the resigning Trustee may petition any court
of competent jurisdiction for the appointment of a successor
trustee, or any Securityholder who has been a bona fide holder
of a Security for at least six months may, subject to the
provisions of Section 5.09, on behalf of himself and all others
similarly situated, petition any such court for the appointment
of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a
successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of
Section 6.08 after written request therefor by the Company
or by any Securityholder who has been a bona fide holder
of a Security or Securities for at least six months, or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.09 and shall fail to resign
after written request therefor by the Company or by any
such Securityholder, or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee and
appoint a successor trustee by written instrument, in
duplicate, 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 5.09, any
Securityholder who has been a bona fide holder of a Security
for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment
of a successor trustee. Such court may thereupon, after such
notice, if any, as it may
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deem proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities at the time outstanding may at any time remove the
Trustee and nominate a successor trustee, which shall be deemed
appointed as successor trustee unless within 10 days after such
nomination the Company objects thereto or if no successor
trustee shall have been so appointed and shall have accepted
appointment within 30 days after such removal, in which case
the Trustee so removed or any Securityholder, upon the terms
and conditions and otherwise as in subsection (a) of this
Section 6.10 provided, may petition any court of competent
jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this
Section 6.10 shall become effective upon acceptance of
appointment by the successor trustee as provided in Section
6.11.
SECTION 6.11. Acceptance by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10 shall
execute, acknowledge and deliver to the Company and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as trustee
herein; but, nevertheless, on the written request of the Company or of the
successor trustee, the trustee ceasing to act shall, upon payment of any
amounts then due it pursuant to the provisions of Section 6.06, execute and
deliver an instrument transferring to such successor trustee all the rights
and powers of the trustee so ceasing to act and shall duly assign, transfer
and deliver to such successor trustee all property and money held by such
retiring trustee thereunder. Upon request of any such successor trustee, the
Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers. Any trustee ceasing to act shall, nevertheless, retain a lien
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.06.
No successor trustee shall accept appointment as provided in this
Section 6.11 unless at the time of such acceptance such successor trustee
shall be qualified under the provisions of Section 6.08 and eligible under
the provisions of Section 6.09.
Upon acceptance of appointment by a successor trustee as provided in
this Section 6.11, the Company shall mail notice of the succession of such
trustee hereunder to
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the holders of Securities at their addresses as they shall appear on the
Security register. If the Company fails to mail such notice within 10 days
after the acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of the Company.
SECTION 6.12. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder
without the execution or filing of any paper or any further act on the part
of any of the parties hereto.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor trustee, and deliver
such Securities so authenticated; and in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee
may authenticate such Securities either in the name of any predecessor
hereunder or in the name of the successor trustee; and in all such cases such
certificates shall have the full force which the Securities or this Indenture
elsewhere provides that the certificate of the Trustee shall have; provided,
however, that the right to adopt the certificate of authentication of any
predecessor Trustee or authenticate Securities in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion
or consolidation.
SECTION 6.13. Limitation on Rights of Trustee as a Creditor.
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.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appointed by the
Trustee upon the request of the Company with power to act on its behalf and
subject to its direction in the authentication and delivery of Securities
issued upon exchange or transfer thereof as fully to all intents and purposes
as though any such Authenticating Agent had been expressly authorized to
authenticate and deliver Securities; provided, that the Trustee shall have no
liability to the Company for any acts or omissions of the Authenticating
Agent with respect to the authentication and delivery of Securities. Any
such Authenticating Agent shall at all times be a corporation organized and
doing business under the laws of the United States or of any state or
territory thereof or of the District of Columbia authorized under such laws
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to act as Authenticating Agent, having a combined capital and surplus of at
least $50,000,000 and being subject to supervision or examination by federal,
state, territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually pursuant to law or the
requirements of such authority, then for the purposes of this Section 6.14
the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect herein specified in this
Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating
Agent shall be a party, or any corporation succeeding to the corporate trust
business of any Authenticating Agent, shall be the successor of such
Authenticating Agent hereunder, if such successor corporation is otherwise
eligible under this Section 6.14 without the execution or filing of any paper
or any further act on the part of the parties hereto or such Authenticating
Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at
any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time any Authenticating Agent shall cease to be eligible under this
Section 6.14, the Trustee may, and upon the request of the Company shall,
promptly appoint a successor Authenticating Agent eligible under this Section
6.14, shall give written notice of such appointment to the Company and shall
mail notice of such appointment to all Securityholders as the names and
addresses of such holders appear on the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall
become vested with all rights, powers, duties and responsibilities of its
predecessor hereunder, with like effect as if originally named as
Authenticating Agent herein.
The Company, as borrower, agrees to pay to any Authenticating Agent
from time to time reasonable compensation for its services. Any
Authenticating Agent shall have no responsibility or liability for any action
taken by it as such in accordance with the directions of the Trustee.
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ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a
specified percentage in aggregate principal amount of the Securities may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the holders of such specified percentage
have joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Securityholders in person or by
agent or proxy appointed in writing, or (b) by the record of such holders of
Securities voting in favor thereof at any meeting of such Securityholders
duly called and held in accordance with the provisions of Article VIII, or
(c) by a combination of such instrument or instruments and any such record of
such a meeting of such Securityholders.
If the Company shall solicit from the Securityholders 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 Securityholders 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 Securityholders of record at the close of business
on the record date shall be deemed to be Securityholders for the purposes of
determining whether Securityholders of the requisite proportion of
outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the outstanding Securities shall be computed as
of the record date; provided, however, that no such authorization, agreement
or consent by such Securityholders on the record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Section 6.01, 6.02 and 8.05, proof of
the execution of any instrument by a Securityholder or his agent or proxy
shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee. The ownership of Securities shall be proved by
the Security Register or by a certificate of the Security registrar. The
Trustee may require such additional proof of any matter referred to in this
Section as it shall deem necessary.
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The record of any Securityholders' meeting shall be proved in the
manner provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any
Security, the Company, the Trustee, any Authenticating Agent, any paying
agent, any transfer agent and any Security registrar may deem the person in
whose name such Security shall be registered upon the Security Register to
be, and may treat him as, the absolute owner of such Security (whether or not
such Security shall be overdue) for the purpose of receiving payment of or on
account of the principal of and premium, if any, and (subject to Section
2.06) interest on such Security and for all other purposes; and neither the
Company nor the Trustee nor any Authenticating Agent nor any paying agent nor
any transfer agent nor any Security registrar shall be affected by any notice
to the contrary. All such payments so made to any holder for the time being
or upon his order shall be valid, and, to the extent of the sum or sums so
paid, effectual to satisfy and discharge the liability for moneys payable
upon any such Security.
SECTION 7.04. Securities Owned by Company Deemed Not Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or any
other obligor on the Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any other obligor on the Securities shall be disregarded and
deemed not to be outstanding for the purpose of any such determination;
provided that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent or waiver, only
Securities which a Responsible Officer of the Trustee actually knows are so
owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as outstanding for the purposes of this Section
7.04 if the pledgee shall establish to the satisfaction of the Trustee the
pledgee's right to vote such Securities and that the pledgee is not the
Company or any such other obligor or Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any such other obligor. In the case of a dispute as to such
right, any decision by the Trustee taken upon the advice of counsel shall be
full protection to the Trustee.
SECTION 7.05. Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the Trustee,
as provided in Section 7.01, of the taking of any action by the holders of
the percentage in aggregate principal amount of the Securities specified in
this Indenture in connection with such action, any holder of a Security (or
any Security issued in whole or in part in exchange or
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substitution therefor), subject to Section 7.01, the serial number of which
is shown by the evidence to be included in the Securities the holders of
which have consented to such action may, by filing written notice with the
Trustee at its principal office and upon proof of holding as provided in
Section 7.02, revoke such action so far as concerns such Security (or so far
as concerns the principal amount represented by any exchanged or substituted
Security). Except as aforesaid any such action taken by the holder of any
Security shall be conclusive and binding upon such holder and upon all future
holders and owners of such Security, and of any Security issued in exchange
or substitution therefor, irrespective of whether or not any notation in
regard thereto is made upon such Security or any Security issued in exchange
or substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders may be called at any time and from time
to time pursuant to the provisions of this Article VIII for any of the
following purposes:
(a) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to consent to the waiving of any
default hereunder and its consequences, or to take any other
action authorized to be taken by Securityholders pursuant to any
of the provisions of Article V;
(b) to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of such
Securities under any other provision of this Indenture or under
applicable law.
SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders to
take any action specified in Section 8.01, to be held at such time and at
such place in the Borough of Manhattan, The City of New York, as the Trustee
shall determine. Notice of every meeting of the Securityholders, setting
forth the time and the place of such meeting and in general terms the action
proposed to be taken at such meeting, shall be mailed to holders
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of Securities at their addresses as they shall appear on the Securities
Register. Such notice shall be mailed not less than 20 nor more than 180 days
prior to the date fixed for the meeting.
SECTION 8.03. Call of Meetings by Company or Securityholders.
In case at any time the Company pursuant to a resolution of the
Board of Directors, or the holders of at least 10% in aggregate principal
amount of the Securities then outstanding, shall have requested the Trustee
to call a meeting of Securityholders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or such Securityholders may
determine the time and the place in said Borough of Manhattan for such
meeting and may call such meeting to take any action authorized in Section
8.01, by mailing notice thereof as provided in Section 8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a Person
shall (a) be a holder of one or more Securities or (b) a Person appointed by
an instrument in writing as proxy by a holder of one or more Securities. The
only Persons who shall be entitled to be present or to speak at any meeting
of Securityholders shall be the Persons entitled to vote at such meeting and
their counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting
of Securityholders, in regard to proof of the holding of Securities and of
the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning
the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 8.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall
in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by majority vote of the
meeting.
Subject to the provisions of Section 8.04, at any meeting each
holder of Securities or proxy therefor shall be entitled to one vote for each
$1,000 principal amount of Securities held or represented by him; provided,
however, that no vote shall be cast or
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counted at any meeting in respect of any Security challenged as not
outstanding and ruled by the chairman of the meeting to be not outstanding.
The chairman of the meeting shall have no right to vote other than by virtue
of Securities held by him or instruments in writing as aforesaid duly
designating him as the person to vote on behalf of other Securityholders.
Any meeting of Securityholders duly called pursuant to the provisions of
Section 8.02 or 8.03 may be adjourned from time to time by a majority of
those present, and the meeting may be held as so adjourned without further
notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the
serial number or numbers of the Securities held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and
who shall make and file with the secretary of the meeting their verified
written reports in triplicate of all votes cast at the meeting. A record in
duplicate of the proceedings of each meeting of Securityholders shall be
prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was mailed as provided in Section 8.02. The record shall show the
serial numbers of the Securities voting in favor of or against any
resolution. The record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of the duplicates
shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting. The holders of the Series A Capital Securities and the
Series B Capital Securities shall vote for all purposes as a single class.
Any record so signed and verified shall be conclusive evidence of
the matters therein stated.
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders.
The Company, when authorized by a Board Resolution, and the Trustee
may from time to time and at any time amend the Indenture, without the
consent of the Securityholders, for one or more of the following purposes:
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(a) to evidence the succession of another Person to the Company, or
successive successions, and the assumption by the successor Person
of the covenants, agreements and obligations of the Company
pursuant to Article X hereof;
(b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the
Securityholders as the Board of Directors and the Trustee shall
consider to be for the protection of the Securityholders, and to
make the occurrence, or the occurrence and continuance, of a
default in any of such additional covenants, restrictions or
conditions a default or an Event of Default permitting the
enforcement of all or any of the remedies provided in this
Indenture as herein set forth; provided, however, that in respect
of any such additional covenant, restriction or condition such
amendment may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed
in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available
to the Trustee upon such default;
(c) to provide for the issuance under this Indenture of Securities in
coupon form (including Securities registrable as to principal
only) and to provide for exchangeability of such Securities with
the Securities issued hereunder in fully registered form and to
make all appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained
herein or in any supplemental indenture, or to make such other
provisions in regard to matters or questions arising under this
Indenture; provided that any such action shall not materially
adversely affect the interests of the holders of the Securities;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities;
(f) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends,
if any, to be placed on Securities, and all other matters required
pursuant to Section 2.07 or otherwise necessary, desirable or
appropriate in connection with the issuance of Securities to
holders of Capital Securities in the event of a distribution of
Securities by Progress Capital Trust following a Dissolution
Event;
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(g) to qualify or maintain qualification of this Indenture under the
Trust Indenture Act;
(h) to enable the Company and the Trust to conduct an Exchange Offer
as contemplated by the Registration Rights Agreement, provided
that any such action shall not materially adversely affect the
interests of the holders of the Securities; or
(i) to make any change that does not adversely affect the rights of
any Securityholder in any material respect.
The Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture to effect such amendment, to make any
further appropriate agreements and stipulations which may be therein
contained and to accept the conveyance, transfer and assignment of any
property thereunder, but the Trustee shall not be obligated to, but may in
its discretion, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any amendment to the Indenture authorized by the provisions of this
Section 9.01 may be executed by the Company and the Trustee without the
consent of the holders of any of the Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. With Consent of Securityholders.
With the consent (evidenced as provided in Section 7.01) of the
holders of a majority in aggregate principal amount of the Securities at the
time outstanding, the Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time amend the Indenture for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the
rights of the holders of the Securities; provided, however, that no such
amendment shall without the consent of the holders of each Security then
outstanding and affected thereby (i) change the Maturity Date of any
Security, or reduce the rate or extend the time of payment of interest
thereon (except as contemplated by Article XVI), or reduce the principal
amount thereof, or reduce any amount payable on redemption thereof, or make
the principal thereof or any interest or premium thereon payable in any coin
or currency other than that provided in the Securities, or impair or affect
the right of any Securityholder to institute suit for payment thereof, or
(ii) reduce the aforesaid percentage of Securities the holders of which are
required to consent to any such amendment to the Indenture, provided,
however, that if the Securities are held by Progress Capital Trust, such
amendment shall not be effective until the holders of a majority in
liquidation amount of Trust Securities shall have consented to such
amendment; provided, further, that if the consent of the holder of each
outstanding Security is required, such amendment shall not be effective until
each holder of the Trust Securities shall have consented to such amendment.
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Upon the request of the Company accompanied by a copy of a
resolution of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture affecting
such amendment, and upon the filing with the Trustee of evidence of the
consent of Securityholders as aforesaid, the Trustee shall join with the
Company in the execution of such supplemental indenture unless such
supplemental indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice,
prepared by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders as their names and addresses
appear upon the Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders
under this Section 9.02 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions of
this Article IX shall comply with the Trust Indenture Act. Upon the
execution of any supplemental indenture pursuant to the provisions of this
Article IX, this Indenture shall be and be deemed to be modified and amended
in accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the Trustee, the
Company and the holders of Securities shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Securities.
Securities authenticated and delivered after the execution of any
supplemental indenture affecting such series pursuant to the provisions of
this Article IX may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any modification of
this Indenture contained in any such supplemental indenture may be prepared
and executed by the Company, authenticated by the Trustee or the
Authenticating Agent and delivered in exchange for the Securities then
outstanding.
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SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished Trustee.
The Trustee, subject to the provisions of Sections 6.01 and 6.02,
may receive, in addition to the document required by Section 13.06, an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant hereto complies with the
requirements of this Article IX. The Trustee may received an Opinion of
Counsel as conclusive evidence that any supplemental indenture executed
pursuant to this Article is authorized or permitted by, and conforms to, the
terms of this Article and that it is proper for the Trustee under the
provisions of this Article to join in the execution thereof.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.
Nothing contained in this Indenture or in any of the Securities
shall prevent any consolidation or merger of the Company with or into any
other Person (whether or not affiliated with the Company, as the case may
be), or successive consolidations or mergers in which the Company or its
successor or successors, as the case may be, shall be a party or parties, or
shall prevent any sale, conveyance, transfer or lease of the property of the
Company, or its successor or successors as the case may be, as an entirety,
or substantially as an entirety, to any other Person (whether or not
affiliated with the Company, or its successor or successors, as the case may
be) authorized to acquire and operate the same; provided, that (a) the
Company is the surviving Person, or the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to which such
sale, conveyance, transfer or lease of property is made is a Person organized
and existing under the laws of the United States or any State thereof or the
District of Columbia, and (b) upon any such consolidation, merger, sale,
conveyance, transfer or lease, the due and punctual payment of the principal
of (and premium, if any) and interest on the Securities according to their
tenor and the due and punctual performance and observance of all the
covenants and conditions of this Indenture to be kept or performed by the
Company shall be expressly assumed, by supplemental indenture (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 Person formed by such consolidation, or into which the Company shall have
been merged, or by the Person which shall have acquired such property, as the
case may be, (c) after giving effect to such consolidation, merger, sale,
conveyance, transfer or lease, no Default or Event of Default shall have
occurred and be continuing and (d) such consolidation, merger, sale,
conveyance, transfer or lease does not cause the Securities to be downgraded
by a nationally recognized statistical rating organization.
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SECTION 10.02. Successor Corporation to be Substituted for Company.
In case of any such consolidation, merger, conveyance or transfer
and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to
the Trustee, of the due and punctual payment of the principal of and premium,
if any, and interest on all of the Securities and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed or observed by the Company, such successor Person
shall succeed to and be substituted for the Company, with the same effect as
if it had been named herein as the party of the first part, and the Company
thereupon shall be relieved of any further liability or obligation hereunder
or upon the Securities. Such successor Person thereupon may cause to be
signed, and may issue either in its own name or in the name of Progress
Financial Corporation, any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee or the Authenticating Agent; and, upon the order of such successor
Person instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee or the Authenticating
Agent shall authenticate and deliver any Securities which previously shall
have been signed and delivered by the officers of the Company to the Trustee
or the Authenticating Agent for authentication, and any Securities which such
successor Person thereafter shall cause to be signed and delivered to the
Trustee or the Authenticating Agent for that purpose. All the Securities so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance
with the terms of this Indenture as though all of such Indentures had been
issued at the date of the execution hereof.
SECTION 10.03. Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.01 and 6.02,
may receive an Opinion of Counsel as conclusive evidence that any
consolidation, merger, sale, conveyance, transfer or lease, and any
assumption, permitted or required by the terms of this Article X complies
with the provisions of this Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for cancellation
all Securities theretofore authenticated (other than any Securities which
shall have been destroyed, lost or stolen and which shall have been replaced
as provided in Section 2.08) and not theretofore cancelled, or (b) all the
Securities not theretofore cancelled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to
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become due and payable within one year or are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the giving
of notice of redemption, and the Company shall deposit with the Trustee, in
trust, funds sufficient to pay on the Maturity Date or upon redemption all of
the Securities (other than any Securities which shall have been destroyed,
lost or stolen and which shall have been replaced as provided in Section
2.08) not theretofore cancelled or delivered to the Trustee for cancellation,
including principal and premium, if any, and interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, due or
to become due to the Maturity Date or redemption date, as the case may be,
but excluding, however, the amount of any moneys for the payment of principal
of or premium, if any, or interest (including Compounded Interest and
Additional Sums, if any) or Liquidated Damages, if any, on the Securities (1)
theretofore repaid to the Company in accordance with the provisions of
Section 11.04, or (2) paid to any State or to the District of Columbia
pursuant to its unclaimed property or similar laws, and if in either case the
Company shall also pay or cause to be paid all other sums payable hereunder
by the Company, then this Indenture shall cease to be of further effect
except for the provisions of Sections 2.02, 2.07, 2.08, 3.01, 3.02, 3.04,
6.06, 6.10 and 11.04 hereof, which shall survive until such Securities shall
mature and be paid. Thereafter, Sections 6.06, 6.10 and 11.04 shall survive,
and the Trustee, on demand of the Company accompanied by any Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture, the Company, however, hereby agreeing to
reimburse the Trustee for any costs or expenses thereafter reasonably and
properly incurred by the Trustee in connection with this Indenture or the
Securities.
SECTION 11.02. Deposited Moneys and U.S. Government Obligations to be
Held in Trust by Trustee.
Subject to the provisions of Section 11.04, all moneys and U.S.
Government Obligations deposited with the Trustee pursuant to Sections 11.01
or 11.05 shall be held in trust and applied by it to the payment, either
directly or through any paying agent (including the Company if acting as its
own paying agent), to the holders of the particular Securities for the
payment of which such moneys or U.S. Government Obligations have been
deposited with the Trustee, of all sums due and to become due thereon for
principal, premium, if any, and interest.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 11.05 or the principal and interest
received in respect thereof other than any such tax, fee or other charge
which by law is for the account of the holders of outstanding Securities.
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SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys
then held by any paying agent of the Securities (other than the Trustee)
shall, upon written demand of the Company, be repaid to it or paid to the
Trustee, and thereupon such paying agent shall be released from all further
liability with respect to such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying agent
for payment of the principal of or premium, if any, or interest on Securities
and not applied but remaining unclaimed by the holders of Securities for two
years after the date upon which the principal of or premium, if any, or
interest (including Compounded Interest and Additional Sums, if any) or
Liquidated Damages, if any, on such Securities, as the case may be, shall
have become due and payable, shall be repaid to the Company by the Trustee or
such paying agent on written demand; and the holder of any of the Securities
shall thereafter look only to the Company for any payment which such holder
may be entitled to collect and all liability of the Trustee or such paying
agent with respect to such moneys shall thereupon cease.
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S. Government
Obligations.
The Company shall be deemed to have been Discharged (as defined
below) from its obligations with respect to the Securities on the 91st day
after the applicable conditions set forth below have been satisfied:
(1) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee or the Defeasance Agent (as defined
below) as trust funds in trust, specifically pledged as security
for, and dedicated solely to, the benefit of the holders of the
Securities (i) money in an amount, or (ii) U.S. Government
Obligations which through the payment of interest and principal
in respect thereof in accordance with their terms will provide,
not later than one day before the due date of any payment, money
in an amount, or (iii) a combination of (i) and (ii), sufficient,
in the opinion (with respect to (ii) and (iii)) of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee and the
Defeasance Agent, if any, to pay and discharge each installment of
principal of and interest and premium, if any, on the outstanding
Securities on the dates such installments of principal, interest
or premium are due;
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(2) if the Securities are then listed on any national securities
exchange, the Company shall have delivered to the Trustee and
the Defeasance Agent, if any, an Opinion of Counsel to the effect
that the exercise of the option under this Section 11.05 would
not cause such Securities to be delisted from such exchange;
(3) no Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit;
and
(4) the Company shall have delivered to the Trustee and the Defeasance
Agent, if any, an Opinion of Counsel to the effect that holders
of the Securities will not recognize income, gain or loss for
United States federal income tax purposes as a result of the
exercise of the option under this Section 11.05 and will be
subject to United States federal income tax on the same amount and
in the same manner and at the same times as would have been the
case if such option had not been exercised, and such opinion shall
be based on a statute so providing or be accompanied by a private
letter ruling to that effect received from the United States
Internal Revenue Service or a revenue ruling pertaining to a
comparable form of transaction to that effect published by the
United States Internal Revenue Service.
"Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Securities and to have satisfied all the obligations under this Indenture
relating to the Securities (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), except (A) the
rights of holders of Securities to receive, from the trust fund described in
clause (1) above, payment of the principal of and the interest and premium,
if any, on the Securities when such payments are due; (B) the Company's
obligations with respect to the Securities under Sections 2.07, 2.08, 5.02
and 11.04; and (C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder.
"Defeasance Agent" means another financial institution which is
eligible to act as Trustee hereunder and which assumes all of the obligations
of the Trustee necessary to enable the Trustee to act hereunder. In the
event such a Defeasance Agent is appointed pursuant to this Section, the
following conditions shall apply:
(1) The Trustee shall have approval rights over the document
appointing such Defeasance Agent and the document setting forth
such Defeasance Agent's rights and responsibilities;
(2) The Defeasance Agent shall provide verification to the Trustee
acknowledging receipt of sufficient money and/or U. S. Government
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Obligations to meet the applicable conditions set forth in this
Section 11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corporate Obligations.
No recourse for the payment of the principal of or premium, if any,
or interest on any Security, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture, or in any Security, or because of
the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor Person to the Company, either
directly or through the Company or any successor Person to the Company,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as
a condition of, and as a consideration for, the execution of this Indenture
and the issue of the Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agreements in this
Indenture contained by the Company shall bind its successors and assigns
whether so expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture authorized
or required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee or officer of any corporation that shall at the time be
the lawful sole successor of the Company.
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SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by authority of 2/3
(two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company, and thereupon such power
so surrendered shall terminate both as to the Company, as the case may be,
and as to any successor Person.
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the holders
of Securities on the Company may be given or served by being deposited
postage prepaid by first class mail, registered or certified mail, overnight
courier service or conformed telecopy addressed (until another address is
filed by the Company with the Trustee for the purpose) to the Company at Four
Sentry Parkway, Suite 230, Blue Bell, Pennsylvania 19422, Attention:
Frederick E. Schea, Senior Vice President and Chief Financial Officer. Any
notice, direction, request or demand by any Securityholder to or upon the
Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the office of the Trustee, 101
Barclay Street, 21st Floor West, New York, New York 10286, Attention:
Corporate Trust, Trustee Administration (unless another address is provided
by the Trustee to the Company for such purpose). Any notice or communication
to a Securityholder shall be mailed by first class mail to his or her address
shown on the register kept by the Security Registrar. Failure to mail a
notice or communication to a Securityholder or any defect in it shall not
affect its sufficiency with respect to other Securityholders.
SECTION 13.05. Governing Law.
This Indenture and each Security shall be deemed to be a contract
made under the laws of the State of New York, and for all purposes shall be
governed by and construed in accordance with the laws of said State, without
regard to conflicts of laws principles thereof.
SECTION 13.06. Evidence of Compliance with Conditions Precedent.
Upon any application or demand by the Company to the Trustee to take
any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that in the opinion
of the signers all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture (except certificates delivered
pursuant to Section 3.05) shall include (1) a statement
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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 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 13.07. Business Days.
In any case where the date of payment of principal of or premium, if
any, or interest on the Securities will not be a Business Day, the payment of
such principal of or premium, if any, or interest on the Securities need not
be made on such date but may be made on the next succeeding Business Day,
with the same force and effect as if made on the date of payment and no
interest shall accrue for the period from and after such date, except that if
such next succeeding Business Day falls in the next succeeding calendar year,
then 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.
SECTION 13.08. Trust Indenture Act to Control.
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 of 1939, such imposed duties shall
control.
SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles
and sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each
of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in this
Indenture or in the Securities shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of
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this Indenture or of the Securities, but this Indenture and the Securities
shall be construed as if such invalid or illegal or unenforceable provision
had never been contained herein or therein.
SECTION 13.12. Assignment.
The Company will 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 will remain primarily liable for all such
obligations. Subject to the foregoing, the 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 13.13. Acknowledgement of Rights.
The Company acknowledges that, with respect to any Securities held
by Progress Capital Trust or a trustee of such trust, if the Property Trustee
of such Trust fails to enforce its rights under this Indenture as the holder
of the Securities held as the assets of Progress Capital Trust any holder of
Capital 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 principal of or premium, if any, or interest on
the Securities when due, the Company acknowledges that a holder of Capital
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of or premium, if any, or interest on the
Securities having a principal amount equal to the aggregate liquidation
amount of the Capital Securities of such holder on or after the respective
due date specified in the Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Special Event Redemption.
If, prior to the Initial Optional Redemption Date, a Special Event
has occurred and is continuing then, notwithstanding Section 14.02(a) but
subject to Section 14.02(c), the Company shall have the right, at any time
within 90 days following the occurrence of such Special Event and prior to
the Initial Optional Redemption Date, upon (i) not less than 45 days written
notice to the Trustee and (ii) not less than 30 days nor more than 60 days
written notice to the Securityholders, to redeem the Securities, in whole
(but not in part), at the Special Event Redemption Price. Following a
Special Event, the Company
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shall take such action as is necessary to promptly determine the Special
Event Redemption Price, including without limitation the appointment by the
Company of a Quotation Agent. The Special Event Redemption Price shall be
paid prior to 12:00 noon, New York time, on the date of such redemption or
such earlier time as the Company determines, provided that the Company shall
deposit with the Trustee an amount sufficient to pay the Special Event
Redemption Price by 10:00 a.m., New York time, on the date such Special Event
Redemption Price is to be paid. The Company shall provide the Trustee with
written notice of the Special Event Redemption Price promptly after the
calculation thereof, which notice shall include any calculation made by the
Quotation Agent in connection with the determination of the Special Event
Redemption Price.
SECTION 14.02. Optional Redemption by Company.
(a) Subject to the provisions of this Article XIV, the Company shall
have the right to redeem the Securities, in whole or in part, from time to time,
on or after the Initial Optional Redemption Date, at the redemption prices set
forth below (expressed as percentages of principal) plus, in each case, accrued
and unpaid interest thereon (including Compounded Interest and Additional Sums,
if any) and Liquidated Damages, if any, to the applicable date of redemption
(the "Optional Redemption Price") if redeemed during the 12-month period
beginning June 1, of the years indicated below.
Year Percentage
2007 105.250%
2008 104.725%
2009 104.200%
2010 103.675%
2011 103.150%
2012 102.625%
2013 102.100%
2014 101.575%
2015 101.050%
2016 100.525%
2017 and thereafter 100.000%
If the Securities are only partially redeemed pursuant to this
Section 14.02, the Securities to be redeemed shall be selected on a pro rata
basis, by lot or other method utilized by the Trustee, not more than 60 days
prior to the date fixed for redemption from
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the outstanding Securities not previously called for redemption, provided,
however, that with respect to Securityholders that would be required to hold
Securities with an aggregate principal amount of less than $100,000 but more
than an aggregate principal amount of zero as a result of such pro rata
redemption, the Company shall redeem Securities of each such Securityholder
so that after such redemption such Securityholder shall hold Securities
either with an aggregate principal amount of at least $100,000 or such
Securityholder no longer holds any Securities and shall use such method
(including, without limitation, by lot) as the Company shall deem fair and
appropriate, provided, further, that any such method of selection may be made
on the basis of the aggregate principal amount of Securities held by each
Securityholder and may be made by making such adjustments as the Company
deems fair and appropriate in order that only Securities in denominations of
$1,000 or integral multiples thereof shall be redeemed. The Optional
Redemption Price shall be paid prior to 12:00 noon, New York time, on the
date of such redemption or at such earlier time as the Company determines,
provided that the Company shall deposit with the Trustee an amount sufficient
to pay the Optional Redemption Price by 10:00 a.m., New York time, on the
date such Optional Redemption Price is to be paid.
(b) Notwithstanding the first sentence of Section 14.02, upon the
entry of an order for dissolution of Progress Capital Trust by a court of
competent jurisdiction, the Securities thereafter will be subject to optional
redemption, in whole only, but not in part, on or after June 1, 2007, at the
optional redemption prices set forth in Section 14.02 and otherwise in
accordance with this Article XIV.
(c) Any redemption of Securities pursuant to Section 14.01 or
Section 14.02 shall be subject to the receipt by the Company of any required
regulatory approval.
SECTION 14.03. No Sinking Fund.
The Securities are not entitled to the benefit of any sinking fund.
SECTION 14.04. Notice of Redemption; Selection of Securities.
In case the Company shall desire to exercise the right to redeem
all, or, as the case may be, any part of the Securities in accordance with
their terms, it shall fix a date for redemption and shall mail a notice of
such redemption at least 30 and not more than 60 days prior to the date fixed
for redemption to the holders of Securities so to be redeemed as a whole or
in part at their last addresses as the same appear on the Security Register.
Such mailing shall be by first class mail. The notice if mailed in the manner
herein provided shall be conclusively presumed to have been duly given,
whether or not the holder receives such notice. In any case, failure to give
such notice by mail or any defect in the notice to the holder of any Security
designated for redemption as a whole or in part shall not affect the validity
of the proceedings for the redemption of any other Security.
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Each such notice of redemption shall specify the CUSIP number of the
Securities to be redeemed, the date fixed for redemption, the redemption
price at which the Securities are to be redeemed (or the method by which such
redemption price is to be calculated), the place or places of payment that
payment will be made upon presentation and surrender of the Securities, that
interest accrued to the date fixed for redemption will be paid as specified
in said notice, and that on and after said date interest thereon or on the
portions thereof to be redeemed will cease to accrue. If less than all the
Securities are to be redeemed the notice of redemption shall specify the
numbers of the Securities to be redeemed. In case any Security is to be
redeemed in part only, the notice of redemption shall state the portion of
the principal amount thereof to be redeemed and shall state that on and after
the date fixed for redemption, upon surrender of such Security, a new
Security or Securities in principal amount equal to the unredeemed portion
thereof will be issued.
By 10:00 a.m. New York time on the redemption date specified in the
notice of redemption given as provided in this Section, the Company will
deposit with the Trustee or with one or more paying agents an amount of money
sufficient to redeem on the redemption date all the Securities so called for
redemption at the appropriate Redemption Price, together with accrued
interest to the date fixed for redemption.
The Company will give the Trustee notice not less than 45 days prior
to the redemption date as to the aggregate principal amount of Securities to
be redeemed and the Trustee shall select, in such manner as in its sole
discretion it shall deem appropriate and fair, the Securities or portions
thereof (in integral multiples of $1,000, except as otherwise set forth in
the applicable form of Security) to be redeemed.
SECTION 14.05. Payment of Securities Called for Redemption.
If notice of redemption has been given as provided in Section 14.04,
the Securities or portions of Securities with respect to which such notice
has been given shall become due and payable on the date and at the place or
places stated in such notice at the applicable Redemption Price, together
with interest accrued to the date fixed for redemption (subject to the rights
of holders of Securities on the close of business on a regular record date in
respect of an Interest Payment Date occurring on or prior to the redemption
date), and on and after said date (unless the Company shall default in the
payment of such Securities at the Redemption Price, together with interest
accrued to said date) interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on the Securities or portions
of Securities so called for redemption shall cease to accrue. On
presentation and surrender of such Securities at a place of payment specified
in said notice, the said Securities or the specified portions thereof shall
be paid and redeemed by the Company at the applicable Redemption Price,
together with interest (including Compounded Interest and Additional Sums, if
any) and Liquidated Damages, if any, accrued thereon to the date fixed for
redemption (subject to the rights of holders of Securities on the close of
business on a regular record date in respect of an Interest Payment Date
occurring on or prior to the redemption date).
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Upon presentation of any Security redeemed in part only, the Company
shall execute and the Trustee shall authenticate and make available for
delivery to the holder thereof, at the expense of the Company, a new Security
or Securities of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Company covenants and agrees, and each holder of Securities
issued hereunder likewise covenants and agrees, that the Securities shall be
issued subject to the provisions of this Article XV; and each holder of a
Security, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
The payment by the Company of the principal of, premium, if any, and
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on all Securities issued hereunder shall, to the
extent and in the manner hereinafter set forth, be subordinated and junior in
right of payment to all Senior Indebtedness, whether outstanding at the date
of this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the occurrence of any
Default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
In the event and during the continuation of any default by the
Company in the payment of principal, premium, interest or any other payment
due on any Senior Indebtedness, or in the event that the maturity of any
Senior Indebtedness 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 premium, if any, or interest
on the Securities.
In the event of the acceleration of the maturity of the Securities,
then no payment shall be made by the Company with respect to the principal
(including redemption payments) of or premium, if any, or interest on the
Securities until the holders of all Senior Indebtedness outstanding at the
time of such acceleration shall receive payment in full of such Senior
Indebtedness (including any amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any payment shall
be received by the Trustee when such payment is prohibited by the preceding
paragraphs of this Section
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15.02, 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 such Senior Indebtedness
and only the amounts specified in such notice to the Trustee shall be paid to
the holders of such Senior Indebtedness.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, all Senior Indebtedness of the
Company shall first be paid in full, or payment thereof provided for in money
in accordance with its terms, before any payment is made by the Company on
account of the principal (and premium, if any) or interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if
any, on the Securities; and upon any such dissolution or winding-up or
liquidation or reorganization, any payment by the Company, or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the Securityholders or the Trustee would be entitled to
receive from the Company, except for the provisions of this Article XV, shall
be paid by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, or by the
Securityholders or by the Trustee under the 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 all such Senior Indebtedness in full, in money or money's
worth, after giving effect to any concurrent payment or distribution to or
for the holders of such Senior Indebtedness, before any payment or
distribution is made to the Securityholders or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received
by the Trustee before all Senior Indebtedness is paid in full, or provision
is made for such payment in money in accordance with its terms, such payment
or distribution shall be held in trust for the benefit of and shall be paid
over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may appear,
as calculated by the Company, for application to the payment of all
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Senior Indebtedness remaining unpaid to the extent necessary to pay all such
Senior Indebtedness in full in money in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the benefit
of the holders of such Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article XV with respect to the Securities to the payment of Senior
Indebtedness 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 Person or the
liquidation or dissolution of the Company following the sale, conveyance,
transfer or lease of its property as an entirety, or substantially as an
entirety, to another Person upon the terms and conditions provided for in
Article X of this Indenture shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 15.03 if such
other Person shall, as a part of such consolidation, merger, sale,
conveyance, transfer or lease, comply with the conditions stated in Article X
of this Indenture. Nothing in Section 15.02 or in this Section 15.03 shall
apply to claims of, or payments to, the Trustee under or pursuant to Section
6.06 of this Indenture.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the
rights of the Securityholders shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company, as the case may be, applicable
to such Senior Indebtedness until the principal of (and premium, if any) and
interest on the Securities shall be paid in full; and, for the purposes of
such subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Securityholders
or the Trustee would be entitled except for the provisions of this Article
XV, and no payment over pursuant to the provisions of this Article XV to or
for the benefit of the holders of such Senior Indebtedness by Securityholders
or the Trustee, shall, as between the Company, its creditors other than
holders of Senior Indebtedness of the Company, and the holders of the
Securities, 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 XV
are and are intended solely for the purposes of defining the relative rights
of the holders of the Securities, on the one hand, and the holders of such
Senior Indebtedness on the other hand.
Nothing contained in this Article XV or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as between the Company,
its creditors other than
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the holders of Senior Indebtedness of the Company, and the holders of the
Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of the Securities the principal of (and
premium, if any) and interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on the Securities as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the holders of the
Securities 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 Security
from exercising all remedies otherwise permitted by applicable law upon
default under the Indenture, subject to the rights, if any, under this
Article XV of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company, as the case may be, received upon the
exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred
to in this Article XV, the Trustee, subject to the provisions of Article VI
of this Indenture, and the Securityholders shall be entitled to conclusively
rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding-up, liquidation or reorganization proceedings
are pending, or a certificate of the receiver, trustee in bankruptcy,
liquidation trustee, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Securityholders, for the
purposes of ascertaining the Persons entitled to participate in such
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 XV.
SECTION 15.05. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance thereof
authorizes and directs the Trustee on such Securityholder's behalf to take
such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XV and appoints the Trustee such
Securityholder's attorney-in-fact for any and all such purposes.
SECTION 15.06. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee 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
Securities pursuant to the provisions of this Article XV. Notwithstanding
the provisions of this Article XV 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 Securities pursuant to the provisions of this Article XV,
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 Article VI of this
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Indenture, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section 15.06 at least two Business Days prior to
the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of (or
premium, if any) or interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on any Security), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to
the purposes for which they were received, and shall not be affected by any
notice to the contrary that may be received by it within two Business Days
prior to such date.
The Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company (or a trustee on behalf of such holder), as the
case may be, 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 XV, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent
to the rights of such Person under this Article XV, and, if such evidence is
not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
Upon any payment or distribution of assets of the Company referred
to in this Article XV, the Trustee and the Securityholders shall be entitled
to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
person making such payment or distribution, delivered to the Trustee or to
the Securityholders, for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article XV.
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article XV in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any
of its rights as such holder.
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With respect to the holders of Senior Indebtedness of the Company,
the Trustee undertakes to perform or to observe only such of its covenants
and obligations as are specifically set forth in this Article XV, and no
implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of such
Senior Indebtedness and, subject to the provisions of Article VI of this
Indenture, the Trustee shall not be liable to any holder of such Senior
Indebtedness if it shall pay over or deliver to Securityholders, the Company
or any other Person money or assets to which any holder of such Senior
Indebtedness shall be entitled by virtue of this Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 6.06.
SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness
of the Company to enforce subordination as herein provided shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part
of the Company, as the case may be, or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Company, as the
case may be, with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or
otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV
or the obligations hereunder of the holders of the Securities to the holders
of such Senior Indebtedness, do any one or more of the following: (i) change
the manner, place or terms of payment or extend the time of payment of, or
renew or alter, such Senior Indebtedness, or otherwise amend or supplement in
any manner such Senior Indebtedness or any instrument evidencing the same or
any agreement under which such Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Senior Indebtedness; (iii) release any Person liable
in any manner for the collection of such Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against the Company, as the
case may be, and any other Person.
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ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the
interest payment period of such Securities for a period not exceeding 10
consecutive semi-annual periods, including the first such semi-annual period
during such extension period (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 shall end on a date other
than an Interest Payment Date or 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 16.01, will bear interest thereon at the Coupon Rate compounded
semi-annually for each semi-annual period of the Extended Interest Payment
Period ("Compounded Interest"). At the end of the Extended Interest Payment
Period, the Company shall pay all interest accrued and unpaid on the
Securities, including any Additional Sums and Compounded Interest (together,
"Deferred Interest") that shall be payable to the holders of the Securities
in whose names the Securities are registered in the Security Register on the
first record date preceding the end of the Extended Interest Payment Period.
Before the termination of any Extended Interest Payment Period, the Company
may further defer payments of interest by further extending such period,
provided that such period, together with all such previous and further
extensions within such Extended Interest Payment Period, shall not exceed 10
consecutive semi-annual periods, including the first such semi-annual period
during such Extended Interest Payment Period, end on a date other than an
Interest Payment Date or extend beyond the Maturity Date of the Securities.
Upon the termination of any Extended Interest Payment Period and 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 16.02. Notice of Extension.
(a) If the Property Trustee is the only registered holder of the
Securities 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 five Business Days before the earlier of (i) the next
succeeding date on which Distributions on the Trust Securities issued by the
Trust are payable, or (ii) the date the Trust is required to give notice of
the record date, or the date such Distributions are payable, to any national
securities exchange or to holders
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of the Capital Securities issued by the Trust, but in any event at least five
Business Days before such record date.
(b) If the Property Trustee is not the only holder of the
Securities at the time the Company selects an Extended Interest Payment
Period, the Company shall give the holders of the Securities and the Trustee
written notice of its selection of such Extended Interest Payment Period at
least 10 Business Days before the earlier of (i) the next succeeding Interest
Payment Date, or (ii) the date the Company is required to give notice of the
record or payment date of such interest payment to any national securities
exchange.
(c) The semi-annual period in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 16.02 shall be counted as one of the 10
semi-annual periods permitted in the maximum Extended Interest Payment Period
permitted under Section 16.01.
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The Bank of New York hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers thereunto duly authorized, as
of the day and year first above written.
PROGRESS FINANCIAL CORPORATION
By: /s/Frederick E. Schea
-------------------------------
Name: Frederick E. Schea
Title: Senior Vice President and Chief
Financial Officer
THE BANK OF NEW YORK,
as Trustee
By: /s/Mary Jane Morrissey
-------------------------------
Name: Mary Jane Morrissey
Title: Vice President
74
<PAGE>
EXHIBIT A
(FORM OF FACE OF SECURITY)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR
ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
(i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY,
AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE REVERSE OF THIS SECURITY IS COMPLETED AND DELIVERED
BY THE TRANSFEREE TO THE COMPANY. SUCH HOLDER FURTHER AGREES THAT IT WILL
DELIVER TO EACH PERSON
A-1
<PAGE>
TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 (100
SECURITIES). ANY SUCH TRANSFER OF SECURITIES IN A BLOCK HAVING AN AGGREGATE
PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE
RECEIPT OF PRINCIPAL, PREMIUM (IF ANY) OR INTEREST OF SUCH SECURITIES, AND
SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH
SECURITIES.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN
SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS SECURITY BY IT IS NOT
PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S.
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH
PROHIBITION.
A-2
<PAGE>
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY.
No. CUSIP No.
PROGRESS FINANCIAL CORPORATION
____% SERIES A JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURE DUE _______ __, 2027
Progress Financial Corporation, a Delaware corporation (the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to The
Bank of New York, as Property Trustee for Progress Capital Trust I or
registered assigns, the principal sum of $15,464,000 on ______ _, 2027 (the
"Maturity Date"), unless previously redeemed, and to pay interest on the
outstanding principal amount hereof from June __, 1997, or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, semi-annually (subject to
deferral as set forth herein) in arrears on ________ __ and _________ __ of
each year, commencing __________ __, 1997, at the rate of ____% per annum
until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the same rate per annum compounded
semi-annually. The amount of interest payable on any Interest Payment Date
shall be computed on the basis of a 360-day year of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month based on a 30-day month. In the event that any date on which the
principal of (or premium, if any) or interest on this Security is payable is
not a Business Day, then the payment payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that if such next succeeding
Business Day falls in the next calendar year, then 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. Pursuant to the Indenture, in certain
circumstances the Company will be required to pay Additional Sums and
Compounded Interest (each as defined in the Indenture) with respect to this
Security. Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Company will be required to pay Liquidated Damages (as
defined in the Registration Rights Agreement) with respect to this Security.
A-3
<PAGE>
The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities, as defined in said Indenture) is registered at the
close of business on the regular record date for such interest installment,
which shall be at the close of business on the _ day of the month in which
the relevant interest payment date falls. Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to
the holders on such regular record date and may be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a special record date to be fixed by
the Trustee for the payment of such defaulted interest, notice whereof shall
be given to the holders of Securities not less than 10 days prior to such
special record date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which
the Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture.
The principal of (and premium, if any) and interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if
any, on this Security shall be payable at the office or agency of the Trustee
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that, payment of interest may be made at
the option of the Company by (i) check mailed to the holder at such address
as shall appear in the Security Register or (ii) by transfer to an account
maintained by the Person entitled thereto, provided that proper written
transfer instructions have been received by the relevant record date.
Notwithstanding the foregoing, so long as the Holder of this Security is the
Property Trustee, the payment of the principal of (and premium, if any) and
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on this Security will be made at such place and
to such account as may be designated by the Property Trustee.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each holder
of this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his or her behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee his or
her attorney-in-fact for any and all such purposes. Each holder hereof, by
his or her acceptance hereof, hereby waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
A-4
<PAGE>
The provisions of this Security are continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed and sealed.
Dated: ________________, 1997
PROGRESS FINANCIAL CORPORATION
By: ____________________________
Name: Frederick E. Schea
Title: Senior Vice President and Chief
Financial Officer
Attest:
By: _______________________
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK, Dated: , 1997
as Trustee
By____________________
Authorized Signatory
A-5
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of June
__, 1997 (the "Indenture"), duly executed and delivered between the Company
and The Bank of New York, as Trustee (the "Trustee"), to which Indenture
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Securities.
Upon the occurrence and continuation of a Special Event prior to
June __, 2007 (the "Initial Optional Redemption Date"), the Company shall
have the right, at any time within 90 days following the occurrence of such
Special Event, to redeem this Security in whole (but not in part) at the
Special Event Redemption Price. "Special Event Redemption Price" shall mean,
with respect to any redemption of the Securities following a Special Event,
an amount in cash equal to the Make Whole Amount. The "Make Whole Amount"
shall mean an amount equal to the greater of (i) 100% of the principal amount
to be redeemed or (ii) the sum, as determined by a Quotation Agent, of the
present values of remaining scheduled payments of principal and interest,
discounted to the prepayment date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus,
in the case of each of clauses (i) and (ii), any accrued and unpaid interest
thereon (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, to the date of such redemption.
In addition, the Company shall have the right to redeem this
Security, in whole or in part, at any time on or after the Initial Optional
Redemption Date (an "Optional Redemption"), at the redemption prices set
forth below (expressed as percentages of principal to be redeemed) plus, in
each case, accrued and unpaid interest thereon (including Additional Sums and
Compounded Interest, if any) and Liquidated Damages, if any, to the
applicable date of redemption (the "Optional Redemption Price") if redeemed
during the 12-month period beginning ______ __ of the years indicated below.
A-6
<PAGE>
Year Percentage
---- ----------
2007 %
2008 %
2009 %
2010 %
2011 %
2012 %
2013 %
2014 %
2015 %
2016 %
2017 and thereafter 100.000%
The Optional Redemption Price or the Special Event Redemption Price,
as the case requires, shall be paid prior to 12:00 noon, New York time, on
the date of such redemption or at such earlier time as the Company
determines, provided, that the Company shall deposit with the Trustee an
amount sufficient to pay the applicable Redemption Price by 10:00 a.m., New
York City, on the date such Redemption Price is to be paid. Any redemption
pursuant to this paragraph will be made upon not less than 30 days nor more
than 60 days notice. If the Securities are only partially redeemed by the
Company pursuant to an Optional Redemption, the particular Securities to be
redeemed shall be selected on a pro rata basis, by lot or such other method
that the Trustee shall utilize, not more than 60 days prior to the date fixed
for redemption from the outstanding Securities not previously called for
redemption, provided, however, that with respect to Securityholders that
would be required to hold Securities with an aggregate principal amount of
less than $100,000 but more than an aggregate principal amount of zero as a
result of such pro rata redemption, the Company shall redeem Securities of
each such Securityholder so that after such redemption such Securityholder
shall hold Securities either with an aggregate principal amount of at least
$100,000 or such Securityholder no longer holds any Securities and shall use
such method (including, without limitation, by lot) as the Company shall deem
fair and appropriate, provided, further, that any such method of selection
may be made on the basis of the aggregate principal amount of Securities held
by each Securityholder thereof and may be made by making such adjustments as
the Company deems fair and appropriate in order that only Securities in
denominations of $1,000 or integral multiples thereof shall be redeemed.
A-7
<PAGE>
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in
the name of the holder hereof upon the cancellation hereof.
Notwithstanding the foregoing, any redemption of Securities by the
Company shall be subject to the receipt of any required regulatory approval.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the Securities at the time outstanding, as defined in the
Indenture, to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of modifying in any manner the rights of the holders of
the Securities; provided, however, that no such supplemental indenture shall,
without the consent of each holder of Securities then outstanding and
affected thereby, (i) change the Maturity Date of any Securities, or reduce
the principal amount thereof, or reduce any amount payable on redemption
thereof, or reduce the rate or extend the time of payment of interest thereon
(subject to Article XVI of the Indenture), or make the principal of, or
interest or premium on, the Securities payable in any coin or currency other
than U.S. dollars, or impair or affect the right of any holder of Securities
to institute suit for the payment thereof, or (ii) reduce the aforesaid
percentage of Securities, the holders of which are required to consent to any
such supplemental indenture. The Indenture also contains provisions
permitting the holders of a majority in aggregate principal amount of the
Securities at the time outstanding affected thereby, on behalf of all of the
holders of the Securities, to waive any past default in the performance of
any of the covenants contained in the Indenture, or established pursuant to
the Indenture, and its consequences, except a default in the payment of the
principal of or premium, if any, or interest on any of the Securities or a
default in respect of any covenant or provision under which the Indenture
cannot be modified or amended without the consent of each holder of
Securities then outstanding. Any such consent or waiver by the holder of
this Security (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future holders and
owners of this Security and of any Security issued in exchange herefor or in
place hereof (whether by registration of transfer or otherwise), irrespective
of whether or not any notation of such consent or waiver is made upon this
Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on this Security at the time
and place and at the rate and in the money herein prescribed.
A-8
<PAGE>
So long as no Event of Default shall have occurred and be
continuing, the Company shall have the right, at any time and from time to
time during the term of the Securities, to defer payments of interest by
extending the interest payment period of such Securities for a period not
exceeding 10 consecutive semi-annual periods, including the first such
semi-annual period during such extension period, and not extending beyond the
Maturity Date of the Securities (an "Extended Interest Payment Period") or
ending on a date other than an Interest Payment Date, at the end of which
period the Company shall pay all interest then accrued and unpaid (together
with interest thereon at the rate specified for the Securities to the extent
that payment of such interest is enforceable under applicable law). Before
the termination of any such Extended Interest Payment Period, the Company may
further defer payments of interest by further extending such Extended
Interest Payment Period, provided that such Extended Interest Payment Period,
together with all such previous and further extensions within such Extended
Interest Payment Period, (i) shall not exceed 10 consecutive semi-annual
periods, including the first semi-annual period during such Extended Interest
Payment Period, (ii) shall not end on any date other than an Interest Payment
Date, and (iii) shall not extend beyond the Maturity Date of the Securities.
Upon the termination of any such Extended Interest Payment Period and the
payment of all accrued and unpaid interest and any additional amounts then
due, the Company may commence a new Extended Interest Payment Period, subject
to the foregoing requirements.
The Company has agreed that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock
(which includes common and preferred stock), (ii) 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
right of payment to the Securities or (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any
Subsidiary of the Company if such guarantee ranks pari passu or junior in
right of payment to the Securities (other than (a) dividends or distributions
in shares of, or options, warrants or rights to subscribe for or purchase
shares of, Common Stock of the Company, (b) any declaration of a dividend in
connection with the implementation of a stockholder's rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Capital Securities Guarantee, (d) as a result of a reclassification of the
Company's capital stock or the exchange or the conversion of one class or
series of the Company's capital stock, for another class or series of the
Company's capital stock, (e) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the exchange or conversion of such
capital stock or the security being exchanged or converted and (f) purchases
of Common Stock related to the issuance of Common Stock or rights under any
of the Company's benefit plans for its directors, officers or employees or
any of the Company's dividend reinvestment plans) if at such time (1) there
shall have occurred any event of which the Company has actual knowledge that
(a) is or, with the giving of notice or the lapse of time, or both, would be,
an Event of Default and (b) in respect of which the Company shall not have
taken reasonable steps to cure, (2) if the Securities are held by Progress
Capital Trust, the Company shall be in default with respect
A-9
<PAGE>
to its payment obligations under the Capital Securities Guarantee or (3) the
Company shall have given notice of its election of the exercise of its right
to extend the interest payment period and any such extension shall be
continuing.
Subject to (i) the receipt of any required regulatory approval and
(ii) the receipt by the Company of an opinion of counsel to the effect that
such distribution will not be a taxable event to holders of Capital
Securities, the Company will have the right at any time to liquidate Progress
Capital Trust and cause the Securities to be distributed to the holders of
the Trust Securities in liquidation of the Trust.
The Securities are issuable only in registered form without coupons
in denominations of $1,000.00 and any integral multiple thereof. As provided
in the Indenture and subject to the transfer restrictions limitations as may
be contained herein and therein from time to time, this Security is
transferable by the holder hereof on the Security Register of the Company,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in the City and State of New York accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Securities of
authorized denominations and for the same aggregate principal amount and
series will be issued to the designated transferee or transferees. No service
charge will be made for any such registration of transfer, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Security, the Company, the Trustee, any authenticating agent, any paying
agent, any transfer agent and the registrar may deem and treat the holder
hereof as the absolute owner hereof (whether or not this Security shall be
overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the Security Registrar) for the purpose of receiving
payment of or on account of the principal hereof and premium, if any, and
(subject to the Indenture) interest due hereon and for all other purposes,
and neither the Company nor the Trustee nor any authenticating agent nor any
paying agent nor any transfer agent nor any registrar shall be affected by
any notice to the contrary.
No recourse shall be had for the payment of the principal of or
premium, if any, or interest on this Security, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor Person,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.
A-10
<PAGE>
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAW PROVISIONS THEREOF.
A-11
<PAGE>
Exhibit 4.2
(FACE OF SECURITY)
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 (100
SECURITIES). ANY SUCH TRANSFER OF SECURITIES IN A BLOCK HAVING AN AGGREGATE
PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE
RECEIPT OF PRINCIPAL, PREMIUM (IF ANY) OR INTEREST OF SUCH SECURITIES, AND
SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH
SECURITIES.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY.
1
<PAGE>
No. 1 CUSIP No.
PROGRESS FINANCIAL CORPORATION
10.50% SERIES B JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURE DUE JUNE 1, 2027
Progress Financial Corporation, a Delaware corporation (the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to The
Bank of New York, as Property Trustee for Progress Capital Trust I or
registered assigns, the principal sum of $15,464,000 on June 1, 2027 (the
"Maturity Date"), unless previously redeemed, and to pay interest on the
outstanding principal amount hereof from June 3, 1997, or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, semi-annually (subject to
deferral as set forth herein) in arrears on June 1, and December 1 of each
year, commencing December 1, 1997, at the rate of 10.50% per annum until the
principal hereof shall have become due and payable, and on any overdue
principal and premium, if any, and (without duplication and to the extent
that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum compounded
semi-annually. The amount of interest payable on any Interest Payment Date
shall be computed on the basis of a 360-day year of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month based on a 30-day month. In the event that any date on which the
principal of (or premium, if any) or interest on this Security is payable is
not a Business Day, then the payment payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that if such next succeeding
Business Day falls in the next calendar year, then 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. Pursuant to the Indenture, in certain
circumstances the Company will be required to pay Additional Sums and
Compounded Interest (each as defined in the Indenture) with respect to this
Security. Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Company will be required to pay Liquidated Damages (as
defined in the Registration Rights Agreement) with respect to this Security.
The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities, as defined in said Indenture) is registered at the close of business
on the regular record date for such interest installment, which shall be at the
close of business on the 15th day of the month immediately preceding the month
in which the relevant interest payment date falls. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the holders on such regular record date and may be paid to the Person
in whose name this
2
<PAGE>
Security (or one or more Predecessor Securities) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the holders of
Securities not less than 10 days prior to such special record date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture.
The principal of (and premium, if any) and interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
on this Security shall be payable at the office or agency of the Trustee
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that, payment of interest may be made at the
option of the Company by (i) check mailed to the holder at such address as shall
appear in the Security Register or (ii) by transfer to an account maintained by
the Person entitled thereto, provided that proper written transfer instructions
have been received by the relevant record date. Notwithstanding the foregoing,
so long as the Holder of this Security is the Property Trustee, the payment of
the principal of (and premium, if any) and interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, on this
Security will be made at such place and to such account as may be designated by
the Property Trustee.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Security are continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as though
fully set forth at this place.
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed and sealed.
Dated: , 1997
PROGRESS FINANCIAL CORPORATION
By:
----------------------
Name: Frederick E. Schea
Title: Senior Vice President and Chief
Financial Officer
Attest:
By:
-----------------------
Name: Eric J. Morgan
Title: Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, Dated: , 1997
as Trustee
By
--------------------
Authorized Signatory
4
<PAGE>
(REVERSE OF SECURITY)
This Security is one of the Securities of the Company (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of June 3,
1997 (the "Indenture"), duly executed and delivered between the Company and The
Bank of New York, as Trustee (the "Trustee"), to which Indenture reference is
hereby made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Securities.
Upon the occurrence and continuation of a Special Event prior to June
1, 2007 (the "Initial Optional Redemption Date"), the Company shall have the
right, at any time within 90 days following the occurrence of such Special
Event, to redeem this Security in whole (but not in part) at the Special Event
Redemption Price. "Special Event Redemption Price" shall mean, with respect to
any redemption of the Securities following a Special Event, an amount in cash
equal to the Make Whole Amount. The "Make Whole Amount" shall mean an amount
equal to the greater of (i) 100% of the principal amount to be redeemed or (ii)
the sum, as determined by a Quotation Agent, of the present values of remaining
scheduled payments of principal and interest, discounted to the prepayment date
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate, plus, in the case of each of clauses (i)
and (ii), any accrued and unpaid interest thereon (including Compounded Interest
and Additional Sums, if any) and Liquidated Damages, if any, to the date of such
redemption.
In addition, the Company shall have the right to redeem this Security,
in whole or in part, at any time on or after the Initial Optional Redemption
Date (an "Optional Redemption"), at the redemption prices set forth below
(expressed as percentages of principal to be redeemed) plus, in each case,
accrued and unpaid interest thereon (including Additional Sums and Compounded
Interest, if any) and Liquidated Damages, if any, to the applicable date of
redemption (the "Optional Redemption Price") if redeemed during the 12-month
period beginning June 1 of the years indicated below.
5
<PAGE>
Year Percentage
---- ----------
2007 105.250%
2008 104.725%
2009 104.200%
2010 103.675%
2011 103.150%
2012 102.625%
2013 102.100%
2014 101.575%
2015 101.050%
2016 100.525%
2017 and thereafter 100.000%
The Optional Redemption Price or the Special Event Redemption Price,
as the case requires, shall be paid prior to 12:00 noon, New York time, on the
date of such redemption or at such earlier time as the Company determines,
provided, that the Company shall deposit with the Trustee an amount sufficient
to pay the applicable Redemption Price by 10:00 a.m., New York City, on the date
such Redemption Price is to be paid. Any redemption pursuant to this paragraph
will be made upon not less than 30 days nor more than 60 days notice. If the
Securities are only partially redeemed by the Company pursuant to an Optional
Redemption, the particular Securities to be redeemed shall be selected on a pro
rata basis, by lot or such other method that the Trustee shall utilize, not more
than 60 days prior to the date fixed for redemption from the outstanding
Securities not previously called for redemption, provided, however, that with
respect to Securityholders that would be required to hold Securities with an
aggregate principal amount of less than $100,000 but more than an aggregate
principal amount of zero as a result of such pro rata redemption, the Company
shall redeem Securities of each such Securityholder so that after such
redemption such Securityholder shall hold Securities either with an aggregate
principal amount of at least $100,000 or such Securityholder no longer holds any
Securities and shall use such method (including, without limitation, by lot) as
the Company shall deem fair and appropriate, provided, further, that any such
method of selection may be made on the basis of the aggregate principal amount
of Securities held by each Securityholder thereof and may be made by making such
adjustments as the Company deems fair and appropriate in order that only
Securities in denominations of $1,000 or integral multiples thereof shall be
redeemed.
6
<PAGE>
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in the
name of the holder hereof upon the cancellation hereof.
Notwithstanding the foregoing, any redemption of Securities by the
Company shall be subject to the receipt of any required regulatory approval.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the Securities at the time outstanding, as defined in the Indenture,
to execute supplemental indentures for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of modifying in any manner the rights of the holders of the Securities;
provided, however, that no such supplemental indenture shall, without the
consent of each holder of Securities then outstanding and affected thereby, (i)
change the Maturity Date of any Securities, or reduce the principal amount
thereof, or reduce any amount payable on redemption thereof, or reduce the rate
or extend the time of payment of interest thereon (subject to Article XVI of the
Indenture), or make the principal of, or interest or premium on, the Securities
payable in any coin or currency other than U.S. dollars, or impair or affect the
right of any holder of Securities to institute suit for the payment thereof, or
(ii) reduce the aforesaid percentage of Securities, the holders of which are
required to consent to any such supplemental indenture. The Indenture also
contains provisions permitting the holders of a majority in aggregate principal
amount of the Securities at the time outstanding affected thereby, on behalf of
all of the holders of the Securities, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture, and its consequences, except a default in the payment
of the principal of or premium, if any, or interest on any of the Securities or
a default in respect of any covenant or provision under which the Indenture
cannot be modified or amended without the consent of each holder of Securities
then outstanding. Any such consent or waiver by the holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future holders and owners of this Security and of
any Security issued in exchange herefor or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and premium, if any, and
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on this Security at the time and place and at the
rate and in the money herein prescribed.
7
<PAGE>
So long as no Event of Default shall have occurred and be continuing,
the Company shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
extension period, and not extending beyond the Maturity Date of the Securities
(an "Extended Interest Payment Period") or ending on a date other than an
Interest Payment Date, at the end of which period the Company shall pay all
interest then accrued and unpaid (together with interest thereon at the rate
specified for the Securities to the extent that payment of such interest is
enforceable under applicable law). Before the termination of any such Extended
Interest Payment Period, the Company may further defer payments of interest by
further extending such Extended Interest Payment Period, provided that such
Extended Interest Payment Period, together with all such previous and further
extensions within such Extended Interest Payment Period, (i) shall not exceed 10
consecutive semi-annual periods, including the first semi-annual period during
such Extended Interest Payment Period, (ii) shall not end on any date other than
an Interest Payment Date, and (iii) shall not extend beyond the Maturity Date of
the Securities. Upon the termination of any such Extended Interest Payment
Period and the payment of all accrued and unpaid interest and any additional
amounts then due, the Company may commence a new Extended Interest Payment
Period, subject to the foregoing requirements.
The Company has agreed that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock), (ii) 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 right of
payment to the Securities or (iii) make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any Subsidiary of the
Company if such guarantee ranks pari passu or junior in right of payment to the
Securities (other than (a) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, Common Stock of the
Company, (b) any declaration of a dividend in connection with the implementation
of a stockholder's rights plan, or the issuance of stock under any such plan in
the future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Capital Securities Guarantee, (d) as a result of a
reclassification of the Company's capital stock or the exchange or the
conversion of one class or series of the Company's capital stock, for another
class or series of the Company's capital stock, (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the exchange or
conversion of such capital stock or the security being exchanged or converted
and (f) purchases of Common Stock related to the issuance of Common Stock or
rights under any of the Company's benefit plans for its directors, officers or
employees or any of the Company's dividend reinvestment plans) if at such time
(1) there shall have occurred any event of which the Company has actual
knowledge that (a) is or, with the giving of notice or the lapse of time, or
both, would be, an Event of Default and (b) in respect of which the Company
shall not have taken reasonable steps to cure, (2) if the Securities are held by
Progress Capital Trust, the Company shall be in default with respect
8
<PAGE>
to its payment obligations under the Capital Securities Guarantee or (3) the
Company shall have given notice of its election of the exercise of its right to
extend the interest payment period and any such extension shall be continuing.
Subject to (i) the receipt of any required regulatory approval and
(ii) the receipt by the Company of an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of Capital Securities, the
Company will have the right at any time to liquidate Progress Capital Trust and
cause the Securities to be distributed to the holders of the Trust Securities in
liquidation of the Trust.
The Securities are issuable only in registered form without coupons in
denominations of $1,000.00 and any integral multiple thereof. As provided in
the Indenture and subject to the transfer restrictions limitations as may be
contained herein and therein from time to time, this Security is transferable by
the holder hereof on the Security Register of the Company, upon surrender of
this Security for registration of transfer at the office or agency of the
Company in the City and State of New York accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or the Trustee duly
executed by the holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of authorized denominations and for the
same aggregate principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for any such
registration of transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this
Security, the Company, the Trustee, any authenticating agent, any paying agent,
any transfer agent and the registrar may deem and treat the holder hereof as the
absolute owner hereof (whether or not this Security shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Security Registrar) for the purpose of receiving payment of or on
account of the principal hereof and premium, if any, and (subject to the
Indenture) interest due hereon and for all other purposes, and neither the
Company nor the Trustee nor any authenticating agent nor any paying agent nor
any transfer agent nor any registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of or
premium, if any, or interest on this Security, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture, against
any incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor Person, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
9
<PAGE>
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PROVISIONS THEREOF.
10
<PAGE>
EXHIBIT 4.3
CERTIFICATE OF TRUST
OF
PROGRESS CAPITAL TRUST I
THIS Certificate of Trust of Progress Capital Trust I (the "Trust"),
dated as of May 29, 1997, is being executed and filed by the undersigned, 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 Progress
Capital Trust I.
2. Delaware Trustee. The name and business address of the trustee of
the Trust with a principal place of business in the State of Delaware are The
Bank of New York (Delaware), White Clay Center, Route 273, Newark, Delaware
19711.
3. Effective Date. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have executed this Certificate of Trust as of the date first-above written.
THE BANK OF NEW YORK (DELAWARE), not in
its individual capacity but solely as trustee of the Trust
By: /s/ Mary Jane Morrissey
-------------------------------
Name: Mary Jane Morrissey
Authorized Signatory
FREDERICK E. SCHEA, not in his individual capacity
but solely as trustee of the Trust
By: /s/ Frederick E. Schea
-------------------------------
<PAGE>
EXHIBIT 4.4
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AMENDED AND RESTATED DECLARATION
OF TRUST
PROGRESS CAPITAL TRUST I
Dated as of June 3, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.............................................. 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application......................... 9
SECTION 2.2 Lists of Holders of Securities........................... 10
SECTION 2.3 Reports by the Property Trustee.......................... 10
SECTION 2.4 Periodic Reports to Property Trustee..................... 10
SECTION 2.5 Evidence of Compliance with Conditions Precedent......... 11
SECTION 2.6 Events of Default; Waiver................................ 11
SECTION 2.7 Event of Default; Notice................................. 12
ARTICLE III
ORGANIZATION
SECTION 3.1 Name..................................................... 13
SECTION 3.2 Office................................................... 14
SECTION 3.3 Purpose.................................................. 14
SECTION 3.4 Authority................................................ 14
SECTION 3.5 Title to Property of the Trust........................... 14
SECTION 3.6 Powers and Duties of the Administrative Trustees......... 14
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees..... 18
SECTION 3.8 Powers and Duties of the Property Trustee................ 19
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee.................................................. 21
SECTION 3.10 Certain Rights of Property Trustee....................... 23
SECTION 3.11 Delaware Trustee......................................... 25
SECTION 3.12 Execution of Documents................................... 25
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities... 26
SECTION 3.14 Duration of Trust........................................ 26
SECTION 3.15 Mergers.................................................. 26
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.................. 28
SECTION 4.2 Responsibilities of the Sponsor.......................... 28
i
<PAGE>
Page
----
SECTION 4.3 Right to Proceed......................................... 29
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee............ 29
SECTION 5.2 Delaware Trustee......................................... 30
SECTION 5.3 Property Trustee; Eligibility............................ 30
SECTION 5.4 Certain Qualifications of Administrative Trustees and
Delaware Trustee Generally............................... 31
SECTION 5.5 Administrative Trustees.................................. 31
SECTION 5.6 Delaware Trustee......................................... 31
SECTION 5.7 Appointment, Removal and Resignation of Trustees......... 32
SECTION 5.8 Vacancies among Trustees................................. 33
SECTION 5.9 Effect of Vacancies...................................... 34
SECTION 5.10 Meetings................................................. 34
SECTION 5.11 Delegation of Power...................................... 35
SECTION 5.12 Merger, Conversion, Consolidation or Succession to
Business................................................. 35
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions............................................ 35
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.................. 36
SECTION 7.2 Execution and Authentication............................. 36
SECTION 7.3 Form and Dating.......................................... 37
SECTION 7.4 Registrar, Paying Agent and Exchange Agent............... 39
SECTION 7.5 Paying Agent to Hold Money in Trust...................... 39
SECTION 7.6 Replacement Securities................................... 40
SECTION 7.7 Outstanding Capital Securities........................... 40
SECTION 7.8 Capital Securities in Treasury........................... 40
SECTION 7.9 Temporary Securities..................................... 41
SECTION 7.10 Cancellation............................................. 42
SECTION 7.11 CUSIP Numbers............................................ 42
ii
<PAGE>
ARTICLE VIII
TERMINATION OF TRUST
Page
----
SECTION 8.1 Termination of Trust..................................... 42
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities................................... 43
SECTION 9.2 Transfer Procedures and Restrictions..................... 44
SECTION 9.3 Deemed Security Holders.................................. 53
SECTION 9.4 Book Entry Interests..................................... 53
SECTION 9.5 Notices to Clearing Agency............................... 54
SECTION 9.6 Appointment of Successor Clearing Agency................. 54
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability................................................ 54
SECTION 10.2 Exculpation.............................................. 55
SECTION 10.3 Fiduciary Duty........................................... 55
SECTION 10.4 Indemnification.......................................... 56
SECTION 10.5 Outside Businesses....................................... 59
SECTION 10.6 Compensation; Fees....................................... 60
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.............................................. 60
SECTION 11.3 Banking.................................................. 61
SECTION 11.4 Withholding.............................................. 61
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments............................................... 62
SECTION 12.2 Meetings of the Holders; Action by Written Consent....... 64
iii
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ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
Page
----
SECTION 13.1 Representations and Warranties of Property Trustee....... 65
SECTION 13.2 Representations and Warranties of Delaware Trustee....... 66
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement............................ 67
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.................................................. 67
SECTION 15.2 Governing Law............................................ 68
SECTION 15.3 Intention of the Parties................................. 68
SECTION 15.4 Headings................................................. 69
SECTION 15.5 Successors and Assigns................................... 69
SECTION 15.6 Partial Enforceability................................... 69
SECTION 15.7 Counterparts............................................. 69
ANNEX I TERMS OF SECURITIES......................................... I-1
EXHIBIT A-1 FORM OF CAPITAL SECURITY CERTIFICATE........................ A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE......................... A2-4
EXHIBIT B SPECIMEN OF DEBENTURE....................................... B-1
EXHIBIT C PURCHASE AGREEMENT ......................................... C-1
EXHIBIT D REGISTRATION RIGHTS AGREEMENT............................... D-1
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CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
------------------- -----------
310(a).......................................... 5.3
310(b).......................................... 5.3(c), 5.3(d)
311(a).......................................... 2.2(b)
311(b).......................................... 2.2(b)
312(a).......................................... 2.2(a)
312(b).......................................... 2.2(b)
313............................................. 2.3
314(a).......................................... 2.4; 3.6(j)
314(c).......................................... 2.5
315(a).......................................... 3.9
315(b).......................................... 2.7(a)
315(c).......................................... 3.9(a)
315(d).......................................... 3.9(b)
316(a).......................................... 2.6
316(c).......................................... 3.6(e)
317(a).......................................... 3.8(e); 3.8(h)
317(b).......................................... 3.8(i); 7.5
---------------
* This Cross-Reference Table does not constitute part of the
Declaration and shall not affect the interpretation of any of
its terms or provisions.
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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
PROGRESS CAPITAL TRUST I
June 3, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of June 3, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of
undivided beneficial interests in the Trust to be issued pursuant to this
Declaration;
WHEREAS, the Trustees (other than the Property Trustee (as defined
herein)) and the Sponsor established Progress Capital Trust I (the "Trust"),
a trust formed under the Delaware Business Trust Act pursuant to a
Declaration of Trust dated as of May 29, 1997 (the "Original Declaration"),
and a Certificate of Trust filed with the Secretary of State of the State of
Delaware on May 29, 1997, for the sole purpose of issuing and selling certain
securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in certain Debentures of the
Debenture Issuer (each as hereinafter defined), and engaging in only those
other activities necessary, advisable or incidental thereto; and
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original
Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory business trust under the Business Trust Act
and that this Declaration constitute the governing instrument of such
business trust, the Trustees declare that all assets contributed to the Trust
will be held in trust for the benefit of the holders, from time to time, of
the securities representing undivided beneficial interests in the assets of
the Trust issued hereunder, subject to the provisions of this Declaration.
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits
to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Administrative Trustee" has the meaning set forth in Section 5.1(b).
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Authorized Officer" of a Person means any other Person that is
authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday or a
day on which banking institutions in the City of New York or the City of Blue
Bell, Pennsylvania are authorized or required by law or executive order to
close.
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"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Capital Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books
of a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A Capital
Securities and the Series B Capital Securities.
"Capital Securities Guarantee" means, collectively, the Series A
Capital Securities Guarantee and the Series B Capital Securities Guarantee.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Capital Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and
which shall undertake to effect book entry transfers and pledges of the
Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Time" means the "Closing Time" under the Purchase Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission as from time to time constituted, or if any time after the
execution of this Declaration such Commission is not existing and performing
the duties now assigned to it under applicable Federal securities laws, then
the body performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
"Common Securities Guarantee" means the guarantee agreement dated as
of June 3, 1997 of the Sponsor in respect of the Common Securities.
"Company Indemnified Person" means (a) any Administrative Trustee;
(b) any Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members,
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partners, employees, representatives or agents of any Administrative Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at 101 Barclay Street, 21st Floor
West, New York, New York 10286.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii)
the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Progress Financial Corporation, a Delaware
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer
of the Debentures under the Indenture.
"Debenture Trustee" means The Bank of New York, a New York banking
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Debentures" means, collectively, the Series A Debentures and the
Series B Debentures.
"Default" means an event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set forth in
Section 7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direct Action" shall have the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders in accordance
with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) that has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
4
<PAGE>
"Exchange Agent" has the meaning set forth in Section 7.4.
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer
to exchange Series B Debentures for Series A Debentures and the Series B
Capital Securities Guarantee for the Series A Capital Securities Guarantee.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Capital Security" has the meaning set forth in Section
7.3(a).
"Holder" means a Person in whose name a Security is registered, such
Person being a beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of June 3, 1997, among the
Debenture Issuer and the Debenture Trustee, as amended from time to time.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"List of Holders" has the meaning set forth in Section 2.2(a).
"Liquidated Damages" has the meaning set forth in the Registration
Rights Agreement.
"Majority in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by
the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting
together as a single class or, as the context may require, Holders of
outstanding Capital Securities or Holders of outstanding Common
5
<PAGE>
Securities voting separately as a class, who are the record owners of more
than 50% of the aggregate liquidation amount of all outstanding Securities of
the relevant class.
"Offering Memorandum" has the meaning set forth in Section 3.6(b)(i).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by any of the Chairman, a Vice Chairman, the Chief
Executive Officer, the President, a Vice President, the Comptroller, the
Secretary or an Assistant Secretary of such Person. Any Officers'
Certificate delivered by the Trust shall be signed by at least one
Administrative Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Declaration
shall include:
(a) a statement that each officer signing the Certificate
has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion
as to whether or not such covenant or condition has been complied
with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
an employee of the Sponsor, and who shall be acceptable to the Property
Trustee.
"Paying Agent" has the meaning specified in Section 7.4.
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"PORTAL" has the meaning set forth in Section 3.6(b)(iii).
"Property Trustee" has the meaning set forth in Section 5.3(a).
"Property Trustee Account" has the meaning set forth in Section
3.8(c)(i).
6
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"Purchase Agreement" means the Purchase Agreement for the initial
offering and sale of Capital Securities in the form of Exhibit C.
"QIBs" shall mean qualified institutional buyers as defined in Rule
144A.
"Quorum" means a majority of the Administrative Trustees or, if
there are only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of June 3, 1997, by and among the Trust, the Debenture
Issuer and the initial purchaser named therein, as amended from time to time.
"Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of
the Sponsor.
"Responsible Officer" means any officer within the Corporate Trust
Office of the Property Trustee with direct responsibility for the
administration of this Declaration and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Restricted Definitive Capital Securities" has the meaning set forth
in Section 7.3(c).
"Restricted Capital Security" means a Capital Security required by
Section 9.2 to contain a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning set forth in Section
9.2(i).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any
successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
7
<PAGE>
"Rule 144A" means Rule 144A under the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Securities" or "Trust Securities" means the Common Securities and
the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and
the Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified in Section
7.1(a) and may be alternatively referred to as the 10.50% Capital Securities.
"Series A Capital Securities Guarantee" means the guarantee
agreement dated as of June 3, 1997, by the Sponsor in respect of the Series A
Capital Securities.
"Series A Debentures" means the Series A 10.50% Junior Subordinated
Deferrable Interest Debentures due June 1, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
"Series B Capital Securities" has the meaning specified in Section
7.1(a).
"Series B Capital Securities Guarantee" means the guarantee
agreement to be entered in connection with the Exchange Offer by the Sponsor
in respect of the Series B Capital Securities.
"Series B Debentures" means the Series B 10.50% Junior Subordinated
Deferrable Interest Debentures due June 1, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
"Special Event" has the meaning set forth in Section 4(c) of Annex I
hereto.
"Sponsor" means Progress Financial Corporation, a Delaware
corporation, or any successor entity resulting from any merger,
consolidation, amalgamation or other business combination, in its capacity as
sponsor of the Trust.
"Successor Entity" has the meaning set forth in Section 3.15(b)(i).
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
8
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"10% in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by
the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting
together as a single class or, as the context may require, Holders of
outstanding Capital Securities or Holders of outstanding Common Securities
voting separately as a class, who are the record owners of 10% or more of the
aggregate liquidation amount of all outstanding Securities of the relevant
class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue as a trustee
in accordance with the terms hereof, and all other Persons who may from time
to time be duly appointed, qualified and serving as trustees in accordance
with the provisions hereof, and references herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Unrestricted Global Capital Security" has the meaning set forth in
Section 9.2(b).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration in order for
this Declaration to be qualified under the Trust Indenture Act and shall, to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to
317, inclusive, of the Trust Indenture Act, such imposed duties shall control.
9
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(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide the Property Trustee, unless the Property Trustee
is Registrar for the Securities, (i) within 14 days after each record date
for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders ("List of
Holders") as of such record date, provided that neither the Sponsor nor the
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time that the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Administrative Trustees on behalf of the Trust, and (ii) at
any other time, within 30 days of receipt by the Trust of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Property Trustee. The Property Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it or which it receives in the
capacity as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year, commencing May 15, 1998,
the Property Trustee shall provide to the Holders of the Capital 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 Property Trustee shall also comply with the requirements
of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as are 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(a)(4) of the Trust
Indenture Act, such compliance certificate to be delivered annually on or
before 120 days after the end of each fiscal year of the Sponsor. Delivery
of such documents, reports and information to the Property Trustee is for
informational purposes only and the Property Trustee's receipt of such shall
not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the
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Sponsor's compliance with any of its covenants hereunder (as to which the
Property Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent provided for in this Declaration 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 may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority
in aggregate principal amount of the holders of the Debentures (a
"Super Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote of
the Holders of at least the proportion in aggregate liquidation
amount of the Capital Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such default shall cease to exist, and any Event of Default with respect
to the Capital Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend
to any subsequent or other default or an Event of Default with respect to the
Capital Securities or impair any right consequent thereon. Any waiver by the
Holders of the Capital Securities of an Event of Default with respect to the
Capital Securities shall also be deemed to constitute a waiver by the Holders
of the Common Securities of any such Event of Default with respect to the
Common Securities for all purposes of this Declaration without any further
act, vote, or consent of the Holders of the Common Securities.
The Holders of a Majority in liquidation amount of the Capital Securities
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy
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<PAGE>
available to the Property Trustee or to direct the exercise of any trust or
power conferred upon the Property Trustee, including the right to direct the
Property Trustee to exercise the remedies available to it as holder of the
Debentures, provided however, that (subject to the provisions of Section 3.9)
the Property Trustee shall have the right to decline to follow any such
direction if the Property Trustee shall determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such
direction or if the Property Trustee, being advised by counsel, determines
that the action of proceeding so directed may not lawfully be taken or if the
Property Trustee, in good faith, by its board of directors or trustees,
executive committe, or a trust committee of directors or trustees and/or
Responsible Officers, shall determine that the action or proceedings so
directed would involve the Property Trustee in personal liability.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration shall
also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under the Declaration
as provided below in this Section 2.6(b), the Event of Default
under the Declaration may only be waived by the vote of the
Holders of at least the proportion in aggregate liquidation
amount of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding;
provided further, the Holders of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to
the Common Securities and their consequences if all Events of Default with
respect to the Capital Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the Holders of the Capital Securities and only the Holders of
the Capital Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of
this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
Subject to the foregoing provisions of this Section 2.6(b), upon such
waiver, any such default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have
been cured for every purpose of this Declaration, but no such waiver shall
extend
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to any subsequent or other default or Event of Default with respect to the
Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the occurrence
of a default actually known to a Responsible Officer, transmit by mail, first
class postage prepaid, to the Holders, notices of all defaults with respect
to the Securities actually known to a Responsible Officer, unless such
defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be
an Event of Default as defined in the Indenture, not including any periods of
grace provided for therein and irrespective of the giving of any notice
provided therein); provided that, except for a default in the payment of
principal of (or premium, if any) or interest (including Compounded Interest
and Additional Sums (as such terms are defined in the Indenture), if any) or
Liquidated Damages (as defined in the Registration Rights Agreement) on any
of the Debentures, the Property Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer in good faith determines
that the withholding of such notice is in the interests of the Holders.
(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 5.01(a) (other than the
payment of Compounded Interest, Additional Sums and Liquidated
Damages) and 5.01(b) of the Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer charged
with the administration of the Declaration shall have actual
knowledge.
(c) Within ten Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Event of Default to the Holders of the Capital
Securities, the Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee a certification as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under this Declaration.
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ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Progress Capital Trust I" as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Delaware Trustee, the Property Trustee and the Holders. The
Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Administrative Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Progress
Financial Corporation, Four Sentry Parkway, Suite 230, Blue Bell,
Pennsylvania 19422-2311. On ten Business Days written notice to the Delaware
Trustee, the Property Trustee and the Holders of Securities, the
Administrative Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities, (b) use the proceeds from the sale of the Securities to
acquire the Debentures, and (c) except as otherwise limited herein, to engage
in only those other activities necessary, advisable or incidental thereto.
The Trust shall not borrow money, issue debt or reinvest proceeds derived
from investments, mortgage or pledge any of its assets, or otherwise
undertake (or permit to be undertaken) any activity that would cause the
Trust not to be classified for United States federal income tax purposes as a
grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Administrative Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an action
taken by the Property Trustee on behalf of the Trust in accordance with its
powers shall constitute the act of and serve to bind the Trust. In dealing
with the Trustees acting on behalf of the Trust, no Person shall be required
to inquire into the authority of the Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the power and
authority of the Trustees as set forth in this Declaration.
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SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Property Trustee Account or as otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in the Trust. The
Holders shall not have legal title to any part of the assets of the Trust,
but shall have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; provided, however, that except as contemplated in Section
7.1(a), (i) the Trust may issue no more than one series of Capital Securities
and no more than one series of Common Securities, (ii) there shall be no
interests in the Trust other than the Securities, and (iii) the issuance of
Securities shall be limited to a simultaneous issuance of both Capital
Securities and Common Securities at the Closing Time;
(b) in connection with the issue and sale of the Capital Securities
and the consummation of the Exchange Offer to:
(i) prepare and execute, if necessary, an offering
memorandum (the "Offering Memorandum") in preliminary and final
form prepared by the Sponsor, in relation to the offering and
sale of Series A Capital Securities to qualified institutional
buyers in reliance on Rule 144A under the Securities Act and to
institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act), and to
execute and file with the Commission, at such time as determined
by the Sponsor, any Registration Statement, including any
amendments thereto, as contemplated by the Registration Rights
Agreement;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor to be necessary, in
order to qualify or register all or part of the Capital
Securities in any State in which the Sponsor has determined to
qualify or register such Capital Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to permit the Capital Securities to trade or be quoted
or listed in or on the Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market or any other
securities exchange, quotation system or the Nasdaq Stock
Market's National Market;
(iv) execute and deliver letters, documents or instruments
with DTC and other Clearing Agencies relating to the Capital
Securities;
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(v) if required, execute and file with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor, relating to the registration of
the Capital Securities under Section 12(g) of the Exchange Act;
and
(vi) execute and enter into the Purchase Agreement, the
Common Securities Guarantee and the Debenture Subscription
Agreement dated as of June 3, 1997 between the Sponsor and the
Trust and the Registration Rights Agreement providing for the
sale and registration of the Capital Securities;
(c) to acquire the Series A Debentures with the proceeds of the
sale of the Series A Capital Securities and the Common Securities and to
exchange the Series A Debentures for a like principal amount of Series B
Debentures, pursuant to the Exchange Offer; provided, however, that the
Administrative Trustees shall cause legal title to the Debentures to be held
of record in the name of the Property Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Capital Securities and Holders of Common
Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Administrative Trustees pursuant to the terms of the Securities;
(g) 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"), unless pursuant to Section 3.8(e), the Property
Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Administrative Trustee;
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(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar and
Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.4 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and to
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest
payment period under the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders or to enable the
Trust to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or
with applicable law, that the Administrative Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company
Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure
that the Debentures will be treated as indebtedness of the
Debenture Issuer for United States federal income tax purposes;
(p) to take all action necessary to consummate the Exchange Offer
or otherwise cause the Capital Securities to be registered pursuant to an
effective registration statement in accordance with the provisions of the
Registration Rights Agreement;
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the Administrative
Trustees, on behalf of the Trust; and
(r) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
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The Administrative Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Administrative
Trustees shall not take any action that is inconsistent with the purposes and
functions of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall have
none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
The Administrative Trustees shall take all actions on behalf of the
Trust that are not specifically required by this Declaration to be taken by
any other Trustee.
Any expenses incurred by the Administrative Trustees pursuant to
this Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee and the Delaware Trustee) shall not, engage in any activity other
than as required or authorized by this Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from holding
the Debentures, but shall distribute all such proceeds to Holders
pursuant to the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust
purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way
whatsoever, except as otherwise expressly provided herein;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities;
(vii) other than as provided in this Declaration or
Annex I, (A) direct the time, method and place of conducting any
proceeding with respect to any remedy available to the Debenture
Trustee, or exercising any trust or power conferred upon the
Debenture Trustee with respect to the Debentures, (B) waive any
past default that is waivable under the Indenture or (C) exercise
any right to rescind or annul any declaration that the principal
of all the Debentures shall be due and payable; or
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(viii) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be
required unless the Trust shall have received an opinion of
independent tax counsel experienced in such matters to the effect
that such amendment, modification or termination will not cause
more than an insubstantial risk that for United States federal
income tax purposes the Trust will not be classified as a grantor
trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the
Holders. The right, title and interest of the Property Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.7. Such vesting
and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Trustee Account") in the
name of and under the exclusive control of the Property Trustee
on behalf of the Holders and, upon the receipt of payments of
funds made in respect of the Debentures held by the Property
Trustee, deposit such funds into the Property Trustee Account and
make payments or cause the Paying Agent to make payments to the
Holders from the Property Trustee Account in accordance with
Section 6.1. Funds in the Property Trustee Account shall be held
uninvested until disbursed in accordance with this Declaration.
The Property Trustee Account shall be an account that is
maintained with a banking institution the rating on whose
long-term unsecured indebtedness by a "nationally recognized
statistical rating organization", as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act, is at least
investment grade;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Trust
Securities to the extent the Debentures are redeemed or mature;
and
(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as shall be
necessary or appropriate to effect the distribution of the
Debentures to Holders upon the occurrence of certain events.
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(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to
the terms of the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act. If
an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay the principal of
or premium, if any, or interest (including Compounded Interest and Additional
Sums, if any) or Liquidated Damages, if any, on the Debentures on the date
such principal, premium, if any, or interest (including Compounded Interest
and Additional Sums, if any) or Liquidated Damages, if any, is otherwise
payable (or in the case of redemption, on the redemption date), then a Holder
of Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or interest
(including Compounded Interest and Additional Sums, if any) or Liquidated
Damages, if any, on the Debentures having a principal amount equal to the
aggregate liquidation amount of the Capital Securities of such Holder (a
"Direct Action") on or after the respective due date specified in the
Debentures. In connection with such Direct Action, the rights of the Holders
of the Common Securities will be subrogated to the rights of such Holder of
Capital Securities to the extent of any payment made by the Debenture Issuer
to such Holder of Capital Securities in such Direct Action. Except as
provided in the preceding sentence, the Holders of Capital Securities will
not be able to exercise directly any other remedy available to the holders of
the Debentures.
(f) The Property Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders pursuant
to the terms of the Securities; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7 (a
"Successor Property Trustee").
(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of
Debentures under the Indenture and, if an Event of Default actually
known to a Responsible Officer occurs and is continuing, the Property
Trustee shall, for the benefit of Holders, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant
to the terms of such Securities.
(h) The Property Trustee shall be authorized to undertake
any actions set forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying
Agent, the Property Trustee may authorize one or more Persons to act
as additional Paying Agents and
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to pay Distributions, redemption payments or liquidation payments on behalf
of the Trust with respect to all Securities and any such Paying Agent shall
comply with Section 317(b) of the Trust Indenture Act. Any such additional
Paying Agent may be removed by the Property Trustee at any time the Property
Trustee remains as Paying Agent and a successor Paying Agent or additional
Paying Agents may be (but are not required to be) appointed at any time by
the Property Trustee while the Property Trustee is so acting as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 3.6.
Notwithstanding anything expressed or implied to the contrary in
this Declaration or any Annex or Exhibit hereto, (i) the Property Trustee
must exercise the powers set forth in this Section 3.8 in a manner that is
consistent with the purposes and functions of the Trust set out in Section
3.3 and (ii) the Property Trustee shall not take any action that is
inconsistent with the purposes and functions of the Trust set out in Section
3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee.
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and in the Securities and no implied covenants shall be read
into this Declaration against the Property Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
2.6) of which a Responsible Officer has actual knowledge, the Property
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that
may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Declaration and in the Securities and the Property Trustee
shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration and in the Securities, and no implied covenants
or obligations shall be read into this Declaration or the
Securities against the Property Trustee; and
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(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively
rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming to
the requirements of this Declaration; provided, however,
that in the case of any such certificates or opinions that
by any provision hereof are specifically required to be
furnished to the Property Trustee, the Property Trustee
shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Declaration;
(ii) the Property Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of not less
than a Majority in liquidation amount of the 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
Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if
it 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 Declaration or indemnity reasonably
satisfactory to the Property Trustee against such risk or
liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures
and the Property Trustee 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 Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability
for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise
agree in writing with the Sponsor. Money held by the Property
Trustee need not be segregated from other funds held by it except
in relation to the Property Trustee Account maintained by the
Property
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Trustee pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law;
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Sponsor with their respective duties under this Declaration, nor
shall the Property Trustee be liable for any default or
misconduct of the Administrative Trustees or the Sponsor; and
(ix) the Trustee shall not be deemed to have notice of any
Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event
which is in fact such a default is received by the Trustee at the
Corporate Trust Office of the Trustee, and such notice references
the Securities and this Indenture.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the
Administrative Trustees contemplated by this Declaration may be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this
Declaration, the Property Trustee shall deem it desirable that a
matter be proved or established before taking, 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
Officers' Certificate which, upon receipt of such request, shall
be promptly delivered by the Sponsor or the Administrative
Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including
any financing or continuation statement or any filing under tax
or securities laws) or any rerecording, refiling or registration
thereof;
(v) the Property Trustee may consult with counsel or other
experts of its selection and the advice or opinion of such
counsel and experts with respect to legal
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matters or advice within the scope of such experts' area of
expertise 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 Sponsor 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 Declaration from any court
of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Declaration at the request or direction of any Holder, unless
such Holder shall have provided to the Property Trustee security
and indemnity, reasonably satisfactory to the Property Trustee,
against the costs, expenses (including reasonable attorneys' fees
and expenses and the expenses of the Property 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 Property Trustee
provided, that, nothing contained in this Section 3.10(a)(vi)
shall be taken to relieve the Property Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise
the rights and powers vested in it by this Declaration;
(vii) 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, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document,
but the Property Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine
the books, records and premises of the Company, personally or by
agent or attorney at the sole cost of the Company and shall incur
no liability or additional liability of any kind by reason of
such inquiry or investigation;
(viii) the Property Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either
directly or by or through agents, custodians, nominees or
attorneys and the Property Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders, and the signature
of the Property Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall
be required to inquire as to the authority of the Property
Trustee to so act or as to its compliance with any of the terms
and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's
taking such action;
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(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Property Trustee (i) may request
instructions from the Holders which instructions may only be
given by the Holders of the same proportion in liquidation amount
of the Securities as would be entitled to direct the Property
Trustee under the terms of the 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
conclusively relying on or acting in or accordance with such
instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Declaration; and
(xii) the Property Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good
faith, without negligence, and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Declaration.
(b) No provision of this Declaration 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 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Administrative Trustees or the Property Trustee
described in this Declaration. Except as set forth in Section 5.2, the
Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Business Trust Act. In
the event the Delaware Trustee shall at any time be required to take any
action or perform any duty hereunder, the Delaware Trustee shall be entitled
to the benefits of Section 3.9(b)(ii)-(viii) and Section 3.10. No implied
covenants or obligations shall be read into this Declaration against the
Delaware Trustee.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Administrative Trustees, and
except as otherwise required by the Business Trust Act or this Declaration,
any Administrative Trustee
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is authorized to execute on behalf of the Trust any documents that the
Administrative Trustees have the power and authority to execute pursuant to
Section 3.6; provided that any Registration Statements contemplated by the
Registration Rights Agreement and referred to in Section 3.6(b)(i), including
any amendments thereto, shall be signed by all of the Administrative Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity or
sufficiency of this Declaration, the Debentures or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence up to May 29, 2028.
SECTION 3.15 Mergers.
(a) The Trust may not merge with or into, consolidate, amalgamate
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with the consent
of the Administrative Trustees or, if there are more than two, a majority of
the Administrative Trustees and without the consent of the Holders, the
Delaware Trustee or the Property Trustee, merge with or into, consolidate,
amalgamate or be replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to, a trust organized
as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust under the Securities; or
(B) substitutes for the Securities other securities
having substantially the same terms as the Securities (the
"Successor Securities") so long as the Successor Securities
rank the same as the Securities rank with respect to
Distributions and payments upon liquidation, redemption and
otherwise;
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(ii) the Sponsor expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties as the
Property Trustee as the holder of the Debentures;
(iii) the Successor Securities are listed, or any
Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with another
organization on which the Capital Securities are then listed or
quoted, if any;
(iv) if the Capital Securities (including any Successor
Securities) are rated by any nationally recognized statistical
rating organization prior to such transaction, such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Capital Securities (including any
Successor Securities), or if the Debentures are so rated, the
Debentures, to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders (including the
holders of any Successor Securities) in any material respect
(other than with respect to any dilution of such Holders'
interests in the new entity);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has
received an opinion of an independent counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of
the Holders (including the holders of any Successor
Securities) in any material respect (other than with respect
to any dilution of the Holders' interest in the new entity);
and
(B) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease,
neither the Trust nor the Successor Entity will be required
to register as an Investment Company;
(viii) the Sponsor or any permitted successor or assignee
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
Capital Securities Guarantee and the Common Securities Guarantee;
and
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(ix) there shall have been furnished to the Property Trustee
an Officer's Certificate and an Opinion of Counsel, each to the
effect that all conditions precedent in this Declaration to such
transaction have been satisfied.
(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of
the Securities, consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets as
an entirety or 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 not to be classified as a grantor trust for
United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
At the Closing Time, the Sponsor will purchase all of the Common
Securities then issued by the Trust, in an amount equal to at least 3% of the
total capital of the Trust, at the same time as the Series A Capital
Securities are issued and sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare the Offering Memorandum and to prepare for filing by
the Trust with the Commission any Registration Statement, including any
amendments thereto, as contemplated by the Registration Rights Agreement;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do
any and all such acts, other than actions which must be taken by the Trust,
and advise the Trust of actions it must take, and prepare for execution and
filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of
any such States;
(c) if deemed necessary or advisable by the Sponsor, to prepare for
filing by the Trust an application to permit the Capital Securities to trade
or be quoted or listed in or on the PORTAL market, or any other securities
exchange, quotation system or the Nasdaq Stock Market's National Market;
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(d) to prepare for filing by the Trust with the Commission
a registration statement on Form 8-A, including any amendments
thereto, relating to the registration of the Capital Securities under
Section 12(g) of the Exchange Act, if required; and
(e) to negotiate the terms of the Purchase Agreement and
the Registration Rights Agreement providing for the sale and
registration of the Capital Securities.
SECTION 4.3 Right to Proceed.
The Sponsor acknowledges the rights of the Holders of
Capital Securities, in the event that a failure of the Trust to pay
Distributions on the Capital Securities is attributable to the failure
of the Company to pay interest or principal on the Debentures, to
institute a proceeding directly against the Debenture Issuer for
enforcement of its payment obligations on the Debentures.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities;
provided, however, that, the number of Trustees shall in no event be
less than two (2); provided further that (1) one Trustee shall satisfy
the requirements of the Delaware Trustee pursuant to Section 5.2; (2)
there shall be at least one Trustee who is an officer of the Sponsor
(an "Administrative Trustee"); and (3) one Trustee shall be the
Property Trustee for so long as this Declaration is required to
qualify as an indenture under the Trust Indenture Act, and such
Trustee may also serve as Delaware Trustee if it meets the applicable
requirements. Notwithstanding the above, 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's property may
at the time be located, the Holders of a Majority in liquidation
amount of the Common Securities acting as a class at a meeting of the
Holders of the Common Securities, and the Administrative Trustees
shall have power to appoint one or more Persons either to act as a
co-trustee, jointly with the Property Trustee, of all or any part of
the Trust's property, or
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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 such capacity any property,
title, right or power deemed necessary or desirable, subject to the
provisions of this Declaration. In case an Event of Default has
occurred and is continuing, the Property Trustee alone shall have
power to make any such appointment of a co-trustee.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise
meets the requirements of applicable law,
provided that, if the Property Trustee has its principal place of
business in the State of Delaware and otherwise meets the requirements
of applicable law, then the Property Trustee shall also be the
Delaware Trustee and Section 3.11 shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the "Property
Trustee") which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; 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 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 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of
this Section 5.3(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall
immediately resign in the manner and with the effect set forth in
Section 5.7(c).
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(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Property Trustee and the Holder of the Common
Securities (as if it were the obligor referred to in Section 310(b) of
the Trust Indenture Act) shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
(d) The Capital Securities Guarantee and the Indenture
shall be deemed to be specifically described in this Declaration for
purposes of clause (i) of the first proviso contained in Section
310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Bank of New York
101 Barclay Street, 21st Floor West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
SECTION 5.4 Certain Qualifications of Administrative Trustees and
Delaware Trustee Generally.
Each Administrative Trustee and the Delaware Trustee (unless
the Property Trustee also acts as the Delaware 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 Authorized Officers.
SECTION 5 Administrative Trustees.
The initial Administrative Trustees shall be:
W. Kirk Wycoff
Frederick E. Schea
Eric J. Morgan
(a) Except as expressly set forth in this Declaration and
except if a meeting of the Administrative Trustees is called with
respect to any matter over which the Administrative Trustees have
power to act, any power of the Administrative Trustees may be
exercised by, or with the consent of, any one such Administrative
Trustee.
(b) An Administrative Trustee shall have the authority set
forth in Section 3.12 to execute on behalf of the Trust any documents
which the Administrative Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.6.
(c) An 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
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the purposes of signing any documents which the Administrative
Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6 Delaware Trustee.
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.7(b) of this Declaration and to
Section 6(b) of Annex I hereto, Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common
Securities voting as a class at a meeting of the Holders of the
Common Securities; and
(iii) if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, with respect to
the Property Trustee or the Delaware Trustee, by vote of Holders
of a Majority in liquidation amount of the Capital Securities
voting as a class at a meeting of Holders of the Capital
Securities.
(b)(i) The Trustee that acts as Property Trustee shall not
be removed in accordance with Section 5.7(a) until a Successor
Property Trustee ("Successor Property Trustee") has been appointed and
has accepted such appointment by written instrument executed by such
Successor Property Trustee and delivered to the Administrative
Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.7(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee
under Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has
been appointed and has accepted such appointment by written
instrument executed by such Successor Delaware Trustee and
delivered to the Administrative Trustees and the Sponsor.
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(c) A Trustee appointed to office shall hold office until
his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing signed by
the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later
date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property Trustee;
or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the
Holders; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware
Trustee has been appointed and has accepted such appointment by
instrument executed by such Successor Delaware Trustee and
delivered to the Trust, the Sponsor and the resigning Delaware
Trustee.
(d) The Holders of the Common Securities or, if an Event of
Default shall have occurred and be continuing after the issuance of
the Securities, the Holders of the Capital Securities shall use their
best efforts to promptly appoint a Successor Delaware Trustee or
Successor Property Trustee, as the case may be, if the Property
Trustee or the Delaware Trustee delivers an instrument of resignation
in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided
in this Section 5.7 within 60 days after delivery of an instrument of
resignation or removal, the Property Trustee or Delaware Trustee
resigning or being removed, as applicable, may petition any court of
competent jurisdiction for appointment of a Successor Property Trustee
or Successor Delaware Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper and prescribe,
appoint a Successor Property Trustee or Successor Delaware Trustee, as
the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable
for the acts or omissions to act of any Successor Property Trustee or
Successor Delaware Trustee, as the case may be.
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(g) At the time of resignation or removal of the Property
Trustee or the Delaware Trustee, the Debenture Issuer shall pay to
such Trustee any amounts that may be owed to such Trustee pursuant to
Section 10.4.
SECTION 5.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the
number of Trustees is increased pursuant to Section 5.1, a vacancy
shall occur. A resolution certifying the existence of such vacancy by
the Administrative Trustees or, if there are more than two, a majority
of the Administrative Trustees shall be conclusive evidence of the
existence of such vacancy. The vacancy shall be filled with a Trustee
appointed in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the
duties of a Trustee shall not operate to dissolve, terminate or 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 5.7, the
Administrative Trustees in office, regardless of their number, shall
have all the powers granted to the Administrative Trustees and shall
discharge all the duties imposed upon the Administrative Trustees by
this Declaration.
SECTION 5.10 Meetings.
If there is more than one Administrative Trustee, meetings
of the Administrative Trustees shall be held from time to time upon
the call of any Administrative Trustee. Regular meetings of the
Administrative Trustees may be held at a time and place fixed by
resolution of the Administrative Trustees. Notice of any in-person
meetings of the Administrative Trustees shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 24 hours before such meeting.
Notice of any telephonic meetings of the Administrative Trustees or
any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting. Notices shall
contain a brief statement of the time, place and anticipated purposes
of the meeting. The presence (whether in person or by telephone) of
an Administrative Trustee at a meeting shall constitute a waiver of
notice of such meeting except where an Administrative Trustee attends
a meeting for the express purpose of objecting to the transaction of
any activity on the ground that the meeting has not been lawfully
called or convened. Unless provided otherwise in this Declaration,
any action of the Administrative Trustees may be taken at a meeting by
vote of a majority of the Administrative Trustees present (whether in
person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the
unanimous written consent of the Administrative
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Trustees. In the event there is only one Administrative Trustee, any
and all action of such Administrative Trustee shall be evidenced by a
written consent of such Administrative Trustee.
SECTION 5.11 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 3.6, including any registration
statement or amendment thereto filed with the Commission, or making
any other governmental filing; and
(b) the Administrative Trustees shall have power to
delegate from time to time to such of their number or to officers of
the Trust 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 5.12 Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee or the Delaware
Trustee or any Administrative Trustee that is not a natural person, as
the case may be, may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee,
as the case may be, shall be a party, or any Person succeeding to all
or substantially all the corporate trust business of the Property
Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Property Trustee or the Delaware Trustee, as the case
may be, hereunder, provided such Person shall be otherwise qualified
and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions in accordance with the
applicable terms of the relevant Holder's Securities. If and to the
extent that the Debenture Issuer makes a payment of interest
(including Compounded Interest and Additional Sums), premium and/or
principal on the Debentures held by the Property Trustee or Liquidated
Damages or any other payments pursuant to the Registration Rights
Agreement with respect to the Debentures held by the Property Trustee
(the amount of any such payment being a
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"Payment Amount"), the Property Trustee shall and is directed, to the
extent funds are available for that purpose, to make a distribution (a
"Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Administrative Trustees shall on behalf of the
Trust issue one class of capital securities representing undivided
beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Series A Capital Securities") and one
class of common securities representing undivided beneficial interests
in the assets of the Trust having such terms as are set forth in Annex
I (the "Common Securities"). The Administrative Trustees shall on
behalf of the Trust issue one class of capital securities representing
undivided beneficial interests in the Trust having such terms as set
forth in Annex I (the "Series B Capital Securities") in exchange for
the Series A Capital Securities accepted for exchange in the Exchange
Offer, which Series B Capital Securities shall not bear the legends
required by Section 9.2(i) unless the Holder of such Series A Capital
Securities is either (A) a broker-dealer who purchased such Series A
Capital Securities directly from the Trust for resale pursuant to Rule
144A or any other available exemption under the Securities Act, (B) a
Person participating in the distribution of the Series A Capital
Securities or (C) a Person who is an affiliate (as defined in Rule
144A) of the Trust. The Trust shall issue no securities or other
interests in the assets of the Trust other than the Trust Securities.
(b) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the
capital of the Trust and shall not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly
issued, fully paid and non-assessable undivided beneficial interests
in the assets of the Trust.
(d) Every Person, by virtue of having become a Holder or a
Capital Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to
the terms of, and shall be bound by, this Declaration.
SECTION 7.2 Execution and Authentication.
(a) The Securities shall be signed on behalf of the Trust
by an Administrative Trustee by manual or facsimile signature. In
case any Administrative
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Trustee of the Trust who shall have signed any of the Securities shall
cease to be such Administrative Trustee before the Securities so
signed shall be delivered by the Trust, such Securities nevertheless
may be delivered as though the person who signed such Securities had
not ceased to be such Administrative Trustee; and any Securities may
be signed on behalf of the Trust by such persons who, at the actual
date of execution of such Security, shall be the Administrative
Trustees of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such an
Administrative Trustee.
(b) One Administrative Trustee shall sign the Capital
Securities for the Trust by manual or facsimile signature. Unless
otherwise determined by the Trust, such signature shall, in the case
of Common Securities, be a manual signature.
A Capital Security shall not be valid until authenticated by
the manual or facsimile signature of an authorized signatory of the
Property Trustee. The signature shall be conclusive evidence that the
Capital Security has been authenticated under this Declaration.
Upon a written order of the Trust signed by one
Administrative Trustee, the Property Trustee shall authenticate the
Capital Securities for original issue. The aggregate number of
Capital Securities outstanding at any time shall not exceed the number
set forth in the Terms in Annex I hereto except as provided in Section
7.6.
The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Capital Securities. An
authenticating agent may authenticate Capital Securities whenever the
Property Trustee may do so. Each reference in this Declaration to
authentication by the Property Trustee includes authentication by such
agent. An authenticating agent has the same rights as the Property
Trustee to deal with the Sponsor or an Affiliate.
SECTION 7.3 Form and Dating.
The Capital Securities and the Property Trustee's
certificate of authentication shall be substantially in the form of
Exhibit A-1 and the Common Securities shall be substantially in the
form of Exhibit A-2, each of which is hereby incorporated in and
expressly made a part of this Declaration. Certificates representing
the Securities may be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the
Administrative Trustees, as evidenced by their execution thereof. The
Securities may have letters, CUSIP or other numbers, notations or
other marks of identification or designation and such legends or
endorsements required by law, stock exchange rule, agreements to which
the Trust is subject, if any, or usage (provided that any such
notation, legend or endorsement is in a form acceptable to the Trust).
The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Property Trustee in
writing. Each Capital Security shall be dated the date of its
authentication. The terms and provisions of the Securities set forth
in Annex I and the forms of
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Securities set forth in Exhibits A-1 and A-2 are part of the terms of
this Declaration and to the extent applicable, the Property Trustee
and the Sponsor, by their execution and delivery of this Declaration,
expressly agree to such terms and provisions and to be bound thereby.
(a) Global Securities. Securities offered and sold to QIBs
in reliance on Rule 144A, as provided in the Purchase Agreement,
shall be issued in the form of one or more permanent global Securities
in definitive, fully registered form without distribution coupons with
the appropriate global legends and Restricted Securities Legend set
forth in Exhibit A-1 hereto (a "Global Capital Security"), which shall
be deposited on behalf of the purchasers of the Capital Securities
represented thereby with the Property Trustee, as custodian for the
Clearing Agency, and registered in the name of the Clearing Agency or
a nominee of the Clearing Agency, duly executed by the Trust and
authenticated by the Property Trustee as hereinafter provided. The
number of Capital Securities represented by a Global Capital Security
may from time to time be increased or decreased by adjustments made on
the records of the Property Trustee and the Clearing Agency or its
nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply
only to the Global Capital Securities and such other Capital
Securities in global form as may be authorized by the Trust to be
deposited with or on behalf of the Clearing Agency.
The Trust shall execute and the Property Trustee shall, in
accordance with this Section 7.3, authenticate and make available for
delivery initially one or more Global Capital Securities that (i)
shall be registered in the name of Cede & Co. or other nominee of such
Clearing Agency and (ii) shall be delivered by the Trustee to such
Clearing Agency or pursuant to such Clearing Agency's written
instructions or held by the Property Trustee as custodian for the
Clearing Agency.
Members of, or participants in, the Clearing Agency
("Participants") shall have no rights under this Declaration with
respect to any Global Capital Security held on their behalf by the
Clearing Agency or by the Property Trustee as the custodian of the
Clearing Agency or under such Global Capital Security, and the
Clearing Agency may be treated by the Trust, the Property Trustee and
any agent of the Trust or the Property Trustee as the absolute owner
of such Global Capital Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust,
the Property Trustee or any agent of the Trust or the Property Trustee
from giving effect to any written certification, proxy or other
authorization furnished by the Clearing Agency or impair, as between
the Clearing Agency and its Participants, the operation of customary
practices of such Clearing Agency governing the exercise of the rights
of a holder of a beneficial interest in any Global Capital Security.
(c) Definitive Capital Securities. Except as provided in
Section 7.9 or 9.2(f)(i), owners of beneficial interests in a Global
Capital Security will not be entitled to receive physical delivery of
certificated Capital Securities ("Definitive Capital Securities").
Purchasers of Securities (other than QIBs) who are "accredited
investors" (as defined
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in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) will
receive Capital Securities in the form of individual certificates in
definitive, fully registered form without distribution coupons and
with the Restricted Securities Legend set forth in Exhibit A-1 hereto
("Restricted Definitive Capital Securities"); provided, however, that
upon transfer of such Restricted Definitive Capital Securities to a
QIB, such Restricted Definitive Capital Securities will, unless the
Global Capital Security has previously been exchanged, be exchanged
for an interest in a Global Capital Security pursuant to the
provisions of Section 9.2. Restricted Definitive Capital Securities
will bear the Restricted Securities Legend set forth on Exhibit A-1
unless removed in accordance with this Section 7.3 or Section 9.2.
(d) Authorized Denominations. The Capital Securities are
issuable only in denominations of $1,000 and any integral multiple
thereof.
SECTION 7.4 Registrar, Paying Agent and Exchange Agent.
The Trust shall maintain in the Borough of Manhattan, The
City of New York, (i) an office or agency where Capital Securities may
be presented for registration of transfer ("Registrar"), (ii) an
office or agency where Capital Securities may be presented for payment
("Paying Agent") and (iii) an office or agency where Securities may be
presented for exchange ("Exchange Agent"). The Registrar shall keep a
register of the Capital Securities and of their transfer. The Trust
may appoint the Registrar, the Paying Agent and the Exchange Agent and
may appoint one or more co-registrars, one or more additional paying
agents and one or more additional exchange agents in such other
locations as it shall determine. The term "Registrar" includes any
additional registrar, "Paying Agent" includes any additional paying
agent and the term "Exchange Agent" includes any additional exchange
agent. The Trust may change any Paying Agent, Registrar, co-registrar
or Exchange Agent without prior notice to any Holder. The Paying
Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Administrative Trustees. The Trust shall notify
the Property Trustee of the name and address of any Agent not a party
to this Declaration. If the Trust fails to appoint or maintain
another entity as Registrar, Paying Agent or Exchange Agent, the
Property Trustee shall act as such. The Trust or any of its
Affiliates may act as Paying Agent, Registrar, or Exchange Agent. The
Trust shall act as Paying Agent, Registrar, and Exchange Agent for the
Common Securities.
The Trust initially appoints the Property Trustee as
Registrar and Paying Agent for the Capital Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the
Property Trustee to agree in writing that the Paying Agent will hold
in trust for the benefit of Holders or the Property Trustee all money
held by the Paying Agent for the payment of liquidation amounts or
Distributions, and will notify the Property Trustee if there are
insufficient funds for such purpose. While any such insufficiency
continues, the Property Trustee may require
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a Paying Agent to pay all money held by it to the Property Trustee.
The Trust at any time may require a Paying Agent to pay all money held
by it to the Property Trustee and to account for any money disbursed
by it. Upon payment over to the Property Trustee, the Paying Agent
(if other than the Trust or an Affiliate of the Trust) shall have no
further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the
Holders all money held by it as Paying Agent.
SECTION 7.6 Replacement Securities.
If a Holder claims that a Security owned by it has been
lost, destroyed or wrongfully taken or if such Security is mutilated
and is surrendered to the Trust or in the case of the Capital
Securities to the Property Trustee, the Trust shall issue and the
Property Trustee shall, upon written order of the Trust, authenticate
a replacement Security if the Property Trustee's and the Trust's
requirements, as the case may be, are met. An indemnity bond must be
provided by the Holder which, in the judgment of the Property Trustee,
is sufficient to protect the Trustees, the Sponsor, the Trust or any
authenticating agent from any loss which any of them may suffer if a
Security is replaced. The Trust may charge such Holder for its
expenses in replacing a Security.
Every replacement Security is an additional beneficial
interest in the Trust.
SECTION 7.7 Outstanding Capital Securities.
The Capital Securities outstanding at any time are all the
Capital Securities authenticated by the Property Trustee except for
those cancelled by it, those delivered to it for cancellation and
those described in this Section as not outstanding.
If a Capital Security is replaced, paid or purchased
pursuant to Section 7.6 hereof, it ceases to be outstanding unless the
Property Trustee receives proof satisfactory to it that the replaced,
paid or purchased Capital Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with
the terms of this Declaration, they cease to be outstanding and
Distributions on them shall cease to accumulate.
A Capital Security does not cease to be outstanding because
one of the Trust, the Sponsor or an Affiliate of the Sponsor holds the
Security.
SECTION 7.8 Capital Securities in Treasury.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Capital
Securities owned by the Trust, the Sponsor or an Affiliate of the
Sponsor, as the case may be, shall be disregarded and deemed
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not to be outstanding, except that for the purposes of determining
whether the Property Trustee shall be fully protected in relying on
any such direction, waiver or consent, only Securities which a
Responsible Officer of the Property Trustee actually knows are so
owned shall be so disregarded.
SECTION 7.9 Temporary Securities.
(a) Until Definitive Capital Securities are ready for
delivery, the Trust may prepare and, in the case of the Capital
Securities, the Property Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form
of Definitive Capital Securities but may have variations that the
Trust considers appropriate for temporary Securities. Without
unreasonable delay, the Trust shall prepare and, in the case of the
Capital Securities, the Property Trustee shall authenticate Definitive
Capital Securities in exchange for temporary Securities.
(b) A Global Capital Security deposited with the Clearing
Agency or with the Property Trustee as custodian for the Clearing
Agency pursuant to Section 7.3 shall be transferred to the beneficial
owners thereof in the form of Definitive Capital Securities only if
such transfer complies with Section 9.2 and (i) the Clearing Agency
notifies the Sponsor that it is unwilling or unable to continue as
Clearing Agency for such Global Capital Security or if at any time
such Clearing Agency ceases to be a "clearing agency" registered under
the Exchange Act and a clearing agency is not appointed by the Sponsor
within 90 days of such notice, (ii) a Default or an Event of Default
has occurred and is continuing or (iii) the Trust at its sole
discretion elects to cause the issuance of Definitive Capital
Securities.
(c) Any Global Capital Security that is transferable to the
beneficial owners thereof in the form of Definitive Capital Securities
pursuant to this Section 7.9 shall be surrendered by the Clearing
Agency to the Property Trustee located in the Borough of Manhattan,
The City of New York, to be so transferred, in whole or from time to
time in part, without charge, and the Property Trustee shall
authenticate and make available for delivery, upon such transfer of
each portion of such Global Capital Security, an equal aggregate
liquidation amount of Securities of authorized denominations in the
form of certificated Capital Securities. Any portion of a Global
Capital Security in transferred pursuant to this Section shall be
registered in such names as the Clearing Agency shall direct. Any
Capital Security in the form of Definitive Capital Securities
delivered in exchange for an interest in the Global Capital Security
shall, except as otherwise provided by Sections 7.3 and 9.2, bear the
Restricted Securities Legend set forth in Exhibit A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder
of a Global Capital Security may grant proxies and otherwise authorize
any Person, including Participants and Persons that may hold interests
through Participants, to take any action which such Holder is entitled
to take under this Declaration or the Securities.
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(e) In the event of the occurrence of any of the events
specified in Section 7.9(b), the Trust will promptly make available to
the Property Trustee a reasonable supply of certificated Capital
Securities in fully registered form without distribution coupons.
SECTION 7.10 Cancellation.
The Trust at any time may deliver Capital Securities to the
Property Trustee for cancellation. The Registrar, Paying Agent and
Exchange Agent shall forward to the Property Trustee any Capital
Securities surrendered to them for registration of transfer,
redemption, exchange or payment. The Property Trustee shall promptly
cancel all Capital Securities, surrendered for registration of
transfer, redemption, exchange, payment, replacement or cancellation
and shall dispose of cancelled Capital Securities in accordance with
its customary procedures unless the Trust otherwise directs. The
Trust may not issue new Capital Securities to replace Capital
Securities that it has paid or that have been delivered to the
Property Trustee for cancellation or that any Holder has exchanged.
SECTION 7.11 CUSIP Numbers.
The Trust in issuing the Capital Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Property Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders of Capital Securities; provided that any such notice may state
that no representation is made as to the correctness of such numbers
either as printed on the Capital Securities or as contained in any
notice of a redemption and that reliance may be placed only on the
other identification numbers printed on the Capital Securities, and
any such redemption shall not be affected by any defect in or omission
of such numbers. The Sponsor will promptly notify the Property
Trustee of any change in the CUSIP numbers.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall automatically terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor; or the
revocation of the Sponsor's charter and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the
Debentures to the Holders, provided that, the Property Trustee
has received written notice from the
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Sponsor directing the Property Trustee to terminate the Trust (which
direction is optional, and except as otherwise expressly provided
below, within the discretion of the Sponsor) and provided, further,
that such direction and such distribution is conditioned on (a) the
receipt of any required regulatory approval and (b) the Administrative
Trustees' receipt of an opinion of an independent tax counsel
experienced in such matters, which opinion may rely on published
rulings of the Internal Revenue Service, to the effect that the
Holders will not recognize any gain or loss for United States federal
income tax purposes as a result of the dissolution of the Trust and
the distribution of Debentures;
(iv) upon the entry of a decree of judicial dissolution of
the Trust by a court of competent jurisdiction;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall
have been paid to the Holders in accordance with the terms of the
Securities; or
(vi) the expiration of the term of the Trust provided in
Section 3.14.
(b) As soon as is practicable after the occurrence of an
event referred to in Section 8.1(a), the Administrative Trustees shall
file a certificate of cancellation with the Secretary of State of the
State of Delaware.
(c) The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this
Declaration and in the terms of the Securities. Any transfer or
purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) The Administrative Trustees shall provide for the
registration of Capital Securities and of the transfer of Capital
Securities, which will be effected without charge but only upon
payment (with such indemnity as the Administrative Trustees may
require) in respect of any tax or other governmental charges that may
be imposed in relation to it. Upon surrender for registration of
transfer of any Capital Securities, the Administrative Trustees shall
cause one or more new Capital Securities to be issued in the name of
the designated transferee or transferees. Every Capital Security
surrendered for
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registration of transfer shall be accompanied by a written instrument
of transfer in form satisfactory to the Administrative Trustees and
the Registrant duly executed by the Holder or such Holder's attorney
duly authorized in writing. Each Capital Security surrendered for
registration of transfer shall be canceled by the Property Trustee. A
transferee of a Capital Security shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Capital Security. By acceptance of a Capital
Security, each transferee shall be deemed to have agreed to be bound
by this Declaration.
(c) For so long as the Trust Securities remain outstanding,
the Sponsor will covenant (i) to directly or indirectly maintain 100%
direct or indirect ownership of the Common Securities of the Trust;
provided, however, that any permitted successor of the Sponsor under
the Indenture may succeed to the Sponsor's ownership of such Common
Securities, (ii) to use its reasonable efforts to cause the Trust (a)
to remain a business trust, except in connection with the distribution
of Debentures to the Holders of Trust Securities in liquidation of the
Trust, the redemption of all of the Trust Securities, or certain
mergers, consolidations or amalgamations, each as permitted by this
Declaration, and (b) to otherwise continue to be classified as a
grantor trust for United States federal income tax purposes and (iii)
to use its reasonable efforts to cause each holder of Trust Securities
to be treated as owning an undivided beneficial interest in the
Debentures.
SECTION 9.2 Transfer Procedures and Restrictions
(a) General. Except as otherwise provided in Section
9.2(b), if Capital Securities are issued upon the registration of
transfer, exchange or replacement of Capital Securities bearing the
Restricted Securities Legend set forth in Exhibit A-1 hereto, or if a
request is made to remove such Restricted Securities Legend on Capital
Securities, the Capital Securities so issued shall bear the Restricted
Securities Legend, or the Restricted Securities Legend shall not be
removed, as the case may be, unless there is delivered to the Trust
and the Property Trustee such evidence satisfactory to the Sponsor,
which shall include an Opinion of Counsel as may be reasonably
required by the Sponsor, that neither the legend nor the restrictions
on transfer set forth therein are required to ensure that transfers
thereof are made pursuant to an exception from the registration
requirements of the Securities Act or, with respect to Restricted
Definitive Capital Securities, that such Securities are not
"restricted" within the meaning of Rule 144. Upon provision of such
satisfactory evidence, the Property Trustee, at the written direction
of the Trust, shall authenticate and deliver Capital Securities that
do not bear the legend.
(b) Transfers After Effectiveness of a Registration
Statement. After the effectiveness of a Registration Statement with
respect to any Capital Securities, all requirements pertaining to
legends on such Capital Securities will cease to apply (other than the
legend requiring that transfers of Capital Securities be made in
blocks having an aggregate liquidation amount of not less than
$100,000), and beneficial interests in a Capital Security in global
form without legends will be available to transferees of such Capital
Securities, upon exchange of the transferring Holder's Restricted
Definitive Capital Security
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or directions to transfer such Holder's beneficial interest in the
Global Capital Security as the case may be. No such transfer or
exchange of a Restricted Definitive Capital Security or of an interest
in the Global Capital Security shall be effective unless the
transferor delivers to the Trust a certificate in a form substantially
similar to that attached hereto as the form of "Assignment" in Exhibit
A-1. Except as otherwise provided in Section 9.2(m), after the
effectiveness of a Registration Statement, the Trust shall issue and
the Property Trustee, upon a written order of the Trust signed by one
Administrative Trustee, shall authenticate a Capital Security in
global form without the Restricted Securities Legend (the
"Unrestricted Global Capital Security") for deposit with the Clearing
Agency or its custodian to evidence transfers of beneficial interests
from the (i) Global Capital Security and (ii) Restricted Definitive
Capital Securities.
(c) Transfer and Exchange of Definitive Capital Securities.
When Definitive Capital Securities are presented to the Registrar or
co-Registrar
(x) to register the transfer of such Definitive Capital
Securities; or
(y) to exchange such Definitive Capital Securities which
became mutilated, destroyed, defaced, stolen or lost, for an
equal number of Definitive Capital Securities,
the Registrar or co-registrar shall register the transfer or make the
exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the Definitive Capital
Securities surrendered for registration of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Administrative Trustees and the Registrar or co-registrar, duly
executed by the Holder thereof or his attorney duly authorized in
writing; and
(ii) in the case of Definitive Capital Securities that are
Restricted Definitive Capital Securities:
(A) if such Restricted Capital Securities are being
delivered to the Registrar by a Holder for registration in
the name of such Holder, without transfer, a certification
from such Holder to that effect; or
(B) if such Restricted Capital Securities are being
transferred: (i) a certification from the transferor in a
form substantially similar to that attached hereto as the
form of "Assignment" in Exhibit A-1, and (ii) if the Trust
or Registrar so requests, evidence reasonably satisfactory
to it as to the compliance with the restrictions set forth
in the Restricted Securities Legend.
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(d) Restrictions on Transfer of a Definitive Capital
Security for a Beneficial Interest in a Global Capital Security. A
Definitive Capital Security may not be exchanged for a beneficial
interest in a Global Capital Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Property Trustee of
a Definitive Capital Security, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the
Property Trustee and the Administrative Trustees, together with:
(i) if such Definitive Capital Security is a Restricted
Capital Security, certification (in a form substantially similar
to that attached hereto as the form of "Assignment" in Exhibit
A-1); and
(ii) whether or not such Definitive Capital Security is a
Restricted Capital Security, written instructions directing the
Property Trustee to make, or to direct the Clearing Agency to
make, an adjustment on its books and records with respect to the
appropriate Global Capital Security to reflect an increase in the
number of the Capital Securities represented by such Global
Capital Security,
then the Property Trustee shall cancel such Definitive Capital
Security and cause, or direct the Clearing Agency to cause, the
aggregate number of Capital Securities represented by the appropriate
Global Capital Security to be increased accordingly. If no Global
Capital Securities are then outstanding, the Trust shall issue and the
Property Trustee shall authenticate, upon written order of any
Administrative Trustee, an appropriate number of Capital Securities in
global form.
(e) Transfer and Exchange of Global Capital Securities.
Subject to Section 9.2(f), the transfer and exchange of Global Capital
Securities or beneficial interests therein shall be effected through
the Clearing Agency, in accordance with this Declaration (including
applicable restrictions on transfer set forth herein, if any) and the
procedures of the Clearing Agency therefor.
(f) Transfer of a Beneficial Interest in a Global Capital
Security for a Definitive Capital Security.
(i) Any Person having a beneficial interest in a Global
Capital Security may upon request, but only upon 20 days prior
notice to the Property Trustee, and if accompanied by the
information specified below, exchange such beneficial interest
for a Definitive Capital Security representing the same number of
Capital Securities. Upon receipt by the Property Trustee from
the Clearing Agency or its nominee on behalf of any Person having
a beneficial interest in a Global Capital Security of written
instructions or such other form of instructions as is customary
for the Clearing Agency or the Person designated by the Clearing
Agency as having such a beneficial interest in a Restricted
Capital Security and a certification from the transferor (in a
form substantially similar to that attached hereto as the form of
"Assignment" in Exhibit A-1), which may be submitted by
facsimile, then the Property Trustee will
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cause the aggregate number of Capital Securities represented by
Global Capital Securities to be reduced on its books and records
and, following such reduction, the Trust will execute and the
Property Trustee will authenticate and make available for
delivery to the transferee a Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for a
beneficial interest in a Global Capital Security pursuant to this
Section 9.2(f) shall be registered in such names and in such
authorized denominations as the Clearing Agency, pursuant to
instructions from its Clearing Agency Participants or otherwise,
shall instruct the Property Trustee in writing. The Property
Trustee shall deliver such Capital Securities to the Persons in
whose names such Capital Securities are so registered in
accordance with such instructions of the Clearing Agency.
(g) Restrictions on Transfer and Exchange of Global Capital
Securities. Notwithstanding any other provisions of this Declaration
(other than the provisions set forth in subsection (h) of this Section
9.2 and subsection (b) of Section 7.9), a Global Capital Security may
not be transferred as a whole except by the Clearing Agency to a
nominee of the Clearing Agency or another nominee of the Clearing
Agency or by the Clearing Agency or any such nominee to a successor
Clearing Agency or a nominee of such successor Clearing Agency.
(h) Authentication of Definitive Capital Securities. If at
any time:
(i) there occurs a Default or an Event of Default which is
continuing, or
(ii) the Trust, in its sole discretion, notifies the
Property Trustee in writing that it elects to cause the issuance
of Definitive Capital Securities under this Declaration,
then the Trust will execute, and the Property Trustee, upon receipt of
a written order of the Trust signed by one Administrative Trustee
requesting the authentication and delivery of Definitive Capital
Securities to the Persons designated by the Trust, will authenticate
and make available for delivery Definitive Capital Securities, equal
in number to the number of Capital Securities represented by the
Global Capital Securities, in exchange for such Global Capital
Securities.
(i) Legend.
(i) Except as permitted by the following paragraph (ii),
each Capital Security certificate evidencing the Global Capital
Securities and the Definitive Capital Securities (and all Capital
Securities issued in exchange therefor or substitution thereof)
shall bear a legend (the "Restricted Securities Legend") in
substantially the following form:
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THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR
ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS
CAPITAL SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS
CAPITAL SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE
LAST DATE ON WHICH PROGRESS FINANCIAL CORPORATION (THE
"COMPANY") OR ANY "AFFILIATE" OF THE COMPANY WAS THE
OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF
THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO
LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
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VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER
THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND
THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i)
PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE
(D) TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE REVERSE OF THIS CAPITAL SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST.
SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE
TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT
OF NOT LESS THAN $100,000 (100 CAPITAL SECURITIES).
ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK
HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL
BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE,
INCLUDING BUT NOT LIMITED TO THE RECEIPT OF
DISTRIBUTIONS OF SUCH CAPITAL SECURITIES, AND SUCH
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST
WHATSOEVER IN SUCH CAPITAL SECURITIES.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE
HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER
(i) IT IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA") OR (ii) THE ACQUISITION AND HOLDING
OF THIS CAPITAL SECURITY BY IT IS NOT PROHIBITED BY
EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S.
INTERNAL REVENUE CODE
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OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH PROHIBITION.
(ii) Upon any sale or transfer of a Restricted Capital
Security (including any Restricted Capital Security represented
by a Global Capital Security) pursuant to an effective
registration statement under the Securities Act or pursuant to
Rule 144 under the Securities Act after such registration
statement ceases to be effective:
(A) in the case of any Restricted Capital Security
that is a Definitive Capital Security, the Registrar shall
permit the Holder thereof to exchange such Restricted
Capital Security for a Definitive Capital Security that does
not bear the Restricted Securities Legend and rescind any
restriction on the transfer of such Restricted Capital
Security; and
(B) in the case of any Restricted Capital Security
that is represented by a Global Capital Security, the
Registrar shall permit the Holder of such Global Capital
Security to exchange such Global Capital Security for
another Global Capital Security that does not bear the
Restricted Securities Legend.
(j) Cancellation or Adjustment of Global Capital Security.
At such time as all beneficial interests in a Global Capital Security
have either been exchanged for Definitive Capital Securities to the
extent permitted by this Declaration or redeemed, repurchased or
canceled in accordance with the terms of this Declaration, such Global
Capital Security shall be canceled by the Property Trustee. At any
time prior to such cancellation, if any beneficial interest in a
Global Capital Security is exchanged for Definitive Capital
Securities, Capital Securities represented by such Global Capital
Security shall be reduced and an adjustment shall be made on the books
and records of the Clearing Agency and the Registrar, to reflect such
reduction.
(k) Obligations with Respect to Transfers and Exchanges of
Capital Securities.
(i) To permit registrations of transfers and exchanges, the
Trust shall execute and the Property Trustee shall authenticate
Definitive Capital Securities and Global Capital Securities at
the Registrar's or co-registrar's request in accordance with the
terms of this Declaration.
(ii) Registrations of transfers or exchanges will be
effected without charge, but only upon payment (with such
indemnity as the Trust or the Sponsor may require) in respect of
any tax or other governmental charge that may be imposed in
relation to it.
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(iii) The Registrar or co-registrar shall not be
required to register the transfer of or exchange of (a) Capital
Securities during a period beginning at the opening of business
15 days before the day of mailing of a notice of redemption or
any notice of selection of Capital Securities for redemption and
ending at the close of business on the day of such mailing; or
(b) any Capital Security so selected for redemption in whole or
in part, except the unredeemed portion of any Capital Security
being redeemed in part.
(iv) Prior to the due presentation for registration of
transfer of any Capital Security, the Trust, the Property
Trustee, the Paying Agent, the Registrar or any co-registrar may
deem and treat the Person in whose name a Capital Security is
registered as the absolute owner of such Capital Security for the
purpose of receiving Distributions on such Capital Security
(subject to Section 2(c) of Annex I) and for all other purposes
whatsoever, and none of the Trust, the Property Trustee, the
Paying Agent, the Registrar or any co-registrar shall be affected
by notice to the contrary.
(v) All Capital Securities issued upon any registration of
transfer or exchange pursuant to the terms of this Declaration
shall evidence the same security and shall be entitled to the
same benefits under this Declaration as the Capital Securities
surrendered upon such registration of transfer or exchange.
(l) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Capital Security,
a Clearing Agency Participant in the Clearing Agency or other
Person with respect to the accuracy of the records of the
Clearing Agency or its nominee or of any Clearing Agency
Participant thereof, with respect to any ownership interest in
the Capital Securities or with respect to the delivery to any
Clearing Agency Participant, beneficial owner or other Person
(other than the Clearing Agency) of any notice (including any
notice of redemption) or the payment of any amount, under or with
respect to such Capital Securities. All notices and
communications to be given to the Holders and all payments to be
made to Holders under the Capital Securities shall be given or
made only to or upon the order of the registered Holders (which
shall be the Clearing Agency or its nominee in the case of a
Global Capital Security). The rights of beneficial owners in any
Global Capital Security shall be exercised only through the
Clearing Agency subject to the applicable rules and procedures of
the Clearing Agency. The Property Trustee may conclusively rely
and shall be fully protected in relying upon information
furnished by the Clearing Agency or any agent thereof with
respect to its Clearing Agency Participants and any beneficial
owners.
(ii) The Property Trustee and the Registrar shall have no
obligation or duty to monitor, determine or inquire as to
compliance with any restrictions on
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transfer imposed under this Declaration or under applicable law with
respect to any transfer of any interest in any Capital Security
(including any transfers between or among Clearing Agency Participants
or beneficial owners in any Global Capital Security) other than to
require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Declaration, and to examine
the same to determine substantial compliance as to form with the
express requirements hereof.
(m) Exchange of Series A Capital Securities for Series B
Capital Securities. The Series A Capital Securities may be exchanged
for Series B Securities pursuant to the terms of the Exchange Offer.
The Property Trustee shall make the exchange as follows:
The Sponsor shall present the Property Trustee with an
Officers' Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities,
the transactions contemplated by the Exchange
Offer have been consummated; and
(B) the number of Series A Capital Securities properly
tendered in the Exchange Offer that are
represented by a Global Capital Security and the
number of Series A Capital Securities properly
tendered in the Exchange Offer that are
represented by Definitive Capital Securities, the
name of each Holder of such Definitive Capital
Securities, the liquidation amount of Capital
Securities properly tendered in the Exchange Offer
by each such Holder and the name and address to
which Definitive Capital Securities for Series B
Capital Securities shall be registered and sent
for each such Holder.
The Property Trustee, upon receipt of (i) such Officers'
Certificate and (ii) an Opinion of Counsel (x) to the effect that the
Series B Capital Securities have been registered under Section 5 of
the Securities Act and the Indenture has been qualified under the
Trust Indenture Act and (y) with respect to the matters set forth in
Section 3(p) of the Registration Rights Agreement, shall authenticate
(A) a Global Capital Security representing Series B Capital Securities
in aggregate liquidation amount equal to the aggregate liquidation
amount of Series A Capital Securities represented by a Global Capital
Security indicated in such Officers' Certificate as having been
properly tendered and (B) Definitive Capital Securities representing
Series B Capital Securities registered in the names of, and in the
liquidation amounts indicated in such Officers' Certificate.
If, upon consummation of the Exchange Offer, less than all
the outstanding Series A Capital Securities shall have been properly
tendered and not withdrawn, the Property Trustee shall make an
endorsement on the Global Capital Security representing
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Series A Capital Securities indicating the reduction in the number and
aggregate liquidation amount represented thereby as a result of the
Exchange Offer.
The Trust shall deliver such Definitive Capital Securities
representing Series B Capital Securities to the Holders thereof as
indicated in such Officers' Certificate.
(n) Minimum Transfers. Series A Capital Securities and,
when issued, Series B Capital Securities may only be transferred in
minimum blocks of $100,000 aggregate liquidation amount. Any transfer
of Series A Capital Securities or Series B Capital Securities in a
block having an aggregate liquidation amount of less than $100,000
shall be deemed to be voided and of no legal effect whatsoever. Any
such transferee shall be deemed not to be a Holder of such Series A or
Series B Capital Securities for any purpose, including, but not
limited to, the receipt of Distributions on such Capital Securities,
and such transferee shall be deemed to have no interest whatsoever in
such Capital Securities.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Security
shall be registered on the books and records of the Trust as the sole
owner of such Security for purposes of receiving Distributions and for
all other purposes whatsoever and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such Security
on the part of any Person, whether or not the Trust shall have actual
or other notice thereof.
SECTION 9.4 Book Entry Interests.
Global Capital Securities shall initially be registered on
the books and records of the Trust in the name of Cede & Co., the
nominee of the Clearing Agency, and no Capital Security Beneficial
Owner will receive a definitive Capital Security Certificate
representing such Capital Security Beneficial Owner's interests in
such Global Capital Securities, except as provided in Section 9.2 and
Section 7.9. Unless and until definitive, fully registered Capital
Securities certificates have been issued to the Capital Security
Beneficial Owners pursuant to Section 9.2 and Section 7.9:
(a) the provisions of this Section 9.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to deal
with the Clearing Agency for all purposes of this Declaration
(including the payment of Distributions on the Global Capital
Securities and receiving approvals, votes or consents hereunder)
as the Holder of the Capital Securities and the sole holder of
the Global Certificates and shall have no obligation to the
Capital Security Beneficial Owners;
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(c) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the
provisions of this Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such
Capital Security Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants and the Clearing Agency shall
receive and transmit payments of Distributions on the Global
Certificates to such Clearing Agency Participants. DTC will make
book entry transfers among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Capital
Security Holders is required under this Declaration, the Trustees
shall give all such notices and communications specified herein to be
given to the Holders of Global Capital Securities to the Clearing
Agency, and shall have no notice obligations to the Capital Security
Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the
Administrative Trustees may, in their sole discretion, appoint a
successor Clearing Agency with respect to such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the
Securities Guarantees and the terms of the Securities, the Sponsor
shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders
which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder any
deficit upon dissolution or termination of the Trust or
otherwise.
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(b) The Debenture Issuer shall be liable for all of the
debts and obligations of the Trust (other than in respect of the
payment of principal, interest and premium, if any, on the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act,
the Holders shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person
for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith
on behalf of the Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of the authority conferred
on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence
or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such
information, opinions, reports or statements presented to the Trust by
any Person as to matters the Indemnified Person reasonably believes
are within such other Person's professional or expert competence and,
if selected by such Indemnified Person, has been selected by such
Indemnified Person with reasonable care on behalf of the Trust,
including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other
facts pertinent to the existence and amount of assets from which
Distributions to Holders might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable
to the Trust or to any other Covered Person for its good faith
reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in
equity (other than the duties imposed on the Property Trustee under
the Trust Indenture Act), are agreed by the parties hereto to replace
such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
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(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified
Person shall act in a manner that is, or provides terms that are,
fair and reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take
such action or provide such terms, considering in each case the
relative interest of each party (including its own interest) to such
conflict, agreement, transaction or situation and the benefits and
burdens relating to such interests, any customary or accepted industry
practices, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the
Indemnified Person shall not constitute a breach of this Declaration
or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider
such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Trust
or any other Person; or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express standard and
shall not be subject to any other or different standard imposed
by this Declaration.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Trust) by reason of the
fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees and expenses), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in
good faith and in a manner which he reasonably believed to be in
or
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not opposed to the best interests of the Trust, and, with respect
to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the Trust to procure a judgment in its favor by reason
of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys' fees and expenses)
actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust and except that no
such indemnification shall be made in respect of any claim, issue
or matter as to which such Company Indemnified Person shall have
been adjudged to be liable to the Trust unless and only to the
extent that the Court of Chancery of Delaware or the court in
which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, such Person is fairly
and reasonably entitled to indemnity for such expenses which such
Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person
shall be successful on the merits or otherwise (including
dismissal of an action without prejudice or the settlement of an
action without admission of liability) in defense of any action,
suit or proceeding referred to in paragraphs (i) and (ii) of this
Section 10.4(a), or in defense of any claim, issue or matter
therein, he shall be indemnified, to the full extent permitted by
law, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 10.4(a) (unless ordered by a court) shall be made by
the Debenture Issuer only as authorized in the specific case upon
a determination that indemnification of the Company Indemnified
Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and
(ii). Such determination shall be made (1) by the Administrative
Trustees by a majority vote of a Quorum consisting of such
Administrative Trustees who were not parties to such action, suit
or proceeding, (2) if such a Quorum is not obtainable, or, even
if obtainable, if a Quorum of disinterested Administrative
Trustees so directs, by independent legal counsel in a written
opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses)
incurred by a Company Indemnified Person in defending a civil,
criminal, administrative or investigative action, suit or
proceeding referred to in paragraphs (i) and (ii) of this Section
10.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt
of an undertaking by or
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on behalf of such Company Indemnified Person to repay such amount
if it shall ultimately be determined that he is not entitled to
be indemnified by the Debenture Issuer as authorized in this
Section 10.4(a). Notwithstanding the foregoing, no advance shall
be made by the Debenture Issuer if a determination is reasonably
and promptly made (i) by the Administrative Trustees by a
majority vote of a quorum of disinterested Administrative
Trustees, (ii) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Administrative Trustees
so directs, by independent legal counsel in a written opinion or
(iii) the Common Security Holder of the Trust, that, based upon
the facts known to the Administrative Trustees, counsel or the
Common Security Holder at the time such determination is made,
such Company Indemnified Person acted in bad faith or in a manner
that such person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any criminal
proceeding, that such Company Indemnified Person believed or had
reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the
Administrative Trustees, independent legal counsel or Common
Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or
Capital Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.4(a) shall not be deemed exclusive of any other rights
to which those seeking indemnification and advancement of
expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer
or Capital Security Holders of the Trust or otherwise, both as to
action in his official capacity and as to action in another
capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each
Company Indemnified Person who serves in such capacity at any
time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights
or obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a
Company Indemnified Person against any liability asserted against
him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Debenture Issuer would
have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references
to "the Trust" shall include, in addition to the resulting or
surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or
merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director,
trustee, officer, employee or agent of another entity, shall
stand in the same
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position under the provisions of this Section 10.4(a) with
respect to the resulting or surviving entity as he would have
with respect to such constituent entity if its separate existence
had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall,
unless otherwise provided when authorized or ratified, continue
as to a person who has ceased to be a Company Indemnified Person
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i)
Property Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of
the Property Trustee or the Delaware Trustee, and (iv) any officers,
directors, shareholders, members, partners, employees,
representatives, custodians, nominees or agents of the Property
Trustee or the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and
to hold each Fiduciary Indemnified Person harmless against, any and
all loss, liability, damage, claim or expense including taxes (other
than taxes based on the income of such Fiduciary Indemnified Person)
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 10.4(b) shall
survive the resignation or removal of the Property Trustee or the
Delaware Trustee and the satisfaction and discharge of this
Declaration.
(c) The Debenture Trustee agrees to pay the Property
Trustee and the Delaware Trustee, from time to time, such compensation
for all services rendered by the Property Trustee and the Delaware
Trustee hereunder as may be mutually agreed upon in writing by the
Sponsor and the Property Trustee or the Delaware Trustee, as the case
may be, and, except as otherwise expressly provided herein, to
reimburse the Property Trustee and the Delaware Trustee upon its or
their request for all reasonable expenses, disbursements and advances
incurred or made by the Property Trustee or the Delaware Trustee, as
the case may be, in accordance with the provisions of this
Declaration, except any such expense, disbursement or advance as may
be attributable to its or their negligence or bad faith.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and
the Property Trustee (subject to Section 5.3(c)) may engage in or
possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders shall have no
rights by virtue of this Declaration in and to such independent
ventures or the income or profits derived
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therefrom, and the pursuit of any such venture, even if competitive
with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor, the Delaware Trustee, or
the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by
the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee shall have the right to take for its own
account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may
engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for,
trustee or agent for, or act on any committee or body of holders of,
securities or other obligations of the Sponsor or its Affiliates.
SECTION 10.6 Compensation; Fees.
The Debenture Issuer agrees:
(a) to pay to the Trustees from time to time such
compensation for all services rendered by them hereunder as the
parties shall agree in writing from time to time (which compensation
shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust); and
(b) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses,
disbursements and advances incurred or made by the Trustees in
accordance with any provision of this Declaration (including the
reasonable compensation and the expenses and disbursements of their
respective agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith.
The provisions of this Section 10.6 shall survive the
dissolution of the Trust and the termination of this Declaration and
the removal or resignation of any Trustee.
No Trustee may claim any lien or charge on any property of
the Trust as a result of any amount due pursuant to this Section 10.6.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
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SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of
account, records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Trust. The books of
account shall be maintained on the accrual method of accounting, in
accordance with generally accepted accounting principles, consistently
applied. The books of account and the records of the Trust shall be
examined by and reported upon as of the end of each Fiscal Year of the
Trust by a firm of independent certified public accountants selected
by the Administrative Trustees.
(b) The Administrative Trustees shall cause to be duly
prepared and delivered to each of the Holders, any annual United
States federal income tax information statement, required by the Code,
containing such information with regard to the Securities held by each
Holder as is required by the Code and the Treasury Regulations.
Notwithstanding any right under the Code to deliver any such statement
at a later date, the Administrative Trustees shall endeavor to deliver
all such information statements within 30 days after the end of each
Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an annual
United States federal income tax return, on a Form 1041 or such other
form required by United States federal income tax law, and any other
annual income tax returns required to be filed by the Administrative
Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
The Trust may maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all
payments of funds in respect of the Debentures held by the Property
Trustee shall be made directly to the Property Trustee Account and no
other funds of the Trust shall be deposited in the Property Trustee
Account. The sole signatories for such accounts shall be designated
by the Administrative Trustees; provided, however, that the Property
Trustee shall designate the signatories for the Property Trustee
Account.
SECTION 11.4 Withholding.
The Trust and the Administrative Trustees shall comply with
all withholding requirements under United States federal, state and
local law. The Trust shall request, and the Holders shall provide to
the Trust, such forms or certificates as are necessary to establish an
exemption from withholding with respect to each Holder, and any
representations and forms as shall reasonably be requested by the
Trust to assist it in determining the extent of, and in fulfilling,
its withholding obligations. The Administrative Trustees shall file
required forms with applicable jurisdictions and, unless an exemption
from withholding
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is properly established by a Holder, shall remit amounts withheld with
respect to the Holder to applicable jurisdictions. To the extent that
the Trust is required to withhold and pay over any amounts to any
authority with respect to Distributions or allocations to any Holder,
the amount withheld shall be deemed to be a Distribution in the amount
of the withholding to the Holder. In the event of any claimed over
withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was
not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration
(including Section 7 of the Annex I hereto) or by any applicable terms
of the Securities, this Declaration may only be amended by a written
instrument approved and executed by:
(i) the Administrative Trustees (or if there are more than
two Administrative Trustees a majority of the Administrative
Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property
Trustee; and
(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee, the
Delaware Trustee.
(b) No amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust
and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an Opinion of Counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by,
and conforms to, the terms of this Declaration (including
the terms of the Securities) and that all conditions
precedent, if any, in this Declaration to the execution and
delivery of such amendment have been satisfied,
provided, however, that the Property Trustee shall not be required to
sign any such amendment which affects the rights, powers, duties,
obligations or immunities of the Property Trustee; and
(ii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of
the Property Trustee in contravention of the Trust Indenture
Act; or
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(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment
Company Act;
(c) At such time after the Trust has issued any Securities
that remain outstanding, any amendment that would adversely affect the
rights, privileges or preferences of any Holder may be effected only
with such additional requirements as may be set forth in the terms of
such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders;
(e) Article Four shall not be amended without the consent
of the Holders of a Majority in liquidation amount of the Common
Securities and;
(f) The rights of the holders of the Common Securities
under Article Five to increase or decrease the number of, and appoint
and remove Trustees shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities;
and
(g) Notwithstanding Section 12.1(c), this Declaration may
be amended without the consent of the Holders to:
(i) cure any ambiguity, correct or supplement any provision
in this Declaration that may be inconsistent with any other
provision of this Declaration or to make any other provisions
with respect to matters or questions arising under this
Declaration which shall not be inconsistent with the other
provisions of the Declaration; and
(ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be 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 Securities are
outstanding or to ensure that the Trust will not be required to
register as an Investment Company under the Investment Company
Act; and
(iii) to modify, eliminate or add any provisions of the
Declaration to such extent as shall be necessary to enable the
Trust and the Sponsor to conduct an Exchange Offer in the manner
contemplated by the Registration Rights Agreement;
provided, however, that in each case such action shall not adversely
affect in any material respect the interests of the Holders, and any
amendments of this Declaration shall become effective when notice
thereof is given to the Holders.
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SECTION 12.2 Meetings of the Holders; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may
be called at any time by the Administrative Trustees (or as provided
in the terms of the Securities) to consider and act on any matter on
which Holders of such class of Securities are entitled to act under
the terms of this Declaration, the terms of the Securities or the
rules of any stock exchange on which the Capital Securities are listed
or admitted for trading. The Administrative Trustees shall call a
meeting of the Holders of such class if directed to do so by the
Holders of at least 10% in liquidation amount of such class of
Securities. Such direction shall be given by delivering to the
Administrative Trustees one or more notices in writing stating that
the signing Holders wish to call a meeting and indicating the general
or specific purpose for which the meeting is to be called. Any
Holders calling a meeting shall specify in writing the Security
Certificates held by the Holders exercising the right to call a
meeting and only those Securities specified shall be counted for
purposes of determining whether the required percentage set forth in
the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of
the Securities, the following provisions shall apply to meetings of
Holders:
(i) notice of any such meeting shall be given to all the
Holders having a right to vote thereat at least seven days and
not more than 60 days before the date of such meeting. Whenever
a vote, consent or approval of the Holders is permitted or
required under this Declaration or the rules of any stock
exchange on which the Capital Securities are listed or admitted
for trading, such vote, consent or approval may be given at a
meeting of the Holders. Any action that may be taken at a
meeting of the Holders may be taken without a meeting if a
consent in writing setting forth the action so taken is signed by
the Holders owning not less than the minimum amount of Securities
in liquidation amount that would be necessary to authorize or
take such action at a meeting at which all Holders having a right
to vote thereon were present and voting. Prompt notice of the
taking of action without a meeting shall be given to the Holders
entitled to vote who have not consented in writing. The
Administrative Trustees may specify that any written ballot
submitted to the Security Holder for the purpose of taking any
action without a meeting shall be returned to the Trust within
the time specified by the Administrative Trustees;
(ii) each Holder may authorize any Person to act for it by
proxy on all matters in which a Holder is entitled to
participate, including waiving notice of any meeting, or voting
or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the
pleasure of the Holder executing it. Except as otherwise
provided herein, all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation
Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders were stockholders of a Delaware
corporation;
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(iii) each meeting of the Holders shall be conducted by
the Administrative Trustees or by such other Person that the
Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Capital Securities are
then listed or trading, otherwise provides, the Administrative
Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders, including notice of
the time, place or purpose of any meeting at which any matter is
to be voted on by any Holders, waiver of any such notice, action
by consent without a meeting, the establishment of a record date,
quorum requirements, voting in person or by proxy or any other
matter with respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents
and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Property Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor
Property Trustee's acceptance of its appointment as Property Trustee
that:
(a) The Property Trustee is a New York banking corporation,
a national banking association or a bank or trust company organized
under the laws of any State of the United States or the District of
Columbia, in any case with trust powers and authority to execute and
deliver, and to carry out and perform its obligations under the terms
of, this Declaration;
(b) The execution, delivery and performance by the Property
Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. This
Declaration has been duly executed and delivered by the Property
Trustee and constitutes a legal, valid and binding obligation of the
Property Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of
the court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law);
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(c) The execution, delivery and performance of this
Declaration by the Property Trustee does not conflict with or
constitute a breach of the charter or by-laws of the Property Trustee;
and
(d) No consent, approval or authorization of, or
registration with or notice to, any New York State or federal banking
authority is required for the execution, delivery or performance by
the Property Trustee of this Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Delaware Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor
Delaware Trustee's acceptance of its appointment as Delaware Trustee
that:
(a) The Delaware Trustee is duly organized, validly
existing and in good standing under the laws of the State of Delaware
or the United States, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms
of, this Declaration;
(b) The execution, delivery and performance by the Delaware
Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Delaware Trustee. This
Declaration has been duly executed and delivered by the Delaware
Trustee and constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of
the court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or
registration with or notice to, any federal banking authority is
required for the execution, delivery or performance by the Delaware
Trustee of this Declaration; and
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware.
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ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement.
The Holders of the Capital Securities, the Debentures and the
Capital Securities Guarantee are entitled to the benefits of a Registration
Rights Agreement. In certain limited circumstances set forth in the
Registration Rights Agreement, the Debenture Issuer shall be required to pay
Liquidated Damages with respect to the Debentures. Unless otherwise stated,
the term "Distribution", as used in this Declaration, includes such
Liquidated Damages.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, overnight courier service or
confirmed telecopy, as follows:
(a) if given to the Trust, in care of the Administrative Trustees
at the Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Property Trustee, the Delaware Trustee and
the Holders):
Progress Capital Trust I
c/o Progress Financial Corporation
Four Sentry Parkway, Suite 230
Blue Bell, Pennsylvania 19422-0764
Attention: Frederick E. Schea
Administrative Trustee
Telecopy: (610) 825-4460
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of to
the Holders):
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
Telecopy: (212) 815-5917
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(c) if given to the Property Trustee, at the Property Trustee's
mailing address set forth below (or such other address as the Property
Trustee may give notice of to the Holders):
The Bank of New York
101 Barclay Street
21st Floor West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telecopy: (212) 815-5917
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder
of the Common Securities may give notice to the Property Trustee and the
Trust):
Progress Financial Corporation
Four Sentry Parkway, Suite 230
Blue Bell, Pennsylvania 19422-0764
Attention: Frederick E. Schea
Senior Vice President and
Chief Fiancial Officer
Telecopy: (610) 825-4460
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 15.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
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SECTION 15.4 Headings.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 15.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 15.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder
of this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and
they shall have the same force and effect as though all of the signers had
signed a single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
/s/W. Kirk Wycoff
----------------------------------------
W. Kirk Wycoff, as Administrative Trustee
/s/Frederick E. Schea
----------------------------------------
Frederick E. Schea, as Administrative Trustee
/s/Eric J. Morgon
----------------------------------------
Eric J. Morgan, as Administrative Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/Mary Jane Morrissey
-------------------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
THE BANK OF NEW YORK,
as Property Trustee
By: /s/Mary Jane Morrissey
-------------------------------------
Name: Mary Jane Morrissey
Title: Vice President
PROGRESS FINANCIAL CORPORATION,
as Sponsor and Debenture Issuer
By: /s/Frederick E. Schea
-------------------------------------
Name: Frederick E. Schea
Title: Senior Vice President and Chief
Financial Officer
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ANNEX I
TERMS OF
SERIES A/SERIES B 10.50% CAPITAL SECURITIES
10.50% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of June 3, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined
in the Offering Memorandum referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
(a) Capital Securities. 15,000 Series A Capital Securities of the
Trust and 15,000 Series B Capital Securities of the Trust, both series
together with an aggregate liquidation amount with respect to the assets of
the Trust of fifteen million dollars ($15,000,000), and each with a
liquidation amount with respect to the assets of the Trust of $1,000 per
security, are hereby designated for the purposes of identification only as
"Series A 10.50% Capital Securities" and "Series B 10.50% Capital
Securities", respectively (collectively, the "Capital Securities"). The
certificates evidencing the Capital Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom
or practice or to conform to the rules of any exchange or quotation system on
or in which the Capital Securities are listed, traded or quoted.
(b) Common Securities. 464 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of three
hundred eighty seven thousand dollars ($464,000) and a liquidation amount
with respect to the assets of the Trust of $1,000 per security, are hereby
designated for the purposes of identification only as "10.50% Common
Securities" (collectively, the "Common Securities"). The certificates
evidencing the Common Securities shall be substantially in the form of
Exhibit A-2 to the Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate
per annum of 10.50% (the "Coupon Rate") of the liquidation amount of $1,000
per Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions
in arrears for more than one semi-annual
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period will bear additional distributions thereon compounded semi-annually at
the Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes distributions of any such
Liquidated Damages payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the
Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for or, if no Distributions have been paid or duly provided
for, from June 3, 1997, and will be payable semi-annually in arrears on June
1 and December 1 of each year, commencing on December 1, 1997 (each, a
"Distribution Date"), except as otherwise described below. Distributions
will be computed on the basis of a 360-day year consisting of twelve 30-day
months and for any period less than a full calendar month on the basis of the
actual number of days elapsed in such month. As long as no Event of Default
has occurred and is continuing under the Indenture, the Debenture Issuer has
the right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures
for a period not exceeding 10 consecutive semi-annual periods, including the
first such semi-annual period during such period (each an "Extension
Period"), during which Extension Period no interest shall be due and payable
on the Debentures, provided that no Extension Period shall end on a date
other than an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, Distributions
will continue to accumulate with additional Distributions thereon (to the
extent permitted by applicable law but not at a rate greater than the rate at
which interest is then accruing on the Debentures) at the Coupon Rate
compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
defer payments of interest by further extending such Extension Period;
provided that such Extension Period, together with all such previous and
further extensions within such Extension Period, may not exceed 10
consecutive semi-annual periods, including the first semi-annual period
during such Extension Period, or extend beyond the Maturity Date of the
Debentures. Upon the termination of any Extension Period and the payment of
all amounts then due, the Debenture Issuer may commence a new Extension
Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the close of
business on the 15th day of the month immediately preceding the month in
which the relevant Distribution Date occurs, which Distribution Dates
correspond to the interest payment dates on the Debentures. Subject to any
applicable laws and regulations and the provisions of the Declaration, each
such payment in respect of the Global Capital Securities will be made as
described under the heading "Description of Capital Securities -- Form,
Denomination, Book-
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Entry Procedures and Transfer" in the Offering Memorandum dated May 30, 1997,
of the Debenture Issuer and the Trust relating to the Securities and the
Debentures. Payments in respect of Capital Securities held in certificated
form will be made by check mailed to the Holder entitled thereto. The
relevant record dates for the Common Securities shall be the same as the
record dates for the Capital Securities. Distributions payable on any
Securities that are not punctually paid on any Distribution Date, as a result
of the Debenture Issuer having failed to make a payment under the Debentures,
will cease to be payable to the Holder on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name
such Securities are registered on the special record date or other specified
date determined in accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that if such next succeeding
Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day with the same force and effect
as if made on such date.
(d) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders.
3. Liquidation Distribution Upon Dissolution.
In the event of any termination of the Trust or the Sponsor
otherwise gives notice of its election to liquidate the Trust pursuant to
Section 8.1(a)(iii) of the Declaration, the Trust shall be liquidated by the
Administrative Trustees as expeditiously as the Administrative Trustees
determine to be possible by distributing, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, to the Holders a
Like Amount (as defined below) of the Debentures, unless such distribution is
determined by the Property Trustee not to be practicable, in which event such
Holders will be entitled to receive Pro Rata out of the assets of the Trust
legally available for distribution to Holders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an
amount equal to the aggregate of the liquidation amount of $1,000 per
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having a Liquidation Amount equal to the principal
amount of Debentures to be paid in accordance with their terms and (ii) with
respect to a distribution of Debentures upon the liquidation of the Trust,
Debentures having a principal amount equal to the Liquidation Amount of the
Securities of the Holder to whom such Debentures are distributed.
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If, upon any such liquidation, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets on hand legally
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Securities shall be paid on a
Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part, at
maturity or upon early redemption (either at the option of the Debenture
Issuer or pursuant to a Special Event, as described below), the proceeds from
such repayment shall be simultaneously applied by the Property Trustee
(subject to the Property Trustee having received written notice no later than
45 days prior to such repayment) to redeem a Like Amount of the Securities at
a redemption price equal to (i) in the case of the repayment of the
Debentures at maturity, the Maturity Redemption Price (as defined below),
(ii) in the case of the optional redemption of the Debentures upon the
occurrence and continuation of a Special Event, the Special Event Redemption
Price (as defined below) and (iii) in the case of the optional redemption of
the Debentures on or after June 1, 2007, the Optional Redemption Price (as
defined below). The Maturity Redemption Price, the Special Event Redemption
Price and the Optional Redemption Price are referred to collectively as the
"Redemption Price". Holders will be given not less than 30 nor more than 60
days notice of such redemption.
(b) (i) The "Maturity Redemption Price", with respect to a
redemption of Securities, shall mean an amount equal to the principal of and
accrued and unpaid interest on the Debentures as of the maturity date thereof.
(ii) In the case of an optional redemption, if fewer than all the
outstanding Securities are to be so redeemed, the Securities to be redeemed
will be determined as described in Section 4(f)(ii) below. Upon the entry of
an order for the dissolution of the Trust by a court of competent
jurisdiction, the Debentures thereafter will be subject to optional
repayment, in whole, but not in part, on or after June 1, 2007 (the "Initial
Optional Redemption Date").
The Debenture Issuer shall have the right (subject to the conditions
in the Indenture) to elect to redeem the Debentures in whole or in part at
any time on or after the Initial Optional Redemption Date, upon not less than
30 days and not more than 60 days notice, at the Optional Redemption Price
and, simultaneous with such redemption, to cause a Like Amount of the
Securities to be redeemed by the Trust at the Optional Redemption Price on a
Pro Rata basis. "Optional Redemption Price" shall mean a price equal to the
percentage of the liquidation amount of Securities to be redeemed plus
accumulated and unpaid Distributions thereon, if any, to the date of such
redemption if redeemed during the 12-month period beginning June 1 of the
years indicated below:
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Year Percentage
---- ----------
2007 105.250%
2008 104.725%
2009 104.200%
2010 103.675%
2011 103.150%
2012 102.625%
2013 102.100%
2014 101.575%
2015 101.050%
2016 100.525%
2017 and thereafter 100.000%
(c) If at any time a Tax Event or a Regulatory Capital Event (each
as defined below, and each a "Special Event") occurs, the Debenture Issuer
shall have the right (subject to the conditions set forth in the Indenture)
at any time prior to the Initial Optional Redemption Date, upon not less than
30 nor more than 60 days notice, to redeem the Debentures in whole, but not
in part, within the 90 days following the occurrence of such Special Event
(the "90 Day Period"), and, simultaneous with such redemption, to cause a
Like Amount of the Securities to be redeemed by the Trust at the Special
Event Redemption Price on a Pro Rata basis.
"Make-Whole Amount" shall be equal to the greater of (i) 100% of the
principal of a Like Amount of Debentures to be redeemed or (ii) the sum, as
determined by a Quotation Agent (as defined in the Indenture), of the present
values of remaining scheduled payments of principal amount and interest on
the Debentures, discounted to the redemption date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate (as defined in the Indenture), plus, in the case of each of
clauses (i) and (ii), accrued and unpaid Distributions thereon, if any, to
the date of such redemption.
"Tax Event" shall occur upon receipt by the Sponsor and the Trust of
an Opinion of Counsel from counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws or any regulations thereunder of the United
States or any political subdivision or taxing authority thereof or therein,
or as a result of any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment
or change is effective or which pronouncement or decision is announced on or
after June 3,
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1997, there is more than an insubstantial risk that (i) the Trust is, or will
be within 90 days of the date of such opinion, subject to United States
federal income tax with respect to income received or accrued on the
Debentures, (ii) interest payable by the Debenture Issuer on the Debentures
is not, or within 90 days of the date of such opinion, will not be,
deductible by the Debenture Issuer, in whole or in part, for United States
federal income tax purposes, or (iii) the Trust is, or will be within 90 days
of the date of such opinion, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
A "Regulatory Capital Event" means that the Sponsor shall have
become, or pursuant to law or regulation will become within 180 days, subject
to capital requirements under which, in the written opinion of independent
bank regulatory counsel experienced in such matters, the Capital Securities
would not constitute Tier 1 Capital (as that concept is used in the
guidelines or regulations issued by the Federal Reserve Board as of the date
of the Offering Memorandum) applied as if the Sponsor (or its successor) were
a bank holding company, or the then-equivalent of such Tier 1 Capital.
"Special Event Redemption Price" shall mean, with respect to a
redemption of Securities, a price equal to the Make-Whole Amount.
(d) On and from the date fixed by the Administrative Trustees for
any distribution of Debentures and liquidation of the Trust: (i) the
Securities will no longer be deemed to be outstanding, (ii) the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee), as
the Holder of the Capital Securities, will receive a registered global
certificate or certificates representing the Debentures to be delivered upon
such distribution and any certificates representing Securities not held by
the Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) will be deemed to represent beneficial interests in a Like Amount of
Debentures until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
(e) The Trust may not redeem fewer than all the outstanding
Securities unless all accumulated and unpaid Distributions have been paid on
all Securities for all semi-annual Distribution periods terminating on or
before the date of redemption.
(f) The procedure with respect to redemptions or distributions of
Securities shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date
fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 4(f)(i), a
Redemption/ Distribution Notice shall be deemed to be given on the day
such notice is first mailed
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by first-class mail, postage prepaid, to Holders. Each
Redemption/Distribution Notice shall be addressed to the Holders at the
address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing
of either thereof with respect to any Holder shall affect the validity of
the redemption or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the particular Securities to be redeemed shall be
selected on a Pro Rata basis (based upon Liquidation Amounts) not more
than 60 days prior to the date fixed for redemption from the outstanding
Capital Securities not previously called for redemption, provided,
however, that with respect to Holders that would be required to hold less
than 100 but more than zero Securities as a result of such pro rata
redemption, the Trust shall redeem Securities of each such Holder so that
after such redemption such Holder shall hold either 100 Securities or
such Holder no longer holds any Securities and shall use such method
(including, without limitation, by lot) as the Trust shall deem fair and
appropriate, provided, further, that any such proration may be made on
the basis of the aggregate Liquidation Amount of Securities held by each
Holder thereof and may be made by making such adjustments as the Trust
deems fair and appropriate in order that only Securities in denominations
of $1,000 or integral multiples thereof shall be redeemed. In respect of
Capital Securities registered in the name of and held of record by the
Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) or any nominee, the distribution of the proceeds of such
redemption will be made to the Clearing Agency and disbursed by such
Clearing Agency in accordance with the procedures applied by such agency
or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, (which notice will be irrevocable), then
(A) with respect to Capital Securities issued in book-entry form, by
12:00 noon, New York City time, on the redemption date, provided that the
Debenture Issuer has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the
Debentures by 10:00 a.m., New York City time, on the maturity date or the
date of redemption, as the case requires, the Property Trustee will
deposit irrevocably with the Clearing Agency or its nominee (or successor
Clearing Agency or its nominee) funds sufficient to pay the applicable
Redemption Price with respect to such Capital Securities and will give
the Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the relevant Clearing Agency Participants, and (B)
with respect to Capital Securities issued in certificated form and Common
Securities, provided that the Debenture Issuer has paid the Property
Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Property Trustee will pay
the relevant Redemption Price to the Holders by check mailed to the
address of the relevant Holder appearing on the books and records of the
Trust on the redemption date. If a Redemp-
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tion/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business
on the date of such deposit, or on the redemption date, as applicable,
Distributions will cease to accumulate on the Securities so called for
redemption and all rights of Holders so called for redemption will cease,
except the right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Securities shall cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the
Redemption Date of the Securities will be subject to the rights of
Holders on the close of business on a regular record date in respect of a
Distribution Date occurring on or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be required
to register or cause to be registered the transfer of (i) any Securities
beginning on the opening of business 15 days before the day of mailing of
a notice of redemption and ending at the close of business on the day of
such mailing or (ii) any Securities selected for redemption except the
unredeemed portion of any Security being redeemed. If any date fixed for
redemption of 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 without any interest or other payment in
respect of any such delay) except that, if such next succeeding Business
Day falls in the next calendar year, such payment shall be made on the
immediately preceding Business Day, with the same force and effect as if
made on such date fixed for redemption. If payment of the Redemption
Price in respect of any Securities is improperly withheld or refused and
not paid either by the Property Trustee or by the Sponsor as guarantor
pursuant to the relevant Securities Guarantee, Distributions on such
Securities will continue to accumulate from the original redemption date
to the actual date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of calculating
the Redemption Price.
(v) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) in respect of the Capital
Securities, the Clearing Agency or its nominee (or any successor Clearing
Agency or its nominee) if the Global Certificates have been issued or, if
Definitive Capital Security Certificates have been issued, to the Holder
thereof, and (B) in respect of the Common Securities to the Holder
thereof.
(vi) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws and banking laws),
provided the acquiror is not the Holder of the Common Securities or the
obligor under the Indenture, the Sponsor or any of its subsidiaries may
at any time and from time to time purchase outstanding Capital Securities
by tender, in the open market or by private agreement.
I-8
<PAGE>
5. Voting Rights - Capital Securities.
(a) Except as provided under Sections 5(b), 6(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights.
(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 such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07
of the Indenture, (iii) exercise any right to rescind or annul a declaration
of acceleration of the maturity of the principal of the Debentures 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 a majority in liquidation
amount of all outstanding Capital Securities; provided, however, that where a
consent under the Indenture would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior approval of each Holder of the Capital Securities.
The Trustees shall not revoke any action previously authorized or approved by
a vote of the Holders of the Capital Securities except by subsequent vote of
such Holders. Subject to Section 2.7 of the Declaration, the Property Trustee
shall notify each Holder of Capital Securities of any notice of default with
respect to the Debentures. In addition to obtaining the foregoing approvals
of such Holders of the Capital Securities, prior to taking any of the
foregoing actions, the Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures
on the due date (or in the case of redemption, on the redemption date), then
a Holder of Capital Securities may directly institute a proceeding for
enforcement of payment to such Holder of the principal of or premium, if any,
or interest on a Like Amount of Debentures (a "Direct Action") on or after
the respective due date specified in the Debentures. In connection with such
Direct Action, the rights of the Common Securities Holder will be subrogated
to the rights of such Holder of Capital Securities to the extent of any
payment made by the Debenture Issuer to such Holder of Capital Securities in
such Direct Action. Except as provided in the second preceding sentence,
the Holders of Capital Securities will not be able to exercise directly any
other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Capital Securities may be
given at a separate meeting of Holders of Capital Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust
or pursuant to written consent. The Administrative Trustees will cause a
notice of any meeting at which Holders of Capital
I-9
<PAGE>
Securities are entitled to vote, or of any matter upon which action by
written consent of such Holders is to be taken, to be mailed to each Holder
of record of Capital Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action
is to be taken, (ii) a description of any resolution proposed for adoption at
such meeting on which such Holders are entitled to vote or of such matter
upon which written consent is sought and (iii) instructions for the delivery
of proxies or consents.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), 6(c), and 7 as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless an Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by the holder of the
Common Securities. If an 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 Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove or replace, or increase or decrease the
number of, the Administrative Trustees, which voting rights are vested
exclusively in the Sponsor as the holder of the Common Securities. No
resignation or removal of a Trustee and no appointment of a successor trustee
shall be effective until the acceptance of appointment by the successor
trustee in accordance with the provisions of the Declaration.
(c) 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 such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07
of the Indenture, (iii) exercise any right to rescind or annul a declaration
of acceleration of the maturity of the principal of the Debentures 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 a Majority in liquidation
amount of all outstanding Common Securities; provided, however, that where a
consent under the Indenture would require the consent of
I-10
<PAGE>
each holder of Debentures affected thereby, no such consent shall be given by
the Property Trustee without the prior approval of each Holder of the Common
Securities. The Trustees shall not revoke any action previously authorized
or approved by a vote of the Holders of the Common Securities except by
subsequent vote of such Holders. Subject to Section 2.7 of the Declaration,
the Property Trustee shall notify each Holder of Common Securities of any
notice of default with respect to the Debentures. In addition to obtaining
the foregoing approvals of such Holders of the Common Securities, prior to
taking any of the foregoing actions, the Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures
on the due date (or in the case of redemption, on the redemption date), then
a Holder of Common Securities may institute a Direct Action for enforcement
of payment to such Holder of the principal of or premium, if any, or interest
on a Like Amount of Debentures on or after the respective due date specified
in the Debentures. In connection with Direct Action, the rights of the
Common Securities Holder will be subordinated to the rights of such Holder of
Capital Securities to the extent of any payment made by the Debenture Issuer
to such Holder of Common Securities in such Direct Action. Except as
provided in the second preceding sentence, the Holders of Common Securities
will not be able to exercise directly any other remedy available to the
holders of the Debentures.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Administrative Trustees will cause a notice
of any meeting at which Holders of Common Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Common Securities. Each such
notice will include a statement setting forth (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
7. Amendments to Declaration and Indenture.
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees, without the consent of
the Holders (i) to cure any ambiguity,
I-11
<PAGE>
correct or supplement any provisions in the Declaration that may be
inconsistent with any other provisions, or to make any other provisions with
respect to matters or questions arising under the Declaration which shall not
be inconsistent with the other provisions of the Declaration, (ii) to modify,
eliminate or add to any provisions of the Declaration to such extent as shall
be 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
Securities are outstanding or to ensure that the Trust will not be required
to register as an "Investment Company" under the Investment Company Act or
(iii) to modify, eliminate or add any provisions of the Declaration to such
extent as shall be necessary to enable the Trust and the Sponsor to conduct
an Exchange Offer in the manner contemplated by the Registration Rights
Agreement; provided, however, that in each case such action shall not
adversely affect in any material respect the interests of any Holder. Any
amendments of the Declaration shall become effective when notice thereof is
given to the Holders. Under the circumstances referred to in Section 12.1(c)
of the Declaration, the Declaration also may be amended by the Trustees and
the Sponsor with (i) the consent of Holders representing a Majority in
liquidation amount of all outstanding 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, provided that, without
the consent of each Holder of Trust Securities, the Declaration may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date
or (ii) restrict the right of a holder of Trust Securities to institute suit
for the enforcement of any such payment on or after such date.
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder according to the aggregate liquidation amount of the Securities held
by the relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Capital Securities pro rata according to the aggregate liquidation amount of
Capital Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Capital Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Capital Securities, to
each Holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding. In
any such proration, the Trust may make such adjustments as may be appropriate
in order that only securities in authorized denominations shall be redeemed
(subject to the minimum block requirements of Section 9.2(n) of the
Declaration).
I-12
<PAGE>
9. Ranking.
The Capital Securities rank pari passu with the Common Securities
and payment thereon shall be made Pro Rata with the Common Securities, except
that, if an Event of Default under the Declaration occurs and is continuing,
no payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full the
Distributions, Redemption Price, Liquidation Distribution and other payments
to which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture.
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights.
The Holders shall have no preemptive rights to subscribe for any
additional securities.
12. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee, the Common Securities Guarantee (as may be appropriate)
and the Indenture (including any supplemental indenture) to a Holder without
charge upon written request to the Sponsor at its principal place of business.
I-13
<PAGE>
EXHIBIT A-1
FORM OF SERIES A CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT: THIS
CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO
TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL
SECURITY AS A WHOLE BY THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING
AGENCY OR BY A NOMINEE OF THE CLEARING AGENCY TO THE CLEARING AGENCY OR
ANOTHER NOMINEE OF THE CLEARING AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.]
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK,
NEW YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[IF THIS CAPITAL SECURITY IS A RESTRICTED CAPITAL SECURITY, INSERT:]
THESE CAPITAL SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL
A1-1
<PAGE>
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH
IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE
LAST DATE ON WHICH PROGRESS FINANCIAL CORPORATION (THE "COMPANY") OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D), TO
REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE
OF THIS CAPITAL SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE
TRUST. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.]
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL
SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED
TO THE RECEIPT OF DISTRIBUTIONS OF SUCH CAPITAL SECURITIES, AND SUCH
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES.
A1-2
<PAGE>
THE HOLDER OF THIS CAPITAL SECURITY BY ITS THE ACCEPTANCE HEREOF
ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL
SECURITY BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION
4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM
ANY SUCH PROHIBITION.
A1-3
<PAGE>
Number of Series A Aggregate Liquidation
Capital Securities Amount: $15,000,000
15,000 CUSIP NO. ___________
Certificate Evidencing Series A Capital Securities
of
Progress Capital Trust I
Series A _____% Capital Securities
(liquidation amount $1,000 per Capital Security)
Progress Capital Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of $15,000,000 in
aggregate liquidation amount of Capital Securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the
Series A _____% Capital Securities (liquidation amount $1,000 per Capital
Security) (the "Capital Securities"). Subject to the Declaration (as defined
below), the Capital Securities are transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions
of the Capital Securities represented hereby are issued and shall in all
respects be subject to the provisions of the Amended and Restated Declaration
of Trust of the Trust dated as of June 3, 1997, as the same may be amended
from time to time (the "Declaration"), including the designation of the terms
of the Capital Securities as set forth in Annex I to the Declaration.
Capitalized terms used but not defined herein shall have the meaning given
them in the Declaration. The Sponsor will provide a copy of the Declaration,
the Capital Securities Guarantee, the Common Securities Guarantee (as may be
appropriate), and the Indenture (including any supplemental indenture) to a
Holder without charge upon written request to the Trust at its principal
place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital
Securities as evidence of indirect beneficial ownership in the Debentures.
A1-4
<PAGE>
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
Dated:
PROGRESS CAPITAL TRUST I
By:
----------------------------
Name: Frederick E. Schea
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
THE BANK OF NEW YORK,
as Property Trustee
Dated: By:
----------------------------
Authorized Signatory
A1-5
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a
rate per annum of ______% (the "Coupon Rate") of the liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions in arrears
for more than one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by applicable law).
Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Debenture Issuer will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions," as used herein, includes such cash
distributions and any such interest and such Liquidated Damages payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds on hand legally available
therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for, if no Distributions have been paid or duly provided for,
from June __, 1997 and will be payable semi-annually in arrears, on _______
and ________ of each year, commencing on _________ , 1997, except as
otherwise described below. Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day months and, for any period less than
a full calendar month, the number of days elapsed in such month. As long as
no Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period at any time and from time
to time on the Debentures for a period not exceeding 10 consecutive calendar
semi-annual periods, including the first such semi-annual period during such
extension period (each an "Extension Period"), provided that no Extension
Period shall end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions also will be deferred. Despite
such deferral, semi-annual Distributions will continue to accumulate with
interest thereon (to the extent permitted by applicable law, but not at a
rate exceeding the rate of interest then accruing on the Debentures) at the
Coupon Rate compounded semi-annually during any such Extension Period. Prior
to the termination of any such Extension Period, the Debenture Issuer may
further defer payments of interest by further extending such Extension
Period; provided that such Extension Period, together with all such previous
and further extensions within such Extension Period, may not exceed 10
consecutive semi-annual periods, including the first semi-annual period
during such Extension Period, end on a date other than an Interest Payment
Date for the Debentures or extend beyond the Maturity Date of the Debentures.
Payments of accumulated Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after
the end of the Extension Period. Upon the termination of any Extension
Period and the payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above requirements.
A1-6
<PAGE>
Subject to the receipt of any required regulatory approval and to
certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Sponsor, at any time liquidate
the Trust and cause the Debentures to be distributed to the holders of the
Securities in liquidation of the Trust or, simultaneous with any redemption
of the Debentures, cause a Like Amount of the Securities to be redeemed by
the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
A1-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- ----------------------------------------------- agent to transfer this Capital
Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date:
--------------------------------
Signature:
---------------------------
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee*:
--------------------------------------
- -----------------------
* Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities and
Exchange Act of 1934, as amended.
A1-8
<PAGE>
[Include the following if the Capital Security bears a Restricted Capital
Securities Legend]
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) / / exchanged for the undersigned's own account without transfer; or
(2) / / transferred pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(3) / / transferred to an institutional "accredited investor" within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under
the Securities Act of 1933 that is acquiring the Capital
Securities for its own account, or for the account of such an
institutional "accredited investor," for investment purposes and
not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act of 1933; or
(4) / / transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(5) / / transferred pursuant to an effective Registration Statement.
Unless one of the boxes is checked, the Registrar will refuse to register any
of the Capital Securities evidenced by this certificate in the name of any
Person other than the registered Holder thereof; provided, however, that if
box (3) or (4) is checked, the Registrar may require, prior to registering
any such transfer of the Capital Securities, such legal opinions,
certifications and other information as the Trust has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under such Act;
provided, further, that (i) if box (2) is checked, the transferee must also
certify in the form attached hereto that it is a "qualified institutional
buyer" as defined in Rule 144A or (ii) if box (3) is checked, the transferee
must also provide to the Registrar a Transferee Letter of Representation in
the form attached to the Offering Memorandum of the Trust dated May 30, 1997;
provided, further, that after the date that a Registration Statement has been
filed and so long as such Registration Statement continues to be effective,
the Registrar may only permit transfers for which box (5) has been checked.
--------------------------------------------
Signature
A1-9
<PAGE>
CERTIFICATE OF QUALIFIED INSTITUTIONAL BUYER
The undersigned transferee of Capital Securities hereby certifies that
(i) the undersigned is a "qualified institutional buyer" (a "QIB") as defined
in Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933, (ii)
the undersigned is aware that the transfer of the Capital Securities to the
undersigned is being made in reliance on Rule 144A and (iii) the undersigned
is acquiring the Capital Securities for its own account or for the account of
another QIB over which the undersigned exercises its sole investment
discretion.
The undersigned also understands and acknowledges that the Capital
Securities have not been registered under the Securities Act or any other
applicable securities law, are being offered for resale in transactions not
requiring registration under the Securities Act and may not be offered, sold,
pledged or otherwise transferred except in compliance with the registration
requirements of the Securities Act or any other applicable securities laws,
pursuant to an exemption therefrom or in a transaction not subject thereto
and, in each case, in compliance with the terms of the Capital Securities and
the terms of the Amended and Restated Declaration of Trust of Progress
Capital Trust I, dated as of June __, 1997, as the same may be amended from
time to time.
---------------------------------
Signature
A1-10
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS
OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH
PROGRESS BANCORP, INC. (THE "COMPANY") OR ANY "AFFILIATE" OF THE COMPANY WAS
THE OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL
SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS
THIS COMMON SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS COMMON SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY
TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS COMMON
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH
HOLDER
A2-1
<PAGE>
FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS COMMON
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THIS COMMON SECURITY IS NOT TRANSFERABLE EXCEPT AS SET FORTH IN
SECTION 9.1(c) OF THE AMENDED AND RESTATED DECLARATION OF TRUST OF THE
PROGRESS CAPITAL TRUST I, DATED AS OF ________, 1997, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME.
A2-2
<PAGE>
Certificate Evidencing Common Securities
of
Progress Capital Trust I
_______% Common Securities
(liquidation amount $1,000 per Common Security)
Progress Capital Trust I, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), hereby certifies that
_____________________ (the "Holder") is the registered owner of 464 common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the _____% Common Securities (liquidation
amount $1,000 per Common Security) (the "Common Securities"). Subject to the
limitations in Section 9.1(c) of the Declaration (as defined below), the
Common Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of June 3, 1997, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the
Common Securities as set forth in Annex I to the Declaration. Capitalized
terms used but not defined herein shall have the meaning given them in the
Declaration. The Sponsor will provide a copy of the Declaration, the Common
Securities Guarantee, the Capital Securities Guarantee (as may be
appropriate) and the Indenture (including any supplemental indenture) to a
Holder without charge upon written request to the Sponsor at its principal
place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities
as evidence of indirect beneficial ownership in the Debentures.
A2-3
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of June __, 1997.
Progress Capital Trust I
By:
__________________________________
Name: Frederick E. Schea
Administrative Trustee
A2-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a
rate per annum of _____% (the "Coupon Rate") of the liquidation amount of
$1,000 per Common Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions in arrears
for more than one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by applicable law).
Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Debenture Issuer will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions", as used herein, includes such cash
distributions and any such interest and such Liquidated Damages payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds available therefor.
Distributions on the Common Securities will be cumulative, will
accrue from the most recent date to which Distributions have been paid or
duly provided for or, if no Distributions have been paid or duly provided
for, from June __, 1997 and will be payable semi-annually in arrears, on
_______ and ________ of each year, commencing on _________, 1997, except as
otherwise described below. Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day months and, for any period less than
a full calendar month, the number of days elapsed in such month. As long as
no Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period at any time and from time
to time on the Debentures for a period not exceeding 10 consecutive calendar
semi-annual periods, including the first such semi-annual period during such
extension period (each an "Extension Period"), provided that no Extension
Period shall end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions also will be deferred. Despite
such deferral, Distributions will continue to accumulate with interest
thereon (to the extent permitted by applicable law, but not at a rate
exceeding the rate of interest then accruing on the Debentures) at the Coupon
Rate compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
defer payments of interest by further extending such Extension Period;
provided that such Extension Period, together with all such previous and
further extensions within such Extension Period, may not exceed 10
consecutive semi-annual periods, including the first semi-annual period
during such Extension Period, or end on a date other than an Interest Payment
Date for the Debentures or extend beyond the Maturity Date of the Debentures.
Payments of accrued Distributions will be payable to Holders as they appear
on the books and records of the Trust on the first record date after the end
of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
A2-5
<PAGE>
Subject to the receipt of any required regulatory approval and to
certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Sponsor, at any time liquidate
the Trust and cause the Debentures to be distributed to the holders to the
Securities in liquidation of the Trust or, simultaneous with any redemption
of the Debentures, cause a Like Amount of the Securities to be redeemed by
the Trust.
Under certain circumstances, the right of the holders of the Common
Securities shall be subordinate to the rights of the holders of the Capital
Securities (as defined in the Declaration), as provided in the Declaration.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-6
<PAGE>
-----------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- --------------------------------------------------------agent to transfer this
Common Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: ____________________________
Signature: _______________________
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
A2-7
<PAGE>
In connection with any transfer of any of the Common Securities evidenced by
this certificate, the undersigned confirms that such Common Securities are
being:
CHECK ONE BOX BELOW
(1) / / exchanged for the undersigned's own account without transfer; or
(2) / / transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(3) / / transferred to an institutional "accredited investor" within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under
the Securities Act of 1933 that is acquiring the Common Securities
for its own account, or for the account of such an institutional
"accredited investor," for investment purposes and not with a view
to, or for offer or sale in connection with, any distribution in
violation of the Securities Act of 1933; or
(4) / / transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(5) / / transferred pursuant to an effective Registration Statement.
Unless one of the boxes is checked, the Registrar will refuse to register any
of the Common Securities evidenced by this certificate in the name of any
Person other than the registered Holder thereof; provided, however, that if
box (3) or (4) is checked, the Registrar may require, prior to registering
any such transfer of the Capital Securities, such legal opinions,
certifications and other information as the Trust has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under such Act;
provided, further, that (i) if box (2) is checked, the transferee must also
certify in the form attached that it is a "qualified institutional buyer" as
defined in Rule 144A or (ii) if box (3) is checked, the transferee must also
provide to the Registrar a Transferee Letter of Representation in the form
attached to the Offering Memorandum of the Trust, dated May 30, 1997 (as
modified to reflect the transfer of Common Securities).
___________________________________
Signature
A2-8
<PAGE>
CERTIFICATE OF QUALIFIED INSTITUTIONAL BUYER
The undersigned transferee of Common Securities hereby certifies that (i)
the undersigned is a "qualified institutional buyer" (a "QIB") as defined in
Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933, (ii)
the undersigned is aware that the transfer of the Common Securities to the
undersigned is being made in reliance on Rule 144A and (iii) the undersigned
is acquiring the Common Securities for its own account or for the account of
another QIB over which the undersigned exercises its sole investment
discretion.
The undersigned also understands and acknowledges that the Common
Securities have not been registered under the Securities Act or any other
applicable securities law, are being offered for resale in transactions not
requiring registration under the Securities Act and may not be offered, sold,
pledged or otherwise transferred except in compliance with the registration
requirements of the Securities Act or any other applicable securities laws,
pursuant to an exemption therefrom or in a transaction not subject thereto
and, in each case, in compliance with the terms of the Common Securities and
the terms of the Amended and Restated Declaration of Trust of Progress
Capital Trust I, dated as of June __, 1997, as the same may be amended from
time to time.
___________________________
Signature
A2-9
<PAGE>
Exhibit 4.5
SERIES B CAPITAL SECURITY CERTIFICATE
[FACE OF SECURITY]
THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF
THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO
TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL
SECURITY AS A WHOLE BY THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING
AGENCY OR BY A NOMINEE OF THE CLEARING AGENCY TO THE CLEARING AGENCY OR
ANOTHER NOMINEE OF THE CLEARING AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK,
NEW YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL
SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED
TO THE RECEIPT OF DISTRIBUTIONS OF SUCH CAPITAL SECURITIES, AND SUCH
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES.
<PAGE>
Number of Series B Aggregate Liquidation
Securities: 15,000 Amount: $15,000,000
Certificate No. 1 CUSIP NO.
Certificate Evidencing Series B Capital Securities
of
Progress Capital Trust I
Series B 10.50% Capital Securities
(liquidation amount $1,000 per Capital Security)
Progress Capital Trust I, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of $15,000,000 in aggregate
liquidation amount of Capital Securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the Series B
10.50% Capital Securities (liquidation amount $1,000 per Capital Security)
(the "Capital Securities"). Subject to the Declaration (as defined below),
the Capital Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions
of the Capital Securities represented hereby are issued and shall in all
respects be subject to the provisions of the Amended and Restated Declaration
of Trust of the Trust dated as of June 3, 1997, as the same may be amended
from time to time (the "Declaration"), including the designation of the terms
of the Capital Securities as set forth in Annex I to the Declaration.
Capitalized terms used but not defined herein shall have the meaning given
them in the Declaration. The Sponsor will provide a copy of the Declaration,
the Capital Securities Guarantee, the Common Securities Guarantee (as may be
appropriate), and the Indenture (including any supplemental indenture) to a
Holder without charge upon written request to the Trust at its principal
place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder and to the benefits of the Capital
Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital
Securities as evidence of indirect beneficial ownership in the Debentures.
2
<PAGE>
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
Dated: , 1997
PROGRESS CAPITAL TRUST I
By:
------------------------------
Name: Frederick E. Schea
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
THE BANK OF NEW YORK,
as Property Trustee
Dated: , 1997 By:
------------------------------
Authorized Signatory
3
<PAGE>
[REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate
per annum of 10.50% (the "Coupon Rate") of the liquidation amount of $1,000
per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for
more than one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by applicable law).
Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Debenture Issuer will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions," as used herein, includes such cash
distributions and any such interest and such Liquidated Damages payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds on hand legally available
therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for, if no Distributions have been paid or duly provided for,
from June 3, 1997 and will be payable semi-annually in arrears, on June 1 and
December 1 of each year, commencing on December 1 , 1997, except as otherwise
described below. Distributions will be computed on the basis of a 360-day
year consisting of twelve 30-day months and, for any period less than a full
calendar month, the number of days elapsed in such month. As long as no
Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period at any time and from time
to time on the Debentures for a period not exceeding 10 consecutive calendar
semi-annual periods, including the first such semi-annual period during such
extension period (each an "Extension Period"), provided that no Extension
Period shall end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions also will be deferred. Despite
such deferral, semi-annual Distributions will continue to accumulate with
interest thereon (to the extent permitted by applicable law, but not at a
rate exceeding the rate of interest then accruing on the Debentures) at the
Coupon Rate compounded semi-annually during any such Extension Period. Prior
to the termination of any such Extension Period, the Debenture Issuer may
further defer payments of interest by further extending such Extension
Period; provided that such Extension Period, together with all such previous
and further extensions within such Extension Period, may not exceed 10
consecutive semi-annual periods, including the first semi-annual period
during such Extension Period, end on a date other than an Interest Payment
Date for the Debentures or extend beyond the Maturity Date of the Debentures.
Payments of accumulated Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after
the end of the Extension Period. Upon the termination of any Extension
Period and the payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above requirements.
4
<PAGE>
Subject to the receipt of any required regulatory approval and to
certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Sponsor, at any time liquidate
the Trust and cause the Debentures to be distributed to the holders of the
Securities in liquidation of the Trust or, simultaneous with any redemption
of the Debentures, cause a Like Amount of the Securities to be redeemed by
the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
5
<PAGE>
----------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- --------------------------------------------------------agent to transfer this
Capital Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date:
-----------------------
Signature:--------------------
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee (*):
-------------------------------
- -----------------------
* Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities and Exchange Act of 1934, as amended.
6
<PAGE>
Exhibit 4.6
==================================================
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
PROGRESS FINANCIAL CORPORATION
Dated as of ______ __, 1997
==================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation........................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application......................... 6
SECTION 2.2 Lists of Holders of Securities........................... 6
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee...... 6
SECTION 2.4 Periodic Reports to Capital Securities Guarantee
Trustee............................................. 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent......... 7
SECTION 2.6 Events of Default; Waiver................................ 7
SECTION 2.7 Event of Default; Notice................................. 7
SECTION 2.8 Conflicting Interests.................................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee
Trustee............................................. 8
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee... 10
SECTION 3.3. Not Responsible for Recitals or Issuance of Series B
Capital Securities Guarantee........................ 12
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility........ 12
SECTION 4.2 Appointment, Removal and Resignation of Capital
Securities Guarantee Trustee........................ 13
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee................................................ 14
SECTION 5.2 Waiver of Notice and Demand.............................. 14
SECTION 5.3 Obligations Not Affected................................. 14
SECTION 5.4 Rights of Holders........................................ 15
<PAGE>
SECTION 5.5 Guarantee of Payment..................................... 15
SECTION 5.6 Subrogation.............................................. 16
SECTION 5.7 Independent Obligations.................................. 16
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions............................... 16
SECTION 6.2 Ranking.................................................. 17
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.............................................. 17
ARTICLE VIII
COMPENSATION AND EXPENSES OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 8.1 Compensation and Expenses................................ 18
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation.............................................. 18
SECTION 9.2 Indemnification.......................................... 19
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Successors and Assigns................................... 19
SECTION 10.2 Amendments............................................... 19
SECTION 10.3 Notices.................................................. 20
SECTION 10.4 Benefit.................................................. 21
SECTION 10.5 Governing Law............................................ 21
ii
<PAGE>
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Series B Capital Securities
Guarantee"), dated as of _______ __, 1997, is executed and delivered by
Progress Financial Corporation, a Delaware corporation (the "Guarantor"), and
The Bank of New York, a New York banking corporation, as trustee (the
"Capital Securities Guarantee Trustee"), for the benefit of the Holders (as
defined herein) from time to time of the Series B Capital Securities (as
defined herein) of Progress Capital Trust I, a Delaware statutory business
trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of June 3, 1997, among the trustees of the Issuer,
the Guarantor, as sponsor, and the holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer intends to issue
capital securities designated the 10.50% Series B Capital Securities
(collectively the "Series B Capital Securities") in exchange for its
outstanding Series A 10.50% Capital Securities (collectively, the "Series A
Capital Securities") upon consummation of the Exchange Offer (as defined in
the Declaration) such Series B Capital Securities to be issued in a number,
up to 15,000, and with an aggregate liquidation amount, up to $15,000,000,
equal to the number and aggregate liquidation amount of the Series A Capital
Securities exchanged for Series B Capital Securities pursuant to the Exchange
Offer; and
WHEREAS, as incentive for the Holders of Series B Capital Securities
to exchange the Series A Capital Securities for the Series B Capital
Securities in the Exchange Offer, the Guarantor desires irrevocably and
unconditionally to agree, to the extent set forth in this Series B Capital
Securities Guarantee, to pay to the Holders of the Series B Capital
Securities the Guarantee Payments (as defined below) and to make certain
other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor has executed and delivered (i) a Common
Securities Guarantee Agreement, dated as of June 3, 1997 (the "Common
Securities Guarantee"), and (ii) a Series A Capital Securities Guarantee
Agreement, dated as of June 3, 1997, between the Guarantor and the Capital
Securities Guarantee Trustee (the "Series A Capital Securities Guarantee"),
in each case with terms substantially identical to this Series B Capital
Securities Guarantee and for the benefit of the holder(s) of the Common
Securities (as defined herein) and the Series A Capital Securities,
respectively, except that if an Event of Default (as defined in the
Declaration) has occurred and is continuing, the rights of holder(s) of the
Common Securities to receive Guarantee Payments under the Common Securities
Guarantee are subordinated, to the extent and in the manner set forth in the
Common Securities Guarantee, to the rights of holders of the Series B Capital
Securities and the Series A Capital Securities to receive Guarantee Payments
under this Series B Capital Securities Guarantee and the Series A Capital
Securities Guarantee, respectively.
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NOW, THEREFORE, in consideration of the purchase by each Holder, which
purchase the Guarantor hereby acknowledges shall benefit the Guarantor, the
Guarantor executes and delivers this Series B Capital Securities Guarantee
for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Series B Capital Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Series B Capital 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 Declaration as of the date of execution of this
Series B Capital Securities Guarantee have the same meaning when
used in this Series B Capital Securities Guarantee unless otherwise
defined in this Series B Capital Securities Guarantee;
(c) a term defined anywhere in this Series B Capital Securities
Guarantee has the same meaning throughout;
(d) all references to "the Series B Capital Securities Guarantee" or
"this Series B Capital Securities Guarantee" are to this Series B
Capital Securities Guarantee as modified, supplemented or amended
from time to time;
(e) all references in this Series B Capital Securities Guarantee to
Articles and Sections are to Articles and Sections of this Series B
Capital Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning when
used in this Series B Capital Securities Guarantee, unless otherwise
defined in this Series B Capital 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 under
the Securities Act of 1933, as amended, or any successor rule thereunder.
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"Business Day" means any day other than a Saturday or a Sunday, or a day
on which banking institutions in the City of New York or the Town of Blue
Bell, Pennsylvania are authorized or required by law or executive order to
close.
"Capital Securities Guarantee Trustee" means The Bank of New York, a New
York banking corporation, until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Series B Capital Securities Guarantee and thereafter means each
such Successor Capital Securities Guarantee Trustee.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital Securities
Guarantee Trustee at which the corporate trust business of the Capital
Securities Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Agreement is
located at 101 Barclay Street, New York, New York 10286.
"Covered Person" means any Holder of Series B Capital Securities.
"Debentures" means the series of subordinated debt securities of the
Guarantor designated the Series B 10.50% Junior Subordinated Deferrable
Interest Debentures due June 1, 2027 held by the Property Trustee (as defined
in the Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Series B Capital Securities Guarantee,
provided, however, that except with respect to a default in payment of any
Guarantee Payment, the Guarantor shall have received notice of default and
shall not have cured such default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Series B Capital Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Series B Capital Securities to the extent the Issuer has funds on hand
legally available therefor at such time, (ii) the redemption price, including
all accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price") to the extent the Issuer has funds on hand legally
available therefor at such time, with respect to any Series B Capital
Securities called for redemption by the Issuer and (iii) upon a voluntary or
involuntary termination and liquidation of the Issuer (other than in
connection with the distribution of Debentures to the Holders in exchange for
Series B Capital Securities as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accumulated and unpaid
Distributions on the Series B Capital Securities to the date of payment, to
the extent the Issuer has funds on hand legally
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available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer. If an
Event of Default has occurred and is continuing, no Guarantee Payments under
the Common Securities Guarantee with respect to the Common Securities or any
guarantee payment under any Other Common Securities Guarantees shall be made
until the Holders shall be paid in full the Guarantee Payments to which they
are entitled under this Series B Capital Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and records of
the Issuer, of any Series B Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Series B
Capital Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include the Guarantor or any Person known to a
Responsible Officer of the Capital Securities Guarantee Trustee to be an
Affiliate of the Guarantor.
"Indemnified Person" means the Capital Securities Guarantee Trustee, any
Affiliate of the Capital Securities Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Capital Securities Guarantee Trustee.
"Indenture" means the Indenture dated as of June 3, 1997, among the
Guarantor (the "Debenture Issuer") and The Bank of New York, as trustee (the
"Indenture Trustee"), pursuant to which the Debentures are to be issued to
the Property Trustee of the Issuer.
"Indenture Event of Default" shall mean any event specified in Section
5.01 of the Indenture.
"Majority in liquidation amount of the Series B Capital Securities"
means, except as provided by the Declaration or by the Trust Indenture Act, a
vote by Holder(s) of more than 50% of the aggregate liquidation amount of all
Series B Capital Securities.
"Officers' Certificate" means, with respect to the Guarantor, a
certificate signed by any of the Chairman, a Vice Chairman, the Chief
Executive Officer, the President, a Vice President, the Comptroller, the
Secretary or an Assistant Secretary of the Guarantor. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Series B Capital Securities Guarantee (other than
pursuant to Section 314(d)(4) of the Trust Indenture Act) 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 statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable
such officer to
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express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(c) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same meaning as
"Other Guarantees" as defined in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures issued by
the Guarantor from time to time and sold to trusts to be established by the
Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by the Guarantor
with respect to capital securities (if any) similar to the Series B Capital
Securities issued by other trusts to be established by the Guarantor (if
any), in each case similar to the Issuer.
"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.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of June 3, 1997, by and among the Guarantor, the Issuer
and the initial purchasers named therein as such agreement may be amended,
modified or supplemented from time to time.
"Responsible Officer" means, with respect to the Capital Securities
Guarantee Trustee, any officer within the Corporate Trust Office of the
Capital Securities Guarantee Trustee with direct responsibility for the
administration of this Series B Capital Securities Guarantee and also means,
with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Successor Capital Securities Guarantee Trustee" means a successor
Capital Securities Guarantee Trustee possessing the qualifications to act as
Capital Securities Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Securities" means the Common Securities and the Series A
Capital Securities and Series B Capital Securities, collectively.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Series B Capital Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Series B Capital Securities Guarantee and shall, to the extent applicable, be
governed by such provisions; and
(b) if and to the extent that any provision of this Series B
Capital 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 Capital Securities Guarantee
Trustee (unless the Capital Securities Guarantee Trustee is otherwise the
registrar of the Capital Securities) with a list, in such form as the Capital
Securities Guarantee Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of such date, (i) within 14
days after each Record Date, 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 14 days before such List of Holders is given to the Capital
Securities 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 Capital
Securities Guarantee Trustee by the Guarantor. The Capital Securities
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Capital Securities 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 Capital Securities Guarantee Trustee
Within 60 days after May 15 of each year, commencing May 15, 1998, the
Capital Securities Guarantee Trustee shall provide to the Holders 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 Capital Securities Guarantee Trustee shall also comply with the
other requirements of Section 313 of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee
The Guarantor shall provide to the Capital Securities 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
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and at the times required by Section 314 of the Trust Indenture Act, provided
that such compliance certificate shall be delivered on or before 120 days
after the end of each fiscal year of the Guarantor. Delivery of such
reports, information and documents to the Capital Securities Guarantee
Trustee is for informational purposes only and the Capital Securities
Guarantee Trustee's receipt of such shall not constitute constructive notice
of any information contained therein or determinable from information
contained therein, including the Guarantor's compliance with any of its
covenants hereunder (as to which the Capital Securities Guarantee Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such evidence of compliance with any conditions precedent, if any,
provided for in this Series B Capital 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 Series B Capital
Securities may, by vote, on behalf of all Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Series B Capital
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 Capital Securities Guarantee Trustee shall, within 90 days
after the occurrence of a default with respect to this Capital Securities
Guarantee, mail by first class postage prepaid, to all Holders, notices of
all defaults actually known to a Responsible Officer, unless such defaults
have been cured before the giving of such notice, provided, that, except in
the case of default in the payment of any Guarantee Payment, the Capital
Securities Guarantee Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee, or a trust
committee of directors and/or a Responsible Officer in good faith determines
that the withholding of such notice is in the interests of the Holders of the
Series B Capital Securities.
(b) The Capital Securities Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless the Capital Securities
Guarantee Trustee shall have received written notice from the Guarantor, or a
Responsible Officer charged with the administration of this Series B Capital
Securities Guarantee shall have obtained actual knowledge, of such Event of
Default.
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SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Series B Capital 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
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Series B Capital Securities Guarantee shall be held by the
Capital Securities Guarantee Trustee for the benefit of the Holders, and the
Capital Securities Guarantee Trustee shall not transfer this Series B Capital
Securities Guarantee to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Capital Securities Guarantee
Trustee on acceptance by such Successor Capital Securities Guarantee Trustee of
its appointment to act as Successor Capital Securities Guarantee Trustee. The
right, title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
has occurred and is continuing, the Capital Securities Guarantee Trustee
shall enforce this Series B Capital Securities Guarantee for the benefit of
the Holders.
(c) The Capital Securities 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 Series B Capital Securities Guarantee,
and no implied covenants shall be read into this Series B Capital Securities
Guarantee against the Series B Capital Securities 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, the Capital
Securities Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Series B Capital Securities Guarantee, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Series B Capital Securities Guarantee
shall be construed to relieve the Capital Securities Guarantee Trustee from
liability for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
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(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 Capital Securities Guarantee
Trustee shall be determined solely by the express provisions of this
Series B Capital Securities Guarantee, and the Capital Securities
Guarantee Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Series B Capital Securities Guarantee, and no implied covenants or
obligations shall be read into this Series B Capital Securities
Guarantee against the Capital Securities Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Capital
Securities Guarantee Trustee, the Capital Securities 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 Capital Securities Guarantee Trustee and
conforming to the requirements of this Series B Capital 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 Capital Securities Guarantee Trustee, the Capital Securities
Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Series B Capital Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer,
unless it shall be proved that the Capital Securities Guarantee Trustee
was negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) the Capital Securities 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 a Majority in
liquidation amount of the Series B Capital Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Capital Securities Guarantee Trustee, or exercising any
trust or power conferred upon the Capital Securities Guarantee Trustee
under this Series B Capital Securities Guarantee; and
(iv) no provision of this Series B Capital Securities Guarantee
shall require the Capital Securities 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 Capital Securities 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 Series B
Capital Securities Guarantee or indemnity, reasonably satisfactory to the
Capital Securities Guarantee Trustee, against such risk or liability is
not reasonably assured to it.
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SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities Guarantee Trustee may conclusively rely,
and shall be fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this Series
B Capital Securities Guarantee may be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Series B Capital
Securities Guarantee, the Capital Securities Guarantee Trustee shall deem
it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Capital Securities
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 Capital Securities 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 Capital Securities Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel with respect
to legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion. Such counsel
may be counsel to the Guarantor or any of its Affiliates and may include
any of its employees. The Capital Securities Guarantee Trustee shall have
the right at any time to seek instructions concerning the administration
of this Series B Capital Securities Guarantee from any court of competent
jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Series B Capital Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Capital Securities
Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Capital Securities Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Capital
Securities Guarantee Trustee's agents, nominees or custodians) and
liabilities that
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might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Capital
Securities Guarantee Trustee; provided that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Capital Securities
Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this Series B
Capital Securities Guarantee.
(vii) The Capital Securities 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 Capital Securities
Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(viii) The Capital Securities 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
Capital Securities 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.
(ix) Any action taken by the Capital Securities Guarantee Trustee or
its agents hereunder shall bind the Holders, and the signature of the
Capital Securities 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 Capital Securities
Guarantee Trustee to so act or as to its compliance with any of the terms
and provisions of this Series B Capital Securities Guarantee, both of
which shall be conclusively evidenced by the Capital Securities Guarantee
Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Series B Capital Securities
Guarantee the Capital Securities Guarantee Trustee shall deem it desirable
to receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Capital Securities Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Series B Capital 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.
(xi) The Capital Securities Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Series
B Capital Securities Guarantee.
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(b) No provision of this Series B Capital Securities Guarantee
shall be deemed to impose any duty or obligation on the Capital Securities
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 Capital Securities 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 Capital
Securities Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Series B Capital
Securities Guarantee
The recitals contained in this Series B Capital Securities Guarantee
shall be taken as the statements of the Guarantor, and the Capital Securities
Guarantee Trustee does not assume any responsibility for their correctness.
The Capital Securities Guarantee Trustee makes no representation as to the
validity or sufficiency of this Series B Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities 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 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Capital Securities Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Capital Securities
Guarantee Trustee shall immediately resign in the manner and with the effect set
out in Section 4.2(c).
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(c) If the Capital Securities Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Capital Securities Guarantee Trustee and Guarantor shall in
all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act, subject to the penultimate paragraph thereof.
SECTION 4.2 Appointment, Removal and Resignation of Capital Securities
Guarantee Trustee
(a) Subject to Section 4.2(b), the Capital Securities Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor
except during an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Capital Securities Guarantee Trustee and
delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office until
a Successor Capital Securities Guarantee Trustee shall have been appointed or
until its removal or resignation. The Capital Securities Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Capital Securities Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Capital Securities Guarantee Trustee and delivered to the Guarantor and the
resigning Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery of an instrument of removal or resignation, the Capital
Securities Guarantee Trustee resigning or being removed may petition any court
of competent jurisdiction for appointment of a Successor Capital Securities
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Capital Securities Guarantee
Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Capital Securities Guarantee Trustee.
(f) Upon termination of this Series B Capital Securities Guarantee or
removal or resignation of the Capital Securities Guarantee Trustee pursuant to
this Section 4.2, the Guarantor shall pay to the Capital Securities Guarantee
Trustee all amounts due to the Capital Securities Guarantee Trustee accrued to
the date of such termination, removal or resignation.
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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 Issuer), as and when due, regardless of any defense, right of
set-off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Series B
Capital 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 Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Series B Capital 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 Issuer of any express or implied agreement,
covenant, term or condition relating to the Series B Capital Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Series B Capital Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Series B Capital 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 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 Series B Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Series B
Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred;
(g) the consummation of the Exchange Offer; 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 with
respect to the Guarantee Payments 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 Series B
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Series B Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series B Capital Securities Guarantee.
(b) If the Capital Securities Guarantee Trustee fails to enforce such
Series B Capital Securities Guarantee, any Holder may institute a legal
proceeding directly against the Guarantor to enforce the Capital Securities
Guarantee Trustee's rights under this Series B Capital Securities Guarantee,
without first instituting a legal proceeding against the Issuer, the Capital
Securities Guarantee Trustee or any other person or entity. The Guarantor
waives any right or remedy to require that any action be brought first against
the Issuer or any other person or entity before proceeding directly against the
Guarantor.
SECTION 5.5 Guarantee of Payment
This Series B Capital Securities Guarantee creates a guarantee of
payment and not of collection.
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SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to such Holders by
the Guarantor under this Series B Capital 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 Series B
Capital Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Series B Capital 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 Issuer with respect to the Series B
Capital Securities, and that the Guarantor shall be liable as principal and
as debtor hereunder to make Guarantee Payments pursuant to the terms of this
Series B Capital 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 Series B Capital Securities remain outstanding, the
Guarantor shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Guarantor's capital stock (which includes common and preferred stock),
(ii) make any payment of principal of, or premium, if any, or interest on or
repay, repurchase or redeem any debt securities of the Guarantor (including
any Other Debentures) that rank pari passu with or junior in right of payment
to the Debentures or (iii) make any guarantee payments with respect to any
guarantee by the Guarantor of the debt securities of any subsidiary of the
Guarantor (including Other Guarantees) if such guarantee ranks pari passu
with or junior in right of payment to the Debentures (other than (a)
dividends or distributions in shares of, or options, warrants, rights to
subscribe for or purchase shares of, common stock of the Guarantor, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in
the future, or the redemption or repurchase of any such rights pursuant
thereto, (c) payments under the Series B Capital Securities Guarantee and the
Series B Capital Securities Guarantee, (d) as a result of a reclassification
of the Guarantor's capital stock or the exchange or the conversion of one
class or series of the Guarantor's
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capital stock for another class or series of the Guarantor's capital stock,
(e) the purchase of fractional interests in shares of the Guarantor's capital
stock pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged and (f) purchases of common
stock related to the issuance of common stock or rights under any of the
Guarantor's benefit plans for its directors, officers or employees or any of
the Guarantor's dividend reinvestment plans) if at such time (i) there shall
have occurred any event of which the Guarantor has actual knowledge that (a)
is, or with the giving of notice or the lapse of time, or both, would be an
Indenture Event of Default and (b) in respect of which the Guarantor shall
not have taken reasonable steps to cure, (ii) if such Debentures are held by
the Property Trustee, the Guarantor shall be in default with respect to its
payment of any obligations under this Series B Capital Securities Guarantee
or (iii) the Guarantor shall have given notice of its election of the
exercise of its right to extend the interest payment period pursuant to
Section 16.01 of the Indenture and any such extension shall be continuing.
SECTION 6.2 Ranking
This Series B Capital Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and
junior in right of payment to Senior Indebtedness (as defined in the
Indenture), to the same extent and in the same manner that the Debentures are
subordinated to Senior Indebtedness pursuant to the Indenture, (ii) pari
passu with the Debentures, the Other Debentures, the Series A Capital
Securities Guarantee, the Common Securities Guarantee and any Other Guarantee
and any Other Common Securities Guarantee, and (iii) senior to the
Guarantor's capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Series B Capital Securities Guarantee shall terminate (i) upon
full payment of the Redemption Price (as defined in the Declaration) of all
Series B Capital Securities, (ii) upon liquidation of the Issuer, the full
payment of the amounts payable in accordance with the Declaration or the
distribution of the Debentures to the Holders and the holders of Common
Securities or (iii) upon exchange of all the Series B Capital Securities for
the Series B Capital Securities in the Exchange Offer and the execution and
delivery of the Series B Capital Securities Guarantee. Notwithstanding the
foregoing, this Series B Capital Securities Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any
Holder must restore payment of any sums paid under the Series B Capital
Securities or under this Series B Capital Securities Guarantee.
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ARTICLE VIII
COMPENSATION AND EXPENSES OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 8.1 Compensation and Expenses
The Guarantor covenants and agrees to pay to the Capital Securities
Guarantee Trustee from time to time, and the Capital Securities Guarantee
Trustee shall be entitled to, such compensation as shall be agreed to in
writing between the Guarantor and the Capital Securities Guarantee Trustee
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Guarantor will pay or
reimburse the Capital Securities Guarantee Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Capital Securities Guarantee Trustee in accordance with any of the provisions
of this Capital Securities Guarantee (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 Guarantor also covenants to
indemnify each of the Capital Securities Guarantee Trustee (and its officers,
agents, directors and employees) for, and to hold it harmless against, any
and all loss, damage, claim, liability or expense including taxes (other than
taxes based on the income of the Capital Securities Guarantee Trustee)
incurred without negligence or bad faith on the part of the Capital
Securities Guarantee Trustee and arising out of or in connection with the
acceptance or administration of this guarantee, including the costs and
expenses of defending itself against any claim of liability in the premises.
The obligations of the Guarantor under this Article VIII to compensate and
indemnify the Capital Securities Guarantee Trustee and to pay or reimburse
the Capital Securities Guarantee Trustee for expenses, disbursements and
advances shall be secured by a lien prior to that of the Series B Capital
Securities upon all property and funds held or collected by the Capital
Securities Guarantee Trustee as such, except funds held in trust for the
benefit of the holders of particular Series B Capital Securities.
The provisions of this Article shall survive the termination of this
Capital Securities Guarantee.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 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 Series B
Capital Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority
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conferred on such Indemnified Person by this Series B Capital 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 might properly be
paid.
SECTION 9.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or 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 Series B Capital Securities Guarantee.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Successors and Assigns
All guarantees and agreements contained in this Series A Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders then outstanding.
SECTION 10.2 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 Series B Capital Securities Guarantee may only be amended
with the prior approval of the Holders of a Majority in liquidation amount of
the Series B Capital Securities (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).
The provisions of the Declaration with respect to consents to amendments
thereof (whether at a meeting or otherwise) shall apply to the giving of such
approval.
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SECTION 10.3 Notices
All notices provided for in this Series B Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative Trustee
at the Issuer's mailing address set forth below (or such other address as the
Issuer may give notice of to the Holders and the Capital Securities Guarantee
Trustee):
Progress Capital Trust I
c/o Progress Financial Corporation
Four Sentry Parkway
Suite 230
Blue Bell, Pennsylvania 19422
Attention: Frederick E. Schea
Administrative Trustee
Telecopy: (610) 825-4460
(b) If given to the Capital Securities Guarantee Trustee, at the
Capital Securities Guarantee Trustee's mailing address set forth below (or
such other address as the Capital Securities Guarantee Trustee may give
notice of to the Holders and the Issuer):
The Bank of New York
101 Barclay Street
21st Floor West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telecopy: (212) 815-5917
(c) 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 and the Capital Securities Guarantee Trustee):
Progress Financial Corporation
Four Sentry Parkway
Suite 230
Blue Bell, Pennsylvania 19422
Attention: Frederick E. Schea
Senior Vice President and Chief Financial Officer
Telecopy: (610) 825-4460
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(d) If given to any Holder of Series B Capital Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 10.4 Benefit
This Series B Capital Securities guarantee is solely for the benefit
of the Holders and, subject to Section 3.1(a), is not separately transferable
from the Series B Capital Securities.
SECTION 10.5 Governing Law
THIS SERIES B CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
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THIS SERIES B CAPITAL SECURITIES GUARANTEE is executed as of the day
and year first above written.
PROGRESS FINANCIAL CORPORATION, as Guarantor
By:_____________________________
Name: Frederick E. Schea
Title: Senior Vice President and
Chief Financial Officer
THE BANK OF NEW YORK, as Capital
Securities Guarantee Trustee
By:___________________________
Name:
Title:
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EXHIBIT 4.7
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REGISTRATION RIGHTS AGREEMENT
Dated June 3, 1997
among
PROGRESS FINANCIAL CORPORATION
PROGRESS CAPITAL TRUST I
and
SANDLER O'NEILL & PARTNERS, L.P.
as Initial Purchaser
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of June 3, 1997 among PROGRESS FINANCIAL CORPORATION, a
Delaware corporation (the "Corporation"), PROGRESS CAPITAL TRUST I, a
business trust formed under the laws of the state of Delaware (the "Trust"),
and SANDLER O'NEILL & PARTNERS, L.P. (the "Initial Purchaser").
This Agreement is made pursuant to the Purchase Agreement dated June
3, 1997 (the "Purchase Agreement"), among the Corporation, as issuer of the
Series A 10.50% Junior Subordinated Deferrable Interest Debentures due June
1, 2027 (the "Subordinated Debentures"), the Trust and the Initial Purchaser,
which provides for, among other things, the sale by the Trust to the Initial
Purchaser of 15,000 of the Trust's Series A 10.50% Capital Securities,
liquidation amount $1,000 per Capital Security (the "Capital Securities"),
the proceeds of which will be used by the Trust to purchase Subordinated
Debentures. The Capital Securities, together with the Subordinated
Debentures and the Corporation's guarantee of the Capital Securities (the
"Capital Securities Guarantee"), are collectively referred to as the
"Securities". In order to induce the Initial Purchaser to enter into the
Purchase Agreement, the Corporation and the Trust have agreed to provide to
the Initial Purchaser and their direct and indirect transferees the
registration rights set forth in this Agreement. The execution and delivery
of this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"Additional Distributions" shall have the meaning set forth in Section
2(e) hereof.
"Advice" shall have the meaning set forth in the last paragraph of
Section 3 hereof.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act or any successor rule thereunder.
"Applicable Period" shall have the meaning set forth in Section 3(t)
hereof.
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"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in New York, New York, Wilmington, Delaware or
Blue Bell, Pennsylvania are authorized or required by law or executive order
to close.
"Closing Time" shall mean the Closing Time as defined in the Purchase
Agreement.
"Corporation" shall have the meaning set forth in the preamble to this
Agreement and also includes the Corporation's successors and permitted
assigns.
"Declaration" or "Declaration of Trust" shall mean the Amended and
Restated Declaration of Trust of Progress Capital Trust I, dated as of June
3, 1997, by the trustees named therein and the Corporation as sponsor.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Trust; provided, however, that such depositary
must have an address in the Borough of Manhattan, in The City of New York.
"Effectiveness Period" shall have the meaning set forth in Section 2(b)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Exchange Offer" shall mean the offer by the Corporation and the Trust to
the Holders to exchange all of the Registrable Securities (other than Private
Exchange Securities) for a like principal amount of Exchange Securities
pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2(a) hereof.
"Exchange Securities" shall mean (i) with respect to the Subordinated
Debentures, the Series B 10.50% Junior Subordinated Deferrable Interest
Debentures due June 1, 2027 (the "Exchange Debentures") containing terms
substantially identical to the Subordinated Debentures (except that they will
not contain terms with respect to the transfer restrictions under the Securities
Act
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(other than requiring minimum transfers thereof to be in blocks of $100,000
aggregate principal amount), and will not provide for any Liquidated Damages
thereon), (ii) with respect to the Capital Securities, the Trust's Series B
10.50% Capital Securities, liquidation amount $1,000 per Capital Security
(the "Exchange Capital Securities") which will have terms substantially
identical to the Capital Securities (except they will not contain terms with
respect to transfer restrictions under the Securities Act (other than
requiring minimum transfers thereof to be in blocks of $100,000 aggregate
liquidation amount), and will not provide for any increase in Additional
Distributions thereon) and (iii) with respect to the Capital Securities
Guarantee, the Corporation's guarantee (the "Exchange Capital Securities
Guarantee") of the Exchange Capital Securities which will have terms
substantially identical to the Capital Securities Guarantee.
"Holder" shall mean the Initial Purchaser, for so long as it owns any
Registrable Securities, and each of its respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture or Declaration of Trust.
"Indenture" shall mean the Indenture relating to the Subordinated
Debentures and the Exchange Debentures dated as of June 3, 1997 between the
Corporation, as issuer, and The Bank of New York, as trustee, as the same may
be amended from time to time in accordance with the terms thereof.
"Initial Purchaser" shall have the meaning set forth in the preamble to
this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(n) hereof.
"Issue Date" shall mean June 3, 1997, the date of original issuance of
the Securities.
"Liquidated Damages" shall have the meaning set forth in Section 2(e)
hereof.
"Majority Holders" shall mean the Holders of a majority of the aggregate
liquidation amount of outstanding Capital Securities.
"Participating Broker-Dealer" shall have the meaning set forth in Section
3(t) hereof.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, limited liability corporation, or a government
or agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2(a)
hereof.
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"Private Exchange Securities" shall have the meaning set forth in Section
2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the preamble to
this Agreement.
"Records" shall have the meaning set forth in Section 3(n) hereof.
"Registrable Securities" shall mean the Securities and, if issued, the
Private Exchange Securities; provided, however, that Securities or Private
Exchange Securities, as the case may be, shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such Securities
or Private Exchange Securities for the exchange or resale thereof, as the
case may be, shall have been declared effective under the Securities Act and
such Securities or Private Exchange Securities, as the case may be, shall
have been disposed of pursuant to such Registration Statement, (ii) such
Securities or Private Exchange Securities, as the case may be, shall have
been sold to the public pursuant to Rule 144(k) (or any similar provision
then in force, but not Rule 144A) under the Securities Act or are eligible to
be sold without restriction as contemplated by Rule 144(k), (iii) such
Securities or Private Exchange Securities, as the case may be, shall have
ceased to be outstanding or (iv) with respect to the Securities, such
Securities shall have been exchanged for Exchange Securities upon
consummation of the Exchange Offer and are thereafter freely tradeable by the
holder thereof (other than an Affiliate of the Corporation).
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Corporation with this Agreement,
including without limitation: (i) all SEC or National Association of
Securities Dealers, Inc. (the "NASD") registration and filing fees,
including, if applicable, the fees and expenses of any "qualified independent
underwriter" (and its counsel) that is required to be retained by any Holder
of Registrable Securities in accordance with the rules and regulations of the
NASD, (ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws (including reasonable fees and
disbursements of one counsel for all underwriters or Holders as a group in
connection with blue sky qualification
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of any of the Exchange Securities or Registrable Securities) and compliance
with the rules of the NASD, (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus and any amendments or supplements
thereto, and in preparing or assisting in preparing, printing and
distributing any underwriting agreements, securities sales agreements and
other documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, (v) the fees and disbursements of
counsel for the Corporation and of the independent certified public
accountants of the Corporation, including the expenses of any "cold comfort"
letters required by or incident to such performance and compliance, (vi) the
fees and expenses of the Trustee and its counsel and any exchange agent or
custodian, (vii) all fees and expenses incurred in connection with the
listing, if any, of any of the Exchange Securities or the Registrable
Securities on any securities exchange or exchanges, and (viii) the reasonable
fees and expenses of any special experts retained by the Corporation in
connection with any Registration Statement.
"Registration Statement" shall mean any registration statement of the
Corporation and the Trust which covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Rule 144(k) Period" shall mean the period of two years (or such shorter
period as may hereafter be referred to in Rule 144(k) under the Securities
Act (or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble to this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Event" shall have the meaning set forth in Section
2(b) hereof.
"Shelf Registration Event Date" shall have the meaning set forth in
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Corporation and the Trust pursuant to the
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provisions of Section 2(b) hereof which covers all of the Registrable
Securities or all of the Private Exchange Securities, as the case may be, on
an appropriate form under Rule 415 under the Securities Act, or any similar
rule that may be adopted by the SEC, and all amendments and supplements to
such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"TIA" shall have the meaning set forth in Section 3(l) hereof.
"Trustees" shall mean any and all trustees with respect to (i) the
Capital Securities under the Declaration, (ii) the Subordinated Debentures
under the Indenture and (iii) the Capital Securities Guarantee.
2. Registration Under the Securities Act.
(a) Exchange Offer. Except as set forth in Section 2(b) below, the
Corporation and the Trust shall, for the benefit of the Holders, use their
reasonable best efforts to (i) cause to be filed with the SEC within 150 days
after the Issue Date an Exchange Offer Registration Statement on an
appropriate form under the Securities Act relating to the Exchange Offer,
(ii) cause such Exchange Offer Registration Statement to be declared
effective under the Securities Act by the SEC not later than the date which
is 180 days after the Issue Date, and (iii) keep such Exchange Offer
Registration Statement effective for not less than 30 calendar days (or
longer if required by applicable law) after the date notice of the Exchange
Offer is mailed to the Holders. Upon the effectiveness of the Exchange Offer
Registration Statement, the Corporation and the Trust shall promptly commence
the Exchange Offer, it being the objective of such Exchange Offer to enable
each Holder eligible and electing to exchange Registrable Securities for a
like principal amount of Exchange Debentures or a like liquidation amount of
Exchange Capital Securities, together with the Exchange Guarantee, as
applicable (assuming that such Holder (i) is not an Affiliate of the Trust or
the Corporation, (ii) is not a broker-dealer tendering Registrable Securities
acquired directly from the Corporation for its own account, (iii) acquires
the Exchange Securities in the ordinary course of such Holder's business and
(iv) has no arrangements or understandings with any Person to participate in
the Exchange Offer for the purpose of distributing the Exchange Securities)
to transfer such Exchange Securities from and after their receipt without any
limitations or restrictions under the Securities Act and under state
securities or blue sky laws (other than requiring minimum transfers in blocks
having an aggregate principal or liquidation amount, as the case may be, of
$100,000).
In connection with the Exchange Offer, the Corporation and the Trust
shall:
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(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 30 days after the date notice thereof is mailed to the Holders (or
longer if required by applicable law) (such period referred to herein as the
"Exchange Period");
(iii) utilize the services of the Depositary for the Exchange Offer;
(iv) permit Holders to withdraw tendered Securities at any time prior to
the close of business, New York time, on the last Business Day of the
Exchange Period, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Securities delivered for exchange, and a
statement that such Holder is withdrawing his election to have such
Securities exchanged;
(v) notify each Holder that any Security not tendered by such Holder in
the Exchange Offer will remain outstanding and continue to accrue interest or
accumulate distributions, as the case may be, but will not retain any rights
under this Agreement (except in the case of the Initial Purchaser and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws relating
to the Exchange Offer.
If the Initial Purchaser determines upon advice of its outside
counsel that it is not eligible to participate in the Exchange Offer with
respect to the exchange of Securities constituting any portion of an unsold
allotment in the initial distribution, as soon as practicable upon receipt by
the Corporation and the Trust of a written request from such Initial
Purchaser, the Corporation and the Trust, as applicable, shall issue and
deliver to such Initial Purchaser in exchange (the "Private Exchange") for
the Securities held by such Initial Purchaser, a like liquidation amount of
Capital Securities of the Trust or, in the event the Trust is liquidated and
Subordinated Debentures are distributed, a like principal amount of the
Subordinated Debentures of the Corporation, together with the Exchange
Guarantee, in each case that are identical (except that such securities may
bear a customary legend with respect to restrictions on transfer pursuant to
the Securities Act) to the Exchange Securities (the "Private Exchange
Securities") and which are issued pursuant to the Indenture, the Declaration
or the Guarantee (which provides that the Exchange Securities will not be
subject to the transfer restrictions set forth in the Indenture or the
Declaration, as applicable (other than requiring minimum transfers in blocks
having
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an aggregate principal or liquidation amount, as the case may be, of
$100,000), and that the Exchange Securities, the Private Exchange Securities
and the Securities will vote and consent together on all matters as one class
and that neither the Exchange Securities, the Private Exchange Securities nor
the Securities will have the right to vote or consent as a separate class on
any matter). The Private Exchange Securities shall be of the same series as
the Exchange Securities and the Corporation and the Trust will seek to cause
the CUSIP Service Bureau to issue the same CUSIP Numbers for the Private
Exchange Securities as for the Exchange Securities issued pursuant to the
Exchange Offer.
As soon as practicable after the close of the Exchange Offer and, if
applicable, the Private Exchange, the Corporation and the Trust, as the case
requires, shall:
(i) accept for exchange all Securities or portions thereof tendered and
not validly withdrawn pursuant to the Exchange Offer or the Private Exchange;
(ii) deliver, or cause to be delivered, to the applicable Trustee for
cancellation all Securities or portions thereof so accepted for exchange by
the Corporation; and
(iii) issue, and cause the applicable Trustee under the Indenture, the
Declaration or the Guarantee, as applicable, to promptly authenticate and
deliver to each Holder, new Exchange Securities or Private Exchange
Securities, as applicable, equal in principal amount to the principal amount
of the Subordinated Debentures or equal in liquidation amount to the
liquidation amount of the Capital Securities (together with the guarantee
thereof) as are surrendered by such Holder.
Distributions on each Exchange Capital Security and interest on each
Exchange Debenture and Private Exchange Security issued pursuant to the
Exchange Offer and in the Private Exchange will accrue from the last date on
which a Distribution or interest was paid on the Capital Security or the
Subordinated Debenture surrendered in exchange therefor or, if no
Distribution or interest has been paid on such Capital Security or
Subordinated Debenture, from the Issue Date. To the extent not prohibited by
any law or applicable interpretation of the staff of the SEC, the Corporation
and the Trust shall use their reasonable best efforts to complete the
Exchange Offer as provided above, and shall comply with the applicable
requirements of the Securities Act, the Exchange Act and other applicable
laws in connection with the Exchange Offer. The Exchange Offer shall not be
subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the staff of the
SEC. Each Holder of Registrable Securities who wishes to exchange such
Registrable Securities for Exchange Securities in the Exchange Offer will be
required to make certain customary representations in connection
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<PAGE>
therewith, including, in the case of any Holder of Capital Securities,
representations that (i) it is not an Affiliate of the Trust or the
Corporation, (ii) the Exchange Securities to be received by it were acquired
in the ordinary course of its business and (iii) at the time of the Exchange
Offer, it has no arrangement with any person to participate in the
distribution (within the meaning of the Securities Act) of the Exchange
Capital Securities. The Corporation and the Trust shall inform the Initial
Purchaser, after consultation with the applicable Trustees, of the names and
addresses of the Holders to whom the Exchange Offer is made, and the Initial
Purchaser shall have the right to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance with this
Section 2(a), the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Registrable Securities that are
Private Exchange Securities and Exchange Securities held by Participating
Broker-Dealers, and the Corporation and the Trust shall have no further
obligation to register the Registrable Securities (other than Private
Exchange Securities) held by any Holder pursuant to Section 2(b) of this
Agreement.
(b) Shelf Registration. In the event that (i) the Corporation, the
Trust or the Majority Holders reasonably determine, after conferring with
counsel (which may be in-house counsel), that the Exchange Offer Registration
provided in Section 2(a) above is not available under applicable law and
regulations and currently prevailing interpretations of the staff of the SEC,
(ii) the Corporation shall determine in good faith that there is a reasonable
likelihood that, or a material uncertainty exists as to whether, consummation
of the Exchange Offer would result in (x) the Trust becoming subject to
federal income tax with respect to income received or accrued on the
Subordinated Debentures or the Exchange Debentures (collectively, the
"Debentures"), (y) interest payable by the Corporation on the Debentures not
being deductible by the Corporation for United States federal income tax
purposes or (z) the Trust becoming subject to more than a de minimus amount
of other taxes, duties or governmental charges, (iii) the Exchange Offer
Registration Statement is not declared effective within 180 days of the Issue
Date or (iv) upon the request of the Initial Purchaser with respect to any
Registrable Securities held by it, if such Initial Purchaser is not
permitted, in the opinion of Muldoon, Murphy & Faucette, pursuant to
applicable law or applicable interpretations of the staff of the SEC, to
participate in the Exchange Offer and thereby receive securities that are
freely tradeable without restriction under the Securities Act and applicable
blue sky or state securities laws (any of the events specified in (i)-(iv)
being a "Shelf Registration Event" and the date of occurrence thereof, the
"Shelf Registration Event Date"), then in addition to or in lieu of
conducting the Exchange Offer contemplated by Section
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2(a), as the case may be, the Corporation and the Trust shall use their
reasonable best efforts to cause to be filed as promptly as practicable after
such Shelf Registration Event Date, as the case may be, and, in any event,
within 45 days after such Shelf Registration Event Date (which shall be no
earlier than 75 days after the Closing Time), a Shelf Registration Statement
providing for the sale by the Holders of all of the Registrable Securities
(except in the case of clause (iv) above in which case the Shelf Registration
Statement need cover only the Registrable Securities held by the Initial
Purchaser, and shall use its reasonable best efforts to have such Shelf
Registration Statement declared effective by the SEC as soon as practicable.
No Holder of Registrable Securities shall be entitled to include any of its
Registrable Securities in any Shelf Registration pursuant to this Agreement
unless and until such Holder furnishes to the Corporation and the Trust in
writing, within 15 days after receipt of a request therefor, such information
as the Corporation and the Trust may, after conferring with counsel with
regard to information relating to Holders that would be required by the SEC
to be included in such Shelf Registration Statement or Prospectus included
therein, reasonably request for inclusion in any Shelf Registration Statement
or Prospectus included therein. Each Holder as to which any Shelf
Registration is being effected agrees to furnish to the Corporation and the
Trust all information with respect to such Holder necessary to make the
information previously furnished to the Corporation by such Holder not
materially misleading.
The Corporation and the Trust agree to use their reasonable best
efforts to keep the Shelf Registration Statement continuously effective and
usable for resales for (a) the Rule 144(k) Period in the case of a Shelf
Registration Statement filed pursuant to Section 2(b)(i), (ii) or (iii) or
(b) 180 days in the case of a Shelf Registration Statement filed pursuant to
Section 2(b)(iv) (subject in each case to extension pursuant to the last
paragraph of Section 3 hereof), or for such shorter period which will
terminate when all of the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or cease to be outstanding (the "Effectiveness Period"). The
Corporation and the Trust shall not permit any securities other than
Registrable Securities to be included in the Shelf Registration. The
Corporation and the Trust will, in the event a Shelf Registration Statement
is declared effective, provide to each Holder a reasonable number of copies
of the Prospectus which is a part of the Shelf Registration Statement and
notify each such Holder when the Shelf Registration has become effective.
The Corporation and the Trust further agree, if necessary, to supplement or
amend the Shelf Registration Statement, if required by the rules, regulations
or instructions applicable to the registration form used by the Corporation
for such Shelf Registration Statement or by the Securities Act or by any
other rules and regulations thereunder for shelf registrations, and the
Corporation and the Trust agree to furnish to the Holders of
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Registrable Securities copies of any such supplement or amendment promptly
after its being used or filed with the SEC.
(c) Expenses. The Corporation, as issuer of the Subordinated
Debentures, shall pay all Registration Expenses in connection with any
Registration Statement filed pursuant to Section 2(a) and/or 2(b) hereof and
will reimburse the Initial Purchaser for the reasonable fees and
disbursements of Muldoon, Murphy & Faucette, counsel for the Initial
Purchaser, incurred in connection with the Exchange Offer and, if applicable,
the Private Exchange, or any one other counsel designated in writing by the
Majority Holders to act as counsel for the Holders of the Registrable
Securities in connection with a Shelf Registration Statement, which other
counsel shall be reasonably satisfactory to the Corporation. Except as
provided herein, each Holder shall pay all expenses of its counsel and any of
its other advisors or experts, underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf
Registration Statement pursuant to Section 2(b) hereof will not be deemed to
have become effective unless it has been declared effective by the SEC;
provided, however, that if, after it has been declared effective, the
offering of Registrable Securities pursuant to such Exchange Offer
Registration Statement or Shelf Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the SEC or any
other governmental agency or court, such Registration Statement will be
deemed not to have been effective during the period of such interference,
until the offering of Registrable Securities pursuant to such Registration
Statement may legally resume. The Corporation and the Trust will be deemed
not to have used their reasonable best efforts to cause the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may
be, to become, or to remain, effective during the requisite period if either
of them voluntarily takes any action that would result in any such
Registration Statement not being declared effective or that would result in
the Holders of Registrable Securities covered thereby not being able to
exchange or offer and sell such Registrable Securities during that period
unless such action is required by applicable law.
(e) Liquidated Damages. In the event that:
(i) neither the Exchange Offer Registration Statement is filed
with the SEC on or prior to the 150th day after the Issue Date nor a Shelf
Registration Statement is filed with the SEC on or prior to the 45th day
after the Shelf Registration Event Date in respect of a Shelf Registration
Event attributable to any of the events set forth in Sections 2(b)(i), (ii)
and (iii) (provided that in no event shall such date be earlier than 75 days
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<PAGE>
after the Issue Date), then commencing on the day after the applicable
required filing date, liquidated damages ("Liquidated Damages") shall accrue
on the principal amount of the Subordinated Debentures, and additional
distributions ("Additional Distributions") shall accumulate on the
liquidation amount of the Trust Securities (as such term is defined in the
Declaration), each at a rate of .25% per annum; or
(ii) neither the Exchange Offer Registration Statement nor a
Shelf Registration Statement is declared effective by the SEC on or prior to
the 180th day after the Issue Date (in the case of an Exchange Offer
Registration Statement) or on or prior to the later of (A) the 30th day after
the date such Shelf Registration Statement was required to be filed and (B)
the 180th day after the Issue Date (in the case of a Shelf Registration
Statement, in respect of a Shelf Registration Event attributable to any of
the events set forth in Sections 2(b)(i), (ii) and (iii)), then, commencing
on the 181st day after the Issue Date (in the case of an Exchange Offer
Registration Statement) or the later of (A) the 31st day after the day such
Shelf Registration Statement was required to be filed and (B) the 181st day
after the Issue Date (in the case of a Shelf Registration Statement, in
respect of a Shelf Registration Event attributable to any of the events set
forth in Sections 2(b)(i), (ii) and (iii)), Liquidated Damages shall accrue
on the principal amount of the Subordinated Debentures, and Additional
Distributions shall accumulate on the liquidation amount of the Trust
Securities, each at a rate of .25% per annum;
(iii) (A) the Trust has not exchanged Exchange Capital
Securities or the Corporation has not exchanged Exchange Guarantees or
Exchange Subordinated Debentures for all Capital Securities, Guarantees or
Subordinated Debentures, as the case may be, validly tendered, in accordance
with the terms of the Exchange Offer on or prior to the 45th day after the
date on which the Exchange Offer Registration Statement was declared
effective or (B) if applicable, the Shelf Registration Statement in respect
of a Shelf Registration Event attributable to any of the events set forth in
Sections 2(b)(i), (ii) and (iii) has been declared effective and such Shelf
Registration Statement ceases to be effective or usable for resales (whether
as a result of an event contemplated by Section 3(e) or otherwise) at any
time prior to the expiration of the Rule 144(k) Period (other than after such
time as all Securities have been disposed of thereunder or otherwise cease to
be Registrable Securities), then Liquidated Damages shall accrue on the
principal amount of Subordinated Debentures, and Additional Distributions
shall accumulate on the liquidation amount of the Trust Securities, each at a
rate of .25% per annum commencing on (x) the 46th day after such effective
date, in the case of (A) above, or (y) the day such Shelf Registration
Statement ceases to be effective or usable for resales in the case of (B)
above;
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<PAGE>
provided, however, that neither the Liquidated Damages rate on the
Subordinated Debentures, nor the Additional Distribution rate on the
liquidation amount of the Trust Securities, may exceed in the aggregate .25%
per annum; provided, further, however, that (1) upon the filing of the
Exchange Offer Registration Statement or a Shelf Registration Statement (in
the case of clause (i) above), (2) upon the effectiveness of the Exchange
Offer Registration Statement or a Shelf Registration Statement (in the case
of clause (ii) above), or (3) upon the exchange of Exchange Capital
Securities, Exchange Guarantees and Exchange Debentures for all Capital
Securities, Guarantees and Subordinated Debentures validly tendered (in the
case of clause (iii)(A) above), or at such time as the Shelf Registration
Statement which had ceased to remain effective or usable for resales again
becomes effective and usable for resales (in the case of clause (iii)(B)
above), Liquidated Damages on the principal amount of the Subordinated
Debentures and Additional Distributions on the liquidation amount of the
Trust Securities as a result of such clause (or the relevant subclause
thereof) shall cease to accrue and accumulate.
Any amounts of Liquidated Damages and Additional Distributions due
pursuant to Section 2(e)(i), (ii) or (iii) above will be payable in cash on
the next succeeding April 1 and October 1, as the case may be, to Holders on
the relevant record dates for the payment of interest and distributions
pursuant to the Indenture and the Declaration, respectively.
(f) Specific Enforcement. Without limiting the remedies available
to the Holders, the Corporation and the Trust acknowledge that any failure by
the Corporation or the Trust to comply with its obligations under Section
2(a) and Section 2(b) hereof may result in material irreparable injury to the
Holders for which there is no adequate remedy at law, that it would not be
possible to measure damages for such injuries precisely and that, in the
event of any such failure, any Holder may obtain such relief as may be
required to specifically enforce the Corporation's and the Trust's
obligations under Section 2(a) and Section 2(b) hereof.
(g) Distribution of Subordinated Debentures. Notwithstanding any
other provisions of this Agreement, in the event that Subordinated Debentures
are distributed to holders of Capital Securities in liquidation of the Trust
pursuant to the Declaration, (i) all references in this Section 2 and in
Section 3 to Securities, Registrable Securities and Exchange Securities shall
not include the Capital Securities and Capital Securities Guarantee or
Exchange Capital Securities and Exchange Capital Securities Guarantee issued
or to be issued in exchange therefor in the Exchange Offer and (ii) all
requirements for action to be taken by the Trust in this Section 2 and in
Section 3 shall cease to apply and all requirements for action to be taken by
the Corporation in this Section 2 and in Section 3 shall apply to the
Subordinated
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Debentures and Exchange Debentures issued or to be issued in exchange
therefor in the Exchange Offer.
3. Registration Procedures. In connection with the obligations of
the Corporation and the Trust with respect to the Registration Statements
pursuant to Sections 2(a) and 2(b) hereof, the Corporation and the Trust
shall:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof
within the relevant time period specified in Section 2 hereof on the
appropriate form under the Securities Act, which form (i) shall be
selected by the Corporation and the Trust, (ii) shall, in the case of a
Shelf Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and, in the case of an Exchange
Offer, be available for the exchange of Registrable Securities, and (iii)
shall comply as to form in all material respects with the requirements of
the applicable form and include all financial statements required by the
SEC to be filed therewith; and use its best efforts to cause such
Registration Statement to become effective and remain effective (and, in
the case of a Shelf Registration Statement, usable for resales) in
accordance with Section 2 hereof; provided, however, that if (1) such
filing is pursuant to Section 2(b), or (2) a Prospectus contained in an
Exchange Offer Registration Statement filed pursuant to Section 2(a) is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Securities, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Corporation and the Trust shall furnish to and afford the
Holders of the Registrable Securities and each such Participating
Broker-Dealer, as the case may be, covered by such Registration
Statement, their counsel and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents (including
copies of any documents to be incorporated by reference therein and all
exhibits thereto) proposed to be filed. The Corporation and the Trust
shall not file any Registration Statement or Prospectus or any amendments
or supplements thereto in respect of which the Holders must be afforded
an opportunity to review prior to the filing of such document if the
Majority Holders or such Participating Broker-Dealer, as the case may be,
their counsel or the managing underwriters, if any, shall reasonably
object;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
Effectiveness Period or the Applicable Period, as the case may be; and
cause each Prospectus to be supplemented, if so determined by the
Corporation or the Trust or requested by
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the SEC, by any required prospectus supplement and as so supplemented to
be filed pursuant to Rule 424 (or any similar provision then in force)
under the Securities Act, and comply with the provisions of the
Securities Act, the Exchange Act and the rules and regulations
promulgated thereunder applicable to it with respect to the disposition
of all securities covered by each Registration Statement during the
Effectiveness Period or the Applicable Period, as the case may be, in
accordance with the intended method or methods of distribution by the
selling Holders thereof described in this Agreement (including sales by
any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities included in the Shelf Registration Statement, at
least three Business Days prior to filing, that a Shelf Registration
Statement with respect to the Registrable Securities is being filed and
advising such Holder that the distribution of Registrable Securities will
be made in accordance with the method selected by the Majority Holders;
and (ii) furnish to each Holder of Registrable Securities included in the
Shelf Registration Statement and to each underwriter of an underwritten
offering of Registrable Securities, if any, without charge, as many
copies of each Prospectus, including each preliminary Prospectus, and any
amendment or supplement thereto and such other documents as such Holder
or underwriter may reasonably request, in order to facilitate the public
sale or other disposition of the Registrable Securities; and (iii)
consent to the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders of Registrable Securities included
in the Shelf Registration Statement in connection with the offering and
sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(d) in the case of a Shelf Registration, use its reasonable best
efforts to register or qualify the Registrable Securities under all
applicable state securities or "blue sky" laws of such jurisdictions by
the time the applicable Registration Statement is declared effective by
the SEC as any Holder of Registrable Securities covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Securities shall reasonably request in writing in advance of such date of
effectiveness, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder and underwriter
to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that the
Corporation and the Trust shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction
where it
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<PAGE>
would not otherwise be required to qualify but for this Section 3(d),
(ii) file any general consent to service of process in any jurisdiction
where it would not otherwise be subject to such service of process or
(iii) subject itself to taxation in any such jurisdiction if it is not
then so subject;
(e) (1) in the case of a Shelf Registration or (2) if Participating
Broker-Dealers from whom the Corporation or the Trust has received prior
written notice that they will be utilizing the Prospectus contained in
the Exchange Offer Registration Statement as provided in Section 3(t)
hereof, are seeking to sell Exchange Securities and are required to
deliver Prospectuses, promptly notify each Holder of Registrable
Securities, or such Participating Broker-Dealers, as the case may be,
their counsel and the managing underwriters, if any, and promptly confirm
such notice in writing (i) when a Registration Statement has become
effective and when any post-effective amendments and supplements thereto
become effective, (ii) of any request by the SEC or any state securities
authority for amendments and supplements to a Registration Statement or
Prospectus or for additional information after the Registration Statement
has become effective, (iii) of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of a
Registration Statement or the qualification of the Registrable Securities
or the Exchange Securities to be offered or sold by any Participating
Broker-Dealer in any jurisdiction described in paragraph 3(d) hereof or
the initiation of any proceedings for that purpose, (iv) in the case of a
Shelf Registration, if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Securities covered
thereby, the representations and warranties of the Corporation and the
Trust contained in any purchase agreement, securities sales agreement or
other similar agreement cease to be true and correct in all material
respects, (v) of the happening of any event or the failure of any event
to occur or the discovery of any facts or otherwise, during the
Effectiveness Period which makes any statement made in such Registration
Statement or the related Prospectus untrue in any material respect or
which causes such Registration Statement or Prospectus to omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and (vi)
the Corporation and the Trust's reasonable determination that a
post-effective amendment to the Registration Statement would be
appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities included within the coverage of such Shelf
Registration Statement, without charge, one conformed copy of each
Registration Statement relating to such
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<PAGE>
Shelf Registration and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be
sold and not bearing any restrictive legends (other than with respect to
restrictions requiring minimum transfers in blocks having an aggregate
principal or liquidation amount, as the case may be, of $100,000) and in
such denominations (consistent with the provisions of the Indenture and
the Declaration) and registered in such names as the selling Holders or
the underwriters may reasonably request at least two Business Days prior
to the closing of any sale of Registrable Securities pursuant to such
Shelf Registration Statement;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, use its
reasonable best efforts to prepare a supplement or post-effective
amendment to such Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and to notify each Holder to
suspend use of the Prospectus as promptly as practicable after the
occurrence of such an event, and each Holder hereby agrees to suspend use
of the Prospectus until the Corporation has amended or supplemented the
Prospectus to correct such misstatement or omission;
(j) obtain a CUSIP number for all Exchange Capital Securities and
the Capital Securities (and if the Trust has made a distribution of the
Subordinated Debentures to the Holders of the Capital Securities, the
Subordinated Debentures or the Exchange Debentures) as the case may be,
not later than the effective date of a Registration Statement, and
provide the Trustee with printed certificates for the Exchange Securities
or the Registrable Securities, as the case may be, in a form eligible for
deposit with the Depositary;
(k) cause the Indenture, the Declaration, the Guarantee and the
Exchange Guarantee to be qualified under the Trust Indenture Act of 1939
(the "TIA") in connection with the registration of the Exchange
Securities or Registrable Securities, as the case may be, and effect such
changes to
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such documents as may be required for them to be so qualified in
accordance with the terms of the TIA and execute, and use its best
efforts to cause the relevant trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable such documents to be so
qualified in a timely manner;
(l) in the case of a Shelf Registration, enter into such agreements
(including underwriting agreements) as are customary in underwritten
offerings and take all such other appropriate actions in connection
therewith as are reasonably requested by the holders of at least 25% in
aggregate principal or liquidation amount, as the case may be, of the
Registrable Securities in order to expedite or facilitate the
registration or the disposition of the Registrable Securities;
(m) in the case of a Shelf Registration, whether or not an
underwriting agreement is entered into and whether or not the
registration is an underwritten registration, if requested by (x) the
Initial Purchaser, in the case where such Initial Purchaser holds
Securities acquired by it as part of its initial allotment and (y)
Holders of at least 25% in aggregate principal or liquidation amount, as
the case may be, of the Registrable Securities covered thereby: (i) make
such representations and warranties to Holders of such Registrable
Securities and the underwriters (if any), with respect to the business of
the Trust, the Corporation and its subsidiaries as then conducted and the
Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, as are
customarily made by issuers of debt securities to underwriters in
underwritten offerings, and confirm the same if and when requested; (ii)
obtain opinions of counsel to the Corporation and the Trust and updates
thereof (which may be in the form of a reliance letter) in form and
substance reasonably satisfactory to the managing underwriters (if any)
and the Holders of a majority in principal amount of the Registrable
Securities being sold, addressed to each selling Holder and the
underwriters (if any) covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as
may be reasonably requested by such underwriters (it being agreed that
the matters to be covered by such opinion may be subject to customary
qualifications and exceptions); (iii) obtain "cold comfort" letters and
updates thereof in form and substance reasonably satisfactory to the
managing underwriters from the independent certified public accountants
of the Corporation and the Trust (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Corporation and the Trust or of any business acquired by the Corporation
and the Trust for which financial statements and financial data are, or
are required
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to be, included in the Registration Statement), addressed to each of the
underwriters, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings and such other matters as reasonably
requested by such underwriters in accordance with Statement on Auditing
Standards No. 72; and (iv) if an underwriting agreement is entered into,
the same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 4 hereof (or such other
provisions and procedures acceptable to Holders of a majority in
aggregate principal amount or liquidation amount, as the case may be, of
Registrable Securities covered by such Registration Statement and the
managing underwriters and agents) customary for such agreements with
respect to all parties to be indemnified pursuant to said Section
(including, without limitation, such underwriters and selling Holders).
The above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder;
(n) if (1) a Shelf Registration is filed pursuant to Section 2(b)
or (2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2(a) is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the Applicable Period, make reasonably
available for inspection by any selling Holder of such Registrable
Securities or Participating Broker-Dealer, as applicable, who certifies
to the Corporation and the Trust that it has a current intention to sell
Registrable Securities pursuant to the Shelf Registration, any
underwriter participating in any such disposition of Registrable
Securities, if any, and any attorney, accountant or other agent retained
by any such selling Holder or each such Participating Broker-Dealer, as
the case may be, or underwriter (collectively, the "Inspectors"), at the
offices where normally kept, during the Corporation's normal business
hours, all financial and other records, pertinent corporate documents and
properties of the Trust, the Corporation and its subsidiaries
(collectively, the "Records") as shall be reasonably necessary to enable
them to exercise any applicable due diligence responsibilities, and cause
the officers, directors and employees of the Trust, the Corporation and
its subsidiaries to supply all relevant information in each case
reasonably requested by any such Inspector in connection with such
Registration Statement. Records which the Corporation and the Trust
determine, in good faith, to be confidential and any Records which it
notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to
avoid or correct a material misstatement or omission in such Registration
Statement, (ii) subject to the lost sentence of this Section 3(n), the
release of such Records is ordered pursuant to a subpoena or other order
from a court of
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competent jurisdiction or is necessary in connection with any action,
suit or proceeding or (iii) the Information in such Records has been made
generally available to the public (other than by an Inspector or a
selling Holder in breach of its obligations hereunder). Each selling
Holder of such Registrable Securities and each such Participating
Broker-Dealer will be required to agree in writing that information
obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Trust or the Corporation unless and
until such is made generally available to the public through no fault of
an Inspector or a Selling Holder. Each selling Holder of such
Registrable Securities and each such Participating Broker-Dealer will be
required to further agree in writing that it will, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, or in connection with any action, suit or proceeding give
notice to the Corporation and allow the Corporation at its expense to
undertake appropriate action to prevent disclosure of the Records deemed
confidential;
(o) comply with all applicable rules and regulations of the SEC so
long as any provision of this Agreement shall be applicable and make
generally available to its securityholders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no
later than 45 days after the end of any 12-month period (or 90 days after
the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Corporation after the effective date of a Registration Statement, which
statements shall cover said 12-month periods;
(p) upon consummation of an Exchange Offer or a Private Exchange,
if requested by a Trustee, obtain an opinion of counsel to the
Corporation addressed to the Trustee for the benefit of all Holders of
Registrable Securities participating in the Exchange Offer or the Private
Exchange, as the case may be, substantially to the effect that (i) the
Corporation and the Trust, as the case requires, has duly authorized,
executed and delivered the Exchange Securities and Private Exchange
Securities, and (ii) each of the Exchange Securities or the Private
Exchange Securities, as the case may be, constitutes a legal, valid and
binding obligation of the Corporation or the Trust, as the case requires,
enforceable against the Corporation or the Trust, as the case requires,
in accordance with its respective terms (in each case, with customary
exceptions);
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(q) if an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Securities by Holders to
the Corporation or the Trust, as applicable (or to such other Person as
directed by the Corporation or the Trust, respectively), in exchange for
the Exchange Securities or the Private Exchange Securities, as the case
may be, the Corporation or the Trust, as applicable, shall mark, or cause
to be marked, on such Registrable Securities delivered by such Holders
that such Registrable Securities are being cancelled in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may
be; in no event shall such Registrable Securities be marked as paid or
otherwise satisfied;
(r) cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Securities and their respective
counsel in connection with any filings required to be made with the NASD;
(s) take all other steps necessary to effect the registration of
the Registrable Securities covered by a Registration Statement
contemplated hereby;
(t) (A) in the case of the Exchange Offer Registration Statement
(i) include in the Exchange Offer Registration Statement a section
entitled "Plan of Distribution," which section shall be reasonably
acceptable to the Initial Purchaser or another representative of the
Participating Broker-Dealers, and which shall contain a summary statement
of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer (a
"Participating Broker-Dealer") that holds Registrable Securities acquired
for its own account as a result of market-making activities or other
trading activities and that will be the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of Exchange Securities to be received
by such broker-dealer in the Exchange Offer, whether such positions or
policies have been publicly disseminated by the staff of the SEC or such
positions or policies, in the reasonable judgment of the Initial
Purchaser or such other representative, represent the prevailing views of
the staff of the SEC, including a statement that any such broker-dealer
who receives Exchange Securities for Registrable Securities pursuant to
the Exchange Offer may be deemed a statutory underwriter and must deliver
a prospectus meeting the requirements of the Securities Act in connection
with any resale of such Exchange Securities, (ii) furnish to each
Participating Broker-Dealer who has delivered to the Corporation the
notice referred to in Section 3(e), without charge, as many copies of
each Prospectus included in the Exchange Offer Registration Statement,
including any preliminary prospectus, and any amendment or
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supplement thereto, as such Participating Broker-Dealer may reasonably
request (each of the Corporation and the Trust hereby consents to the use
of the Prospectus forming part of the Exchange Offer Registration
Statement or any amendment or supplement thereto by any Person subject to
the prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, in connection with the sale or transfer of
the Exchange Securities covered by the Prospectus or any amendment or
supplement thereto), (iii) use its reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and
supplement the Prospectus contained therein in order to permit such
Prospectus to be lawfully delivered by all Persons subject to the
prospectus delivery requirements of the Securities Act for such period of
time as such Persons must comply with such requirements under the
Securities Act and applicable rules and regulations in order to resell
the Exchange Securities; provided, however, that such period shall not be
required to exceed 90 days (or such longer period if extended pursuant to
the last sentence of Section 3 hereof) (the "Applicable Period"), and
(iv) include in the transmittal letter or similar documentation to be
executed by an exchange offeree in order to participate in the Exchange
Offer (x) the following provision:
"If the exchange offeree is a broker-dealer holding Registrable
Securities acquired for its own account as a result of market-making
activities or other trading activities, it will deliver a prospectus
meeting the requirements of the Securities Act in connection with
any resale of Exchange Securities received in respect of such
Registrable Securities pursuant to the Exchange Offer";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, the broker-dealer
will not be deemed to admit that it is an underwriter within the meaning of
the Securities Act; and
(B) in the case of any Exchange Offer Registration Statement, the
Corporation and the Trust agree to deliver to the Initial Purchaser or to
another representative of the Participating Broker-Dealers, if requested
by the Initial Purchaser or such other representative of Participating
Broker-Dealers, on behalf of the Participating Broker-Dealers upon
consummation of the Exchange Offer (i) an opinion of counsel in form and
substance reasonably satisfactory to the Initial Purchaser or such other
representative of the Participating Broker-Dealers, covering the matters
customarily covered in opinions requested in connection with Exchange
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Offer Registration Statements and such other matters as may be reasonably
requested (it being agreed that the matters to be covered by such opinion
may be subject to customary qualifications and exceptions), (ii) an
officers' certificate containing certifications substantially similar to
those set forth in Section 5(f) of the Purchase Agreement and such
additional certifications as are customarily delivered in a public
offering of debt securities and (iii) as well as upon the effectiveness
of the Exchange Offer Registration Statement, a comfort letter, in each
case, in customary form if permitted by Statement on Auditing Standards
No. 72.
The Corporation or the Trust may require each seller of Registrable
Securities as to which any registration is being effected to furnish to the
Corporation or the Trust, as applicable, such information regarding such
seller as may be required by the staff of the SEC to be included in a
Registration Statement. The Corporation or the Trust may exclude from such
registration the Registrable Securities of any seller who fails to furnish
such information within a reasonable time after receiving such request. The
Corporation shall have no obligation to register under the Securities Act the
Registrable Securities of a seller who so fails to furnish such information.
In the case of a Shelf Registration Statement, or if Participating
Broker-Dealers who have notified the Corporation and the Trust that they will
be utilizing the Prospectus contained in the Exchange Offer Registration
Statement as provided in Section 3(t) hereof, are seeking to sell Exchange
Securities and are required to deliver Prospectuses, each Holder agrees that,
upon receipt of any notice from the Corporation or the Trust of the happening
of any event of the kind described in Section 3(e)(ii), 3(e)(iii), 3(e)(v) or
3(e)(vi) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(i) hereof or until it is advised in writing (the
"Advice") by the Corporation and the Trust that the use of the applicable
Prospectus may be resumed, and, if so directed by the Corporation and the
Trust, such Holder will deliver to the Corporation or the Trust (at the
Corporation's or the Trust's expense, as the case requires) all copies in
such Holder's possession, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable Securities
or Exchange Securities, as the case may be, current at the time of receipt of
such notice. If the Corporation or the Trust shall give any such notice to
suspend the disposition of Registrable Securities or Exchange Securities, as
the case may be, pursuant to a Registration Statement, the Corporation and
the Trust shall use their reasonable best efforts to file and have declared
effective (if an amendment) as soon as practicable an amendment or supplement
to the Registration Statement and shall extend the period during which such
Registra-
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tion Statement is required to be maintained effective and usable for resales
pursuant to this Agreement by the number of days in the period from and
including the date of the giving of such notice to and including the date
when the Corporation and the Trust shall have made available to the Holders
(x) copies of the supplemented or amended Prospectus necessary to resume such
dispositions or (y) the Advice.
4. Indemnification and Contribution. (a) In connection with any
Registration Statement, the Corporation and the Trust shall, jointly and
severally, indemnify and hold harmless the Initial Purchaser, each Holder,
each underwriter who participates in an offering of the Registrable
Securities, each Participating Broker-Dealer, each Person, if any, who
controls any of such parties within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each of their respective
partners, directors, officers, employees and agents, as follows:
(i) from and against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact contained
in any Registration Statement (or any amendment thereto), covering
Registrable Securities or Exchange Securities, including all documents
incorporated therein by reference, 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 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) from and against any and all loss, liability, claim, damage
and expense whatsoever, joint or several, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any court or 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, if such settlement is effected with the prior written consent
of the Corporation; and
(iii) from and against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by such
Holder, such Participating Broker-Dealer, or any underwriter (except to
the extent otherwise expressly provided in Section 4(c) hereof)),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any court or
governmental agency or body, commenced or threatened, or any
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claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) of this Section 4(a);
provided, however, that (i) this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished in writing
to the Corporation or the Trust by such Holder, such Participating
Broker-Dealer or any underwriter with respect to such Holder, Participating
Broker-Dealer or any underwriter, as the case may be, expressly for use in a
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) and (ii) the Company and the Trust shall not
be liable to any such Holder, Participating Broker-Dealer, any underwriter or
controlling person, with respect to any untrue statement or alleged untrue
statement or omission or alleged omission in any preliminary Prospectus to
the extent that any such loss, liability, claim, damage or expense of any
Holder, Participating Broker-Dealer, any underwriter or controlling person
results from the fact that such Holder, any underwriter or Participating
Broker-Dealer sold Securities to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
final Prospectus as then amended or supplemented if the Corporation had
previously furnished copies thereof to such Holder, underwriter or
Participating Broker-Dealer and the loss, liability, claim, damage or expense
of such Holder, underwriter, Participating Broker-Dealer or controlling
person results from an untrue statement or omission of a material fact
contained in the preliminary Prospectus which was corrected in the final
Prospectus. Any amounts advanced by the Company or the Trust to an
indemnified party pursuant to this Section 4 as a result of such losses shall
be returned to the Corporation or the Trust if it shall be finally determined
by such a court in a judgment not subject to appeal or final review that such
indemnified party was not entitled to indemnification by the Corporation or
the Trust.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Corporation, the Trust, any underwriter and the other
selling Holders and each of their respective directors, officers (including
each officer of the Corporation and the Trust who signed the Registration
Statement), employees and agents and each Person, if any, who controls the
Corporation, the Trust, any underwriter or any other selling Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all loss, liability, claim, damage and expense
whatsoever described in the indemnity contained in Section 4(a) hereof, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in a Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto)
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<PAGE>
in reliance upon and in conformity with written information furnished to the
Corporation or the Trust by such selling Holder with respect to such Holder
expressly for use in such Registration Statement (or any amendment thereto),
or any such Prospectus (or any amendment or supplement thereto); provided,
however, that in the case of a Shelf Registration Statement, no such Holder
shall be liable for any claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Registrable Securities
pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it
may have under this Section 4, except to the extent that it is materially
prejudiced by such failure. An indemnifying party may participate at its own
expense in the defense of such action, or, if it so elects within a
reasonable time after receipt of such notice, assume the defense of any suit
brought to enforce any such claim; but if it so elects to assume the defense,
such defense shall be conducted by counsel chosen by it and approved by the
indemnified party or parties which approval shall not be unreasonably
withheld. In the event that an indemnifying party elects to assume the
defense of any such suit and retain such counsel, the indemnified party or
parties shall bear the fees and expenses of any additional counsel thereafter
retained by such indemnified party or parties; provided, however, that the
indemnified party or parties shall have the right to employ counsel (in
addition to local counsel) to represent the indemnified party or parties who
may be subject to liability arising out of any action in respect of which
indemnity may be sought against the indemnifying party if, in the reasonable
judgment of counsel for the indemnified party or parties, there may be legal
defenses available to such indemnified party or parties which are different
from or in addition to those available to the indemnifying party, in which
event the fees and expenses of appropriate separate counsel shall be borne by
the indemnifying party. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one counsel (in addition to local
counsel), separate from its 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 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 4 (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise
or consent (i) includes an
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unconditional written release in form and substance satisfactory to the
indemnified parties 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) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Corporation, the Trust,
and the Holders shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement incurred by the Corporation, the Trust, and the Holders, as
incurred; provided that no Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any Person that was not guilty of such fraudulent
misrepresentation. As between the Corporation, the Trust, and the Holders,
such parties shall contribute to such aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
in such proportion as shall be appropriate to reflect the relative fault of
the Corporation and Trust, on the one hand, and the Holders, on the other
hand, with respect to the statements or omissions which resulted in such
loss, liability, claim, damage or expense, or action in respect thereof, as
well as any other relevant equitable considerations. The relative fault of
the Corporation and the Trust, on the one hand, and of the Holders, on the
other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Corporation or the Trust, on the one hand, or by or on behalf of the
Holders, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Corporation, the Trust and the Holders of the Registrable Securities
agree that it would not be just and equitable if contribution pursuant to
this Section 4 were to be determined by pro rata allocation or by any other
method of allocation that does not take into account the relevant equitable
considerations. For purposes of this Section 4, each Affiliate of a Holder,
and each director, officer, employee, agent and Person, if any, who controls
a Holder or such Affiliate within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Holder, and each director of each of the Corporation or
the Trust, each officer of each of the Corporation or the Trust who signed
the Registration Statement, and each Person, if any, who controls each of the
Corporation and the Trust within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to
contribution as each of the Corporation or the Trust.
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5. Participation in an Underwritten Registration. No Holder may
participate in an underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's Registrable Securities on the basis provided in
the underwriting arrangement approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents reasonably required under the terms of
such underwriting arrangements.
6. Selection of Underwriters. The Holders of Registrable
Securities covered by the Shelf Registration Statement who desire to do so
may sell the securities covered by such Shelf Registration in an underwritten
offering, subject to the provisions of section 3(l) hereof. In any such
underwritten offering, the underwriter or underwriters and manager or
managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount or liquidation amount, as
applicable, of the Registrable Securities included in such offering;
provided, however, that such underwriters and managers must be reasonably
satisfactory to the Corporation and the Trust.
7. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the Corporation or the
Trust is subject to the reporting requirements of Section 13 or 15 of the
Exchange Act and any Registrable Securities remain outstanding, each of the
Corporation and the Trust, as the case may be, will file the reports required
to be filed by it under the Securities Act and Section 13(a) or 15(d) of the
Exchange Act and the rules and regulations adopted by the SEC thereunder,
provided that if it ceases to be so required to file such reports, it will,
upon the request of any Holder of Registrable Securities (a) make publicly
available such information as is necessary to permit sales of its securities
pursuant to Rule 144 under the Securities Act, (b) deliver such information
to a prospective purchaser as is necessary to permit sales of its securities
pursuant to Rule 144A under the Securities Act, and (c) take such further
action that is reasonable in the circumstances, in each case, to the extent
required from time to time to enable such Holder to sell its Registrable
Securities without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144 under the Securities
Act, as such rule may be amended from time to time, (ii) Rule 144A under the
Securities Act, as such rule may be amended from time to time, or (iii) any
similar rules or regulations hereafter adopted by the SEC. Upon the request
of any Holder of Registrable Securities, the Corporation and the Trust will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
(b) No Inconsistent Agreements. The Corporation or the Trust has
not entered into, nor will the Corporation or the Trust
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on or after the date of this Agreement enter into, any agreement which is
inconsistent with the rights granted to the Holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the
Corporation's or the Trust's other issued and outstanding securities under
any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Corporation and the Trust has obtained
the written consent of Holders of at least a majority in aggregate principal
amount of the outstanding Registrable Securities affected by such amendment,
modification, supplement, waiver or departure; provided that no amendment,
modification or supplement or waiver or consent to the departure with respect
to the provisions of Section 4 hereof shall be effective as against any
Holder of Registrable Securities unless consented to in writing by such
Holder of Registrable Securities. Notwithstanding the foregoing sentence,
(i) this Agreement may be amended, without the consent of any Holder of
Registrable Securities, by written agreement signed by the Corporation, the
Trust and the Initial Purchaser, to cure any ambiguity, correct or supplement
any provision of this Agreement that may be inconsistent with any other
provision of this Agreement or to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with other provisions of this Agreement, (ii) this Agreement may
be amended, modified or supplemented, and waivers and consents to departures
from the provisions hereof may be given by written agreement signed by the
Corporation, the Trust and the Initial Purchaser to the extent that any such
amendment, modification, supplement, waiver or consent is, in their
reasonable judgment, necessary or appropriate to comply with applicable law
(including any interpretation of the Staff of the SEC) or any change therein
and (iii) to the extent any provision of this Agreement relates to the
Initial Purchaser, such provision may be amended, modified or supplemented,
and waivers or consents to departures from such provisions may be given, by
written agreement signed by the Initial Purchaser, the Corporation and the
Trust.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder
to the Corporation or the Trust by means of a notice given in accordance with
the provisions of this Section 7(d), which address initially is, with respect
to the Initial Purchaser, the address set forth in the Purchase Agreement;
and (ii) if to the Corporation or the Trust, ini-
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tially at the Corporation's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 7(d).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications shall
be concurrently delivered by the Person giving the same to the Trustee, at
the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of the
Initial Purchaser, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing
herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the
Purchase Agreement or the Indenture. If any transferee of any Holder shall
acquire Registrable Securities, in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable
Securities, such Person shall be conclusively deemed to have agreed to be
bound by and to perform all of the terms and provisions of this Agreement and
such Person shall be entitled to receive the benefits hereof.
(f) Third Party Beneficiary. The Initial Purchaser and any
Participating Broker-Dealer shall be a third party beneficiary of the
agreements made hereunder between the Corporation and the Trust, on the one
hand, and the Holders, on the other hand, and shall have the right to enforce
such agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
MADE IN THE STATE OF NEW YORK. THE VALIDITY AND
31
<PAGE>
INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH
HEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO
CONFLICTS OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE MATTERS
CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL
JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE
COMPANY, ON BEHALF OF ITSELF AND THE SUBSIDIARIES (INCLUDING, WITHOUT
LIMITATION, THE TRUST), IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
32
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
PROGRESS FINANCIAL CORPORATION
By: /s/ Frederick E. Schea
-------------------------------------------
Name: Frederick E. Schea
Title: Senior Vice President
and Chief Financial
Officer
PROGRESS CAPITAL TRUST I
By: /s/ W. Kirk Wycoff
-------------------------------------------
Name: W. Kirk Wycoff
Title: Administrative Trustee
By: /s/ Frederick E. Schea
-------------------------------------------
Name: Frederick E. Schea
Title: Administrative Trustee
By: /s/ Eric J. Morgan
-------------------------------------------
Name: Eric J. Morgan
Title: Administrative Trustee
Confirmed and accepted as of
the date first above
written:
SANDLER O'NEILL & PARTNERS, L.P.
By: SANDLER O'NEILL & PARTNERS CORP.,
the sole general partner
By: /s/ Catherine A. Lawton
-----------------------------------
Name: Catherine A. Lawton
Title: Vice President
33
<PAGE>
EXHIBIT 12.1
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
(Excluding Interest on Deposits)
The Corporation's ratios of earnings to fixed charges (excluding
interest on deposits) for the periods indicated were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income (loss)............................... $ 1,991 $ 1,171 $ 1,253 $ 2,671 $ (716) $ 683 $ 1,278
Extraordinary items, net of tax................. -- -- -- -- -- -- --
Cumulative effect of changes in accounting for
income taxes.................................. -- -- -- -- -- -- --
Income tax expense (benefit).................... 1,162 621 762 1,868 -- (1,034) 74
--------- --------- --------- --------- --------- --------- ---------
Pretax earnings (loss)........................ $ 3,153 $ 1,792 $ 2,015 $ 803 $ (716) $ (351) $ 1,352
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Fixed charges:
Portion of rental expense which approximates the
interest factor............................... $ -- $ -- $ -- $ -- $ -- $ -- $ --
Interest on borrowed funds...................... 1,965 870 2,662 3,082 2,337 2,089 2,021
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges............................. $ 1,965 $ 870 $ 2,662 $ 3,082 $ 2,337 $ 2,089 $ 2,021
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Earnings (for ratio calculation)................ $ 5,118 $ 82,662 $ 4,677 $ 3,885 $ 1,621 $ 1,738 3,373
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Ratio of earnings to fixed charges.............. 2.60x 3.06x 1.76x 1.26x .69x .83x 1.67x
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>
For purposes of computing the consolidated ratio of earnings to fixed
charges, "earnings" represent net income (loss) before extraordinary items and
cumulative effect of changes in accounting principles plus applicable income
taxes and fixed charges. Fixed charges, excluding interest on deposits, include
gross interest expense (other than on deposits) and the portion deemed
representative of the interest factor of rent expense, net of income from
subleases. Fixed charges, including gross interest on deposits, include all
interest expense and the portion deemed representative of the interest factor of
rent expense, net of income from subleases.
<PAGE>
EXHIBIT 12.2
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
(Including Interest on Deposits)
The Corporation's ratios of earnings to fixed charges (including interest
on deposits) for the periods indicated were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income (loss)............................... $ 1,991 $ 1,171 $ 1,253 $ 2,671 $ (716) $ 683 $ 1,278
Extraordinary items, net of tax................. -- -- -- -- -- -- --
Cumulative effect of changes in accounting for
income taxes.................................. -- -- -- -- -- -- --
Income tax expense (benefit).................... 1,162 621 762 1,868 -- (1,034) 74
--------- --------- --------- --------- --------- --------- ---------
Pretax earnings (loss)........................ $ 3,153 $ 1,792 $ 2,015 $ 803 $ (716) $ (351) $ 1,352
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Fixed charges:
Portion of rental expense which approximates the
interest factor............................... $ -- $ -- $ -- $ -- $ -- $ -- $ --
Interest on borrowed funds...................... 7,942 6,891 14,682 15,335 12,505 11,465 13,737
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges........................... $ 7,942 $ 6,891 $ 14,682 $ 15,335 $ 12,505 $ 11,465 $ 13,737
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Earnings (for ratio calculation)................ $ 11,095 $ 8,683 $ 16,697 $ 16,138 $ 11,798 $ 11,114 15,089
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Ratio of earnings to fixed charges.............. 1.40x 1.26x 1.14x 1.05x .94x .97x 1.10x
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>
For purposes of computing the consolidated ratio of earnings to fixed
charges, "earnings" represent net income (loss) before extraordinary items
and cumulative effect of changes in accounting principles plus applicable
income taxes and fixed charges. Fixed charges, excluding interest on
deposits, include gross interest expense (other than on deposits) and the
portion deemed representative of the interest factor of rent expense, net of
income from subleases. Fixed charges, including gross interest on deposits,
include all interest expense and the portion deemed representative of the
interest factor of rent expense, net of income from subleases.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this registration statement
on Form S-4 of our report, dated January 22, 1997, on our audits of the
consolidated financial statements of Progress Financial Corporation. We also
consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
October 17, 1997
<PAGE>
Exhibit 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
-----------------------
PROGRESS FINANCIAL CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 23-2413363
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Four Sentry Parkway
Suite 200
Blue Bell, Pennsylvania 19422-2311
(Address of principal executive offices) (Zip code)
----------------------
Series B Junior Subordinated Deferrable Interest Debentures
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
<TABLE>
<CAPTION>
- --------------------------------------------- --------------------------------------
NAME Address
- --------------------------------------------- --------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York, N.Y. 10006,
New York and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and
17 C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed
with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1
filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
2
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 20th day of October, 1997.
THE BANK OF NEW YORK
By: /S/WALTER N. GITLIN
-----------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
4
<PAGE>
Exhibit 7
- -----------------------------------------------------------------------------
CONSOLIDATED REPORT OF CONDITION OF
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN THOUSANDS
- ------------------------------------------------------------- --------------
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin........................................... $ 7,769,502
Interest-bearing balances................................... 1,472,524
Securities:
Held-to-maturity securities................................. 1,080,234
Available-for-sale securities............................... 3,046,199
Federal funds sold and Securities pur-
chased under agreements to resell........................... 3,193,800
Loans and lease financing
receivables:
Loans and leases, net of unearned
income.................................................... 35,352,045
LESS: Allowance for loan and
lease losses.............................................. 625,042
LESS: Allocated transfer risk
reserve................................................... 429
Loans and leases, net of unearned
income, allowance, and reserve............................ 34,726,574
Assets held in trading accounts............................... 1,611,096
Premises and fixed assets (including
capitalized leases)......................................... 676,729
Other real estate owned....................................... 22,460
Investments in unconsolidated
subsidiaries and associated
companies................................................... 209,959
Customers' liability to this bank on
acceptances outstanding..................................... 1,357,731
Intangible assets............................................. 720,883
Other assets.................................................. 1,627,267
--------------
Total assets.................................................. $ 57,514,958
--------------
--------------
LIABILITIES
Deposits:
In domestic offices......................................... $ 26,875,596
Noninterest-bearing...............................11,213,657
Interest-bearing..................................15,661,939
In foreign offices, Edge and
Agreement subsidiaries, and IBFs............................ 16,334,270
Noninterest-bearing..................................596,369
Interest-bearing..................................15,737,901
Federal funds purchased and Securities
sold under agreements to repurchase......................... 1,583,157
Demand notes issued to the U.S.
Treasury.................................................... 303,000
Trading liabilities........................................... 1,308,173
Other borrowed money:
With remaining maturity of one year
or less................................................... 2,383,570
With remaining maturity of more than
one year through three years.............................. 0
With remaining maturity of more than
three years............................................... 20,679
Bank's liability on acceptances exe-
cuted and outstanding....................................... 1,377,244
Subordinated notes and debentures............................. 1,018,940
Other liabilities............................................. 1,732,792
--------------
Total liabilities............................................. 52,937,421
--------------
EQUITY CAPITAL
Common stock................................................. 1,135,284
Surplus...................................................... 731,319
Undivided profits and capital
reserves................................................... 2,721,258
Net unrealized holding gains
(losses) on available-for-sale
securities................................................. 1,948
Cumulative foreign currency transla-
tion adjustments........................................... (12,272)
--------------
Total equity capital......................................... 4,577,537
--------------
Total liabilities and equity
capital..................................................... $57,514,958
--------------
--------------
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Alan R. Griffith |
J. Carter Bacot |
Thomas A. Renyi | Directors
<PAGE>
Exhibit 25.2
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) / /
------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
NEW YORK 13-5160382
(State of Incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (zip code)
------------------------
PROGRESS CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
Delaware 23-2905945
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Four Sentry Parkway
Suite 200
Blue Bell, Pennsylvania 19422-2311
(Address of principal executive offices) (Zip code)
------------------------
Series B Capital Securities
(Title of the indenture securities)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- -------------------------------------------------------------------------------
Name Address
- -------------------------------------------------------------------------------
Superintendent of Banks of the 2 Rector Street, New York,
State of New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of New
York, and State of New York, on the 20th day of October, 1997.
THE BANK OF NEW YORK
By: /S/ WALTER N. GITLIN
-----------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
in Thousands
--------------
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.............$ 7,769,502
Interest-bearing balances...................................... 1,472,524
Securities:
Held-to-maturity securities.................................... 1,080,234
Available-for-sale securities.................................. 3,046,199
Federal funds sold and Securities purchased under agreements
to resell...................................................... 3,193,800
Loans and lease financing receivables:
Loans and leases, net of unearned income....................... 35,352,045
LESS: Allowance for loan and lease losses...................... 625,042
LESS: Allocated transfer risk reserve.......................... 429
Loans and leases, net of unearned income, allowance,
and reserve................................................ 34,726,574
Assets held in trading accounts.................................. 1,611,096
Premises and fixed assets (including capitalized leases)......... 676,729
Other real estate owned.......................................... 22,460
Investments in unconsolidated subsidiaries and associated
companies...................................................... 209,959
Customers' liability to this bank on acceptances
outstanding.................................................... 1,357,731
Intangible assets................................................ 720,883
Other assets..................................................... 1,627,267
-----------
Total assets.....................................................$57,514,958
-----------
-----------
LIABILITIES
Deposits:
In domestic offices............................................$26,875,596
Noninterest-bearing............................................ 11,213,657
Interest-bearing............................................... 15,661,939
In foreign offices, Edge and Agreement subsidiaries,
and IBFs.................................................... 16,334,270
Noninterest-bearing............................................ 596,369
Interest-bearing............................................... 15,737,901
Federal funds purchased and Securities sold under
agreements to repurchase....................................... 1,583,157
Demand notes issued to the U.S. Treasury......................... 303,000
Trading liabilities.............................................. 1,308,173
Other borrowed money:
With remaining maturity of one year or less.................... 2,383,570
With remaining maturity of more than one year through
three years.................................................. 0
With remaining maturity of more than three years............... 20,679
Bank's liability on acceptances executed and outstanding......... 1,377,244
Subordinated notes and debentures................................ 1,018,940
Other liabilities................................................ 1,732,792
-----------
Total liabilities................................................ 52,937,421
-----------
EQUITY CAPITAL
Common stock..................................................... 1,135,284
Surplus.......................................................... 731,319
Undivided profits and capital reserves........................... 2,721,258
Net unrealized holding gains (losses) on available-
for-sale securities............................................ 1,948
Cumulative foreign currency translation adjustments.............. (12,272)
-----------
Total equity capital............................................. 4,577,537
-----------
Total liabilities and equity capital.............................$57,514,958
-----------
-----------
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true to the best of my
knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of
our knowledge and belief has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System
and is true and correct.
Alan R. Griffith
J. Carter Bacot Directors
Thomas A. Renyi
<PAGE>
Exhibit 25.3
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
__________________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
__________________________
PROGRESS FINANCIAL CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 23-2413363
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Four Sentry Parkway
Suite 200
Blue Bell, Pennsylvania 19422-2311
(Address of principal executive offices) (Zip code)
__________________________
Guarantee of Series B Capital Securities of
Progress Capital Trust I
(Title of the indenture securities)
================================================================================
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
______ ________________
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................. $ 7,769,502
Interest-bearing balances ......................... 1,472,524
Securities:
Held-to-maturity securities ....................... 1,080,234
Available-for-sale securities ..................... 3,046,199
Federal funds sold and Securities purchased under
agreements to resell............................... 3,193,800
Loans and lease financing receivables:
Loans and leases, net of unearned income .......... 35,352,045
LESS: Allowance for loan and lease losses ......... 625,042
LESS: Allocated transfer risk reserve.............. 429
Loans and leases, net of unearned income,
allowance, and reserve......................... 34,726,574
Assets held in trading accounts ..................... 1,611,096
Premises and fixed assets (including
capitalized leases) ............................... 676,729
Other real estate owned ............................. 22,460
Investments in unconsolidated subsidiaries and
associated companies .............................. 209,959
Customers' liability to this bank on acceptances
outstanding ....................................... 1,357,731
Intangible assets ................................... 720,883
Other assets ........................................ 1,627,267
-----------
Total assets ........................................ $57,514,958
-----------
-----------
LIABILITIES
Deposits:
In domestic offices ............................... $26,875,596
Noninterest-bearing ............................... 11,213,657
Interest-bearing .................................. 15,661,939
In foreign offices, Edge and Agreement
subsidiaries, and IBFs .......................... 16,334,270
Noninterest-bearing ............................... 596,369
Interest-bearing .................................. 15,737,901
Federal funds purchased and Securities sold under
agreements to repurchase ......................... 1,583,157
Demand notes issued to the U.S. Treasury ............ 303,000
Trading liabilities ................................. 1,308,173
Other borrowed money:
With remaining maturity of one year or less ....... 2,383,570
With remaining maturity of more than one year
through three years.............................. 0
With remaining maturity of more than three years .. 20,679
Bank's liability on acceptances executed and
outstanding ........................................ 1,377,244
Subordinated notes and debentures ................... 1,018,940
Other liabilities ................................... 1,732,792
-----------
Total liabilities ................................... 52,937,421
-----------
EQUITY CAPITAL
Common stock ....................................... 1,135,284
Surplus ............................................ 731,319
Undivided profits and capital reserves ............. 2,721,258
Net unrealized holding gains (losses) on
available-for-sale securities .................... 1,948
Cumulative foreign currency translation adjustments. ( 12,272)
------------
Total equity capital ............................... 4,577,537
------------
Total liabilities and equity capital ............... $ 57,514,958
------------
------------
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true to the best of my
knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of
our knowledge and belief has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System
and is true and correct.
Alan R. Griffith
J. Carter Bacot
Thomas A. Renyi Directors
______________________________________________________________________________
<PAGE>
Exhibit 99.1
LETTER OF TRANSMITTAL
PROGRESS CAPITAL TRUST I
Offer to Exchange its
10.50% Series B Capital Securities
(Liquidation Amount $1,000 per Capital Security)
which have been registered under the Securities Act of 1933
for any and all of its outstanding
10.50% Series A Capital Securities
(Liquidation Amount $1,000 per Capital Security)
Pursuant to the Prospectus
dated October __, 1997
______________
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER __, 1997,
UNLESS THE OFFER IS EXTENDED.
______________
The Exchange Agent for the Exchange Offer is:
The Bank of New York
By Registered or Certified Mail: By Hand or Overnight Delivery:
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attention: Reorganization Department Ground Level
Odell Romeo New York, New York 10286
Attention: Reorganization Department
Odell Romeo
Confirm by Telephone
or for Information call:
(212) 815-6337
Facsimile Transmissions:
(Eligible Institutions Only)
(212) 815-6339
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders of Old Capital
Securities (as defined below) either if (i) Old Capital Securities are to be
forwarded herewith or (ii) tenders of Old Capital Securities are to be made by
book-entry transfer to an account maintained by The Bank of New York (the
"Exchange Agent")
<PAGE>
at The Depository Trust Company ("DTC") pursuant to the procedures set forth in
"The Exchange Offer--Procedures for Tendering Old Capital Securities" in the
Prospectus.
Holders of Old Capital Securities whose certificates (the "Certificates")
for such Old Capital Securities are not immediately available or who cannot
deliver their Certificates and all other required documents to the Exchange
Agent on or prior to the Expiration Date (as defined in the Prospectus) or who
cannot complete the procedures for book-entry transfer on or prior to the
Expiration Date, must tender their Old Capital Securities according to the
guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for
Tendering Old Capital Securities" in the Prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
ALL TENDERING HOLDERS COMPLETE THIS BOX:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD CAPITAL SECURITIES TENDERED
(See Instruction 4)
- ----------------------------------------------------------------------------------------------------------------------------------
If blank, please print name and address of registered Old Capital Securities tendered
holder. (Attach additional list if necessary)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Liquidation Amount of
Aggregate Old Capital Securities
Liquidation Amount Tendered
Certificate of Old Capital (if less than all are
Number(s)* Securities tendered)**
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
TOTAL
AMOUNT
TENDERED:
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Old Capital Securities may be tendered in whole or in part in
denominations of $100,000 and integral multiples of $1,000 in excess
thereof, provided that if any Old Capital Securities are tendered for
exchange in part, the untendered principal amount thereof must be
$100,000 or any integral multiple of $1,000 in excess thereof. All Old
Capital Securities held shall be deemed tendered unless a lesser number
is specified in this column.
2
<PAGE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE
AGENT WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution_______________________________________________
DTC Account Number__________________________________________________________
Transaction Code Number_____________________________________________________
/ / CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED
DELIVERY IF TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)________________________________________________
Window Ticket Number (if any)_______________________________________________
Date of Execution of Notice of Guaranteed Delivery__________________________
Name of Institution which Guaranteed Delivery_______________________________
If Guaranteed Delivered is to be made By Book-Entry Transfer:
Name of Tendering Institution___________________________________
DTC Account Number______________________________________________
Transaction Code Number__________________________________________
/ / CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NONEXCHANGED OR
NONTENDERED OLD CAPITAL SECURITIES ARE TO BE RETURNED BY CREDITING THE
DTC ACCOUNT NUMBER SET FORTH ABOVE.
/ / CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER
TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO
RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name________________________________________________________________________
Address_____________________________________________________________________
_____________________________________________________________________
Area Code and Telephone Number______________________________________________
Contact Person______________________________________________________________
3
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Progress Capital Trust I, a trust created
under the laws of Delaware (the "Trust") and Progress Financial Corporation, a
Delaware corporation (the "Corporation"), the above-described aggregate
Liquidation Amount of the Trust's 10.50% Series A Capital Securities (the "Old
Capital Securities") in exchange for a like aggregate Liquidation Amount of the
Trust's 10.50% Series B Capital Securities (the "New Capital Securities") which
have been registered under the Securities Act of 1933 (the "Securities Act"),
upon the terms and subject to the conditions set forth in the Prospectus, dated
October __, 1997 (as the same may be amended or supplemented from time to time,
the "Prospectus"), receipt of which is acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitute the "Exchange
Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Old Capital Securities tendered herewith in accordance with the
terms and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Trust all right, title and interest in and to such Old Capital
Securities as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent also is acting as agent of the
Corporation and the Trust in connection with the Exchange Offer) with respect to
the tendered Old Capital Securities, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
subject only to the right of withdrawal described in the Prospectus, to (i)
deliver Certificates for Old Capital Securities to the Corporation or the Trust
together with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Trust, upon receipt by the Exchange Agent, as the
undersigned's agent, of the New Capital Securities to be issued in exchange for
such Old Capital Securities, (ii) present Certificates for such Old Capital
Securities for transfer, and to transfer the Old Capital Securities on the books
of the Trust, and (iii) receive for the account of the Trust all benefits and
otherwise exercise all rights of beneficial ownership of such Old Capital
Securities, all in accordance with the terms and conditions of the Exchange
Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, sell, assign and transfer the Old
Capital Securities tendered hereby and that, when the same are accepted for
exchange, the Trust will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances,
and that the Old Capital Securities tendered hereby are not subject to any
adverse claims or proxies. The undersigned will, upon request, execute and
deliver any additional documents deemed by the Corporation, the Trust or the
Exchange Agent to be necessary or desirable to complete the exchange, assignment
and transfer of the Old Capital Securities tendered hereby, and the undersigned
will comply with its obligations under the Registration Rights Agreement. The
undersigned has read and agrees to all of the terms of the Exchange Offer.
The name(s) and address(es) of the registered holder(s) of the Old Capital
Securities tendered hereby should be printed above, if they are not already set
forth above, as they appear on the Certificates representing such Old Capital
Securities. The Certificate number(s) of the Old Capital Securities that the
undersigned wishes to tender should be indicated in the appropriate boxes above.
If any tendered Old Capital Securities are not exchanged pursuant to the
Exchange Offer for any reason, or if Certificates are submitted for more Old
Capital Securities than are tendered or accepted for exchange, Certificates for
such nonexchanged or nontendered Old Capital Securities will be returned (or, in
the case of Old Capital Securities tendered by book-entry transfer, such Old
Capital Securities will be credited to an account maintained at DTC), without
expense to the tendering holder, promptly following the expiration or
termination of the Exchange Offer.
The undersigned understands that tenders of Old Capital Securities pursuant
to any one of the procedures described in "The Exchange Offer--Procedures for
Tendering Old Capital Securities" in the Prospectus and in the Instructions
herein will, upon the Corporation's and the Trust's acceptance for exchange of
such tendered Old Capital Securities, constitute a binding agreement between the
undersigned, the
4
<PAGE>
Corporation and the Trust upon the terms and subject to the conditions of the
Exchange Offer. The undersigned recognizes that, under certain circumstances
set forth in the Prospectus, the Corporation and the Trust may not be required
to accept for exchange any of the Old Capital Securities tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the New Capital
Securities be issued in the name(s) of the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, that such New Capital Securities
be credited to the account indicated above maintained at DTC. If applicable,
substitute Certificates representing Old Capital Securities not exchanged or not
accepted for exchange will be issued to the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, will be credited to the account
indicated above maintained at DTC. Similarly, unless otherwise indicated under
"Special Delivery Instructions," please deliver New Capital Securities to the
undersigned at the address shown below the undersigned's signature.
By tendering Old Capital Securities and executing this Letter of
Transmittal, the undersigned hereby represents and agrees that (i) the
undersigned is not an "affiliate" of the Corporation or the Trust within the
meaning of Rule 405 under the Securities Act, (ii) any New Capital Securities to
be received by the undersigned are being acquired in the ordinary course of its
business, (iii) the undersigned has no arrangement or understanding with any
person to participate in the distribution (within the meaning of the Securities
Act) of New Capital Securities to be received in the Exchange Offer and (iv) if
the undersigned is not a broker-dealer, the undersigned is not engaged in, and
does not intend to engage in, a distribution (within the meaning of the
Securities Act) of such New Capital Securities. By tendering Old Capital
Securities pursuant to the Exchange Offer and executing this Letter of
Transmittal, a holder of Old Capital Securities which is a broker-dealer
represents and agrees, consistent with certain interpretive letters issued by
the staff of the Division of Corporation Finance of the Securities and Exchange
Commission to third parties, that (a) such Old Capital Securities held by the
broker-dealer are held only as a nominee or (b) such Old Capital Securities were
acquired by such broker-dealer for its own account as a result of market-making
activities or other trading activities and it will deliver the Prospectus (as
amended or supplemented from time to time) meeting the requirements of the
Securities Act in connection with any resale of such New Capital Securities
(provided that, by so acknowledging and by delivering a Prospectus, such
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act).
The Corporation and the Trust have agreed that, subject to the provisions
of the Registration Rights Agreement, the Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer (as
defined below) in connection with resales of New Capital Securities received in
exchange for Old Capital Securities, where such Old Capital Securities were
acquired by such Participating Broker-Dealer for its own account as a result of
market-making activities or other trading activities, for a period ending 90
days after the Expiration Date (subject to extension under certain limited
circumstances described in the Prospectus) or, if earlier, when all such New
Capital Securities have been disposed of by such Participating Broker-Dealer.
In that regard, each broker-dealer who acquired Old Capital Securities for its
own account and as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), by tendering such Old Capital Securities and
executing this Letter of Transmittal, agrees that, upon receipt of notice from
the Corporation or the Trust of the occurrence of any event or the discovery of
any fact which makes any statement contained or incorporated by reference
therein, in light of the circumstances under which they were made, not
misleading or of the occurrence of certain other events specified in the
Registration Rights Agreement, such Participating Broker-Dealer will suspend the
sale of New Capital Securities pursuant to the Prospectus until the Corporation
and the Trust have amended or supplemented the Prospectus to correct such
misstatement or omission and has furnished copies of the amended or supplemented
Prospectus to the Participating Broker-Dealer or the Corporation or the Trust
has given notice that the sale of the New Capital Securities may be resumed, as
the case may be. If the Corporation or the Trust gives such Notice to suspend
the sale of the New Capital Securities, it shall extend the 90-day period
referred to above during which Participating Broker-Dealers are entitled to use
the Prospectus in connection with the resale of New Capital Securities by the
number of days during the period from and including the date of the giving of
such notice to and including the date when Participating Broker-Dealers shall
have received copies of the supplemented or amended Prospectus necessary to
permit resales of the New Capital Securities or to and
5
<PAGE>
including the date on which the Corporation or the Trust has given notice that
the sale of New Capital Securities may be resumed, as the case may be.
As a result, a Participating Broker-Dealer who intends to use the
Prospectus in connection with re-sales of New Capital Securities received in
exchange for Old Capital Securities pursuant to the Exchange Offer must notify
the Corporation and the Trust, or cause the Corporation and the Trust to be
notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided above or may be
delivered to the Exchange Agent at the address set forth in the Prospectus under
"The Exchange Offer--Exchange Agent."
Holders whose Old Capital Securities are accepted for exchange will not
receive Distributions on such Old Capital Securities and the undersigned waives
the right to receive any Distribution on such Old Capital Securities following
such acceptance. Holders of Old Capital Securities as of the November 15, 1997
record date for the initial Distribution on December 1, 1997, including such
holders who tender their Old Capital Securities pursuant to the Exchange Offer,
will be entitled to receive such Distribution.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
6
<PAGE>
HOLDER(S) SIGN HERE
(See Instructions 2, 5 and 6)
(Please Complete Substitute Form W-9 Below)
(Note: Signature(s) must be guaranteed if required by Instruction 2)
Must be signed by registered holder(s) exactly as name(s) appear(s)
on Certificates(s) for the Old Capital Securities hereby tendered or on
a security position listing, or by any person(s) authorized to become
the registered holder(s) by endorsements and documents transmitted
herewith (including such opinions of counsel, certificates and other
information as may be required by the Corporation, the Trust or the
Exchange Agent to comply with the restrictions on transfer applicable to
the Old Capital Securities). If signature is by an attorney-in-fact,
executor, administrator, trustee, guardian, officer of a corporation or
another acting in a fiduciary capacity or representative capacity,
please set forth the signer's full title. See Instruction 5.
________________________________________________________________________________
________________________________________________________________________________
(Signature(s) of Holder(s))
Date___________________, 1997
Name(s)_________________________________________________________________________
________________________________________________________________________________
(Please Print)
Area Code(s) and Telephone Number_______________________________________________
________________________________________________________________________________
(Tax Identification or Social Security Number(s))
GUARANTEE OF SIGNATURE(S)
(See Instructions 2 and 5)
Authorized Signature ___________________________________________________________
Name ___________________________________________________________________________
(Please Print)
Date___________________, 1997
Capacity or Title_______________________________________________________________
Name of Firm____________________________________________________________________
Address_________________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number__________________________________________________
7
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 5 and 6)
To be completed ONLY if New Capital Securities and/or any Old Capital Securities
that are not tendered are to be issued in the name of someone other than the
registered holder of the Old Capital Securities whose name(s) appear(s) above.
Issue:
/ / New Capital Securities to:
/ / Old Capital Securities not tendered to:
Name____________________________________________________________________________
(Please Print)
Address_________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
________________________________________________________________________________
(Taxpayer Identification or Social Security No.)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5 and 6)
To be completed ONLY if New Capital Securities and/or any Old Capital Securities
that are not tendered are to be sent to someone other than the registered
holder of the Old Capital Securities whose name(s) appear(s) above, or to the
registered holder(s) at an address other than that shown above.
Mail:
/ / New Capital Securities to:
/ / Old Capital Securities not tendered to:
Name____________________________________________________________________________
(Please Print)
Address_________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
________________________________________________________________________________
(Taxpayer Identification or Social Security No.)
8
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed either if (a) tenders
are to be made pursuant to the procedures for tender by book-entry transfer set
forth under "The Exchange Offer--Procedures for Tendering Old Capital
Securities" in the Prospectus and an Agent's Message is not delivered or (b)
Certificates are to be forwarded herewith. Timely confirmation of a book-entry
transfer of such Old Capital Securities into the Exchange Agent's account at
DTC, or Certificates as well as this Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent at its addresses set forth herein on or prior
to the Expiration Date. Tenders by book-entry transfer also may be made by
delivering an Agent's Message in lieu of this Letter of Transmittal. The term
"book-entry confirmation" means a confirmation of book-entry transfer of Old
Capital Securities into the Exchange Agent's account at DTC. The term "Agent's
Message" means a message transmitted by DTC to and received by the Exchange
Agent and forming a part of a book-entry confirmation, which states that DTC has
received an express acknowledgement from the tendering participant, which
acknowledgment states that such participant has received and agrees to be bound
by the Letter of Transmittal (including the representations contained herein)
and that the Trust and the Corporation may enforce the Letter of Transmittal
against such participant. Old Capital Securities may be tendered in whole or in
part in the Liquidation Amount of $100,000 (100 Capital Securities) and integral
multiples of $1,000 in excess thereof, provided that, if any Old Capital
Securities are tended for exchange in part, the untendered Liquidation Amount
thereof must be $100,000 (100 Capital Securities) or any integral multiple of
$1,000 in excess thereof.
Holders who wish to tender their Old Capital Securities and (i) who cannot
complete the procedures for delivery by book-entry transfer on or prior to the
Expiration Date,(ii) who cannot deliver their Old Capital Securities, this
Letter of Transmittal and all other required documents to the Exchange Agent on
or prior to the Expiration Date or (iii) whose Old Capital Securities are not
immediately available, may tender their Old Capital Securities by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth under "The Exchange Offer--Procedures
for Tendering Old Capital Securities" in the Prospectus. Pursuant to such
procedures: (a) such tender must be made by or through an Eligible Institution
(as defined below); (b) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the
Corporation, must be received by the Exchange Agent on or prior to the
Expiration Date; and (c) the Certificates (or a book-entry confirmation (as
defined above and in the Prospectus)) representing all tendered Old Capital
Securities, in proper form for transfer, together with a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent within three New York Stock
Exchange, Inc. trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offer--Procedures for
Tendering Old Capital Securities" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Old Capital
Securities to be properly tendered pursuant to the guaranteed delivery
procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on or
prior to the Expiration Date. As used herein and in the Prospectus, "Eligible
Institution" means a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as "an eligible guarantor institution," including (as such terms
are defined therein) (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
9
<PAGE>
Neither the Corporation nor the Trust will accept any alternative,
conditional or contingent tenders. Each tendering holder, by execution of a
Letter of Transmittal (or facsimile thereof), waives any right to receive any
notice of the acceptance of such tender.
2. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder (which
term, for purposes of this document, shall include any participant in DTC whose
name appears on a security position listing as the owner of the Old Capital
Securities) of Old Capital Securities tendered herewith, unless such holder(s)
has completed either the box entitled "Special Issuance Instructions" or the box
entitled "Special Delivery Instructions" above, or
(ii) such Old Capital Securities are tendered for the account of a firm that
is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal. See Instruction 5.
3. Inadequate Space. If the space provided in the box captioned
"Description of Old Capital Securities" is inadequate, the Certificate number(s)
and/or the Liquidation Amount of Old Capital Securities and any other required
information should be listed on a separate signed schedule which is attached to
this Letter of Transmittal.
4. Partial Tenders and Withdrawal Rights. Tenders of Old Capital
Securities will be accepted only in the principal amount of $100,000 (100
Capital Securities) and integral multiples of $1,000 in excess thereof, provided
that if any Old Capital Securities are tendered for exchange in part, the
untendered principal amount thereof must be $100,000 (100 Capital securities) or
any integral multiple of $1,000 in excess thereof. If less than all the Old
Capital Securities evidenced by any Certificate submitted are to be tendered,
fill in the Liquidation Amount of Old Capital Securities which are to be
tendered in the box entitled "Liquidation Amount of Old Capital Securities
Tendered (if less than all are tendered)." In such case, a new Certificate(s)
for the remainder of the Old Capital Securities that were evidenced by your old
Certificate(s) will be sent to the holder of the Old Capital Securities,
promptly after the Expiration Date, unless the appropriate boxes on this Letter
of Transmittal are completed. All Old Capital Securities represented by
Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written or facsimile
transmission of such notice of withdrawal must be received by the Exchange Agent
at one of its addresses set forth above or in the Prospectus on or prior to the
Expiration Date. Any such notice of withdrawal must specify the name of the
person who tendered the Old Capital Securities to be withdrawn, the aggregate
Liquidation Amount of Old Capital Securities to be withdrawn, and (if
Certificates for Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Certificate
for the Old Capital Securities, if different from that of the person who
tendered such Old Capital Securities. If Certificates for the Old Capital
Securities have been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such Certificates for the Old Capital
Securities, the tendering holder must submit the serial numbers shown on the
particular Certificates for the Old Capital Securities to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Old Capital Securities tendered for the
account of an Eligible Institution. If Old Capital Securities have been
tendered pursuant to the procedures for book-entry transfer set forth under "The
Exchange Offer--Procedures for Tendering Old Capital Securities" in the
Prospectus, the notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawal of Old Capital Securities, in
which case a notice of withdrawal will be effective if delivered to the Exchange
Agent by written or facsimile transmission on or prior to the Expiration Date.
Withdrawals of tenders of Old Capital Securities may not be rescinded. Old
Capital Securities properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described in
the Prospectus under "The Exchange Offer--Procedures for Tendering Old Capital
Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. None of the Corporation, the Trust, any affiliates or
assigns of the Corporation and the Trust, the Exchange Agent nor any other
person shall be under any duty to give any notification of any irregularities in
any
10
<PAGE>
notice of withdrawal or incur any liability for failure to give any such
notification. Any Old Capital Securities which have been tendered but which are
withdrawn will be returned to the holder thereof without cost to such holder
promptly after withdrawal.
5. Signatures on Letter of Transmittal, Assignments and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Old
Capital Securities tendered hereby, the signature(s) must correspond exactly
with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Old Capital Securities tendered hereby are owned of record by
two or more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Old Capital Securities are registered in different name(s)
on several Certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles thereof) as there are
different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Corporation and the Trust, in their sole discretion, of such
persons' authority to so act.
When this Letter of Transmittal is signed by the registered holder(s) of
the Old Capital Securities listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless New Capital
Securities are to be issued in the name of a person other than the registered
holder(s). Signature(s) on such Certificate(s) or bond power(s) must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Old Capital Securities listed, the Certificates must
be endorsed or accompanied by appropriate bond powers, signed exactly as the
name or names of the registered owner(s) appear(s) on the Certificates, and also
must be accompanied by such opinions of counsel, certifications and other
information as the Corporation, the Trust or the Exchange Agent may require in
accordance with the restrictions on transfer applicable to the Old Capital
Securities. Signatures on such Certificates or bond powers must be guaranteed
by an Eligible Institution.
6. Special Issuance and Delivery Instructions. If New Capital Securities
are to be issued in the name of a person other than the signer of this Letter of
Transmittal, or if New Capital Securities are to be sent to someone other than
the signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Old Capital Securities not exchanged will be returned by mail
or, if tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC. See Instruction 4.
7. Irregularities. The Corporation and the Trust will determine, in
their sole discretion, all questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tender of Old Capital Securities, which determination shall be final and binding
on all parties. The Corporation and the Trust reserve the absolute right, in
their sole and absolute discretion, to reject any and all tenders determined by
either of them not to be in proper form or the acceptance of which, or exchange
for, may, in the view of counsel to the Corporation and the Trust, be unlawful.
The Corporation and the Trust also reserve the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer set forth
in the Prospectus under "The Exchange Offer--Certain Conditions to the Exchange
Offer" or any conditions or irregularity in any tender of Old Capital Securities
of any particular holder whether or not similar conditions or irregularities are
waived in the case of other holders. The Corporation's and the Trust's
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the instructions hereto) will be final and binding.
No tender of Old Capital Securities will be deemed to have been validly made
until all irregularities with respect to such tender have been cured or waived.
None of the Corporation, the Trust, any affiliates or assigns of the
Corporation, the Trust, the Exchange Agent, or any other person shall be under
any duty to give notification of any irregularities in tenders or incur any
liability for failure to give such notification.
11
<PAGE>
8. Questions, Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, this Letter of Transmittal and the Notice
of Guaranteed Delivery may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. 31% Backup Withholding; Substitute Form W-9. Under U.S. Federal
income tax law, a holder whose tendered Old Capital Securities are accepted for
exchange is required to provide the Exchange Agent with such holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 below. If the
Exchange Agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the holder or other payee to a $50 penalty. In
addition, payments to such holders or other payees with respect to Old Capital
Securities exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form W-9.
If the holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60 day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with its TIN within such 60 day period,
amounts withheld will be remitted to the IRS as backup withholding. In
addition, 31% of all payments made thereafter will be withheld and remitted to
the IRS until a correct TIN is provided.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Old Capital Securities or of the last transferee appearing on the transfers
attached to, or endorsed on, the Old Capital Securities. If the Old Capital
Securities are registered in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that holder's exempt status.
Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax. Rather,
the U.S. Federal income tax liability of a person subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
10. Lost, Destroyed or Stolen Certificates. If any Certificate(s)
representing Old Capital Securities have been lost, destroyed or stolen, the
holder should promptly notify the Exchange Agent. The holder will then be
instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificate(s) have been followed.
11. Security Transfer Taxes. Holders who tender their Old Capital
Securities for exchange will not be obligated to pay any transfer taxes in
connection therewith. If, however, New Capital Securities are to be delivered
to, or are to be issued in the name of, any person other than the registered
holder of the Old Capital Securities tendered, or if a transfer tax is imposed
for any reason other than the exchange of Old Capital Securities in connection
with the Exchange Offer, then the amount of any such transfer tax (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or
exemption
12
<PAGE>
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
Important: This Letter of Transmittal (or facsimile thereof) and all other
required documents must be received by the Exchange Agent on or prior to the
Expiration Date.
13
<PAGE>
TO BE COMPLETED BY ALL
TENDERING SECURITYHOLDERS
(See Instruction 9)
PAYER'S NAME: THE BANK OF NEW YORK
SUBSTITUTE Part 1 - PLEASE TIN________________
Form W-9 PROVIDE YOUR TIN IN Social Security
THE BOX AT RIGHT AND Number or
CERTIFY BY SIGNING Employer
AND DATING BELOW Identification
Number
Department of the Treasury Part 2
Internal Revenue Service Awaiting TIN / /
CERTIFICATION - UNDER THE PENALTIES OF
PERJURY, I CERTIFY THAT (1) the number
shown on this form is my correct taxpayer
identification number (or I am waiting for
a number to be issued to me), (2) I am not
subject to backup withholding either
because (i) I am exempt from backup
withholding, (ii) I have not been notified
by the Internal Revenue Service ("IRS")
that I am subject to backup withholding as
a result of a failure to report all
interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to
backup withholding, and (3) any other
information provided on this form is true
and correct.
Payer's Request for
Taxpayer Identification
Number (TIN) Signature___________________________________
and Certification Date________________________________________
You must cross out item (iii) in Part (2)
above if you have been notified by the IRS
that you are subject to backup withholding
because of underreporting interest or
dividends on your tax return and you have
not been notified by the IRS that you are
no longer subject to backup withholding.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU
PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL DETAILS.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered
an application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all payments made to me on account of the New Capital
Securities shall be retained until I provide a taxpayer identification number
to the Exchange Agent and that, if I do not provide my taxpayer
identification number within 60 days, such retained amounts shall be remitted
to the Internal Revenue Service as backup withholding and 31% of all
reportable payments made to me thereafter will be withheld and remitted to
the Internal Revenue Service until I provide a taxpayer identification number.
Signature_________________________________ Date______________________________
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<PAGE>
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
10.50% Series A Capital Securities
(Liquidation Amount $1,000 per Capital Security)
OF
PROGRESS CAPITAL TRUST I
Unconditionally Guaranteed By Progress Financial Corporation
This Notice of Guaranteed Delivery, or one substantially equivalent to
this form, must be used to accept the Exchange Offer (as defined below) if
(i) the procedures for delivery by book-entry transfer cannot be completed on
or prior to the Expiration Date (as defined in the Prospectus referred to
below), (ii) certificates for the Trust's (as defined below) 10.50% Series A
Capital Securities (the "Old Capital Securities") are not immediately
available or (iii) Old Capital Securities, the Letter of Transmittal and all
other required documents cannot be delivered to The Bank of New York (the
"Exchange Agent") on or prior to the Expiration Date. This Notice of
Guaranteed Delivery may be delivered by hand, overnight courier or mail, or
transmitted by facsimile transmission, to the Exchange Agent. See "The
Exchange Offer--Procedures for Tendering Old Capital Securities" in the
Prospectus.
The Exchange Agent for the Exchange Offer is:
The Bank of New York
By Registered of Certified Mail: By Hand or Overnight Delivery:
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attention: Reorganization Department Ground Level
Odell Romeo New York, New York 10286
Attention: Reorganization Department
Odell Romeo
Confirm by Telephone
or for Information call:
(212) 815-6337
Facsimile Transmissions:
(Eligible Institutions Only)
(212) 815-6339
Delivery of this Notice of Guaranteed Delivery to an address other than
as set forth above or transmission of this Notice of Guaranteed Delivery via
a facsimile to a number other than as set forth above will not constitute a
valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to Progress Capital Trust I, a trust
created under the laws of Delaware (the "Trust"), upon the terms and subject
to the conditions set forth in the Prospectus dated October __, 1997 (as the
same may be amended or supplemented from time to time, the "Prospectus"), and
the related Letter of Transmittal (which together constitute the "Exchange
Offer"), receipt of which is hereby acknowledged, the aggregate liquidation
amount of Old Capital Securities set forth below pursuant to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The
Exchange Offer--Procedures for Tendering Old Capital Securities."
Aggregate Liquidation Amount Name(s) of Registered Holder(s):
Tendered:
------------------------- ------------------------------
Certificate No(s). (if available): Address(es):
- ---------------------------------- ------------------------------
------------------------------
If Old Capital Securities will be Area Code and Telephone Number(s):
tendered by book-entry transfer,
provide the following information: ------------------------------
DTC Account Number:
--------------- ------------------------------
Date: Signature(s):
----------------------------- -----------------
------------------------------
------------------------------
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein):(i) bank;(ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker, government securities dealer; (iii)a credit
union; (iv)a national securities exchange, registered securities association
or clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association recognized program (each of the foregoing
being referred to as an "Eligible Institution"), hereby guarantees to deliver
to the Exchange Agent, at one of its addresses set forth above, either the
Old Capital Securities tendered hereby in proper form for transfer, or
confirmation of the book-entry transfer of such Old Capital Securities to the
Exchange Agent's account at The Depository Trust Company ("DTC"), pursuant to
the procedures for book-entry transfer set forth in the Prospectus, in either
case together with one or more properly completed and duly executed Letter(s)
of Transmittal (or facsimile thereof) and any other required documents within
three business days after the date of execution of this Notice of Guaranteed
Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Old Capital Securities tendered hereby to the Exchange
Agent within the time period set forth above and that failure to do so could
result in a financial loss to the undersigned.
Name of Firm:
--------------------- ------------------------------
Address: (Authorized Signature)
--------------------------
Title:
- ---------------------------------- ------------------------
(Zip Code)
Name:
------------------------
Area Code and (Please type or print)
Telephone Number:
----------------- Date:
-------------------------
NOTE: DO NOT SEND OLD CAPITAL SECURITIES WITH THIS NOTICE OF GUARANTEED
DELIVERY. ACTUAL SURRENDER OF OLD CAPITAL SECURITIES MUST BE MADE PURSUANT
TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
