<PAGE>
As filed with the Securities and Exchange Commission on November 5, 1999
Registration No. 333-
333- 01
==============
=====================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form S-3
Registration Statement under the Securities Act of 1933
-----------------------
<TABLE>
<S> <C>
SANDY SPRING BANCORP, INC. SANDY SPRING CAPITAL TRUST I
(Exact name of Registrant as specified in its charter) (Exact name of Registrant as specified
in its trust agreement)
MARYLAND
(State or other jurisdiction of DELAWARE
incorporation or organization) (State or other jurisdiction of
_________ incorporation or organization)
_____________
6022
(Primary Standard Industrial 6719
Classification Code Number) (Primary Standard Industrial
Classification Code Number)
52-1532952
(I.R.S. Employer Applied for
Identification No.) (I.R.S. Employer
Identification No.)
</TABLE>
________________________
17801 Georgia Avenue
Olney, Maryland
(301) 774-6400
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
________________________
Hunter R. Hollar
President and Chief Executive Officer
Sandy Spring Bancorp, Inc.
17801 Georgia Avenue
Olney, Maryland
(Name, address, including zip code, and telephone number, including area code,
of agents for service)
________________________
Copies to:
<TABLE>
<S> <C>
James I. Lundy, III, Esquire Norman B. Antin, Esquire
Noel M. Gruber. Esquire Jeffrey D. Haas, Esquire
Kennedy, Baris & Lundy, L.L.P. Elias, Matz, Tiernan & Herrick L.L.P.
Suite P-15 734 15th Street, N.W.
4701 Sangamore Road Washington, D.C. 20005
Bethesda, Maryland 20816
</TABLE>
________________________
Approximate Date of Commencement of Proposed Sale to the Public:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462 under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ] __________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
Title of Each Class of Securities Amount Proposed Maximum Proposed Maximum Amount of
to be Registered to be Offering Price Aggregate Registration
Registered Per Unit(1) Offering Price(1) Fee(2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Preferred Securities of Sandy
Spring Capital Trust I................. $35,000,000 100% $35,000,000 $9,730
- ---------------------------------------------------------------------------------------------------------------------------------
Junior Subordinated Deferrable Interest
Debentures of Sandy Spring Bancorp, $35,000,000 100% $35,000,000 N/A
Inc.(2)
- ---------------------------------------------------------------------------------------------------------------------------------
Sandy Spring Bancorp, Inc. Guarantee
with respect to the Trust Preferred N/A N/A N/A N/A
Securities(3)
--------------------------------------------------------------------------------------------------------------------------------
Total.............................. $35,000,000(4) 100% $35,000,000(4) $9,730
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) No separate consideration will be received for the Junior Subordinated
Deferrable Interest Debentures of Sandy Spring Bancorp, Inc. (the "Junior
Subordinated Debentures") distributed upon any liquidation of Sandy Spring
Capital Trust I.
(3) No separate consideration will be received for the Sandy Spring Bancorp,
Inc. Guarantee.
(4) Such amount represents the liquidation amount of the Sandy Spring Capital
Trust I Trust Preferred Securities and the principal amount of Junior
Subordinated Debentures that may be distributed to holders of such Trust
Preferred Securities upon any liquidation of Sandy Spring 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.
================================================================================
<PAGE>
Subject to completion, dated November 5, 1999
1,400,000 Trust Preferred Securities
SANDY SPRING CAPITAL TRUST I
% Cumulative Trust Preferred Securities
(Liquidation Amount $25 per Trust Preferred Security)
[LOGO]
Fully and Unconditionally Guaranteed by
Sandy Spring Bancorp, Inc.
Sandy Spring Bancorp: We are a bank holding company that offers,
through our subsidiary Sandy Spring National Bank of Maryland, a broad range of
commercial and retail banking and trust services to our customers from offices
in Montgomery, Howard, Anne Arundel and Prince George's counties in Maryland and
Tyson's Corner, Virginia.
Sandy Spring Capital Trust I is a subsidiary of Sandy Spring Bancorp
and a statutory business trust created under Delaware law.
The Offering: In this offering, the Trust will sell Trust Preferred
Securities to the public and Common Securities to us; use the proceeds from
these sales to buy an equal principal amount of ___% Junior Subordinated
Debentures due ___________, 2029 issued by us, and distribute the future
payments it receives on the Junior Subordinated Debentures to the holders of the
Trust Preferred Securities and Common Securities.
. The Trust Preferred Security will pay you cumulative cash distributions at
an annual rate of % on March 31, June 30, September 30 and December 31 of
each year, beginning , 1999. Distribution payments to you may be deferred
for up to 20 consecutive calendar quarters.
. The Trust Preferred Securities mature on , 2029.
. The Trust may redeem the Trust Preferred Securities, at a redemption price
of $25 per Trust Preferred Security, plus accrued and unpaid
distributions, on or after , 2004 and under other circumstances.
. A brief description of the Trust Preferred Securities can be found under
the heading "Summary" in this prospectus.
. We intend to apply for listing of the Trust Preferred Securities on the
Nasdaq National Market under the symbol "SASRP."
-------------------------
There are certain risks you should consider before investing in the
Trust Preferred Securities. See "Risk Factors" beginning on page __.
------------------------
<TABLE>
<CAPTION>
Per Security Total
------------ -----
<S> <C> <C>
Public Offering Price................................................... $25.00 $35,000,000
Proceeds to the Trust................................................... $25.00 $35,000,000
</TABLE>
Because the proceeds of the sale of the Trust Preferred Securities
will be invested in the Junior Subordinated Debentures, we, as issuer of
the Junior Subordinated Debentures, will pay the underwriters $ per
Trust Preferred Security (or $ in the aggregate) as compensation.
Neither the Securities and Exchange Commission nor any state
securities commission has approved of anyone's investment in these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
These securities are not savings accounts, deposits or obligations of
any bank and are not insured by the Federal Deposit Insurance Corporation
or any other governmental agency.
The Trust Preferred Securities will be ready for delivery in book-
entry form through The Depository Trust Company on or about , 1999.
-------------------------
Legg Mason Wood Walker
Incorporated
Wheat First Securities
Ferris, Baker Watts
Incorporated
The date of this prospectus is , 1999
<PAGE>
[map]
We have not, and the underwriters have not, authorized any other person to
provide you with information other than as provided in this prospectus. This
prospectus is not an offer to sell, nor is it seeking an offer to buy, these
Trust Preferred Securities in any state where the offer or sale is not
permitted. The information in this prospectus is complete and accurate as of
the date on the front cover, but the information may have changed since that
date.
<PAGE>
TABLE OF CONTENTS
Page
----
Summary............................................................ 1
Selected Consolidated Financial and Other Data..................... 7
Risk Factors....................................................... 8
Caution About Forward Looking Statements........................... 12
Ratios of Earnings to Fixed Charges................................ 13
Use of Proceeds.................................................... 15
Capitalization..................................................... 16
Management......................................................... 14
Sandy Spring Capital Trust I....................................... 16
Description of Trust Preferred Securities.......................... 17
Description of Junior Subordinated Debentures...................... 29
Description of Guarantee........................................... 39
Book-Entry Issuance................................................ 41
Relationship among the Trust Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee...................................... 43
Certain Federal Income Tax Consequences............................ 44
ERISA Considerations............................................... 45
Underwriting....................................................... 48
Legal Matters...................................................... 49
Experts............................................................ 49
Where You Can Find More Information................................ 49
-------------------------
<PAGE>
SUMMARY
The items in the following summary are described in more detail later in
this prospectus. This summary provides an overview of selected information and
does not contain all the information you should consider. You also should read
the more detailed information set out in this prospectus or incorporated in the
prospectus by reference. See "Where You Can Find More Information" (page ).
In this prospectus, "we," "our," and " us," refer to Sandy Spring Bancorp, Inc.
Sandy Spring Bancorp
We are the holding company for Sandy Spring National Bank of Maryland.
Founded in 1868, we are the oldest banking business native to Montgomery County,
Maryland, and the fifth largest commercial banking organization headquartered in
Maryland. At September 30, 1999, we had consolidated assets of $1.5 billion,
deposits of $1.2 billion, and stockholders' equity of $110.0 million. Our common
stock trades on the Nasdaq Stock Market's National Market under the symbol
"SASR."
We offer a broad range of commercial and retail banking and trust services
through:
. Sandy Spring National Bank's network of 30 community banking offices in
Montgomery, Howard, Anne Arundel, and Prince George's counties in Maryland
and in Tyson's Corner, Virginia;
. The bank's subsidiaries, Sandy Spring Mortgage Corporation and Sandy
Spring Insurance Corporation; and
. Our web-based internet banking services for commercial, consumer, and
trust services, first offered in 1997.
Our assets and loans have increased at a compound annual growth rate of 13%
since January 1, 1994. Our earnings increased at a compound annual growth rate
of 16% from 1994 through 1998. Earnings for the first nine months of 1999
increased by 11% compared to the same period in 1998. In general, our increased
earnings resulted from:
. Interest revenue growth from increased loans and investment securities;
. Growth in fees and other noninterest revenues, reflecting management's
continued focus on this area;
. Improvements in operating efficiency; and
. Sustained asset quality.
See "Selected Consolidated Financial and Other Data" (page ).
We have increased our assets through internal growth and acquisitions. On
September 26, 1999 we completed the acquisition of seven branches from another
financial institution, along with approximately $216 million in deposits and a
$34 million portfolio of consumer and commercial loans. In the past five years,
we also have acquired a branch in Bethesda, Maryland and an $80 million asset
bank headquartered in Annapolis, Maryland. We also expect to open a new
community banking office in Edgewater in Anne Arundel County during the first
quarter of 2000. We routinely explore opportunities for expansion of our core
banking business and related activities.
We are a community banking organization that focuses our lending and other
services on businesses and consumers in our local market area. At September 30,
1999:
. Commercial and commercial real estate loans accounted for 47% of our loan
portfolio;
. Residential mortgages were 31% of the portfolio; and
. Consumer loans were 22% of the portfolio.
Historically, we have experienced low levels of loan losses. Our annualized
ratio of net loan charge offs to average loans was 0.03% for the first nine
months of 1999 and 0.04% for the year 1998. Our ratio of nonperforming assets to
total assets was 0.29% at September 30, 1999, compared to 0.13% at December 31,
1998, and 0.31% at September 30, 1998.
Our management team is made up of experienced community bankers. On average,
our executive management team has 17 years of banking experience. See
"Management" (page ).
Our principal office is located at 17801 Georgia Avenue, Olney, Maryland, and
our telephone number is (301) 774-6400.
1
<PAGE>
Sandy Spring Capital Trust I
Sandy Spring Capital Trust I (the "Trust") is a statutory business trust that
we formed under the Delaware Business Trust Act. The Trust is selling 1,400,000
Trust Preferred Securities in this offering. The Trust also will issue common
trust securities ("Common Securities") to us. (The Trust Preferred Securities
and the Common Securities are referred to in this prospectus as the "Trust
Securities.")
The Trust exists only to issue Trust Securities for cash, to invest the
proceeds in an equivalent amount of % Junior Subordinated Deferrable Interest
Debentures due , 2029 (the "Junior Subordinated Debentures") issued by us, and
to engage in other activities that are necessary or incidental to the issuance
of the Trust Securities and the investment in Junior Subordinated Debentures.
The Trust does not have separate financial statements. We do not believe that
the statements would be significant to you because the Trust is our direct,
wholly owned subsidiary, has no independent operations, and exists solely for
the reasons summarized above. We will pay all of the expenses of operating the
Trust.
The Trust's principal office is located at 17801 Georgia Avenue, Olney,
Maryland, and its telephone number is (301) 774-6400.
2
<PAGE>
The Offering
Issuer of the Trust Preferred
Securities.................... Sandy Spring Capital Trust I, a Delaware
statutory business trust.
Securities offered............ 1,400,000 % Trust Preferred Securities,
liquidation amount $25 per security. The Trust
Preferred Securities represent preferred
undivided beneficial interests in the Trust's
assets, which will consist solely of the Junior
Subordinated Debentures and payments under the
Junior Subordinated Debentures.
The Trust will sell the Trust Preferred
Securities to the public and the Common
Securities to us. The Trust will use the
proceeds from the sale of the Trust Securities to
buy the Junior Subordinated Debentures from us.
Distributions................. The Trust Preferred Securities will pay
cumulative cash distributions at a ___% annual
rate. Distributions will accumulate from the date
the Trust issues the Trust Preferred Securities,
and will be paid quarterly in arrears on March
31, June 30, September 30 and December 31 of each
year, beginning on December 31, 1999.
Distributions on the Trust Preferred Securities
may be deferred, as described below. The initial
cash distribution payable on , 1999
will equal $ for each Trust Preferred
Security. Subsequent cash distributions will
equal $ for each Trust Preferred
Security.
The record date for distributions on the Trust
Preferred Securities will be one business day
prior to the relevant distribution date for so
long as the Trust Preferred Securities remain in
book-entry form (if not in book-entry form, the
record date will be the fifteenth day of the
month in which the distributions are made).
Maturity...................... The Junior Subordinated Debentures will
mature on , 2029. The Trust must redeem
the Trust Preferred Securities when the Junior
Subordinated Debentures are paid on the maturity
date. The Trust Preferred Securities will be
redeemed at the same redemption price as the
Junior Subordinated Debentures.
Redemption.................... We may redeem all or a part of the Junior
Subordinated Debentures on or after
, 2004 at a redemption price of $25 per Junior
Subordinated Debenture, plus accrued and unpaid
distributions.
In addition, we may redeem all of the Junior
Subordinated Debentures at our option:
. if certain tax events occur;
. if there is a change in the Investment Company
Act of 1940 that requires the Trust to register
under that law; or
3
<PAGE>
. if there is a change in, among other things, the
regulatory capital adequacy guidelines that
apply to us.
These circumstances are collectively referred to
as "Special Events."
We will not redeem the Junior Subordinated
Debentures before they mature without approval by
the regulatory agencies that supervise us if such
approval is then required.
The Trust will use the cash proceeds of any
redemption of the Junior Subordinated Debentures
the liquidation amount for an equal amount of
Trust Preferred Securities. The liquidation
amount you will receive will be equal to the
redemption price described above.
Deferral of distributions.... The Trust relies solely on payments made by us on
the Junior Subordinated Debentures to pay
distributions on the Trust Preferred Securities.
If no event of default under the Junior
Subordinated Debentures is continuing, we have the
right, at one or more times, to defer interest
payments on the Junior Subordinated Debentures for
up to 20 consecutive calendar quarters, but not
beyond the maturity date of the Junior
Subordinated Debentures. If we defer interest
payments on the Junior Subordinated Debentures:
. the Trust will also defer distributions on the
Trust Preferred Securities;
. your distributions will continue to accrue at an
annual rate of ___% of the liquidation amount of
$25 per Trust Preferred Security; and
. you will accumulate additional distributions at
the same rate, compounded quarterly, on any
unpaid distributions (to the extent permitted by
law).
When a deferral period ends, we will be required
to pay to the Trust all accumulated and unpaid
interest due on the Junior Subordinated Debentures
and, when the Trust receives this payment, it will
be required to pay all accumulated and unpaid
distributions on the Trust Securities.
If we defer payments of interest on the Junior
Subordinated Debentures, the Trust Preferred
Securities will be treated as having been issued
with original issue discount for United States
federal income tax purposes. This means that you
will still be required to include income in your
gross income for United States federal income tax
purposes before you receive any corresponding cash
distribution, even if you are a cash basis
taxpayer.
We have agreed to certain restrictions if we
exercise our right to defer interest payments.
During any period in which we defer interest
payments on the Junior Subordinated Debentures, we
will not be permitted to (with limited exceptions
described under "Description of Junior
Subordinated Debentures--Option to Extend Interest
Payment Date"):
4
<PAGE>
. declare or pay dividends or make other
distributions on, redeem, purchase or acquire,
or make liquidation payments with respect to,
our capital stock;
. pay interest, principal or premium on, or repay,
repurchase or redeem any of our debt securities
that rank equal with or junior to the Junior
Subordinated Debentures, or make guarantee
payments with respect to any of these
securities.
Guarantee.................... We will fully and unconditionally guarantee the
Trust Preferred Securities based on:
. our obligations to make payments on the Junior
Subordinated Debentures;
. our obligations under a guarantee executed for
your benefit (the "Guarantee"); and
. our obligations under the Trust Agreement, which
sets forth the terms of the Trust Securities.
Instead, you or the property trustee may enforce
the Trust's rights under the Junior Subordinated
Debentures directly against us. If we do not make
payments on the Junior Subordinated Debentures,
the Trust will not have sufficient funds to make
payments on the Trust Preferred Securities. The
Guarantee does not cover payments when the Trust
does not have sufficient funds.
Distribution of the Junior
Subordinated Debentures...... We may dissolve the Trust at any time and
distribute the Junior Subordinated Debentures to
you, subject to any required approval by the
regulatory agencies that supervise us. If the
Junior Subordinated Debentures are distributed, we
will use our best efforts to list them on a
national securities exchange or comparable
automated quotation system.
Ranking...................... Our obligations under the Junior Subordinated
Debentures are unsecured and will rank junior in
priority of payment to our current, and any
future, senior and subordinated indebtedness and
will be effectively subordinated to all existing
and future liabilities and obligations of our
subsidiaries, including Sandy Spring National
Bank. As of September 30, 1999, we had no senior
or subordinated indebtedness outstanding and our
subsidiaries had total liabilities (excluding
liabilities owed to us) of $1.4 billion. Our
obligations under the Junior Subordinated
Debentures will rank at least equal to other
junior subordinated debentures issued or to be
issued by us to similar trusts.
Our obligations under the Guarantee are unsecured
and will rank in priority of payment:
. junior to all of our indebtedness, except for
those liabilities made equal or subordinate to
the Junior Subordinated Debentures by their
terms;
5
<PAGE>
. at least equal to all other guarantees issued or
to be issued by us with respect to other similar
trust preferred securities; and
. senior to our capital stock.
Limited voting rights........ Except in limited circumstances, you will have no
voting rights as a holder of the Trust Preferred
Securities.
Listing...................... We intend to apply for listing of the Trust
Preferred Securities on the Nasdaq National Market
under the symbol "SASRP."
Book-entry................... The Trust Preferred Securities will be represented
by a global security that will be deposited with
and registered in the name of The Depository Trust
Company, New York, New York or its nominee. This
means that you will not receive a certificate for
your Trust Preferred Securities.
Use of proceeds.............. The Trust plans to use the proceeds from the sale
of the Trust Securities to purchase the Junior
Subordinated Debentures from us. We intend to use
the net proceeds from the sale of the Junior
Subordinated Debentures for general corporate
purposes, including capital contributions to Sandy
Spring National Bank to increase its capital to
levels maintained before our recent branch
acquisition, and for working capital. Initially,
we may use the net proceeds to make short-term
investments.
6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The following selected historical financial and other data should be
read in connection with the historical financial information and with the
other financial information incorporated by reference in this prospectus. See
"Where You Can Find More Information" (page ). The financial information for the
interim periods ended September 30, 1999 and 1998 has not been audited, and, in
the opinion of management, reflects all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of that data. The
results of operations for the nine months do not necessarily indicate the
results for the full year.
<TABLE>
<CAPTION>
At and for the
nine months ended
September 30, At and for the years ended December 31,
----------------- ------------------------------------------------------
1999 1998 1998 1997 1996 (1) 1995 (1) 1994 (1)
---- ---- ---- ---- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Results of Operations:
Interest income $ 67,892 $ 62,391 $ 84,272 $ 75,565 $ 66,621 $ 62,115 $ 51,578
Interest expense 29,743 28,556 38,749 34,486 30,233 29,342 21,496
------ ------ ------ ------ ------ ------ ------
Net interest income 38,149 33,835 45,523 41,079 36,388 32,773 30,082
Provision for credit losses 741 542 552 986 308 180 212
------ ------ ------ ------ ------ ------ ------
Net interest income after provision
for credit losses 37,408 33,293 44,971 40,093 36,080 32,593 29,870
Noninterest income 9,009 8,852 12,123 9,132 6,547 4,478 4,189
Noninterest expenses 27,984 25,079 34,053 29,442 25,344 22,424 21,462
------ ------ ------ ------ ------ ------ ------
Income before taxes 18,433 17,066 23,041 19,783 17,283 14,647 12,597
Income taxes 5,061 5,042 6,936 6,588 5,789 4,653 3,694
Net income $ 13,372 $ 12,024 $ 16,105 $ 13,195 $ 11,494 $ 9,994 $ 8,903
======== ======== ======== ======== ======== ======= =======
Per Share Data:
Basic net income per share $ 1.39 $ 1.25 $ 1.67 $ 1.35 $ 1.18 $ 1.05 $ 0.95
Diluted net income per share 1.39 1.24 1.66 1.34 1.18 1.04 0.94
Dividends declared per share 0.56 0.45 0.63 0.47 0.39 0.32 0.27
Book value per share at period end 11.43 11.50 11.57 10.77 9.85 9.02 7.86
Financial Condition (at period end):
Assets $1,547,014 $1,241,848 $1,343,471 $1,121,333 $ 978,595 $ 876,203 $ 830,834
Loans (2) 774,326 610,286 624,412 558,893 523,166 492,540 457,052
Securities 635,295 520,603 595,099 453,249 356,695 285,839 304,704
Deposits 1,167,172 913,928 954,571 853,011 806,341 743,592 700,340
Borrowings 259,146 212,126 271,392 159,018 72,947 39,955 53,423
Stockholders' equity 109,992 110,611 110,937 104,675 96,581 86,941 73,766
Selected Ratios (for the period):
Return on average assets (3) 1.34% 1.38% 1.36% 1.28% 1.27% 1.18% 1.14%
Return on average equity (3) 16.22 15.14 15.02 13.25 12.81 12.37 12.24
Net interest margin (3) 4.39 4.54 4.40 4.42 4.45 4.32 4.31
Efficiency ratio (4) 55.17 54.54 55.21 56.82 55.27 56.96 59.11
Dividend payout ratio 40.29 36.29 37.95 35.07 33.05 30.77 28.72
Credit Quality Ratios:
Allowance for credit losses to loans 1.03% 1.22% 1.18% 1.26% 1.22% 1.34% 1.46%
Allowance for credit losses to
nonperforming loans 186 208 408 263 137 735 382
Nonperforming loans to total loans (5) 0.55 0.59 0.29 0.48 0.89 0.18 0.38
Nonperforming assets to total assets (6) 0.28 0.31 0.13 0.26 0.48 0.11 0.24
Net charge-offs to average loans (3) 0.03 0.03 0.04 0.07 0.10 0.05 0.06
Capital Ratios:
Average equity to average assets 8.02% 8.85% 9.02% 9.65% 9.90% 9.57% 9.28%
Total capital to risk-weighted assets 12.13 16.01 15.67 17.07 17.56 17.67
Tier I capital to risk-weighted assets 11.20 14.97 14.58 15.97 16.44 16.42
Leverage ratio 7.33 8.73 8.50 9.46 10.38 10.09
Ratio of Earnings to Fixed Charges: (7)
Including interest on deposits 1.61X 1.59X 1.59X 1.57X 1.57X 1.50X 1.58X
Excluding interest on deposits 2.89 3.39 3.31 4.23 7.59 6.12 8.48
</TABLE>
(1) Data for 1994, 1995 and 1996 other than dividends per share have been
retroactively adjusted to reflect the acquisition of Annapolis Bancshares,
Inc. on August 29, 1996, which was accounted for as a pooling of interests
transaction. Capital ratios for 1994 are not available.
(2) Loans are shown net of unearned income but before deduction of the allowance
for credit losses.
(3) The ratios for the nine-month periods have been annualized.
(4) The efficiency ratio is calculated by dividing operating expenses by the sum
of tax-equivalent net interest income and non interest income. The
calculation excludes significant non-operating income and expense, including
Y2K compliance cost, merger related expense, amortization of intangibles,
and gains and losses on sales of loans and securities.
(5) Nonperforming loans consist of non-accrual loans, loans that are
contractually past due by 90 days or more, and loans with restructured
terms.
(6) Nonperforming assets consist of nonperforming loans and other real estate
owned, net of reserves.
(7) See "Ratios of Earnings to Fixed Charges." (page ).
7
<PAGE>
RISK FACTORS
You should carefully read the following risk factors before you decide to
buy any Trust Preferred Securities. You should also consider the other
information in this prospectus and the documents that are incorporated by
reference.
Risks Related to an Investment in the Trust Preferred Securities
Payments on the Trust Preferred Securities are entirely dependent on our making
payments on the Junior Subordinated Debentures. We will make payments under the
Guarantee only if the Trust has cash available.
The Trust's ability to pay distributions (including the $25 per Trust
Preferred Security liquidation distribution) is entirely dependent on our making
the related payments on the Junior Subordinated Debentures when due. If we do
not make payments on the Junior Subordinated Debentures, the Trust will not have
sufficient funds to pay distributions or the $25 per Trust Preferred Security
liquidation amount. Because the Guarantee does not cover payments when the Trust
does not have sufficient funds, you will not be able to rely upon the Guarantee
for payment of these amounts. Instead, you may directly sue us or seek other
remedies to collect your pro rata share of payments owed or rely on the property
trustee to enforce the Trust's rights under the Junior Subordinated Debentures
directly against us.
The Trust's ability to make payments on the Trust Preferred Securities depends
on our ability to make payments on the Junior Subordinated Debentures.
The Junior Subordinated Debentures and the Guarantee will be our
obligations only. The Trust will be unable to make payments to you if we do not
receive sufficient funds from our subsidiaries to allow us to pay interest on or
principal of the Junior Subordinated Debentures.
We are a bank holding company regulated by the Board of Governors of the
Federal Reserve System and substantially all of our assets are held by our
subsidiaries. Our ability to make payments on the Junior Subordinated Debentures
depends primarily on the results of operations of our subsidiaries and their
ability to provide funds to us. Our subsidiaries are separate and distinct legal
entities and have no obligations to pay any amounts due under the Junior
Subordinated Debentures or to make funds available, whether by dividend, loan or
otherwise, for such purpose. In addition, there are various legal limitations on
the extent to which certain of our subsidiaries may extend credit, pay dividends
or otherwise supply funds to, or engage in transactions with, us or some of our
subsidiaries.
Our right to participate in any distribution of the assets of any
subsidiary, including the bank, upon a subsidiary's liquidation or
reorganization or otherwise, is subject to the prior claims of creditors of that
subsidiary, except to the extent that we may be recognized as a creditor of that
subsidiary. As a result, the Junior Subordinated Debentures and the Guarantee
will be effectively subordinated to all existing and future liabilities of our
subsidiaries. As of September 30, 1999, our subsidiaries had total liabilities
(excluding liabilities owed to us) of $1.4 billion. Holders of the Junior
Subordinated Debentures and beneficiaries of the Guarantee should look only to
our assets for payments on the Junior Subordinated Debentures or under the
Guarantee, as the case may be. There is no limit under the Trust Preferred
Securities, the Junior Subordinated Debentures or the Guarantee as to our
ability or our subsidiaries' ability to incur additional indebtedness.
Our obligations under the Guarantee and the Junior Subordinated Debentures will
be subordinated in right of payment to our current and future senior and
subordinated indebtedness.
Our obligations under the Guarantee are unsecured and will rank in priority
of payment:
. junior to all of our indebtedness, except for those liabilities made
equal or subordinate to the Guarantee by their terms;
. equal to all other guarantees issued or to be issued by us with
respect to other similar trust preferred securities; and
. senior to our capital stock.
This means that we cannot make any payments on the Guarantee if we default
on a payment of any of our other liabilities, except those liabilities, which,
by their terms, rank equal with or subordinate to the Guarantee. In the event of
our bankruptcy, liquidation or dissolution, our assets would be available to pay
obligations under the Guarantee only after all payments have been made on our
other liabilities, except those liabilities, which, by their terms, rank equal
with or subordinate to the Guarantee.
Our obligations under the Junior Subordinated Debentures are unsecured and
will rank junior in priority of payment to our current and future senior and
subordinated indebtedness, and will be effectively subordinated to all existing
and future liabilities and obligations of our subsidiaries, including the bank.
This means that we cannot make any payments of principal (including redemption
payments) or interest on the Junior Subordinated Debentures if we default on a
payment on any of our senior indebtedness or subordinated indebtedness. In the
event of our bankruptcy,
8
<PAGE>
liquidation or distribution, our assets would be available to pay obligations
under the Junior Subordinated Debentures only after all payments have been made
on our senior indebtedness and our subordinated indebtedness. There is no limit
under the Trust Preferred Securities, the Junior Subordinated Debentures or the
Guarantee on our ability to incur additional indebtedness, including
indebtedness that ranks senior in priority of payment to the Junior Subordinated
Debentures and the Guarantee.
If we defer interest payments there will be adverse tax consequences for you and
this may affect the trading price for the Trust Preferred Securities.
At any time that there is no event of default under the Junior Subordinated
Debentures, we have the right to defer interest payments one or more times on
the Junior Subordinated Debentures for up to 20 consecutive calendar quarters,
but not beyond the maturity date of the Junior Subordinated Debentures.
If we defer interest payments on the Junior Subordinated Debentures, the Trust
will also defer distributions on the Trust Preferred Securities. During a
deferral period, you will be required to accrue income (in the form of original
issue discount) for United States federal income tax purposes in an amount equal
to the interest that accrues on your pro-rata share of the Junior Subordinated
Debentures held by the Trust. As a result, you must include the accrued but
unpaid income in your gross income for United States federal income tax purposes
before you receive cash, even if you are a cash basis taxpayer. You will not
receive the cash related to any accrued and unpaid interest from the Trust if
you sell the Trust Preferred Securities before the end of the deferral period.
The Trust Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest on the Junior Subordinated Debentures.
During a deferral period, your tax basis in the Trust Preferred Securities
will increase by the amount of accrued but unpaid distributions. If you sell the
Trust Preferred Securities during a deferral period, your increased tax basis
will decrease the amount of any capital gain or increase the amount of any
capital loss that you may have otherwise realized on the sale. A capital loss,
except in certain limited circumstances, cannot be applied to offset ordinary
income. As a result, deferral of distributions could result in ordinary income,
and a related tax liability for the holder, and a capital loss that may only be
used to offset a capital gain.
We do not currently intend to exercise our right to defer interest payments
on the Junior Subordinated Debentures. However, if we exercise our right in the
future, we expect that the market price of the Trust Preferred Securities would
be adversely affected. If you sell the Trust Preferred Securities during a
deferral period, you may not receive the same return on your investment as
someone who continues to hold the Trust Preferred Securities.
We may redeem the Trust Preferred Securities at any time upon the occurrence of
a Special Event.
If a Special Event occurs, we may elect to redeem all of the Junior
Subordinated Debentures. A Special Event means a Tax Event, an Investment
Company Event or a Regulatory Capital Event and is more fully described under
"Description of Trust Preferred Securities--Redemption" and defined under
"Description of Trust Preferred Securities - Definitions." If there is a
Special Event and we elect to redeem the Junior Subordinated Debentures, we must
do so within 90 days of the Special Event, and the Trust must redeem the Trust
Preferred Securities at a redemption price equal to the liquidation amount of
$25 per Trust Preferred Security, plus accrued and unpaid distributions. We may
exercise this right only if we receive any required approval by the regulatory
agencies that supervise us.
Some or all of the Trust Preferred Securities may be redeemed on or after
________________, 2004.
We may redeem some or all of the Junior Subordinated Debentures on or after
, 2004, which will cause an equal amount of the Trust Preferred Securities to be
redeemed simultaneously with the redemption of the Junior Subordinated
Debentures. If less than all of the Junior Subordinated Debentures are redeemed,
the Trust must redeem an
9
<PAGE>
amount of Trust Preferred Securities having an aggregate liquidation value equal
to the principal amount of the Junior Subordinated Debentures that have been
redeemed. We can exercise this right only if we receive any required approval by
the regulatory agencies that supervise us. You should assume that we will
exercise our redemption option if we are able to refinance our obligations at a
lower interest rate or if it is otherwise in our interest to redeem the Junior
Subordinated Debentures.
Distribution of the Junior Subordinated Debentures could adversely affect the
market price for the Trust Preferred Securities and have tax consequences for
you.
We may dissolve the Trust at any time before the maturity of the Junior
Subordinated Debentures on , 2029. As a result, the Trustees
may distribute the Junior Subordinated Debentures to the holders of Trust
Preferred Securities. Although we have agreed to use our best efforts to list
the Junior Subordinated Debentures on a national securities exchange or
comparable automated quotation system if this occurs, there can be no assurance
that the Junior Subordinated Debentures will be approved for listing or that a
trading market will exist for the Junior Subordinated Debentures.
We cannot predict the market prices for the Junior Subordinated Debentures
if they are distributed. Accordingly, the Junior Subordinated Debentures that
you receive upon a distribution, or the Trust Preferred Securities you hold
pending such a distribution, may trade at a price that is less than the price
you paid for the Trust Preferred Securities. Because you may receive Junior
Subordinated Debentures, you must also make an investment decision with regard
to the Junior Subordinated Debentures. You should carefully review all the
information regarding the Junior Subordinated Debentures contained in this
prospectus.
Under current United States federal income tax laws, a distribution of the
Junior Subordinated Debentures to you upon the dissolution of the Trust would
not be a taxable event to you. Nevertheless, if the Trust is classified for
United States federal income tax purposes as an association taxable as a
corporation at the time it is dissolved, the distribution of the Junior
Subordinated Debentures would be a taxable event to you.
The holders of the Trust Preferred Securities and the Junior Subordinated
Debentures are not protected by covenants in the Indenture or the Trust
Agreement.
The Indenture, which contains the terms of the Junior Subordinated
Debentures, and the Trust Agreement, which contains the terms of the Trust
Securities, do not include financial or other terms that protect holders of
Junior Subordinated Debentures or Trust Preferred Securities if we experience
significant adverse changes in our financial condition or results of operations.
In addition, the Indenture and the Trust Agreement do not limit our ability or
the ability of our subsidiaries to incur additional indebtedness, including
indebtedness that ranks senior to the Junior Subordinated Debentures and the
Guarantee.
You will have limited voting rights.
As a holder of Trust Preferred Securities, you will have voting rights only
in limited circumstances. Your voting rights will relate only to the
modification of the Trust Preferred Securities and the exercise of the Trust's
rights as holder of the Junior Subordinated Debentures. In general, only we can
replace or remove any of the Trustees. Together with the property trustee, the
administrative trustees, we may amend the Trust Agreement without your consent
for certain things, including to ensure that the Trust will be classified for
United States federal income tax purposes as a grantor trust. You will have no
voting rights on matters submitted to a vote of our stockholders. However, if
an event of default under the Trust Agreement is continuing, the holders of at
least a majority in aggregate liquidation amount of the Trust Preferred
Securities may replace the property trustee and the Delaware trustee.
Potential tax law changes could require us to redeem the Trust Preferred
Securities.
From time to time, certain tax law changes have been proposed that would
deny interest deductions to corporate issuers of debt instruments with terms
that include certain of the terms of the Junior Subordinated Debentures. In
addition, the Internal Revenue Service ("IRS") has in the past challenged
taxpayers' treatment as indebtedness of securities issued with characteristics
similar to the Junior Subordinated Debentures. To date, such tax law change
proposals have not been enacted and the only known challenge that has advanced
as far as litigation was settled short of trial, with resolution favorable to
the taxpayer's position. However, if any similar tax law change were enacted or
any such challenge by the IRS were upheld, such event could
10
<PAGE>
give rise to a Tax Event (as defined under "Description of Trust Preferred
Securities--Redemption") which could result in an early redemption of the Trust
Preferred Securities.
There may be no active or liquid market for the Trust Preferred Securities.
We plan to have the Trust Preferred Securities quoted on the Nasdaq
National Market. We cannot predict whether an active and liquid trading market
for the Trust Preferred Securities will develop or whether a continued quotation
of the Trust Preferred Securities will be available on the Nasdaq National
Market. Although the underwriters have informed the Trust and us that they
intend to make a market in the Trust Preferred Securities, the underwriters are
not obligated to do so and any such market-making activity may be terminated at
any time without notice. Future trading prices of the Trust Preferred
Securities will depend on many factors including, among other things, prevailing
interest rates, our operating results and financial condition, and the market
for similar securities.
Risks Relating to Us
Changes in interest rates could reduce our profitability.
Our ability to make a profit, like that of most financial institutions,
substantially depends upon our net interest income, which is the difference
between the interest income we earn on our interest-earning assets (such as
loans and investment securities) and the interest expense we pay on our
interest-bearing liabilities (such as deposits and borrowings). Certain assets
and liabilities, however, may react in different degrees to changes in market
interest rates. Further, interest rates on some types of assets and liabilities
may fluctuate prior to changes in broader market interest rates, while rates on
other types may lag behind. Additionally, some of our assets, such as
adjustable-rate mortgages, have features, including payment and rate caps, that
restrict changes in their interest rates.
Factors such as inflation, recession, unemployment, money supply,
international disorders, instability in domestic and foreign financial markets,
and other factors beyond our control may affect interest rates. Changes in
market interest rates also will affect the level of voluntary prepayments on our
loans and the receipt of payments on our mortgage-backed securities, resulting
in the receipt of proceeds that may be reinvested at a lower rate than the loan
or mortgage-backed security being prepaid. Although we pursue an asset-
liability management strategy designed to control our risk from changes in
market interest rates, changes in interest rates can still have a material
adverse effect on our profitability.
Our allowance for credit losses may be inadequate to cover losses actually
incurred, which could affect our ability to make payments on the Junior
Subordinated Debentures.
We maintain an allowance for credit losses in an amount we believe is
sufficient to provide for known and inherent risks in our loan portfolio. At any
time, there are loans included in our loan portfolio that may result in losses,
but that have not been identified as nonperforming or potential problem loans.
We have procedures that we use to help us identify potential problem loans at a
time when they can be worked out with minimal loss. However, we cannot be sure
that we will be able to identify deteriorating loans before they become
nonperforming assets, or that we will be able to limit losses on those loans
that are identified. If Sandy Spring National Bank incurs actual losses on its
loans in excess of its allowance for credit losses, it may have insufficient
income to extend credit, pay dividends or otherwise supply funds to us. If this
occurs, we may be unable to make payments of interest and principal on the
Junior Subordinated Debentures, and the Trust may be unable to make payments of
interest and principal to you.
Changes in local economic conditions could reduce our income and growth, and
could lead to higher levels of problem loans and charge-offs.
Our lending operations are concentrated in Montgomery, Howard, Ann Arundel
and Prince George's Counties in Maryland. Adverse changes in economic
conditions in these areas, or the neighboring areas of Washington, D.C. and its
Virginia suburbs or Baltimore, Maryland and its suburbs could hurt our ability
to collect loans, could reduce the demand for loans, and otherwise could
negatively affect our performance and financial condition.
We compete with others for business.
We compete for loans, deposits, and investment dollars with other banks and
other kinds of financial institutions and enterprises, such as securities firms,
insurance companies, savings and loan associations, credit unions, mortgage
brokers, and private lenders, many of which have substantially
11
<PAGE>
greater resources than ours. In addition, non-depository institution competitors
are generally not subject to the extensive regulation applicable to us and Sandy
Spring National Bank. The differences in resources and regulation may make it
harder for us to compete profitably, reduce the rates that we can earn on loans
and investments, increase the rates we must offer on deposits and other funds,
and adversely affect our financial condition and earnings.
Our future profits will be affected by the integration of seven new branches
acquired in September 1999 into our banking operations.
Our future profits will be affected by our ability to retain the branch
deposits acquired in September 1999, to generate revenues from the new branch
locations and the loans we acquired, to manage the costs associated with the
acquired branch offices, and otherwise to successfully integrate the new
branches into our operations.
The year 2000 problem may have significant adverse effects on us and our
customers.
Many computer programs now in use have not been designed to properly
recognize years after 1999. If not corrected, these programs could fail or
create erroneous results after December 31, 1999. This year 2000 ("Y2K") issue
affects the entire banking industry because of the industry's reliance on
computers and other equipment that uses computer chips, and may have significant
effects on banking customers, bank regulators, and the general economy.
We established a Y2K plan to prevent or limit adverse effects of the Y2K
issue on us and our customers. We believe implementation of our plan is
substantially complete However, our belief that we, and our principal suppliers
of software and data processing services, will achieve Y2K compliance, is based
on assumptions that may not prove accurate, and on statements made by our data
processing suppliers and other third parties, and is therefore subject to
uncertainty. Although we have undertaken a customer awareness program, customer
concerns about the Y2K issue may adversely impact us. The actual effects on our
individual customers, on governmental authorities that regulate us, on the
financial markets and economy in general, and any resulting consequences to us,
cannot be estimated with any assurance. Because of these uncertainties, we
cannot be certain that Y2K compliance will be achieved.
Failure to achieve Y2K compliance by us, our principal software suppliers, the
payments system of banks and the Federal Reserve System, and the
telecommunications and power suppliers upon which we and they rely, could cause
disruptions in services to our customers. Failure by our borrowers to achieve
Y2K compliance could have adverse financial effects on them, and make it more
difficult for them to pay their loans, which in turn could result in reduced
income or additional loan losses for us.
Government regulation significantly affects our business.
The banking industry is heavily regulated. Banking regulations are
primarily intended to protect the federal deposit insurance funds and
depositors, not shareholders. Sandy Spring National Bank is subject to
regulation and supervision by the Office of the Comptroller of the Currency. We
are subject to regulation and supervision by the Board of Governors of the
Federal Reserve System. The burden imposed by federal and state regulations puts
banks and bank holding companies at a competitive disadvantage compared to less
regulated competitors such as finance companies, mortgage banking companies and
leasing companies. Changes in the laws, regulations and regulatory practices
affecting the banking industry could impose additional costs on us, could hurt
our ability to compete profitably with other financial institutions, or could
have other material adverse effects on us.
CAUTION ABOUT FORWARD LOOKING STATEMENTS
We make forward looking statements in this prospectus that are subject to
risks and uncertainties. These forward looking statements include:
. Statements of goals, intentions, and expectations;
. Estimates of risks and of future costs and benefits;
. Statements of the ability to achieve "Y2K" compliance; and
. Statements of the ability to achieve financial and other goals.
12
<PAGE>
These forward looking statements are subject to significant uncertainties
because they are based upon or are affected by:
. Our estimates and projections of future interest rates and other economic
conditions;
. Statements by suppliers of data processing equipment and services, government
agencies, and other third parties as to "Y2K" compliance and costs;
. Future laws and regulations; and
. A variety of other matters.
Because of these uncertainties, the actual future results may be materially
different from the results indicated by these forward looking statements. In
addition, our past results of operations do not necessarily indicate our future
results.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table shows our consolidated ratios of earnings to fixed
charges for the indicated periods.
<TABLE>
<CAPTION>
At and for the
nine months ended
September 30, At and for the years ended December 31,
----------------- --------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratios of earnings to
fixed charges:
Including interest on
deposits 1.61X 1.59X 1.59X 1.57X 1.57X 1.50X 1.58X
Excluding interest on
deposits 2.89 3.39 3.31 4.23 7.59 6.12 8.48
</TABLE>
For purposes of computing the ratios of earnings to fixed charges, earnings
represent income (loss) before extraordinary items and cumulative effect of
changes in accounting principles plus applicable income taxes and fixed charges.
Fixed charges include gross interest expense (excluding interest on deposits in
one case and including that interest in the other) and one-third of rent
expenses, which approximates the interest expense of those charges.
13
<PAGE>
MANAGEMENT
<TABLE>
<CAPTION>
Name Age Position
- ------------------------------------------------------------------------ --- --------------------------------------------
<S> <C> <C>
Hunter R. Hollar 50 President and Chief Executive
Officer of Sandy Spring
Bancorp ( "Sandy Spring") and
Sandy Spring National Bank
James H. Langmead 49 Vice President and Treasurer of Sandy Spring
and Executive Vice President and Chief
Financial Officer of the bank
Lawrence T. Lewis, III 50 Executive Vice President of the
bank
Frank H. Small 53 Executive Vice President of the
bank
James R. Farmer 48 Senior Vice President of the
bank
Stanley L. Merson 43 Senior Vice President of the
bank and
President, Sandy Spring
Mortgage Corporation
Sara E. Watkins 43 Senior Vice President of the
bank
</TABLE>
The principal occupations and business experience of each of our executive
officers are shown below.
Hunter R. Hollar is President and Chief Executive Officer and a director of
Sandy Spring and the bank. From 1990 and until 1993, Mr. Hollar served as
President of Sandy Spring and Chief Operating Officer of the bank. He began his
banking career in 1972. Prior to joining Sandy Spring, Mr. Hollar served in
various positions with Dominion Bancshares, including Regional Executive Officer
of Dominion Bank of Shenadoah Valley, N.A. and Senior Vice President and Senior
Credit Officer of Dominion Bank of Richmond, N.A. He is active in state and
local civic associations. He serves as a member of the Maryland Chamber of
Commerce Strategic Planning Task Force, the Board of the Maryland Bankers
Association and of the Board of Trustees of the Maryland Bankers Association
School of Bank Management, and is Chairman of Maryland Bank Services, Inc. (an
affiliate of the Maryland Bankers Association). He is Chair of the Board of
Montgomery General Hospital, and is a member of the boards of the Montgomery
County Chamber of Commerce, the Easter Seal Society, the Strathmore Hall Arts
Center, and St. Johns Episcopal School of Olney, Maryland.
James H. Langmead, CPA, is the Vice President and Treasurer of Sandy
Spring, and Executive Vice President and Chief Financial Officer of the bank.
Previously, Mr. Langmead served in various positions with Sandy Spring and the
bank, including Senior Vice President and Controller of the bank. His banking
career began in 1971. Prior to joining the bank in 1992, Mr. Langmead was
Executive Vice President and Chief Financial Officer of the Bank of Baltimore.
He is a member of the Financial Executives Institute and is Trustee and
Treasurer of the Sandy Spring Museum.
Lawrence T. Lewis is Executive Vice President of the bank with
responsibility for lending, investment, and trust activities. He began his
employment with the bank in 1996 as Senior Vice President. From January 1984 to
December 1995, Mr. Lewis was a managing director of Clark Melvin Securities
Corporation. From 1979 to 1984, he served as Senior Vice President for
institutional sales at the predecessor to Ferris, Baker, Watts. His prior
commercial banking career, which included service as Senior Vice President with
responsibility for the investment portfolio at Maryland National Bank, began in
1972.
Frank H. Small is Executive Vice President of the bank with responsibility
for the branch system, operations, technology management, and electronic
banking. His banking career began in 1969. Before joining the bank in 1990, Mr.
Small was Vice President in charge of branch operations at Equitable Bank, N.A.
and Maryland National Bank.
14
<PAGE>
James R. Farmer became a Senior Vice President of the bank in 1994. Prior
to that, Mr. Farmer was Vice President of the bank. Mr. Farmer has been employed
by the bank since 1979.
Stanley L. Merson is President of Sandy Spring Mortgage Corporation and a
Senior Vice President of the bank. Mr. Merson has served in various positions
with the bank since 1982, including Vice President of the Commercial Loan
Department.
Sara E. Watkins became a Senior Vice President of the bank in 1997. Prior
to that, Ms. Watkins was Vice President and Branch Administrator of the bank
(from June 1994) and Vice President and Region Manager of the bank (from April
1992).
USE OF PROCEEDS
All of the proceeds from the sale of the Trust Preferred Securities
together with proceeds of the Common Securities will be invested by the Trust in
the Junior Subordinated Debentures to be issued by us. We intend to use the
estimated net proceeds from the sale of the Junior Subordinated Debentures of
approximately $ million for general corporate purposes, including
capital contributions to Sandy Spring National Bank to increase its capital to
levels maintained before our recent branch acquisition, and for working capital.
Initially, the net proceeds may be used to make short-term investments.
15
<PAGE>
CAPITALIZATION
The following table shows our unaudited consolidated capitalization as of
September 30, 1999, and our capitalization on a pro forma basis as if the sale
of the Trust Preferred Securities, the issuance of the Junior Subordinated
Debentures and the application of the estimated net proceeds as described in
"Use of Proceeds" occurred on September 30, 1999. You should also read the more
detailed information included or incorporated by reference in this prospectus,
including the financial statements and related notes.
<TABLE>
<CAPTION>
At September 30, 1999
-----------------------
Actual Pro Forma
------ ---------
(dollars in thousands, except per share)
<S> <C> <C>
Guaranteed preferred beneficial interests in Sandy Spring Bancorp, Inc.
subordinated debentures $ -- $
Stockholders' Equity:
Common stock--par value $1.00; shares authorized 15,000,000;
shares issued and outstanding 9,626,090 $ 9,626 9,626
Surplus 23,928 23,928
Retained earnings 84,305 84,305
Accumulated other comprehensive income (7,867) (7,867)
-------- --------
Total Stockholders' Equity $109,992 $109,992
======== ========
Capital Ratios:
Total capital to risk-weighted assets (1) 12.13%
Tier I capital to risk-weighted assets (1) 11.20
Leverage ratio (1) (2) 7.33
</TABLE>
________________
(1) The total risk-based capital ratio, as adjusted, is computed including the
total estimated net proceeds from the sale of the Preferred Securities.
Federal Reserve guidelines limit the amount of the Preferred Securities and
cumulative perpetual preferred stock included in Tier 1 capital to an
aggregate of 25% of Tier 1 capital, and accordingly the leverage and Tier 1
capital ratios, as adjusted, are computed excluding $8,726,000 of the
Preferred Securities. Pro Forma risk-weighted capital ratios assume that
net proceeds of the offering of the Preferred Securities are invested in
assets in the 20% risk weight category.
(2) The leverage ratio is Tier 1 capital divided by quarterly average total
assets less intangibles.
The Federal Reserve has allowed cumulative preferred stock meeting certain
criteria and issued by subsidiaries of bank holding companies to be included as
Tier 1 capital for purposes of regulatory capital calculations, up to a maximum,
along with other cumulative preferred stock issued by the bank holding company,
of 25% of Tier 1 capital. We believe the Trust Preferred Securities will
meet the Federal Reserve's criteria for inclusion in Tier 1 capital, subject to
such 25% limitation.
SANDY SPRING CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law upon the
filing of a certificate of trust with the Delaware Secretary of State. The
Trust will be governed by the terms of the Amended and Restated Declaration of
Trust (the "Trust Agreement"), which will be qualified under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"). The Trust exists for the
exclusive purposes of (i) issuing and selling the Trust Securities, (ii) using
the proceeds from the sale of Trust Securities to acquire the Junior
Subordinated Debentures and (iii) engaging in other activities that are
incidental or necessary to these purposes. The Junior Subordinated Debentures
will be the sole assets of the Trust, and, accordingly, payments under the
Junior Subordinated Debentures will be the sole revenues of the Trust.
All of the Common Securities will be owned by us. We will acquire Common
Securities with a $25 liquidation amount, equal to at least 3% of the total
capital of the Trust. While the Common Securities will have terms equal in
priority of payment with the Trust Preferred Securities, if we default on the
Junior Subordinated Debentures, then cash distributions and liquidation,
redemption and other amounts payable on the Common Securities will be
subordinated to the Trust Preferred Securities in priority of payment.
16
<PAGE>
The Trust has a term of approximately 31 years, but may be dissolved
earlier as provided in the Trust Agreement. The Trust's business and affairs are
conducted by the Issuer Trustees, who are appointed by us as holder of the
Common Securities. The trustees for the Trust will be 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 Administrative
Trustees who are our officers (each, an "Administrative Trustee" and
collectively, the "Administrative Trustees"). The Property Trustee, the
Delaware Trustee and the Administrative Trustees are collectively referred to as
the "Issuer Trustees" in this prospectus. The Property Trustee will act as sole
indenture trustee under the Trust Agreement. The Bank of New York will also act
as trustee under the Guarantee and the Indenture. The duties and obligations of
each Issuer Trustee are governed by the Trust Agreement. The holder of the
Common Securities of the Trust 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 Trust Preferred 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 Trust Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, whose
voting rights will be vested exclusively in the holder of the Common Securities.
We will pay all fees, expenses, debts and obligations related to the Trust
and the offering of the Trust Preferred Securities and will pay, directly or
indirectly, all ongoing costs and expenses of the Trust, except the Trust's
obligations with respect to the Trust Preferred Securities and the Common
Securities.
For financial reporting purposes, the Trust will be treated as our
subsidiary and, accordingly, the accounts of the Trust will be included in our
Consolidated Financial Statements. We will present the Trust Preferred
Securities as a separate line item in our consolidated Statement of Financial
Condition entitled, "Guaranteed preferred beneficial interests in Sandy Spring
Bancorp, Inc. subordinated debentures," and we will include appropriate
disclosures about the Trust Preferred Securities, the Guarantee and the Junior
Subordinated Debentures in the notes to our Consolidated Financial Statements.
For financial reporting purposes, we will record distributions payable on the
Trust Preferred Securities as "minority interest income of subsidiaries" in our
Consolidated Statements of Operations.
DESCRIPTION OF TRUST PREFERRED SECURITIES
This summary of certain provisions of the Trust Preferred Securities, the
Common Securities and the Trust Agreement 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, and
the Trust Indenture Act. The form of the Trust Agreement has been filed as an
exhibit to the Registration Statement of which this prospectus forms a part.
The Trust Agreement will be qualified under the Trust Indenture Act. The
Property Trustee will act as the indenture trustee (the "Debenture Trustee") for
purposes of complying with the Trust Indenture Act.
General
The Trust will issue the Trust Preferred Securities pursuant to the terms
of the Trust Agreement. We will own all of the Common Securities. The Trust
Preferred Securities will represent preferred undivided beneficial interests in
the assets of the Trust. The holders of the Trust Preferred Securities will be
entitled to a preference in certain circumstances with respect to Distributions
(as defined below) and amounts payable on redemption or liquidation over the
Common Securities, as well as other benefits as described in the Trust
Agreement. The Trust Agreement prohibits the issuance by the Trust of any
securities other than the Trust Securities or the incurrence of any indebtedness
by the Trust.
The Trust Preferred Securities will rank equal in priority of payment, and
payments will be made thereon pro rata with the Common Securities except under
certain circumstances. See "--Subordination of Common Securities." Legal title
to the Junior Subordinated Debentures will be held by the Property Trustee in
trust for the benefit of the holders of the Trust Securities. The Guarantee will
not guarantee payment of Distributions or amounts payable on redemption of the
Trust Preferred Securities or liquidation of the Trust when the Trust does not
have funds on hand legally available for such payments.
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Distributions
Payment of Distributions. Distributions on each Trust Preferred Security
will be cumulative, will accrue from December 31, 1999, and will be payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing December 31, 1999, at the annual rate of % of the stated
liquidation amount of $25 per Trust Preferred Security ("Distributions"). The
initial Distribution will equal $ for each Trust Preferred Security.
Subsequent Distributions will equal $ for each Trust Preferred
Security. Distributions in arrears for more than one quarter will (to the
extent permitted by law) accrue interest at the rate per annum of ____%,
compounded quarterly. Distributions shall be made to the holders of the Trust
Preferred Securities on the relevant record date, which for so long as the Trust
Preferred Securities remain in book-entry form, will be one Business Day (as
defined below) prior to the relevant Distribution Date (as defined below) and,
in the event the Trust Preferred Securities are not in book-entry form, will be
the fifteenth day of the month in which the relevant Distribution Date occurs.
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 a
full calendar quarter, on the basis of the actual number of days elapsed in the
quarter based on 30-day months. In the event that any date on which
Distributions are payable on the Trust Preferred Securities is not a Business
Day, payment of the Distribution payable 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), except that if the next succeeding Business Day falls in the
next succeeding calendar year, the 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 (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 the City
of New York, New York or Olney, Maryland are authorized or required by law or
executive order to close.
Deferral Period. So long as no Debenture Event of Default shall have
occurred and be continuing, we will have the right under the Indenture to defer
the payment of interest on the Junior Subordinated Debentures at any time or
from time to time for a period not exceeding 20 consecutive calendar quarters
with respect to each deferral period (each, a "Deferral Period"), provided that
no Deferral Period shall end on a date other than an Interest Payment Date (as
defined herein) or extend beyond , 2029, which is the "Stated
Maturity Date." Upon any such election, quarterly Distributions on the Trust
Preferred Securities will be deferred by the Trust during such Deferral Period.
Distributions to which holders of the Trust Preferred Securities are entitled
during any such Deferral Period will accumulate additional Distributions thereon
at the rate per annum of %, compounded quarterly from the relevant
Distribution Date. The term "Distributions," as used herein, includes any such
additional Distributions.
Prior to the termination of any Deferral Period, we may further extend the
Deferral Period, provided that an extension will only be permitted under the
Trust Agreement to the extent that the Deferral Period, together with all other
extensions occurring both before and after such extension, does not exceed 20
consecutive calendar quarters, end on a date other than an Interest Payment Date
or extend beyond the Stated Maturity Date. Upon the termination of any such
Deferral Period and the payment of all amounts then due on any Interest Payment
Date, we may elect to begin a new Deferral Period, subject to the above
requirements. No interest shall be due and payable during a Deferral Period,
except at the end of the period. If Distributions are deferred, the deferred
Distributions and accrued interest will be paid to holders of the Trust
Preferred Securities as they appear on the books and records of the Trust on the
record date for Distributions due at the end of the Deferral Period. We must
give the Property Trustee, the Administrative Trustees and the Debenture Trustee
notice of our election of any such Deferral Period (or an extension thereof) at
least five Business Days prior to the earlier of (i) the date the Distributions
on the Trust Preferred Securities would have been payable except for the
election to begin such Deferral 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 such Trust Preferred 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 we may elect to begin a Deferral Period.
During any such Deferral Period, we may not:
. declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our capital
stock;
. make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any of our debt securities (including any other
debentures related to other trust preferred securities that
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may be issued in the future ("Other Debentures")) and that rank equal with
or junior in right of payment to the Junior Subordinated Debentures; or
. make any guarantee payments with respect to any guarantee made by us of the
debt securities of any of our subsidiaries (including other guarantees of
trust preferred securities) if such guarantee ranks equal with or junior in
right of payment to the Junior Subordinated Debentures.
However, we will not be in violation of the Indenture if, during the
Deferral Period, we
. declare or pay dividends or make distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, our common
stock;
. declare a dividend in connection with the implementation of a stockholders'
rights plan, or issue stock under any such plan in the future, or redeem or
repurchase of any such rights pursuant to any such plan;
. make payments under the Guarantee;
. purchase any fractional shares as a result of a reclassification of our
capital stock;
. purchase any fractional interests in shares of our capital stock pursuant
to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged therefor; or
. purchase common stock as a result of the issuance of common stock or rights
under any of our benefit plans for directors, officers, employees, or any
of our dividend reinvestment plans.
We do not currently intend to exercise our option to defer payments of
interest on the Junior Subordinated Debentures.
Source of Distribution. The Trust's funds available for distribution to
holders of the Trust Preferred Securities will be limited to payments under the
Junior Subordinated Debentures. If we do not make interest payments on the
Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the Trust Preferred Securities. The payment of
Distributions will be guaranteed by us if and to the extent the Trust has funds
on hand legally available for the payment of such Distributions.
Redemption
Mandatory Redemption of the Trust Preferred Securities. Upon the repayment
or redemption at any time, in whole or in part, of any Junior Subordinated
Debentures, the proceeds from such repayment or redemption will 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 a redemption price equal to $25 per Trust
Preferred Security plus any accrued and unpaid Distributions thereon to the
Redemption Date. If less than all of the Junior Subordinated Debentures are to
be prepaid on a Redemption Date, then the proceeds of such prepayment will be
allocated pro rata to the Preferred and Common Trust Securities, as described
below.
Optional Redemption of the Junior Subordinated Debentures. On or after
, 2004, we will have the right to redeem the Junior Subordinated Debentures in
whole at any time or in part from time to time at a redemption price equal to
100% of the principal amount thereof plus accrued and unpaid interest on the
Junior Subordinated Debentures so redeemed to the date fixed for redemption. We
would redeem the Junior Subordinated Debentures upon not less than 30 nor more
than 60 days written notice, in each case subject to receipt of prior approval
if it is then required under applicable regulatory requirements. If we redeem
the Junior Subordinated Debentures, the Trust Securities will be redeemed as
described in the preceding paragraph.
Special Event or Distribution of Junior Subordinated Debentures. If a
Special Event (as defined below) occurs and is continuing, we will have the
right, within 90 days following the occurrence of such Special Event, and upon
not less than 30 nor more than 60 days written notice, to redeem the Junior
Subordinated Debentures in whole (but not in
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part) and thereby cause a mandatory redemption of the Trust Securities in whole
(but not in part) at the redemption price, in each case subject to receipt of
prior approval if it is then required under applicable regulatory requirements.
If a Special Event has occurred and is continuing and we do not elect to redeem
the Junior Subordinated Debentures (and thereby cause a mandatory redemption of
the Trust Securities) or to dissolve the Trust and, after satisfaction of
creditors as required by applicable law, cause the Junior Subordinated
Debentures to be distributed to holders of the Trust Securities, the Trust
Securities will remain outstanding and Additional Sums (as defined below) may be
payable on the Junior Subordinated Debentures.
Definitions. The terms described in the preceding paragraph have the
following meanings:
"Additional Sums" means the additional amounts as may be necessary to be
paid by us with respect to the Junior Subordinated Debentures in order that the
amount of Distributions then due and payable by the Trust on the outstanding
Trust Securities will not be reduced as a result of any additional taxes, duties
and other governmental charges to which the Trust has become subject.
An "Investment Company Event" means the receipt by us of an opinion of
counsel experienced in such matters to the effect that, as a result of any
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that the Trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940 (the "Investment Company Act"), which change
becomes effective on or after the original issuance of the Trust Preferred
Securities.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to that portion of the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, allocated to the Common Securities
and to the Trust Preferred Securities based upon the relative Liquidation
Amounts of such classes and the proceeds of which will be used to pay the
redemption price of such Trust Securities, and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of Trust Securities in
connection with a dissolution or liquidation of the Trust, Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the holders to whom such Junior Subordinated Debentures are
distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
A "Regulatory Capital Event" means that we shall have received an opinion
of 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 of the United States or any rules,
guidelines or policies of applicable regulatory agencies or (b) any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of the Trust
Agreement, there is more than an insubstantial risk that the Trust Preferred
Securities do not constitute, or within 90 days of the date thereof, will not
constitute, Tier 1 Capital (or its then equivalent) for purposes of the capital
adequacy guidelines of the Board of Governors of the Federal Reserve (or any
successor regulatory authority with jurisdiction over bank holding companies),
or any capital adequacy guidelines as then in effect and applicable to us. The
distribution of the Junior Subordinated Debentures in connection with the
dissolution of the Trust by us will not in and of itself constitute a Regulatory
Capital Event.
A "Special Event" means a Tax Event, an Investment Company Event or a
Regulatory Capital Event, as the case may be.
A "Tax Event" means the receipt by us 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 of the United States or of any political subdivision or
taxing authority, or as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement or decision is announced
on or after the date of the Trust Agreement, there is more than an insubstantial
risk that (i) the Trust is, or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect to income
received or accrued on the Junior Subordinated Debentures, (ii) interest payable
by us on the Junior Subordinated Debentures is not, or within 90 days of the
date of such opinion
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will not be, deductible by us, 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 minor amount of other taxes, duties or
other governmental charges.
Distribution of Junior Subordinated Debentures
We will have the right at any time to dissolve 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. This right is
subject to (i) our having received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of Trust Preferred
Securities and (ii) prior approval by the applicable regulatory authorities if
it is then required under applicable regulatory requirements.
After the 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) The Depository Trust Company ("DTC" or
"Depositary") or its nominee will receive, in respect of each registered global
certificate, if any, representing Trust Securities 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 with an interest rate identical to
the distribution rate of, and accrued and unpaid interest 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 we will issue to such holder, and the Debenture Trustee
will authenticate, a certificate representing such Junior Subordinated
Debentures.
We can give no assurance as to the market prices for the Trust Preferred
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 Trust Preferred Securities that you may
purchase, or the Junior Subordinated Debentures that you may receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
that you paid to purchase the Trust Preferred Securities.
If the Junior Subordinated Debentures are distributed to the holders of
Trust Preferred Securities, we will use our best efforts to list the Junior
Subordinated Debentures on a national securities exchange or comparable
automated quotation system.
Redemption Procedures
If applicable, Trust Securities will be redeemed at the redemption price
with the proceeds from the contemporaneous repayment or redemption of the Junior
Subordinated Debentures. Any redemption of Trust Securities will be made and the
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 redemption price.
The Trust may not redeem fewer than all of the outstanding Trust Preferred
Securities unless all accrued and unpaid Distributions have been paid on all
Trust Preferred Securities for all quarterly Distribution periods terminating on
or prior to the date of redemption. If a partial redemption of the Trust
Preferred Securities would result in the delisting of the Trust Preferred
Securities by a national securities exchange or other organization on which the
Trust Preferred Securities are listed, then, pursuant to the Indenture, we may
only redeem the Junior Subordinated Debentures in whole and, as a result, the
Trust may only redeem the Trust Preferred Securities in whole.
If the Trust gives a notice of redemption in respect of the Trust Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the Redemption Date, to the extent that we have deposited with the
Property Trustee by 10:00 a.m., New York City time, funds sufficient to pay the
redemption price with respect to the Trust Preferred 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
redemption price and will give DTC or its nominees irrevocable instructions and
authority to pay the redemption price to the holders of such Trust Preferred
Securities. See "Book-Entry Issuance." If such Trust Preferred Securities are
no longer in book-entry form, the Property Trustee, to the extent we have
deposited with the Property Trustee funds sufficient to pay the redemption
price, will irrevocably deposit with the Paying Agent for such Trust Preferred
Securities funds sufficient to pay the
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aggregate redemption price and will give such Paying Agent irrevocable
instructions and authority to pay the redemption price to the holders thereof
upon surrender of their certificates evidencing such Trust Preferred Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date shall be payable to the holders of such Trust Preferred
Securities on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required, then
upon the date of such deposit, all rights of the holders of the Trust Preferred
Securities called for redemption will cease, except the right of the holders of
such Trust Preferred Securities to receive the redemption price, but without
interest on such redemption price and such Trust Preferred Securities will cease
to be outstanding. In the event that any Redemption Date of Trust Preferred
Securities is not a Business Day, then the 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 we fail to
repay the Junior Subordinated Debentures on maturity or payment of the
redemption price is improperly withheld or refused and not paid either by the
Trust or by us pursuant to the Guarantee as described under "Description of
Guarantee," (i) Distributions on Trust Preferred Securities will continue to
accrue at the then applicable rate from the Redemption Date originally
established by the Trust to the date such redemption price is actually paid and
(ii) the actual payment date will be the Redemption Date for purposes of
calculating the redemption price.
Subject to the Trust Agreement and applicable law (including, without
limitation, United States federal securities law), we or our subsidiaries may at
any time and from time to time purchase outstanding Trust Preferred Securities
by tender, in the open market or by private agreement.
Payment of the redemption price on the Trust Preferred Securities and any
distribution of Junior Subordinated Debentures to holders of Trust Preferred
Securities will be made on the Redemption Date.
If less than all of the Trust Securities issued by the Trust are to be
redeemed on a Redemption Date, then the aggregate redemption price for such
Trust Securities to be redeemed will be allocated pro rata to the Trust
Preferred Securities and Common Securities based upon the relative Liquidation
Amounts of the Trust Securities or such other method as the Trustee shall deem
appropriate, not more than 60 days prior to the date fixed for redemption. The
particular Trust Preferred Securities to be redeemed will be selected by the
Property Trustee from the outstanding Trust Preferred Securities not previously
called for redemption, by such method as the Property Trustee deems fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or an integral multiple thereof) of the Liquidation Amount of
Trust Preferred Securities. The Property Trustee will promptly notify the
security registrar in writing of the Trust Preferred Securities selected for
redemption and, in the case of any Trust Preferred Securities selected for
partial redemption, the Liquidation Amount thereof to be redeemed. For all
purposes of the Trust Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Trust Preferred Securities shall relate
to the portion of the aggregate Liquidation Amount of Trust Preferred Securities
which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days prior to the Redemption Date to each holder of Trust Securities at its
registered address. Unless we default in payment of the 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. However, if on any Distribution Date or
Redemption Date a Debenture Event of Default (as described in "Description of
Junior Subordinated Debentures--Debenture Events 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, will be made unless payment in full in cash of all accumulated and
unpaid Distributions on all of the outstanding Trust Preferred Securities for
all Distribution periods terminating on or prior to the Debenture Event of
Default, or in the case of payment of the redemption price, the full amount of
such redemption price shall have been made or provided for, and all funds
available to the Property Trustee will first be applied to the payment in full
in cash of all Distributions on, or redemption price of, the Trust Preferred
Securities then due and payable.
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In the case of any Event of Default under the Trust Agreement relating to a
Debenture Event of Default (as described in "-- Events of Default; Notice"), as
holder of the Common Securities, we 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 has been cured, waived or otherwise eliminated. Until any such Event of
Default has been so cured, waived or otherwise eliminated, the Property Trustee
will act solely on behalf of the holders of the Trust Preferred Securities and
not on behalf of us as holder of the Common Securities, and only the holders of
the Trust Preferred Securities will have the right to direct the Property
Trustee to act on their behalf.
Liquidation Distribution Upon Dissolution
We will have the right at any time to dissolve the Trust and cause the
Junior Subordinated Debentures to be distributed to the holders of the Trust
Preferred Securities. Our right is subject to (i) our having received an
opinion of an independent tax counsel experienced in such matters to the effect
that such distribution will not be a taxable event to holders of Trust Preferred
Securities for United States federal income tax purposes, and (ii) our having
received prior approval if it is then required under applicable regulatory
requirements. See "--Distribution of Junior Subordinated Debentures."
In addition, the Trust will automatically dissolve upon the first to occur
of: (i) certain events of our bankruptcy, dissolution or liquidation; (ii) the
distribution of a Like Amount of the Junior Subordinated Debentures to the
holders of the Trust Securities, if we have given written direction to the
Property Trustee to dissolve the Trust (which direction is optional and, except
as described above, wholly within our discretion); (iii) redemption of all of
the Trust Securities; (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 dissolution occurs as described in clause (i), (ii), (iv), or (v)
above, the Trust will be liquidated by the Administrative Trustees as
expeditiously as the Administrative Trustees determine to be possible by
distributing to the holders of the Trust Securities, after satisfaction of
liabilities to creditors of the Trust, a Like Amount of the Junior Subordinated
Debentures. However, if such a distribution is determined by the Property
Trustee not to be practicable, the holders will be entitled to receive out of
the assets of the Trust legally available for distribution, after satisfaction
of liabilities to creditors of the Trust, 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. However, if a Debenture
Event of Default has occurred and is continuing, the Trust Preferred Securities
will have a priority over the Common Securities. See "--Subordination of Common
Securities."
If we elect not to redeem the Junior Subordinated Debentures prior to
maturity in accordance with their terms and either elect not to or are 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.
If we elect to dissolve the Trust and thereby cause the Junior Subordinated
Debentures to be distributed to holders of the Trust Preferred Securities in
liquidation of the Trust, we shall continue to have the right to shorten the
maturity of the Junior Subordinated Debentures, subject to certain conditions.
Events of Default; Notice
Any one of the following events that has occurred and is continuing
constitutes an "Event of Default" under the Trust Agreement (an "Event of
Default") with respect to the Trust Preferred Securities, regardless of the
reason for such Event of Default and whether it occurs voluntary or involuntary
or by operation of law or pursuant to any order, rule or regulation:
. the occurrence of a Debenture Event of Default (see "Description of
Junior Subordinated Debentures--Debenture Events of Default");
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. default by the Trust in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period
of 30 days;
. default by the Trust in the payment of the redemption price of any
Trust Security when it becomes due and payable;
. default in the performance, or breach, in any material respect, of any
covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a default or breach in the performance of a covenant or
warranty which is addressed in the second or third clause above), and
continuation of the default or breach, for a period of 60 days after
there has been given, by registered or certified mail, to the
defaulting Issuer Trustee or Trustees by the holders of at least 25%
in aggregate Liquidation Amount of the outstanding Trust Preferred
Securities, a written notice specifying the default or breach and
requiring it to be remedied and stating that the notice is a "Notice
of Default" under the Trust Agreement; or
. the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by us to appoint a
successor Property Trustee within 60 days of the event.
Within 90 days after the occurrence of any Event of Default known to the
Property Trustee, the Property Trustee will transmit notice of the Event of
Default to the holders of the Trust Preferred Securities, the Administrative
Trustees and us, unless the Event of Default has been cured or waived. We and
the Administrative Trustees are required to file annually with the Property
Trustee a certificate as to whether or not we or they are in compliance with all
the conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Trust
Preferred Securities will have a preference over the Common Securities. See "--
Subordination of Common Securities" and "--Liquidation Distribution Upon
Default." Upon a Debenture Event of Default, unless the principal of all the
Junior Subordinated Debentures has already become due and payable, either the
Property Trustee or the holders of not less than 25% in aggregate principal
amount of the Junior Subordinated Debentures then outstanding may declare all of
the Junior Subordinated Debentures to be due and payable immediately by giving
notice in writing to us (and to the Property Trustee, if notice is given by
holders of the Junior Subordinated Debentures). If the Property Trustee or the
holders of the Junior Subordinated Debentures fail to declare the principal of
all of the Junior Subordinated Debentures due and payable upon a Debenture Event
of Default, the holders of at least 25% in Liquidation Amount of the Trust
Preferred Securities then outstanding will have the right to declare the Junior
Subordinated Debentures immediately due and payable. In either event, payment
of principal and interest on the Junior Subordinated Debentures will remain
subordinated to the extent provided in the Indenture. In addition, holders of
the Trust Preferred Securities have the right in certain circumstances to bring
a direct action ("Direct Action"). See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Trust Preferred
Securities."
Removal of Issuer Trustees
Unless a Debenture Event of Default has occurred and is continuing, any
Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed by the holders of a
majority in Liquidation Amount of the outstanding Trust Preferred Securities. In
no event will the holders of the Trust Preferred Securities have the right to
vote to appoint, remove or replace the Administrative Trustees, which voting
rights are vested exclusively in us, as the holder of the Common Securities. No
resignation or removal of an Issuer Trustee (other than an Administrative
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.
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Co-trustees and Separate Property Trustee
Unless an Event of Default has occurred and is continuing, at any time or
times, for the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any property of the Trust may at the time be
located, we, as the holder of the Common Securities, and the Administrative
Trustees shall have the right to appoint one or more persons either to act as a
co-trustee, jointly with the Property Trustee, of all or any part of such
property, or 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 the person or persons in such capacity any property, title, right or
power deemed necessary or desirable, subject to the provisions of the Trust
Agreement. In case a Debenture Event of Default has occurred and is continuing,
the Property Trustee alone will have power to make the appointment.
Merger or Consolidation of Issuer Trustees
Any Person into which the Property Trustee or the Delaware 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 is a party, or any Person succeeding
to all or substantially all the corporate trust business of such Issuer Trustee,
will be the successor of such Issuer Trustee under the Trust Agreement, provided
the 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 "-- Distribution of
Junior Subordinated Debentures." The Trust may, at our request, with the consent
of the Administrative Trustees but without the consent of the holders of the
Trust Preferred Securities, the Property Trustee or the Delaware Trustee, merge
with or into, consolidate, amalgamate, or be replaced by or convey, transfer or
lease its properties and assets as an entirety or substantially as an entirety
to a trust organized under the laws of any State; provided, that (i) the
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) we
expressly appoint 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 Trust Preferred Securities or 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 Preferred Securities are then listed or quoted, if any, (iv) if the Trust
Preferred Securities (including any Successor Securities) are rated by any
nationally recognized statistical rating organization prior to the transaction,
the merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Trust 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) the 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), (vi) the successor entity has a purpose substantially identical to
that of the Trust, (vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, we have received an opinion from
independent counsel to the Trust experienced in such matters to the effect that
(a) the 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), (b) following the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor such successor entity will
be required to register as an investment company under the Investment Company
Act, and (c) the Trust will continue to be, or the successor entity will be,
classified as a grantor trust for federal income tax purposes, (viii) we 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
(ix) the Property Trustee is given an officer's certificate and an opinion of
counsel each to the effect that all conditions precedent in the Trust Agreement
to the transactions have been satisfied. Notwithstanding the foregoing, the
Trust will 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 the 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 or each holder of the Trust Securities not to be treated as owning an
undivided interest in the Junior Subordinated Debentures.
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 Trust Preferred Securities will have no voting
rights.
The Trust Agreement may be amended from time to time by us, 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, or (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. However, the amendment to
the Trust Agreement under these circumstances may not adversely affect the
interests of the holders of the Trust Securities. Any amendments of the Trust
Agreement under these circumstances will become effective when notice is given
to the holders of the Trust Securities. The Trust Agreement may be amended by
the Administrative Trustees, the Property Trustee and us (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. However, 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 reduce the amount payable on redemption thereof 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 payment
on or after the specified date. Notwithstanding the foregoing, no amendments or
modification may be made to the Declaration if such amendment or modification
would (i) cause the Trust to be classified as other than a grantor trust for
United States federal income tax purposes, (ii) reduce or otherwise adversely
affect the powers of the Property Trustee in contravention of the Trust
Indenture Act or (iii) cause a Special Event.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, subject to the requirement of the Property Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in Liquidation Amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
direct the exercise of any trust or power conferred on the Property Trustee with
respect to the Junior Subordinated Debentures, including the right to direct the
Property Trustee, as holder of the Junior Subordinated Debentures, to (i)
exercise the remedies available under the Indenture with respect to the Junior
Subordinated Debentures, (ii) waive any past defaults under the Indenture that
are available 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 the
consent will be required. However, where a consent under the Indenture would
require the consent of each affected holder of Junior Subordinated Debentures,
no consent may be given by the Property Trustee without the prior approval of
each holder of the Trust Preferred Securities. The Issuer Trustees will not
revoke any action previously authorized or approved by a vote of the holders of
the Trust Preferred Securities except by subsequent vote of those holders. The
Property Trustee will notify each holder of Trust Preferred Securities within 90
days of any notice of default with respect to the Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of the holders of
the Trust Preferred Securities prior to taking any of the foregoing actions, the
Property Trustee will 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.
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Any required approval of holders of Trust Preferred Securities may be given
at a meeting of the holders convened for that purpose or pursuant to written
consent without prior notice. The Administrative Trustees will cause a notice of
any meeting at which holders of Trust Preferred Securities are entitled to vote
to be given to each holder of record of Trust Preferred Securities in the manner
set forth in the Trust Agreement.
No vote or consent of the holders of Trust Preferred Securities will be
required for the Trust to redeem and cancel the Trust Preferred Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of the Trust Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Trust Preferred Securities that are owned by us, the Trustees or any affiliate
of us or any Trustees, will, for purposes of such vote or consent, be treated as
if they were not outstanding.
Global Trust Preferred Securities
The Trust Preferred Securities will be represented by one or more global
certificates registered in the name of DTC or its nominee (a "Global Trust
Preferred Security"). Beneficial interests in the Trust Preferred Securities
will be shown on, and transfer thereof will be effected only through, records
maintained by persons that have accounts with such Depositary ("Participants").
Except as described below, Trust Preferred Securities in the certificated form
will not be issued in exchange for the global certificates. See "Book-Entry
Issuance."
A global security will be exchangeable for Trust Preferred Securities
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies us that it is unwilling or unable to continue as
a depositary for the global security and no successor depositary shall have been
appointed within 90 days, or if at any time the Depositary ceases to be a
clearing agency registered under the Exchange Act, at a time when the Depository
is required to be so registered to act as such depository, (ii) the Trust in its
sole discretion determines that the global security may be so exchangeable, or
(iii) there shall have occurred and be continuing an Event of Default under the
Indenture. Any global security that is exchangeable as described in the
preceding sentence will be exchangeable for definitive certificates registered
in the names as the Depositary shall direct. We expect that the instructions
will be based upon directions received by the Depositary with respect to
ownership of beneficial interests in the global security. In the event that
Trust Preferred Securities are issued in definitive form, the Trust Preferred
Securities will be in denominations of $25 and integral multiples thereof and
may be transferred or exchanged at the offices described below.
Unless and until it is exchanged in whole or in part for individual Trust
Preferred Securities, a Global Trust Preferred Security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any nominee to a successor Depositary or any nominee of
the successor.
Payments on Trust Preferred Securities represented by a global security
will be made to the Depositary, as the depositary for the Trust Preferred
Securities. In the event the Trust Preferred Securities are issued in
definitive form, Distributions will be payable, the transfer of the Trust
Preferred Securities will be registrable, and Trust Preferred Securities will be
exchangeable for Trust Preferred Securities of other denominations of a like
aggregate Liquidation Amount, at the corporate trust office of the Property
Trustee, or at the offices of any paying agent or transfer agent appointed by
the Administrative Trustees by check mailed to the address of the persons
entitled thereto or by wire transfer. For a description of the terms of the
depositary arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other manners, See "Book-Entry Issuance."
Upon the issuance of a Global Trust Preferred Security, and the deposit of
the Global Trust Preferred Security with or on behalf of the Depositary, the
Depositary for the Global Trust Preferred Security or its nominee will credit,
on its book-entry registration and transfer system, the respective aggregate
Liquidation Amounts of the individual Trust Preferred Securities represented by
the Global Trust Preferred Securities to the accounts of Participants. These
accounts will be designated by the dealers, underwriters, or agents with respect
to the Trust Preferred Securities. Ownership of beneficial interests in a
Global Trust Preferred Security will be limited to Participants or persons that
may hold interests through Participants. Ownership of beneficial interests in
the Global Trust Preferred Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of Participants) and the
records of Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of the
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securities in definitive form. These limits and laws may impair the ability to
transfer beneficial interest in a Global Trust Preferred Security.
So long as the Depositary for a Global Trust Preferred Security, or its
nominee, is the registered owner of the Global Trust Preferred Security, the
Depositary or the nominee, as the case may be, will be considered the sole owner
or holder of the Trust Preferred Securities represented by the Global Trust
Preferred Security for all purposes under the Trust Agreement governing such
Trust Preferred Securities. Except as provided below, owners of beneficial
interest in a Global Trust Preferred Security will not be entitled to have any
of the individual Trust Preferred Securities represented by such Global Trust
Preferred Security registered in their names, will not receive or be entitled to
receive physical delivery of any such Trust Preferred Securities in definitive
form and will not be considered the owners or holders under the Trust Agreement.
Neither the Property Trustee, any Paying Agent (as defined below), the
Securities Registrar (as defined below) for the Trust Preferred Securities nor
we will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of the
Global Trust Preferred Security representing the Trust Preferred Securities or
for maintaining supervising or reviewing any records relating to the beneficial
ownership interests.
We expect that the Depositary for Trust Preferred Securities or its
nominee, upon receipt of any payment of the Liquidation Amount or Distributions
in respect of a permanent Global Trust Preferred Security, immediately will
credit Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the aggregate Liquidation Amount of such
Global Trust Preferred Security as shown on the records of such Depositary or
its nominee. We also expect that payments by Participants to owners of
beneficial interests in such Global Trust Preferred Security held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." These payments will be the responsibility
of such Participants.
If the Depositary for the Trust Preferred Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by us within 90 days, the Trust will issue
individual Trust Preferred Securities in exchange for the Global Trust Preferred
Security. In addition, the Trust may at any time and in its sole discretion,
subject to any limitations described herein relating to the Trust Preferred
Securities, determine not to have any Trust Preferred Securities represented by
one or more Global Trust Preferred Securities and, in that event, will issue
individual Trust Preferred Securities in exchange for the Global Trust Preferred
Security. In any such instance, an owner of a beneficial interest in a Global
Trust Preferred Security will be entitled to physical delivery of individual
Trust Preferred Securities represented by the Global Trust Preferred Security
equal in Liquidation Amount to the beneficial interest and to have the Trust
Preferred Securities registered in its name. Individual Trust Preferred
Securities so issued will be issued in denominations, unless otherwise specified
by us, of $25 and integral multiples thereof.
Payment and Paying Agency
Payments on the Trust Preferred Securities held in global form will be made
to the Depositary, which will credit the relevant accounts at the Depositary on
the applicable Distribution Dates. Payments on the Trust Preferred Securities
that are not held by the Depositary will be made by check mailed to the address
of the holder entitled thereto as the address which appears on the register. The
paying agent (the "Paying Agent") will initially be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and us. The Paying Agent will be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustees. In the
event that the Property Trustee will no longer be the Paying Agent, the
Administrative Trustees will appoint a successor (which will be a bank or trust
company acceptable to the Administrative Trustees and us) to act as Paying
Agent.
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Registrar and Transfer Agent
The Property Trustee will initially act as registrar and transfer agent for
the Trust Preferred Securities (the "Securities Registrar"). Registration of
transfers of the Trust Preferred Securities will be effected without charge by
or on behalf of the Trust, but upon payment of any tax or other governmental
charges that may be imposed in connection with any transfer or exchange. The
Trust will not be required to register or cause to be registered the transfer of
the Trust Preferred 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 the 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 or security against the
costs, expenses and liabilities that might be incurred. If no Event of Default
has occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the Trust
Agreement or is unsure of the application of any provision of the Trust
Agreement, and the matter is not one on which holders of the Trust Securities
are entitled under the Trust Agreement to vote, then the Property Trustee may
take the action as is directed by and, if not so directed, may take 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 other than a grantor trust for United
States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated by us as indebtedness for United States federal
income tax purposes. In this connection, we and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the Trust Agreement, that we and the
Administrative Trustees determine in our discretion to be necessary or desirable
for these purposes, as long as the action does not adversely affect the
interests of the holders of the Trust Securities or vary the terms thereof.
The Administrative Trustees also serve as administrative trustees of Trust I.
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 Junior Subordinated Debentures are to be issued under an Indenture, as
supplemented from time to time (as so supplemented, the "Indenture"), between
the Debenture Trustee and us. The Indenture will be qualified under the Trust
Indenture Act. This summary of certain terms and provisions of the Junior
Subordinated Debentures and the Indenture does not purport to be complete, and
is qualified in its 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. The form of the Indenture has been filed as an exhibit to the Registration
Statement.
Concurrently with the issuance of the Trust Preferred Securities, the Trust
will invest the proceeds, together with the consideration paid by us for the
Common Securities, in Junior Subordinated Debentures issued by us. The Junior
Subordinated Debentures will be issued as unsecured debt under the Indenture.
We may at any time dissolve the Trust and, after satisfaction of
liabilities to creditors of the Trust, cause the Junior Subordinated Debentures
to be distributed to the holders of the Trust Securities in liquidation of the
Trust. If the Junior Subordinated Debentures are distributed to the holders of
the Trust Preferred Securities, we will use our best
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efforts to list the Junior Subordinated Debentures on a national securities
exchange or comparable automated quotation system.
General
The Junior Subordinated Debentures will bear interest at the annual rate of
% of the principal amount thereof, payable quarterly in arrears on the last day
of March, June, September and December of each year (each, an "Interest Payment
Date"), commencing , 1999, to the person in whose name each
Junior Subordinated Debenture is registered, subject to certain exceptions, on
the fifteenth day of the month in which the relevant Interest Payment Date
occurs. Notwithstanding the above, in the event that either (i) Junior
Subordinated Debentures are held by the Property Trustee and the Trust Preferred
Securities are no longer in book-entry only form or (ii) the Junior Subordinated
Debentures are not represented by a Global Subordinated Debenture, the record
date for such payment shall be the first day of the month in which such payment
is made. The amount of each interest payment due with respect to the Junior
Subordinated Debentures will include amounts accrued through the date the
interest payment is due. We anticipate that, until the dissolution, 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 Preferred
Securities. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months and, for any period of less
than a full calendar quarter, on the basis of the actual number of days elapsed
in the quarter based upon 30-day months. 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 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 the next succeeding Business Day falls in the
next succeeding calendar year, then the payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of % thereof, compounded quarterly.
The term "interest," as used herein, includes quarterly interest payments,
interest on quarterly interest payments not paid on the applicable Interest
Payment Date and Additional Sums (as defined below), as applicable.
The Junior Subordinated Debentures will mature on , 2029 (the
"Stated Maturity Date"). Beginning on , 2004 we will have the right
to redeem the Junior Subordinated Debentures, in whole or in part and from time
to time, at a redemption price equal to 100% of the principal amount plus
accrued and unpaid interest on the Junior Subordinated Debentures redeemed to
the date fixed for redemption, subject to our having received prior approval if
it is then required under applicable regulatory requirements. In the event that
we elect to redeem the Junior Subordinated Debentures, we will give notice to
the Debenture Trustee, and the Debenture Trustee will give notice of the
shortening to the holders of the Junior Subordinated Debentures no less than 30
days or more than 60 days prior to the effectiveness thereof.
The Junior Subordinated Debentures will rank equal with all Other
Debentures and will be unsecured and will rank subordinate and junior in right
of payment to all Senior and Subordinated Indebtedness (as defined under
"Description of Junior Subordinated Debentures--Subordination") to the extent
and in the manner set forth in the Indenture.
Option to Extend Interest Payment Date
So long as no Debenture Event of Default has occurred and is continuing, we
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 20 consecutive calendar quarters, provided that no Deferral Period
may end on a date other than an Interest Payment Date or extend beyond the
Stated Maturity Date. At the end of such Deferral Period, we must pay all
interest then accrued and unpaid (together with interest thereon) at the annual
rate of %, compounded quarterly, to the extent permitted by applicable
law. During a Deferral Period, interest will continue to accrue and, if the
Junior Subordinated Debentures have been distributed to holders of the Trust
Preferred Securities, holders of Junior Subordinated Debentures (or holders of
the Trust Preferred Securities while Trust Preferred 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 Consequences--Interest Income and
Original Issue Discount."
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During a Deferral Period, we will not undertake any of the actions set
forth below under "-- Certain Covenants We Have Made."
Prior to the termination of any such Deferral Period, we may further extend
such Deferral Period, provided that such extension does not cause such Deferral
Period together with all previous and further extensions within the Deferral
Period to exceed 20 consecutive calendar quarters, end on a date other than an
Interest Payment Date or extend beyond the Stated Maturity Date. Upon the
termination of any such Deferral Period and the payment of all amounts then due
on any Interest Payment Date, we may elect to begin a new Deferral Period,
subject to the above requirements. No interest will be due and payable during a
Deferral Period, except at the end of that period. We must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of
election of any Deferral Period (or an extension thereof) at least five Business
Days prior to the earlier of (i) the next succeeding date on which Distributions
on the Trust Preferred Securities are payable or (ii) the date the Trust is
required to give notice to any securities exchange or to holders of Trust
Preferred Securities of the record date or the date such Distributions are
payable, but in any event not less than five Business Days prior to the record
date. The Debenture Trustee will give notice of our election to begin or extend
a new Deferral Period to the holders of the Trust Preferred Securities.
Additional Sums
If the Trust or the Property Trustee is required to pay any additional
taxes, duties, assessments or other governmental charges, we will pay Additional
Sums as required so that the Distributions payable by the Trust shall not be
reduced as a result of any such additional taxes, duties, assessments or other
governmental charges.
Redemption
Subject to our having received any prior approval required under applicable
regulatory requirements, the Junior Subordinated Debentures are redeemable prior
to maturity at our option on or after , 2004, in whole (at any time)
or in part (from time to time), at a redemption price equal to 100% of the
principal amount plus accrued and unpaid interest on the Junior Subordinated
Debentures to the date of redemption.
The Junior Subordinated Debentures are also redeemable prior to maturity at
any time in whole (but not in part), within 90 days following the occurrence of
a Special Event, in each case at a redemption price equal to 100% of the
principal amount plus accrued and unpaid interest on the Junior Subordinated
Debentures so redeemed to the date fixed for redemption. If a partial
redemption of the Trust Preferred Securities resulting from a partial redemption
of the Junior Subordinated Debentures would result in a delisting of the Trust
Preferred Securities, then we may redeem the Junior Subordinated Debentures in
whole only.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at the holder's registered address. Unless we default
in payments of the redemption price, on and after the redemption date, interest
ceases to accrue on the Junior Subordinated Debentures or portions called for
redemption.
The Junior Subordinated Debentures will not be subject to any sinking fund.
Distribution upon Liquidation
Under certain circumstances involving the dissolution of the Trust, the
Junior Subordinated Debentures may be distributed to the holders of the Trust
Preferred Securities in liquidation of the Trust after satisfaction of
liabilities to creditors of the Trust. See "Description of Trust Preferred
Securities--Liquidation Distribution Upon Dissolution." If distributed to
holders of the Trust Preferred Securities in liquidation, the Junior
Subordinated Debentures will initially be issued in the form of one or more
global securities and the Depositary or any successor depositary for the Trust
Preferred Securities will act as depositary for the Junior Subordinated
Debentures. We anticipate that the depositary arrangements for the Junior
Subordinated Debentures be substantially identical to those in effect for the
Trust Preferred Securities. If the Junior Subordinated Debentures are
distributed to the holders of Trust Preferred Securities upon the liquidation of
the Trust, we will use our best efforts to list the Junior Subordinated
Debentures on the Nasdaq National Market or such other stock exchanges or
automated quotation system, if any, on which the Trust Preferred Securities are
then listed or quoted. We can give no assurance as to the market price of any
Junior Subordinated Debentures that may be distributed to the holders of Trust
Preferred Securities.
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Certain Covenants We Have Made
If at any time (1) there shall have occurred any event of which we have
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 we
shall not have taken reasonable steps to cure, (2) we are in default with
respect to our payment of any obligations under the Guarantee, or (3) we shall
have given notice of our election of a Deferral Period as provided in the
Indenture and shall not have rescinded such notice, and such Deferral Period, or
any extension thereof, shall have commenced and be continuing, then we will not,
. declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to,
any of our capital stock;
. make any payment of principal, interest or premium, if any, on
or repay or repurchase or redeem any of our debt securities
(including Other Debentures) that rank equal with or junior in
right of payment to the Junior Subordinated Debentures; or
. make any guarantee payments with respect to any guarantee by us
of the debt securities of any of our subsidiaries (including
under Other Guarantees) if such guarantee ranks equal or junior
in right of payment to the Junior Subordinated Debentures.
. However, we will not violate the first bullet point above if we
declare or pay dividends or make distributions in shares of, or
options, warrants or rights to subscribe for or purchase shares
of our common stock;
. declare a dividend in connection with the implementation of a
stockholders' rights plan, or issue stock under any plan in the
future, or redeem or repurchase any rights under such a plan;
. make payments under the Guarantee;
. purchase fractional shares as a result of a reclassification of
our capital stock;
. purchase fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of our capital
stock or the security being converted or exchanged; or
. purchase common stock as a result of the issuance of common
stock or rights under any of our benefit plans for directors,
officers, or employees or our dividend reinvestment plan.
So long as the Trust Securities remain outstanding, we also have agreed (i)
to maintain 100% direct or indirect ownership of the Common Securities;
provided, however, that any permitted successor to us under the Indenture may
succeed to our ownership of such Common Securities, (ii) to not voluntarily
dissolve, wind-up or terminate the Trust, except in connection with the
distribution of the Junior Subordinated Debentures or certain mergers,
consolidations or amalgamations, each as permitted by the Trust Agreement, (iii)
to timely perform our duties as sponsor of the Trust, (iv) to use our 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 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
(v) to use our reasonable efforts to cause each holder of Trust Securities to be
treated as owning an undivided beneficial interest in the Junior Subordinated
Debentures.
Subordination
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In the Indenture, we have covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior and Subordinated 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 which we are the subject of, the holders of
Senior and Subordinated Indebtedness will first be entitled to receive payment
in full of principal of all Allocable Amounts (as defined below) on such Senior
and Subordinated Indebtedness before the holders of Junior Subordinated
Debentures will be entitled to receive or retain any payment in respect thereof.
As of September 30, 1999, we had no Senior and Subordinated Indebtedness
outstanding.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior and Subordinated Indebtedness outstanding
at the time of such acceleration will first be entitled to receive payment in
full of such amounts due thereon (including any amounts due upon acceleration)
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 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 any Senior and Subordinated
Indebtedness, or an event of default with respect to any Senior and Subordinated
Indebtedness resulting in the acceleration of the maturity thereof, or if any
judicial proceeding shall be pending with respect to any default.
We are a holding company and almost all of our operating assets are owned
by our subsidiaries. We are a legal entity separate and distinct from our
subsidiaries. Holders of Junior Subordinated Debentures should look only to us
for payments on the Junior Subordinated Debentures. The principal sources of our
income are dividends, interest and fees from our subsidiaries. We rely primarily
on dividends from the Bank to meet our obligations for payment of principal and
interest on our corporate expenses. There are regulatory limitations on the
payment of dividends directly or indirectly to us from the Bank. As of September
30, 1999, under applicable banking statutes, the total capital available for
payment of dividends by the Bank to us was approximately $27 million. However,
bank regulatory authorities have the power to prohibit any act, including the
payment of dividends, if such act would reduce bank capital to a point that, in
the opinion of such regulatory authorities, 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, us and certain
affiliates, and on investments in stock or other securities. These restrictions
prevent us and our affiliates from borrowing from the Bank unless the loans are
secured by various types of collateral. Further, secured loans, other
transactions and investments by the Bank are generally limited in amount as to
us and as to each of our affiliates to 10% of the Bank's capital and surplus and
as to us and all of our other affiliates to an aggregate of 20% of the Bank's
capital and surplus.
Because we are a holding company, our right 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 Trust
Preferred 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 we may be recognized as a creditor
of that subsidiary. At September 30, 1999, our subsidiaries had total
liabilities (excluding liabilities owed to us) of $1.4 billion. Accordingly,
the Junior Subordinated Debentures will be effectively subordinated to all
existing and future liabilities of our subsidiaries and all liabilities of any
of our future subsidiaries. The Indenture does not limit our or our
subsidiaries' ability to incur or issue other secured or unsecured debt,
including Senior and Subordinated Indebtedness.
Definitions. For purposes of the foregoing paragraphs, the following
definitions apply:
"Allocable Amounts," when used with respect to any Senior and Subordinated
Indebtedness, means all amounts due or to become due on the Senior and
Subordinated Indebtedness less, if applicable, any amount which would have been
paid to, and retained by, the holders of the Senior and Subordinated
Indebtedness (whether as a result of the receipt of payments by the holders of
such Senior and Subordinated Indebtedness from us or any other obligated party
or from any holders of, or trustee in respect of, other indebtedness that is
subordinate and junior in right of payment to the Senior and Subordinated
Indebtedness) but for the fact that such Senior and Subordinated Indebtedness is
subordinated or junior in right of payment to (or subject to a requirement that
amounts received on such Senior and Subordinated Indebtedness be paid over to
obligees on) trade accounts payable or accrued liabilities arising in the
ordinary course of business.
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"Indebtedness" means with respect to any person, whether recourse is to all
or a portion of the assets of such person and whether or not contingent: (i)
every obligation of any person for money borrowed; (ii) every obligation of the
person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of the person with
respect to letters of credit, banker's acceptances or similar facilities issued
for the account of the person; (iv) every obligation of the person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of the person; (vi) all
indebtedness of the person 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 person has
guaranteed or is responsible or liable, directly or indirectly, as obligor or
otherwise.
"Senior and Subordinated Indebtedness" means the principal of (and premium,
if any) and interest, if any (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to us whether or
not the claim for post-petition interest is allowed in such proceeding), on our
Indebtedness whether incurred on or prior to the date of the Indenture or
thereafter incurred, unless in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that the obligations
are not superior in right of payment to the Junior Subordinated Debentures or to
other Indebtedness which is equal with, or subordinated to, the Junior
Subordinated Debentures. However, Senior and Subordinated Indebtedness does not
include (i) any of our Indebtedness which when incurred and without respect to
any election under section 1111(b) of the United States Bankruptcy Reform Act of
1978, as amended, was without recourse to us, (ii) any Indebtedness we have to
any of our subsidiaries, (iii) Indebtedness to any of our employees, and (iv)
any other debt securities issued pursuant to the Indenture.
Denominations, Registration and Transfer
If the Junior Subordinated Debentures are distributed to the holders of the
Trust Preferred Securities, the Junior Subordinated Debentures will be
represented by global certificates registered in the name of the Depositary or
its nominee (the "Global Subordinated Debenture"). Beneficial interests in the
Junior Subordinated Debentures will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary. Except as described
below, Junior Subordinated Debentures in certificated form will not be issued in
exchange for the global certificates. See "Book-Entry Issuance."
Unless and until a Global Subordinated Debenture is exchanged in whole or
in part for the individual Junior Subordinated Debentures, it may not be
transferred except as a whole by the Depositary for the Global Subordinated
Debenture to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
nominee to a successor Depositary or any nominee of the successor.
A Global Subordinated Debenture will be exchangeable for Junior
Subordinated Debentures registered in the names of persons other than the
Depositary or its nominee only if (i) the Depositary notifies us that it is
unwilling or unable to continue as a depositary for such Global Subordinated
Debenture and no successor shall have been appointed, or if at any time the
Depositary ceases to be a clearing agency registered under the Exchange Act, at
a time when the Depositary is required to be so registered to act as such
depositary, (ii) we in our sole discretion determine that the Global
Subordinated Debenture will be so exchangeable or (iii) there shall have
occurred and be continuing a Debenture Event of Default with respect to the
Global Subordinated Debenture. Any Global Subordinated Debenture that is
exchangeable pursuant to the preceding sentence will be exchangeable for
definitive certificates registered in such names as the Depositary shall direct.
It is expected that the instructions will be based upon directions received by
the Depositary from its Participants with respect to ownership of beneficial
interests in the Global Subordinated Debenture. In the event that Junior
Subordinated Debentures are issued in definitive form, the Junior Subordinated
Debentures will be in denominations of $25 and integral multiples thereof and
may be transferred or exchanged at the offices described below.
Payments on Junior Subordinated Debentures represented by a Global
Subordinated Debenture will be made to the Depositary, as the depositary for the
Junior Subordinated Debentures. In the event Junior Subordinated Debentures will
be registrable, Junior Subordinated Debentures will be exchangeable for Junior
Subordinated Debentures of other denominations of a like aggregate principal
amount, at the corporate office of the Debenture Trustee, or at the offices of
any paying agent or transfer agent appointed by us, provided that payment of
interest may be made at our option by
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check mailed to the address of the persons entitled thereto or by wire transfer.
In addition, if the Junior Subordinated Debentures are issued in certificated
form, the record dates for payment of interest will be the first day of the
month in which such payment is to be made. For a description of the Depositary
and the terms of the depositary arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters, see "Book-Entry
Issuance."
We will appoint the Debenture Trustee as securities registrar under the
Indenture (the "Securities Registrar"). Junior Subordinated Debentures may be
presented for exchange as provided above, and may be presented for registration
of transfer (with the form of transfer endorsed thereon, or a satisfactory
written instrument of transfer, duly executed), at the office of the Securities
Registrar. We may at any time rescind the designation of any transfer agent or
approve a change in the location through which any transfer agent acts, provided
that we maintain a transfer agent in the place of payment. We may at any time
designate additional transfer agents with respect to the Junior Subordinated
Debentures.
In the event of any redemption, neither we nor the Debenture Trustee shall
be required to (i) issue, register the transfer of or exchange Junior
Subordinated Debentures during a period beginning at the opening of business 15
days before the day of selection for redemption of Junior Subordinated
Debentures and ending at the close of business on the day of mailing of the
relevant notice of redemption or (ii) transfer or exchange any Junior
Subordinated Debentures so selected for redemption, except, in the case of any
Junior Subordinated Debentures being redeemed in part, any portion thereof not
to be redeemed.
Global Subordinated Debentures
Upon the issuance of the Global Subordinated Debenture and the deposit of
such Global Subordinated Debenture with or on behalf of the Depositary, the
Depositary for the Global Subordinated Debenture or its nominee will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the individual Junior Subordinated Debentures represented by the
Global Subordinated Debenture to the accounts of persons that have accounts with
such Depositary ("Participants"). Ownership of beneficial interests in a Global
Subordinated Debenture will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests in such Global
Subordinated Debenture will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of Participants). The laws of some states
require that certain purchasers of securities take physical delivery of the
securities in definitive form. These limits and laws may impair the ability to
transfer beneficial interests in a Global Subordinated Debenture.
So long as the Depositary for a Global Subordinated Debenture, or its
nominee, is the registered owner of the Global Subordinated Debenture, the
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Junior Subordinated Debentures represented by the Global
Subordinated Debenture for all purposes under the Indenture governing the Junior
Subordinated Debentures. Except as provided below, owners of beneficial
interests in a Global Subordinated Debenture will not be entitled to have any of
the individual Junior Subordinated Debentures represented by such Global
Subordinated Debenture registered in their names, will not receive or be
entitled to receive physical delivery of any such Junior Subordinated Debentures
in definitive form and will not be considered the owners or holders under the
Indenture.
Payments of principal of and interest on individual Junior Subordinated
Debentures represented by a Global Subordinated Debenture registered in the name
of the Depositary or its nominee will be made to the Depositary or its nominee,
as the case may be, as the registered owner of the Global Subordinated Debenture
representing the Junior Subordinated Debentures. Neither we nor the Debenture
Trustee, any Paying Agent, or the Securities Registrar for such Junior
Subordinated Debentures will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of the Global Subordinated Debenture representing the Junior
Subordinated Debentures or for maintaining, supervising or reviewing any records
relating to the beneficial ownership interests.
If the Depositary is at any time unwilling, unable or ineligible to
continue as depositary and a successor depositary is not appointed by us within
90 days after we receive notice or otherwise become aware of the situation, we
will issue individual Junior Subordinated Debentures in exchange for the Global
Subordinated Debenture. In addition, we may at any time and in our sole
discretion, determine not to have the Junior Subordinated Debentures represented
by one or more Global Subordinated Debenture and, in such event, we will issue
individual Junior Subordinated
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Debentures in exchange for the Global Subordinated Debenture. Further, if we so
specify with respect to the Junior Subordinated Debentures, an owner of a
beneficial interest in a Global Subordinated Debenture representing Junior
Subordinated Debentures may, on terms acceptable to us, the Debenture Trustee
and the Depositary for such Global Subordinated Debenture, receive individual
Junior Subordinated Debentures in exchange for such beneficial interests. In any
such instance, an owner of a beneficial interest in a Global Subordinated
Debenture will be entitled to physical delivery of individual Junior
Subordinated Debentures registered in its name. Individual Junior Subordinated
Debentures so issued will be issued in denominations, unless otherwise specified
by us, of $25 and integral multiples thereof.
Payment and Paying Agents
Payment of principal of and any 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 we may designate from
time to time, except that at our option, 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 the address
appears in the register for Junior Subordinated Debentures or (ii) by transfer
to an account maintained by the Person as specified in the 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. We may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent; however
we will at all times be required to maintain a Paying Agent in each place of
payment for the Junior Subordinated Debentures.
We expect that the Depositary or its nominee, upon receipt of any payment
of principal or interest in respect of a permanent Global Subordinated Debenture
representing the Junior Subordinated Debentures, immediately will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the principal amount of the Global
Subordinated Debenture as shown on the records of such Depositary or its
nominee. We also expect that payments by Participants to owners of beneficial
interests in such Global Subordinated Debenture held through the Participants
will be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in bearer form or
registered in "street name." These payments will be the responsibility of such
Participants.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by us in trust, for the payment of the principal of or interest on any
Junior Subordinated Debenture and remaining unclaimed for two years after such
principal or interest has become due and payable will, at our request, be repaid
to us and the holder of such Junior Subordinated Debenture will thereafter look,
as a general unsecured creditor, only to us for payment thereof.
Modification of Indenture
From time to time we 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 (provided that any action does not
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 us 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 rate or extend the time of payment of interest except
pursuant to our right under the Indenture to defer the payment of interest or
make the principal of, or interest on, the Junior Subordinated Debentures
payable in any coin or currency other than U.S. dollars, 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
modification of the Indenture; provided that so long as any of the Trust
Preferred Securities remain outstanding, no modification may be made that
adversely affects the holders of such Trust Preferred Securities, and no
termination of the Indenture may occur, and no waiver of any Debenture Event of
Default or compliance with any covenant under the Indenture may be effective,
without the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of the Trust Preferred Securities unless and until the
principal amount of the Junior Subordinated Debentures and all accrued and
unpaid interest thereon have been paid in full and certain other conditions
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are satisfied. If the consent of the Property Trustee, as holder of the Junior
Subordination Debentures, is required under the Indenture with respect to
amendments, waivers or supplements of the Indenture or the Junior Subordinated
Debentures, the Property Trustee shall request the direction of the holders of
the Trust Securities with respect to such amendments, waivers or supplements and
shall vote as directed by a majority in Liquidation Amount of the Trust
Securities voting together as a single class. Where a consent under the
Indenture would require the consent of each holder of Junior Subordinated
Debentures, no such consent shall be given by the Property Trustee without the
prior consent of each holder of Trust Preferred Securities. In addition, we and
the Debenture Trustee may execute, without the consent of any holder of Junior
Subordinated Debentures, any supplemental Indenture for the purpose of creating
any new series of Junior Subordinated Debentures.
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," regardless of the reason and whether it is
voluntary or involuntary or effected by operation of law or pursuant to any
judgment, decree, order, rule or regulation:
. failure for 30 days to pay any interest on the Junior Subordinated
Debentures or any Other Debentures, when due (subject to the deferral
of any due date in the case of an Deferral Period);
. failure to pay any principal on the Junior Subordinated Debentures or
any Other Debentures when due whether at maturity, upon redemption, by
declaration of acceleration of maturity or otherwise;
. failure to observe or perform certain other covenants contained in the
Indenture for 60 days after written notice to us from the Debenture
Trustee or the holders of at least 25% in aggregate outstanding
principal amount of Junior Subordinated Debentures;
. certain events of our bankruptcy, insolvency or reorganization.
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 or exercising any trust or power conferred on
the Debenture Trustee, with respect to the Junior Subordinated Debentures. 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
amount of, and any interest on, the Junior Subordinated Debentures to be due and
payable immediately upon a Debenture Event of Default; provided that, in the
case of certain events of bankruptcy, insolvency or reorganization, such amounts
shall automatically become due and payable. If the Debenture Trustee or
holders of the Junior Subordinated Debentures fail to make the declaration, the
Property Trustee or the holders of at least 25% in the aggregate Liquidation
Amount of the Trust Preferred Securities will have the right. The holders of a
majority in aggregate outstanding principal amount of the Junior Subordinated
Debentures may annul the 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.
Should the holders of the Junior Subordinated Debentures fail to annul such
declaration and waive the default, the holders of a majority in aggregate
Liquidation Amount of the Trust Preferred Securities shall have the right.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures may, on behalf of the holders of all the Junior
Subordinated Debentures, waive any past default, except a default in the payment
of principal on or interest (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee) or
a default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debenture.
In case a Debenture Event of Default occurs and is continuing as to Junior
Subordinated Debentures, the Property Trustee will have the right to declare the
principal of and the interest on such Junior Subordinated Debentures, and any
other amounts payable under the Indenture, to be due and payable and to enforce
its other rights as a creditor with respect to such Junior Subordinated
Debentures.
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The Indenture requires the annual filing by us with the Debenture Trustee
of a certificate as to the absence of certain defaults under the Indenture.
Enforcement of Certain Rights by Holders of Trust Preferred Securities
If a Debenture Event of Default has occurred and is continuing and is
attributable to our failure to pay the principal of or interest on the Junior
Subordinated Debentures on the due date, a holder of Trust Preferred Securities
may institute a Direct Action. We may not amend the Indenture to remove the
right to bring a Direct Action without the prior written consent of the holders
of all of the Trust Preferred Securities. If the right to bring a Direct Action
is removed, the Trust may become subject to the reporting obligations under the
Exchange Act and the rules and regulations thereunder. Notwithstanding any
payments made to a holder of Trust Preferred Securities by us in connection with
a Direct Action, we will remain obligated to pay the principal of or interest on
the Junior Subordinated Debentures, and we will be subrogated to the rights of
the holder of such Trust Preferred Securities with respect to payments on the
Trust Preferred Securities to the extent of any payments made by us to such
holder in any Direct Action.
The holders of the Trust Preferred Securities will not be able to exercise
directly any remedies available to the holders of the Junior Subordinated
Debentures, other than those set forth in the preceding paragraph, unless there
shall have been an Event of Default under the Trust Agreement. See "Description
of Trust Preferred Securities--Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that we will 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, unless: (i) we are the surviving
Person, or the Person formed by or surviving any consolidation or merger (if
other than us) or to which the 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; (ii) upon any consolidation,
merger, sale, conveyance, transfer or lease, the due and punctual payment of the
principal of and interest on the Junior Subordinated Debentures according to
their tenor and the due and punctual performance and observance of all the
covenants and conditions of the Indenture to be kept or performed by us will 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 Debenture Trustee executed and delivered to the Debenture Trustee by the
Person formed by the consolidation, or into which we will have been merged, or
by the Person which will have acquired our property, as the case may be; (iii)
after giving effect to the consolidation, merger, sale, conveyance, transfer or
lease, no Default or Event of Default, or any event which, after notice or lapse
of time or both, would become a Default or an Event of Default, will have
occurred and be continuing; (iv) the consolidation, merger, sale, conveyance,
transfer or lease does not cause the Junior Subordinated Debentures to be
downgraded by a nationally recognized statistical rating organization; and (v)
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 us that may adversely affect holders of the Junior
Subordinated Debentures.
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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 due and payable or (ii) will become due and payable
at maturity or called for redemption within one year, and we deposit or cause to
be deposited with the Debenture Trustee funds, in trust, for the purpose and in
an amount sufficient to pay and discharge the entire indebtedness on the Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation, for the principal and interest to the Stated Maturity Date, then
the Indenture will cease to be of further effect (except as to our obligations
to pay all other sums due pursuant to the Indenture and to provide the officers'
certificates and opinions of counsel described therein), and we will be deemed
to have satisfied and discharged the Indenture. We will only be permitted to
take such action if, among other things, we deliver to the Debenture Trustee an
opinion of counsel (who may be counsel for us) to the effect that the holders of
the Junior Subordinated Debentures will not recognize income, gain or loss for
federal income tax purposes as a result of our actions and will be subject to
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 deposit and defeasance had not
occurred.
Governing Law
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of New York.
Information Concerning the Debenture Trustee
The Debenture Trustee has and will 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 Guarantee will be executed and delivered by The Bank of New York (the
"Guarantee Trustee") and us concurrently with the issuance by the Trust of the
Trust Preferred Securities for the benefit of the holders from time to time of
the Trust Preferred Securities. The Guarantee will be qualified as an Indenture
under the Trust Indenture Act. This summary of certain provisions of the
Guarantee does not purport to be complete and is subject to, and qualified in
its entirety by reference to, all of the provisions of the Guarantee and the
Trust Indenture Act. The form of the Guarantee has been filed as an exhibit to
the Registration Statement of which this prospectus forms a part.
General
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the Trust Preferred Securities, but will apply
only to the extent that the Trust has funds sufficient to make such payments,
and is not a guarantee of collection.
We will irrevocably agree to pay in full on a subordinated basis, the
Guarantee Payments (as defined below) to the holders of the Trust Preferred
Securities, as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert other than the defense of
payment. The following payments with respect to the Trust Preferred Securities,
to the extent not paid by or on behalf of the Trust (the "Guarantee Payments"),
will be subject to the Guarantee: (i) any accrued and unpaid Distributions
required to be paid on the Trust Preferred 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 Trust Preferred 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
dissolution, winding-up or liquidation of the Trust (other than in connection
with the distribution of the Junior Subordinated Debentures to holders of the
Trust Preferred Securities or the redemption of all Trust Preferred 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
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available for distribution to holders of Trust Preferred Securities after
satisfaction of liabilities to creditors of the Trust as required by applicable
law. Our obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by us to the holders of the Trust Preferred
Securities or by causing the Trust to pay such amounts to such holders.
We will, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Indenture, taken together, fully, irrevocably
and unconditionally guarantee all of the Trust's obligations under the Trust
Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Trust Preferred Securities. See "Relationship
Among the Trust Preferred Securities, the Junior Subordinated Debentures and the
Guarantee."
Status of the Guarantee
If we do not make interest payments on the Junior Subordinated Debentures
held by the Trust, the Trust will not be able to pay Distributions on the Trust
Preferred Securities and will not have funds legally available therefor. The
Guarantee will rank subordinate and junior in right of payment to all Senior and
Subordinated Indebtedness. The Guarantee will rank pari passu to the Junior
Subordinated Debentures, Other Debentures, the guarantee on the Common
Securities, any other guarantee on future issuances of trust preferred
securities and any senior preferred stock which may be hereafter issued by us.
Because we are a holding company, our right 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 we may be recognized as a creditor of that subsidiary.
Accordingly, our obligations under the Guarantee effectively will be
subordinated to all existing and future liabilities of our subsidiaries and all
liabilities of any of our future subsidiaries. Claimants should look only to our
assets for payments under the Guarantee. For more information, please refer to
"Description of Junior Subordinated Debentures--General."
The Guarantee will constitute a guarantee of payment and not of collection,
which means the guaranteed party may institute a legal proceeding directly
against us 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 Trust Preferred 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
Trust Preferred Securities of the Junior Subordinated Debentures. The Guarantee
does not limit our ability to incur or issue other secured or unsecured debt,
including Senior and Subordinated Indebtedness, whether under the Indenture, any
other indenture that we may enter into in the future or otherwise.
Events of Default
An event of default under the Guarantee will occur upon our failure to
perform any of our payment or other obligations. The holders of a majority in
aggregate Liquidation Amount of the Trust Preferred 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 Trust Preferred Securities may institute
a legal proceeding directly against us to enforce the Guarantee Trustee's rights
under the Guarantee without first instituting a legal proceeding against the
Trust, the Guarantee Trustee or any other person or entity. Notwithstanding the
foregoing, if we fail to make a payment under the Guarantee, a holder of Trust
Preferred Securities may directly institute a proceeding against us for
enforcement of the Guarantee for payment to the holder of the Trust Preferred
Securities of the holder's pro rata portion of the principal of or interest on
the Junior Subordinated Debentures on or after the due dates specified in the
Junior Subordinated Debentures.
We, as guarantor, will be required to file annually with the Guarantee
Trustee a certificate as to whether or not we are in compliance with all the
conditions and covenants applicable to us under the Guarantee.
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Amendments and Assignment
Except with respect to any changes that do not adversely affect the rights
of holders of the Trust Preferred 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 aggregate Liquidation Amount of such outstanding
Trust Preferred Securities. All guarantees and agreements contained in the
Guarantee Agreement shall bind our successors, assigns, receivers, trustees and
representatives and shall inure to the benefit of the holders of the Trust
Preferred Securities then outstanding.
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon
full payment of the redemption price of the Trust Preferred Securities, upon
full payment of the Liquidation Amount payable upon liquidation of the Trust or
upon distribution of Junior Subordinated Debentures to the holders of the Trust
Preferred Securities. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the Trust Preferred
Securities must restore payment of any sums paid under the Trust Preferred
Securities or the Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance of
a default by us in performance of the Guarantee, will undertake to perform only
such duties as are specifically set forth in the Guarantee and, in case a
default with respect to the Guarantee has occurred, 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 Trust Preferred Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
Governing Law
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
BOOK-ENTRY ISSUANCE
The Depositary will act as securities depositary for all of the Trust
Preferred Securities and the Junior Subordinated Debentures. The Trust
Preferred Securities and the Junior Subordinated Debentures will be issued only
as fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global certificates will be
issued for the Trust Preferred Securities and the Junior Subordinated Debentures
and will be deposited with the Depositary.
The Depositary is a limited purpose trust company organized under the New
York Banking Law, as a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary holds securities that its Participants deposit with the
Depositary. The Depositary also facilitates the settlement among Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. "Direct Participants" include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
The Depositary is owned by a number of its Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the Depositary system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain custodial relationships with Direct
Participants, either directly or indirectly ("Indirect Participants"). The
rules applicable to the Depositary and its Participants are on file with the
SEC.
Purchases of Trust Preferred Securities or Junior Subordinated Debentures
within the Depositary system must be made by or through Direct Participants,
which will receive a credit for the Trust Preferred Securities or Junior
Subordinated Debentures on the Depositary's records. The ownership interest of
each actual purchaser of each Trust Preferred Securities and each Subordinated
Debenture ("Beneficial Owner") is in turn to be recorded on the Direct and
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Indirect Participants' records. Beneficial Owners will not receive written
confirmation from the Depositary of their purchases, but we expect that
Beneficial Owners will receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased Trust
Preferred Securities or Junior Subordinated Debentures. Transfers of ownership
interests in the Trust Preferred Securities or Junior Subordinated Debentures
are to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Trust Preferred Securities or Junior
Subordinated Debentures, except in the event that use of the book-entry system
for the Junior Subordinated Debentures is discontinued.
The Depositary has no knowledge of the actual Beneficial Owners of the
Trust Preferred Securities or Junior Subordinated Debentures; the Depositary's
records reflect only the identity of the Direct Participants to whose accounts
such Trust Preferred Securities or Junior Subordinated Debentures are credited,
which may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Trust Preferred Securities or Junior Subordinated Debentures. If less than
all of the Trust Preferred Securities or the Junior Subordinated Debentures are
being redeemed, the Property Trustee will determine by lot or pro rata the
amount of the Trust Preferred Securities of each Direct Participant to be
redeemed.
Although voting with respect to the Trust Preferred Securities or the
Junior Subordinated Debentures is limited to the holders of record of the Trust
Preferred Securities or Junior Subordinated Debentures, as applicable, in those
instances in which a vote is required, neither the Depositary nor Cede & Co.
will itself consent or vote with respect to Trust Preferred Securities or Junior
Subordinated Debentures. Under its usual procedures, the Depository would mail
an omnibus proxy (the "Omnibus Proxy") to the relevant Issuer Trustee as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts such
Trust Preferred Securities or Junior Subordinated Debentures are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Distribution payments on the Trust Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Issuer Trustee to the
Depositary. The Depositary's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on the Depositary's records unless the Depositary has reason to
believe that it will not receive payments on such payment date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices and will be the responsibility of such Participant and not
of the Depositary, the relevant Issuer Trustee, the Trust or us, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of Distributions to the Depositary is the responsibility of the relevant
Issuer Trustee, disbursement of such payments to Direct Participants is the
responsibility of the Depositary, and disbursements of such payments to the
Beneficial Owners is the responsibility of Direct and Indirect Participants.
The Depositary may discontinue providing its services as securities
depositary with respect to any of the Trust Preferred Securities or the Junior
Subordinated Debentures at any time by giving reasonable notice to the relevant
Issuer Trustee and us. In the event that a successor securities depositary is
not obtained, definitive Trust Preferred Securities or Junior Subordinated
Debentures certificates representing such Trust Preferred Securities or Junior
Subordinated Debentures are required to be printed and delivered. We, at our
option, may decide to discontinue use the system of book-entry transfers through
the Depositary (or a successor depositary). After a Debenture Event of Default,
the holders of a majority in liquidation preference of Trust Preferred
Securities or aggregate principal amount of Junior Subordinated Debentures may
determine to discontinue the system of book-entry transfers through the
Depositary. In any such event, definitive certificates for such Trust Preferred
Securities or Junior Subordinated Debentures will be printed and delivered.
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The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Trust and
we believe to be accurate but neither the Trust nor we assume any responsibility
for the accuracy thereof. Neither the Trust nor we have any responsibility for
the performance by the Depositary or its Participants of their respective
obligations as described herein or under the rules and procedures governing
their respective operations.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE JUNIOR SUBORDINATED
DEBENTURES AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Trust Preferred
Securities (to the extent the Trust has funds on hand legally available for the
payment of such Distributions) will be irrevocably guaranteed by us as and to
the extent set forth under "Description of Guarantee." Taken together, our
obligations under the Junior Subordinated Debentures, the Indenture, the Trust
Agreement and the Guarantee will provide, in the aggregate, a full, irrevocable
and unconditional guarantee of payments of Distributions and other amounts due
on the Trust Preferred Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Trust Preferred Securities. If and to the extent
that we do 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 Trust Preferred Securities. The Guarantee will 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 Trust Preferred
Securities is to institute a Direct Action. Our obligations under the Guarantee
will be (i) subordinate and junior in right of payment to all Senior and
Subordinated Indebtedness, except for those liabilities made equal or
subordinate to the Guarantee by their terms, (ii) pari passu to all other
guarantees that may be issued by us in the future with respect to other similar
trust preferred securities,; (iii) senior to our capital stock and (iv)
effectively subordinated to the liabilities and obligations of our subsidiaries.
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 Trust Preferred Securities, because:
(i) the aggregate principal amount of the Junior Subordinated Debentures will be
equal to the sum of the aggregate Liquidation Amount 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) we shall pay for all and any
costs, expenses and liabilities of the Trust except the Trust's obligations to
holders of Trust Securities under the Trust Securities; and (iv) the Trust
Agreement will provide 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 Trust Preferred Securities
A holder of any Trust Preferred Security may institute a legal proceeding
directly against us 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 and Subordinated
Indebtedness would not constitute a default or Event of Default under the Trust
Agreement. However, in the event of payment defaults under, or acceleration of,
Senior and Subordinated Indebtedness, the subordination provisions of the
Indenture will provide that no payments may be made in respect of the Junior
Subordinated Debentures until such Senior and Subordinated 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.
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Limited Purpose of the Trust
The Trust Preferred Securities will represent preferred beneficial
interests in the Trust, and 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 other
activities that are necessary or incidental thereto. A principal difference
between the rights of a holder of a Trust Preferred Security and a holder of a
Junior Subordinated Debenture is that a holder of a Junior Subordinated
Debenture will be entitled to receive from us the principal amount of and
interest on Junior Subordinated Debentures held, while a holder of Trust
Preferred Securities is entitled to receive Distributions from the Trust (or, in
certain circumstances, from us 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 dissolution, 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 Preferred
Securities will be entitled to receive, out of assets held by the Trust, the
Liquidation Distribution in cash. See "Description of Trust Preferred Securities
- - Distribution of Junior Subordinated Debentures." Upon our voluntary or
involuntary liquidation or bankruptcy, the Property Trustee, as holder of the
Junior Subordinated Debentures, would be a subordinated creditor of ours,
subordinated in right of payment to all Senior and Subordinated Indebtedness as
set forth in the Indenture, but entitled to receive payment in full of principal
and interest, before any of our stockholders receive payments or distributions.
Since we will be the guarantor under the Guarantee and will agree 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 Trust
Preferred Securities and a holder of Junior Subordinated Debentures relative to
other creditors and to our stockholders in the event of our liquidation or
bankruptcy will be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the material United States federal income tax
considerations that may be relevant to the purchasers of Trust Preferred
Securities, which has been passed upon by Kennedy, Baris & Lundy, L.L.P.,
counsel to Sandy Spring and the Trust, as it relates to matters of law and legal
conclusions. The conclusions expressed are based upon current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), related regulations and
current administrative rulings and court decisions, all of which are subject to
change at any time, with possible retroactive effect. Subsequent changes may
cause tax consequences to vary substantially from the consequences described
below. Furthermore, the authorities on which the following summary is based are
subject to various interpretations, and it is therefore possible that the United
States federal income tax treatment of the purchase, ownership, and disposition
of Trust Preferred Securities may differ from the treatment described below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Trust Preferred
Securities. The discussion generally focuses on holders of Trust Preferred
Securities who are individual citizens or residents of the United States and who
acquire Trust Preferred Securities on their original issue at their offering
price and hold Trust Preferred Securities as capital assets. The discussion has
only limited application to dealers in securities, corporations, estates, trusts
or nonresident aliens and does not address all the tax consequences that may be
relevant to holders who may be subject to special tax treatment, such as, for
example, banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors, or persons that will hold the Trust Preferred Securities as a
position in a "straddle," as part of a "synthetic security" or "hedge," as part
of a "conversion transaction" or other integrated investment, or as other than a
capital asset.
The following summary also does not address the tax consequences to persons
that have a functional currency other than the U.S. dollar, or the tax
consequences to shareholders, partners or beneficiaries of a holder of Trust
Preferred Securities. It also 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 Trust
Preferred Securities. Accordingly, each prospective investor should consult, and
should rely exclusively on, such investor's own tax advisors in analyzing the
federal, state, local and foreign tax consequences of the purchase, ownership or
disposition of Trust Preferred Securities.
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Classification of the Junior Subordinated Debentures
The Junior Subordinated Debentures will be classified for United States
federal income tax purposes as our indebtedness under current law, assuming full
compliance with the terms of the Indenture and certain other documents, and
based upon certain other facts and circumstances. No assurance can be given,
however, that this classification will not be challenged by the Internal Revenue
Service or, if challenged, that such a challenge will not be successful. We, the
Trust and the holders of the Trust Preferred Securities (by acceptance of a
beneficial interest in a Trust Preferred Security) agree to treat the Junior
Subordinated Debentures as our indebtedness for all United States federal income
tax purposes. The remainder of this discussion assumes that the Junior
Subordinated Debentures will be classified for United States federal income tax
purposes as our indebtedness.
Classification of the Trust
Under current law and assuming full compliance with the terms of the Trust
Agreement and Indenture (and certain other documents described herein), the
Trust will be classified for United States federal income tax purposes as a
grantor trust and not as an association taxable as a corporation. Accordingly,
for United States federal income tax purposes, each holder of Trust Preferred
Securities generally will be treated as owning an undivided beneficial interest
in the Junior Subordinated Debentures, and each holder will be required to
include in its gross income items of income realized with respect to its
allocable share of the Junior Subordinated Debentures.
Interest Income and Original Issue Discount
Under applicable Treasury regulations (the "Regulations"), if the terms and
conditions of a debt instrument make the likelihood that stated interest will
not be timely paid a "remote" contingency, such contingency will be ignored in
determining whether a debt instrument is issued with Original Issue Discount
("OID"). We believe that the likelihood of our exercising our option to defer
payments of interest is remote, because exercising the option would, among other
things, prevent us from declaring dividends on any class of our equity
securities. Based on this conclusion by us, Tax Counsel has rendered its opinion
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 tax accounting.
Under the Regulations, if we were to exercise our option to defer payments
of stated interest, the Junior Subordinated Debentures would, at such time, be
treated as redeemed and reissued 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
related thereto would not be reported as taxable income. Consequently, a holder
of Trust Preferred Securities would be required to include in gross income OID
even though we would not make actual cash payments during a Deferral Period.
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 the interpretation described in this summary. If the option
to defer the payment of interest were determined not to be "remote," the Junior
Subordinated Debentures would be treated as having been originally issued with
OID. In that 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 the holder's method of tax accounting, and actual
distributions of stated interest would not be reported as taxable income.
Characterization of Income
Because income on the Trust Preferred Securities will constitute interest
or OID, corporate holders of the Trust Preferred Securities will not be entitled
to a dividends-received deduction with respect to any income recognized with
respect to the Trust Preferred Securities.
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Distribution of Junior Subordinated Debentures or Cash Upon Liquidation of the
Trust
We 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. The 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
the holder's aggregate tax basis in its Trust Preferred Securities. For United
States federal income tax purposes, a holder's holding period in the Junior
Subordinated Debentures so received in liquidation of the Trust would include
the period during which the Trust Preferred Securities were held by the holder.
Under certain circumstances described herein, the Junior Subordinated
Debentures may be redeemed for cash and the proceeds of such redemption
distributed to holders in redemption of their Trust Preferred Securities. Such
a redemption would, for United States federal income tax purposes, constitute a
taxable disposition of the redeemed Trust Preferred Securities, and a holder
could recognize gain or loss as if it sold such redeemed Trust Preferred
Securities for cash.
Sales of Trust Preferred Securities
A holder that sells Trust Preferred Securities (including a redemption of
the Trust Preferred Securities by us) will recognize gain or loss equal to the
difference between its adjusted tax basis in the Trust Preferred Securities and
the amount realized on the sale of such Trust Preferred 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 Trust Preferred 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 Trust
Preferred Securities in respect of OID. The gain or loss generally will be a
capital gain or loss and generally will be a long-term capital gain or loss if
the Trust Preferred Securities have been held for more than one year.
A holder who disposes of the Trust Preferred Securities between record
dates for payments of distributions thereon will be required to include in
income (to the extent not previously included in income) as ordinary income
amounts attributable to accrued and unpaid interest on the Junior Subordinated
Debentures through the date of disposition. A holder will recognize gain on a
disposition in an amount equal to the excess of the amount realized on
disposition (excluding the portion of the sales price treated as interest) over
the holder's adjusted basis in the Trust Preferred Securities. To the
extent the selling price is less than the holder's adjusted tax basis, a holder
will recognize a capital loss. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
The Trust Preferred 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 Debenture are deemed to have been issued with OID) who disposes of
his Trust Preferred 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, if applicable, OID), and to add the 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.
Holders of Trust Preferred Securities other than a holder who purchased the
Trust Preferred Securities upon original issuance may be considered to have
acquired their undivided interests in the Junior Subordinated Debentures with
"market discount" or "acquisition premium" as such phrases are defined for
United States federal income tax purposes. Such holders are advised to consult
their tax advisors as to the income tax consequences of the acquisition,
ownership and disposition of the Trust Preferred Securities.
Potential Tax Law Changes
Changes in legislation affecting the United States federal income tax
treatment of the Junior Subordinated Debentures are possible, and could
adversely affect our ability to deduct the interest payable on the Junior
Subordinated Debentures.
46
<PAGE>
Information Reporting to Holders
Generally, income on the Trust Preferred Securities will be reported to
holders on Internal Revenue Form 1099, which forms should be mailed to holders
of Trust Preferred Securities by January 31 following each calendar year.
Backup Withholding and Information Reporting
The amount of interest (or OID) accrued on the Trust Preferred Securities
held of record by individual citizens or residents of the United States, or
certain trusts, estates, and partnerships, will be reported to the Internal
Revenue Service on Forms 1099. These forms should be mailed to such holders of
Trust Preferred Securities by January 31 following each calendar year. Payments
made on, and proceeds from the sale of, the Trust Preferred Securities may be
subject to a "backup" withholding tax (currently at 31%) unless the holder
complies with certain identification and other requirements. Any amounts
withheld under the backup withholding rules will be allowed as a credit against
the holder's United States federal income tax liability, provided the required
information is provided to the Internal Revenue Service.
The United States Federal Income Tax discussion provided above is included
for general information only and may not be applicable depending upon the
particular situation of a holder of Trust Preferred Securities. Holders of Trust
Preferred Securities should consult their tax advisors with respect to the tax
consequences to them of the purchase, ownership and disposition of the Trust
Preferred Securities, including the tax consequences under state, local, foreign
and other tax laws and the possible effects of changes in united states federal
or other tax laws.
ERISA CONSIDERATIONS
Employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
("Plans") generally may purchase Trust Preferred Securities, subject to the
investing fiduciary's determination that the investment in Trust Preferred
Securities satisfies ERISA's fiduciary standards and other requirements
applicable to investments by the Plan.
In any case, we or any of our affiliates may be considered a "party in
interest" (within the meaning of ERISA) or a "disqualified person" (or within
the meaning of Section 4975 of the Code) with respect to certain Plans
(generally, Plans maintained or sponsored by, or contributed to by, any such
persons with respect to which Sandy Spring or an affiliate is a fiduciary, or
Plans for which we or an affiliate provides services). The acquisition and
ownership of Trust Preferred Securities by a Plan (or by an individual
retirement arrangement or other Plans described in Section 4975(e)(1) of the
Code) with respect to which we or any of our affiliates is considered a party in
interest or a disqualified person may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Trust Preferred
Securities are acquired pursuant to and in accordance with an applicable
exemption.
As a result, Plans with respect to which we or any of our affiliates is a
party in interest or a disqualified person should not acquire Trust Preferred
Securities unless the Trust Preferred Securities are acquired pursuant to and in
accordance with an applicable exemption. Any other Plans or other entities whose
assets include Plan assets subject to ERISA or Section 4975 of the Code
proposing to acquire Trust Preferred Securities should consult with their own
counsel.
The sale of Trust Preferred Securities to Plans is in no respect a
representation by the Trust, us, the Property Trustee, the underwriters or any
other person associated with the sale of the Trust Preferred Securities that
such securities meet all relevant legal requirements with respect to investments
by Plans generally or any particular Plan, or that such securities are otherwise
appropriate for Plans generally or any particular Plan. Any purchaser proposing
to acquire Trust Preferred Securities with assets of any Plan should consult
with its counsel.
47
<PAGE>
UNDERWRITING
The underwriters named below have severally agreed, to purchase from the
Trust the number of Trust Preferred Securities shown by their names, below, at
the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this prospectus.
<TABLE>
<CAPTION>
Underwriter Number of Trust
Preferred Securities
- ------------------------------------------ ------------------------
<S> <C>
Legg Mason Wood Walker, Incorporated
Wheat First Securities, a division of
First Union Securities, Inc.
Ferris, Baker Watts, Incorporated
-----
Total =====
</TABLE>
The underwriting agreement provides that the obligations of the
underwriters are subject to certain conditions, and that if any of the foregoing
Trust Preferred Securities are purchased by the underwriters pursuant to the
underwriting agreement, all such securities must be purchased. In the event of
a default by an underwriter, the underwriting agreement provides that, in
certain circumstances, purchase commitments of the nondefaulting underwriters
may be increased, or the underwriting agreement may be terminated. The
underwriters may reject orders in whole or in part and withdraw, cancel, or
modify the offer without notice. We and the Trust each have agreed to
indemnify the underwriters and their controlling persons against certain
liabilities, including liabilities under the Securities Act of 1933 or to
contribute to payments the underwriters may be required to made.
The underwriters also may impose a penalty bid on certain selling group
members. This means that if the underwriters purchases Trust Preferred
Securities in the open market to reduce the underwriter's short position or to
stabilize the price of the Trust Preferred Securities, it may reclaim the amount
of the selling concession from the selling group members who sold those Trust
Preferred Securities as part of the offering.
The underwriters may create a "short position" in the Trust Preferred
Securities in connection with the offering, which means that they may over-allot
or sell more shares than are set forth on the cover page of this prospectus. If
the underwriters create a short position by such over-allotment, then the
underwriters may reduce that short position by purchasing Trust Preferred
Securities in the open market. The underwriters also may elect to reduce any
short position by exercising all or part of the over-allotment option. In
general, purchases of a security for the purpose of stabilization or to reduce a
short position could cause the price of security to be higher than it might
otherwise be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
The underwriters have advised us and the Trust that it proposes to offer
the Trust Preferred Securities directly to the public initially at the public
offering price set forth on the cover page of this prospectus and to certain
dealers at such price less a concession not in excess of $ per Trust
Preferred Security. The underwriters may allow and such dealers may reallow a
concession not in excess of $ per Trust Preferred Security to certain other
brokers and dealers. After the public offering, the public offering price,
concession and reallowance, and other selling terms may be changed by the
underwriters.
Because the National Association of Securities Dealers, Inc. (the "NASD")
is expected to view the Trust Preferred Securities as interests in a direct
participation program, the offering of the Trust Preferred Securities is being
made in compliance with the applicable provisions of the NASD's Rules of
Conduct.
Application has been made to have the Trust Preferred Securities approved
for quotation on The Nasdaq Stock Market's National Market. The underwriters
have advised the Trust that they presently intend to make a market in the Trust
Preferred Securities after the commencement of trading on The Nasdaq Stock
Market's National Market, but no assurances can be made as to the liquidity of
such Trust Preferred Securities or that an active and liquid trading market will
develop or, if developed, that it will continue. The offering price and
distribution rate have been determined by negotiations
48
<PAGE>
between us and the underwriters, and the offering price of the Trust Preferred
Securities may not be indicative of the market price following the offering. The
underwriters will have no obligation to make a market in the Trust Preferred
Securities, however, and may cease market-making activities, if commenced, at
any time.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Trust
Preferred Securities, the enforceability of the Trust Agreement and the
formation of the Trust will be passed upon by Richards, Layton & Finger, P.A.,
special Delaware counsel to Sandy Spring and the Trust. Certain legal matters
for Sandy Spring and the Trust, including the validity of the Guarantee and the
Junior Subordinated Debentures, will be passed upon for Sandy Spring and the
Trust by Kennedy, Baris & Lundy, L.L.P., Bethesda, Maryland, counsel to Sandy
Spring and the Trust. Certain legal matters will be passed upon for the
underwriters by Elias, Matz, Tiernan & Herrick L.L.P.,Washington, D.C..
Kennedy, Baris & Lundy, L.L.P. and Elias, Matz, Tiernan & Herrick L.L.P. will
rely on the opinion of Richards, Layton & Finger, P.A. as to matters of Delaware
law. Certain matters relating to United States federal income tax
considerations will be passed upon for Sandy Spring by Kennedy, Baris & Lundy,
L.L.P.
EXPERTS
The consolidated financial statements of Sandy Spring Bancorp, Inc. at
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998, incorporated by reference in this Prospectus have been
audited by Stegman & Company, independent auditors, as stated in their reports,
which are incorporated by reference in this Prospectus. These financial
statements have been incorporated by reference in reliance upon the report of
that firm given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). Our SEC
filings are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You also may read and copy any documents we file with the
SEC at its public reference room at 450 Fifth Street, NW, Washington, DC 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room.
The Trust is not currently subject to the information reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Trust will become subject to these requirements upon the
effectiveness of the registration statement that contains this prospectus,
although it intends to seek and expects to receive an exemption from those
requirements.
We and the Trust have filed a registration statement on Form S-3 (the
"Registration Statement) to register the Trust Preferred Securities to be sold
in the offering, the Junior Subordinated Debentures and the Guarantee. This
Prospectus is part of that Registration Statement. As allowed by the SEC, this
Prospectus does not contain all of the information you can find in the
Registration Statement or the exhibits to the Registration Statement.
SEC regulations allow us to "incorporate by reference" information into
this Prospectus, which means that the we can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is considered part of this Prospectus.
Information incorporated by reference from earlier documents is superseded by
information that has been incorporated by reference from more recent documents.
This Prospectus incorporates by reference the documents listed below that
we have previously filed with the SEC (file no. 000-19065). These documents
contain important information about us and our finances. Some of these filings
have been amended by later filings, which are also listed.
1. Annual Report on Form 10-K for the Year ended December 31, 1998;
2. Quarterly Report on Form 10-Q for the Quarter ended March 31, 1999;
3. Current Report on Form 8-K filed April 7; 1999;
4. Quarterly Report on Form 10-Q for the Quarter ended June 30, 1998;
5. Current Report on Form 8-K filed July 23, 1999 ;
6. Current Report on Form 8-K filed September 30, 1999; and
7. Quarterly Report on Form 10-Q for the Quarter ended
September 30, 1999;
49
<PAGE>
We also incorporate by reference additional documents that may be filed
with the SEC after the date of this prospectus and before the termination of the
offering. These additional documents are incorporated by reference in this
prospectus and to be a part of this prospectus from the date the additional
documents are filed.. These documents include periodic reports, such as Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on
Form 8-K, as well as proxy statements. You can obtain any of the documents
incorporated by reference through us, the SEC or the SEC's internet web site as
described above. Documents that are incorporated by reference are available from
us without charge, including any exhibits that are specifically incorporated by
reference. You may obtain documents incorporated by reference in this prospectus
by requesting them in writing or by telephone from us at the following address:
Marjorie S. Holsinger
Corporate Secretary
Sandy Spring Bancorp, Inc.
17801 Georgia Avenue,
Olney, Maryland 20832
Telephone: (301) 774-6400.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information that is different from what is contained in this prospectus. This
prospectus is dated November [ ], 1999. You should not assume that the
information contained in this prospectus is accurate as of any date other than
that date.
_________________________
50
<PAGE>
================================================================================
1,400,000 Trust Preferred
Securities
Sandy Spring Capital Trust I
% Cumulative Trust Preferred Securities fully and unconditionally
guaranteed by
Sandy Spring Bancorp, Inc.
PROSPECTUS
Legg Mason Wood Walker
Incorporated
Wheat First Securities
Ferris, Baker Watts
Incorporated
, 1999
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC registration fee $ 9,730
NASD fee 4,000
Nasdaq fees* 35,000
Trustees' fees and expenses* 25,000
Legal fees and expenses* 75,000
Accounting fees and expenses* 10,000
Printing expenses* 30,000
Miscellaneous expenses* 21,270
--------
Total $210,000
_________________ ========
* Estimated.
Item 15. Indemnification of Directors and Officers.
Sandy Spring's Articles of Incorporation generally provide for indemnification
to the extent authorized by applicable law. Section 2-418 of the Maryland
General Corporation Law sets forth circumstances under which directors,
officers, employees and agents of Sandy Spring may be insured or indemnified
against liability which they may incur in these capacities. The Maryland General
Corporation Law provides, in pertinent part, as follows:
2-418 INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. --
(a) In this section the following words have the meanings indicated.
(1) "Director" means any person who is or was a director of a corporation
and any person who, while a director of a corporation, is or was serving at the
request of the corporation as a director, officer, partner, trustee, employee,
or agent of another foreign or domestic corporation, partnership, joint venture,
other enterprise, or employee benefit plan.
(2) "Corporation" includes any domestic or foreign predecessor entity of a
corporation in a merger, consolidation, or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(3) "Expenses" include attorney's fees.
(4) "Official capacity" means the following:
(i) When used with respect to a director, the office of director in the
corporation; and
(ii) When used with respect to a person other than a director as
contemplated in sub-section (j), the elective or appointive office in the
corporation held by the officer, or the employment or agency relationship
undertaken by the employee or agent in behalf of the corporation.
(iii) "Official capacity" does not include service for any other foreign or
domestic corporation or any partnership, joint venture, trust, other enterprise,
or employee benefit plan.
(5) "Party" includes a person who was, is, or is threatened to be made a
named defendant or respondent in a proceeding.
(6) "Proceeding" means any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative.
(b)(1) A corporation may indemnify any director made a party to any proceeding
by reason of service in that capacity unless it is established that:
(i) The act or omission of the director was material to the matter giving
rise to the proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and deliberate dishonesty; or
(ii) The director actually received an improper personal benefit in money,
property, or services; or
(iii) In the case of any criminal proceeding, the director had reasonable
cause to believe that the act or omission was unlawful.
(2)(i) Indemnification may be against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding.
(ii) However, if the proceeding was one by or in the right of the
corporation, indemnification may not be
<PAGE>
made in respect of any proceeding in which the director shall have been adjudged
to be liable to the corporation.
(3)(i) The termination of any proceeding by judgment, order, or settlement
does not create a presumption that the director did not meet the requisite
standard of conduct set forth in this subsection.
(ii) The termination of any proceeding by conviction, or a plea of nolo
contendere or its equivalent, or an entry of an order of probation prior to
judgment, creates a rebuttal presumption that the director did not meet that
standard of conduct.
(c) A director may not be indemnified under subsection (B) of this section
in respect of any proceeding charging improper personal benefit to the director,
whether or not involving action in the director's official capacity, in which
the director was adjudged to be liable on the basis that personal benefit was
improperly received.
(d) Unless limited by the charter:
(1) A director who has been successful, on the merits or otherwise, in the
defense of any proceeding referred to in subsection (B) of this section shall be
indemnified against reasonable expenses incurred by the director in connection
with the proceeding.
(2) A court of appropriate jurisdiction upon application of a director and
such notice as the court shall require, may order indemnification in the
following circumstances:
(i) If it determines a director is entitled to reimbursement under
paragraph
(1) of this subsection, the court shall order indemnification, in which
case the director shall be entitled to recover the expenses of securing such
reimbursement; or
(ii) If it determines that the director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not the
director has met the standards of conduct set forth in subsection (b) of this
section or has been adjudged liable under the circumstances described in
subsection (c) of this section, the court may order such indemnification as the
court shall deem proper. However, indemnification with respect to any
proceeding by or in the right of the corporation or in which liability shall
have been adjudged in the circumstances described in subsection (c) shall be
limited to expenses.
(3) A court of appropriate jurisdiction may be the same court in which the
proceeding involving the director's liability took place.
(e)(1) Indemnification under subsection (b) of this section may not be made by
the corporation unless authorized for a specific proceeding after a
determination has been made that indemnification of the director is permissible
in the circumstances because the director has met the standard of conduct set
forth in subsection (b) of this section.
(2) Such determination shall be made:
(i) By the board of directors by a majority vote of a quorum consisting of
directors not, at the time, parties to the proceeding, or, if such a quorum
cannot be obtained, then by a majority vote of a committee of the board
consisting solely of two or more directors not, at the time, parties to such
proceeding and who were duly designated to act in the matter by a majority vote
of the full board in which the designated directors who are parties may
participate;
(ii) By special legal counsel selected by the board of directors or a
committee of the board by vote as set forth in subparagraph (I) of this
paragraph, or, if the requisite quorum of the full board cannot be obtained
therefor and the committee cannot be established, by a majority vote of the full
board in which directors who are parties may participate; or
(iii) By the stockholders.
(3) Authorization of indemnification and determination as to reasonableness
of expenses shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses shall be
made in the manner specified in subparagraph (ii) of paragraph (2) of this
subsection for selection of such counsel.
(4) Shares held by directors who are parties to the proceeding may not be
voted on the subject matter under this subsection.
(f)(1) Reasonable expenses incurred by a director who is a party to a
proceeding may be paid or reimbursed by the corporation in advance of the final
disposition of the proceeding upon receipt by the corporation of:
(i) A written affirmation by the director of the director's good faith
belief that the standard of conduct necessary for indemnification by the
corporation as authorized in this section has been met; and
(ii) A written undertaking by or on behalf of the director to repay the
amount if it shall ultimately be determined that the standard of conduct has not
been met.
(2) The undertaking required by subparagraph (ii) of paragraph (1) of this
subsection shall be an unlimited
II-2
<PAGE>
general obligation of the director but need not be secured and may be accepted
without reference to financial ability to make the repayment.
(3) Payments under this subsection shall be made as provided by the
charter, bylaws or contract or as specified in subsection (e) of this section.
(g) The indemnification and advancement of expenses provided or authorized
by this section may not be deemed exclusive of any other rights, by
indemnification or otherwise, to which a director may be entitled under the
charter, the bylaws, a resolution of stockholders of directors, an agreement or
otherwise, both as to action in an official capacity and as to action in another
capacity while holding such office.
(h) This section does not limit the corporation's power to pay or reimburse
expenses incurred by a director in connection with an appearance as a witness in
a proceeding at a time when the director has not been made a named defendant or
respondent in the proceeding.
(i) For purposes of this section:
(1) The corporation shall be deemed to have requested a director to serve
an employee benefit plan where the performance of the director's duties to the
corporation also imposes duties on, or otherwise involves services by, the
director to the plan or participants or beneficiaries of the plan:
(2) Excise taxes assessed on a director with respect to an employee benefit
plan pursuant to applicable law shall be deemed fined; and
(3) Action taken or omitted by the director with respect to an employee
benefit plan in the performance of the director's duties for a purpose
reasonably believed by the director to be in the interest of the participants
and beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the corporation.
(j) Unless limited by the charter:
(1) An officer of the corporation shall be indemnified as and to the extent
provided in subsection (d) of this section for a director and shall be entitled,
to the same extent as a director, to seek indemnification pursuant to the
provisions of subsection (d);
(2) A corporation may indemnify and advance expenses to an officer,
employee, or agent of the corporation to the same extent that it may indemnify
directors under this section; and
(3) A corporation, in addition, may indemnify and advance expenses to an
officer, employee, or agent who is not a director to such further extent,
consistent with law, as may be provided by its charter, bylaws, general or
specific action of its board of directors or contract.
(k)(1) A corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent of the corporation,
or who, while a director, officer, employee, or agent of the corporation, is or
was serving at the request of the corporation as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, other enterprise, or employee benefit plan
against any liability asserted against and incurred by such person in any such
capacity or arising out of such person's position, whether or not the
corporation would have the power to indemnify against liability under the
provisions of this section.
(2) A corporation may provide similar protection, including a trust fund,
letter of credit, or surety bond, not inconsistent with this section.
(3) The insurance or similar protection may be provided by a subsidiary or
an affiliate of the corporation.
(l) Any indemnification of, or advance of expenses to, a director in
accordance with this section, if arising out of a proceeding by or in the right
of the corporation, shall be reported in writing to the stockholders with the
notice of the next stockholders' meeting or prior to the meeting.
II-3
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
Exhibit No. Description
- ----------- -----------
1 Form of Underwriting Agreement
4.1 Indenture of the Corporation relating to the Junior Subordinated
Debentures
4.2 Form of Certificate of Junior Subordinated Debenture (included as
Exhibit A to Exhibit 4.1)
4.3 Certificate of Trust of Sandy Spring Capital Trust I
4.4 Amended and Restated Declaration of Trust of Sandy Spring Capital
Trust I
4.5 Form of Trust Preferred Security Certificate for Sandy Spring Capital
Trust I (included as Exhibit A to Exhibit 4.4)
4.6 Form of Guarantee of the Corporation relating to the Trust Preferred
Securities
5.1 Form of Opinion and consent of Kennedy, Baris & Lundy, L.L.P. as to
legality of the Junior Subordinated Debentures and the Guarantee to be
issued by the Corporation
5.2 Form of Opinion of Richards, Layton & Finger P.A. as to legality of
the Trust Preferred Securities to be issued by Sandy Spring Capital
Trust I
8 Form of Opinion of Kennedy, Baris & Lundy, L.L.P. as to certain
federal income tax matters
12.1 Computation of ratio of earnings to fixed charges
23.1 Consent of Stegman & Company
23.2 Consent of Kennedy, Baris & Lundy, L.L.P. (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger P.A. (included in Exhibit 5.2)
24 Power of Attorney
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Amended and Restated Declaration of Trust of Sandy
Spring Capital Trust I
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Indenture
25.3 Form T-1 Statement of Eligibility of The Bank of New York under the
Guarantee for the benefit of the holders of the Trust Preferred
Securities
- --------------------
Item 17. 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.
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 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.
For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
II-4
<PAGE>
For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Sandy Spring
Bancorp, Inc. certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Olney, State of Maryland, on the 5th day of
November 1999.
SANDY SPRING BANCORP, INC.
By: /s/ Hunter R. Hollar
-----------------------------------------
Hunter R. Hollar
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ John Chirtea* Director November 5, 1999
- -----------------
John Chirtea
/s/ Susan D. Goff* Director November 5, 1999
- ------------------
Susan D. Goff
/s/ Solomon Graham* Director November 5, 1999
- -------------------
Solomon Graham
/s/ Gilbert L. Hardesty* Director November 5, 1999
- ------------------------
Gilbert L. Hardesty
/s/ Joyce R. Hawkins* Director November 5, 1999
- ---------------------
Joyce R. Hawkins
/s/ Thomas O. Keech* Director November 5, 1999
- --------------------
Thomas O. Keech
/s/ Charles F. Mess* Director November 5, 1999
- --------------------
Charles F. Mess
/s/ Robert L. Mitchell* Director November 5, 1999
- -----------------------
Robert L. Mitchell
/s/ Robert l. Orndorff, Jr.* Director November 5, 1999
- -----------------------------
Robert L. Orndorff, Jr.
/s/ David E. Rippeon* Director November 5, 1999
- ---------------------
David E. Rippeon
/s/ Lewis R. Schumann* Director November 5, 1999
- ----------------------
Lewis R. Schumann
/s/ W. Drew Stabler* Director, Chairman of November 5, 1999
- -------------------- the Board
W. Drew Stabler
II-6
<PAGE>
/s/ James H. Langmead Vice President, Treasurer and
- --------------------- Principal Financial and
James H. Langmead Accounting Officer
*By: /s/ Marjorie S. Holsinger
-------------------------------------
Marjorie S. Holsinger, Attorney in Fact
Pursuant to the requirements of the Securities Act of 1933, Sandy Spring
Capital Trust I certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Olney, State of Maryland, on the 5th day of
November 1999.
SANDY SPRING CAPITAL TRUST I
By: /s/ Hunter R. Hollar
----------------------------------------------
Hunter R. Hollar, Administrative Trustee
By: /s/ James H. Langmead
----------------------------------------------
James H. Langmead, Administrative Trustee
By: /s/ Lawrence T. Lewis, III
----------------------------------------------
Lawrence T. Lewis, III, Administrative Trustee
II-7
<PAGE>
Exhibit 1
_____________________________________
SANDY SPRING BANCORP, INC.
(a Maryland corporation); and
SANDY SPRING CAPITAL TRUST
(a Delaware statutory business trust)
1,400,000
____% Cumulative Trust
Preferred Securities
UNDERWRITING AGREEMENT
Dated: __________, 1999
_____________________________________
<PAGE>
SANDY SPRING BANCORP, INC.
(a Maryland corporation); and
SANDY SPRING CAPITAL TRUST
(a Delaware statutory business trust)
1,400,000
____% Cumulative Trust
Preferred Securities
(Liquidation Amount $25 Per Cumulative Preferred Security)
UNDERWRITING AGREEMENT
----------------------
______, 1999
LEGG MASON WOOD WALKER, INCORPORATED
FIRST UNION SECURITIES
FERRIS, BAKER WATTS, INCORPORATED
As Representatives of the Several Underwriters
c/o Legg Mason Wood Walker, Incorporated
1747 Pennsylvania Avenue N.W.
Washington, D.C. 20006
Attention: Mark C. Micklem, Managing Director
Ladies and Gentlemen:
Sandy Spring Capital Trust (the "Trust"), a statutory business trust
organized under the Delaware Business Trust Act, 12 Del. C. (S)(S) 3801 et seq.
-- ----
(the "Delaware Act"), confirms its agreement with you and Legg Mason Wood
Walker, Incorporated, First Union Securities and Ferris, Baker Watts,
Incorporated (the "Representatives"), as the representatives of each of the
corporations listed on Schedule A hereto (collectively, the "Underwriters"),
with respect to the issuance and sale by the Trust, and the purchase by the
Underwriters, acting severally and not jointly, of the respective numbers of
_____ % Cumulative Trust Preferred Securities (liquidation amount $25 per
preferred security) set forth in Schedule A hereto. The aforesaid 2,000,000
preferred securities to be purchased by the Underwriters are hereinafter called,
the "Preferred Securities." The Preferred Securities are more fully described in
the Prospectus (as defined below).
The Preferred Securities will be guaranteed by Sandy Spring Bancorp, Inc.
(the "Company"), to the extent set forth in the Prospectus (as defined below),
with respect to distributions and amounts payable upon liquidation or redemption
(the "Preferred Securities Guarantee") pursuant to the Preferred Securities
Guarantee Agreement (the "Preferred Securities Guarantee Agreement") to be
<PAGE>
dated as of Closing Time (as defined below) executed and delivered by the
Company and The Bank of New York (the "Guarantee Trustee"), a New York banking
corporation, not in its individual capacity but solely as trustee for the
benefit of the holders from time to time of the Preferred Securities. The
Company and the Trust each understand that the Underwriters propose to make a
public offering of the Preferred Securities as soon as they deem advisable after
this Agreement has been executed and delivered, and the Declaration (as defined
herein), the Indenture (as defined herein), and the Preferred Securities
Guarantee Agreement have been qualified under the Trust Indenture Act of 1939,
as amended (the "1939 Act"). The entire proceeds from the sale of the Preferred
Securities will be combined with the entire proceeds from the sale by the Trust
to the Company of its common securities (the "Common Securities") guaranteed by
the Company, to the extent set forth in the Prospectus, with respect to
distributions and amounts payable upon liquidation or redemption (the "Common
Securities Guarantee" and, together with the Preferred Securities Guarantee, the
"Guarantees") pursuant to the Common Securities Guarantee Agreement (the "Common
Securities Guarantee Agreement" and, together with the Preferred Securities
Guarantee Agreement, the "Guarantee Agreements"), to be dated as of Closing
Time, executed and delivered by the Company for the benefit of the holders from
time to time of the Common Securities, and will be used by the Trust to purchase
the ____% Junior Subordinated Deferrable Interest Debentures due 2029 (the
"Junior Subordinated Debentures") issued by the Company. The Preferred
Securities and the Common Securities will be issued pursuant to the Amended and
Restated Declaration of Trust of the Trust, to be dated as of Closing Time (the
"Declaration"), among the Company, as Sponsor, The Bank of New York, as property
trustee (the "Property Trustee"), The Bank of New York (Delaware), as Delaware
trustee (the "Delaware Trustee"), and Hunter R. Hollar, James H. Langmead, and
______________ as administrative trustees (the "Administrative Trustees" and
together with the Property Trustee and the Delaware Trustee, the "Trustees"),
and the holders from time to time of undivided beneficial interests in the
assets of the Trust. The Junior Subordinated Debentures will be issued pursuant
to an Indenture, to be dated as of Closing Time (the "Indenture"), between the
Company and The Bank of New York, as debenture trustee (the "Debenture
Trustee"). The Preferred Securities, the Preferred Securities Guarantee and the
Junior Subordinated Debentures are collectively referred to herein as the
"Securities." The Trust and the Company are collectively referred to herein as
the "Offerors." The Indenture, the Declaration and this Agreement are
collectively referred to herein as the "Operative Documents." Capitalized terms
used herein without definition have the respective meanings specified in the
Prospectus.
The Company and the Trust have filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (Nos. 333-
_____ and 333-_____-01) covering the registration of the Securities under the
Securities Act of 1933, as amended (the "1933 Act"), including the related
preliminary prospectus. Promptly after execution and deliver of this Agreement,
the Company will either (i) prepare and file a prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") and the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b) of
Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the Company and
the Trust have elected to rely upon Rule 434 ("Rule 434") of the 1933 Act
Regulations, prepare and file a term sheet (a "Term Sheet") in accordance with
the provisions of Rule 434 and Rule 424(b). The information included in such
prospectus or in such
2
<PAGE>
Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of such
registration statement at the time it became effective (a) pursuant to paragraph
(b) of Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to
paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each
prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto, if any, at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement" and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus in the form first furnished to the Underwriters for use in connection
with the offering of the Preferred Securities is herein call the "Prospectus."
If Rule 434 is relied on, the term "Prospectus" shall refer to the preliminary
prospectus dated __________, 1999 together with the Term Sheet and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
SECTION 1. Representations and Warranties.
------------------------------
(a) The Offerors jointly and severally represent and warrant to each
Underwriter as of the date hereof and as of the Closing Time referred to in
Section 2(c) hereof, and agree with each Underwriter as follows:
(i) Compliance with Registration Requirements. Each of the
-----------------------------------------
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time, the Registration Statement, the
Rule 462(b) Registration Statement, if any, and any amendments and
supplements thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading. Neither the
3
<PAGE>
Prospectus nor any amendments or supplements thereto, at the time the
Prospectus or any such amendment or supplement was issued and at the
Closing Time, included or will include an untrue statement of a material
fact or omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. If Rule 434 is used, the Company will
comply with the requirements of Rule 434 and the Prospectus shall not be
"materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective. The representations and warranties in this subsection shall not
apply (A) to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Trust or the Company in writing by any Underwriter through
the Representatives expressly for use in the Registration Statement or
Prospectus and (B) that part of the Registration Statement which shall
constitute the Statements of Eligibility (Forms T-1) under the 1939 Act.
Each preliminary prospectus and the prospectus filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and, if
applicable, each preliminary prospectus and the Prospectus delivered to the
Underwriters for use in connection with this offering was substantively
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(ii) Independent Accountants. The accountants who certified the
-----------------------
financial statements incorporated by reference in the Prospectus are
independent public accountants within the meaning of the 1933 Act and the
1933 Act Regulations.
(iii) Financial Statements. The consolidated historical financial
--------------------
statements, together with the related schedules and notes, incorporated by
reference in the Prospectus present fairly, in all material respects, the
consolidated financial position of the Company and its consolidated
subsidiaries at the dates indicated, and the statements of income, changes
in stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified, said financial statements have been
prepared in con formity with generally accepted accounting principles
("GAAP") in the United States applied on a consistent basis throughout the
periods involved, except as disclosed in the notes to such financial
statements; the supporting schedules, if any, included in the Prospectus
present fairly, in all material respects, the information required to be
stated therein; and the summary financial data included in the Prospectus
present fairly, in all material respects, the information shown therein and
have been compiled on a basis consistent with that of the audited financial
statements incorporated by reference in the Prospectus.
(iv) No Material Adverse Change in Business. Since the respective
--------------------------------------
dates as of which information is given in the Prospectus, except as
otherwise stated therein or contemplated thereby, there has not been (A)
any material adverse change in the financial
4
<PAGE>
condition, or in the earnings, business affairs or business prospects of
the Trust, or of the Company and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), (B) any transaction entered into by the Trust,
the Company or any of its subsidiaries, other than in the ordinary course
of business, that is material to the Trust, or to the Company and its
subsidiaries, considered as one enterprise, or (C) any dividend or
distribution of any kind declared, paid or made by the Company on any class
of its capital stock, other than regular quarterly dividends on the
Company's common stock.
(v) Good Standing of the Company. The Company has been duly
----------------------------
organized and is validly existing as a corporation in good standing under
the laws of the State of Maryland and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under each of the Operative Documents to which it is a party; the Company
is duly registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended.
(vi) Good Standing of the Bank. Sandy Spring National Bank of
-------------------------
Maryland (the "Bank") has been duly organized and is validly existing as a
commercial bank in good standing under the laws of the United States and
has full power and authority under such laws to own, lease and operate its
properties and to conduct its business as now being conducted and as
described in the Prospectus.
(vii) Good Standing of Other Subsidiaries. The only direct or
-----------------------------------
indirect subsidiaries of the Company are the Bank, Sandy Spring Insurance
Corporation and Sandy Spring Mortgage Corporation (collectively, the
"Subsidiaries"). Each of the Subsidiaries has been duly organized and is
validly existing as a corporation in good standing under the laws of its
respective jurisdiction of incorporation and each Subsidiary has the
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus or the documents
incorporated by reference therein.
(viii) Foreign Qualifications. The Company and each of the
----------------------
Subsidiaries are duly qualified as a foreign corporation to transact
business and are each in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
or be in good standing would not result in a Material Adverse Effect (as
defined in Section 1(a)(iv) hereof).
(ix) Capital Stock Duly Authorized and Validly Issued. All of the
------------------------------------------------
issued and outstanding capital stock of the Company has been duly
authorized and validly issued and is fully paid and nonassessable and none
of the capital stock of the Company was issued in violation of the
preemptive rights or similar rights arising by operation of law, under the
Articles of Incorporation or bylaws of the Company or under any agreement
to which the
5
<PAGE>
Company is a party. All of the issued and outstanding capital stock of each
of the Subsidiaries has been duly authorized and validly issued, is fully
paid and nonassessable and is owned by the Company, directly or through its
Subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equitable right; and none of such outstanding
shares of capital stock of the Subsidiaries was issued in violation of any
preemptive or similar rights arising by operation of law, or under the
Articles of Incorporation or bylaws of the Company or any such Subsidiary
or under any agreement to which the Company or any such Subsidiary is a
party.
(x) Capitalization. The authorized, issued and outstanding
--------------
capital stock of the Company as of September 30, 1999 is as set forth in
the Prospectus under "Capitalization," and there have not been any
subsequent issuances of capital stock of the Company except for subsequent
issuances, if any, pursuant to any dividend reinvestment plan,
reservations, agreements, conversions, stock dividends or employee or
director benefit plans.
(xi) Good Standing of the Trust. The Trust has been duly created
--------------------------
and is validly existing in good standing as a business trust under the
Delaware Act with the power and authority to own property and to conduct
its business as described in the Prospectus and to enter into and perform
its obligations under the Operative Documents, as applicable, and the
Preferred Securities; the Trust is not a party to or otherwise bound by any
material agreement other than those described in the Prospectus; and the
Trust is, and will be, under current law, classified for United States
federal income tax purposes as a grantor trust and not as an association
taxable as a corporation.
(xii) Authorization of Common Securities. The Common Securities
----------------------------------
have been duly authorized for issuance by the Trust pursuant to the
Declaration and, when certificates therefor have been issued, executed and
authenticated in accordance with the Declaration and delivered by the Trust
to the Company against payment therefor in accordance with the Common
Securities Subscription Agreement, will be validly issued and fully paid
and nonassessable undivided beneficial ownership interests in the assets of
the Trust. The issuance of the Common Securities is not subject to
preemptive or other similar rights, and, at the Closing Time, all of the
issued and outstanding Common Securities of the Trust will be directly
owned by the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equitable right.
(xiii) Authorization of Preferred Securities. At the Closing
-------------------------------------
Time, the Preferred Securities will have been duly authorized for issuance
by the Trust pursuant to the Declaration, and the Preferred Securities,
when certificates therefore have been issued, executed and authenticated in
accordance with the Declaration and delivered against payment therefor as
provided herein, will be validly issued and fully paid and nonassessable
undivided beneficial ownership interests in the assets of the Trust and
will conform to the description thereof in the Prospectus. The issuance of
the Preferred Securities will not be subject to preemptive or other similar
rights.
6
<PAGE>
(xiv) Authorization of Agreement. This Agreement has been duly
--------------------------
authorized, executed and delivered by the Offerors.
(xv) Authorization of Declaration. The Declaration has been
----------------------------
qualified under the 1939 Act and has been duly authorized by the Company
and, at the Closing Time, will have been duly executed and delivered by the
Company and the Trustees, and assuming due authorization, execution and
delivery of the Declaration by the Trustees, the Declaration will, at the
Closing Time, be a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now
or hereafter in effect relating to creditors' rights generally, (b) general
principles of equity (regardless of whether enforceability is considered in
a proceeding at law or in equity) and (c) any public policy underlying
applicable federal or state laws (collectively, the "Enforceability
Exceptions").
(xvi) Authorization of Guarantees. The Preferred Securities
---------------------------
Guarantee has been qualified under the 1939 Act and each of the Guarantees
has been duly authorized by the Company; at the Closing Time, each of the
Guarantees will have been duly executed and delivered by the Company and
will constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
enforceability may be limited by the Enforceability Exceptions; and the
Preferred Securities Guarantee will conform in all material respects to the
description thereof in the Prospectus.
(xvii) Authorization of Indenture. The Indenture has been
--------------------------
qualified under the 1939 Act and has been duly authorized by the Company
and, at the Closing Time, will have been duly executed and delivered by the
Company and will constitute a valid, legal and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except to the extent that enforceability may be limited by the
Enforceability Exceptions.
(xviii) Authorization of Debentures. The Junior Subordinated
---------------------------
Debentures have been duly authorized by the Company; at the Closing Time,
the Junior Subordinated Debentures will have been duly executed by the
Company and, when authenticated in the manner provided for in the Indenture
and delivered by the Company to the Trust against payment therefor as
described in the Prospectus, will constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with their
terms, except to the extent that enforceability may be limited by the
Enforceability Exceptions; and the Junior Subordinated Debentures will be
in the form contemplated by, and entitled to the benefits of, the Indenture
and will conform in all material respects to the descriptions thereof in
the Prospectus.
7
<PAGE>
(xix) Authorization of Trustees. Each of the Administrative
-------------------------
Trustees of the Trust is an officer of the Company and has been duly
authorized by the Company to execute and deliver the Declaration.
(xx) Trust and Company Not Investment Company. Neither the Trust
----------------------------------------
nor the Company is, and immediately following consummation of the
transactions contemplated hereby and the application of the net proceeds as
described in the Prospectus neither the Trust nor the Company will be, an
"investment company" or a company "controlled" by an "investment company"
which is required to be registered under the Investment Company Act of
1940, as amended (the "1940 Act").
(xxi) Accuracy of Disclosure. The Operative Documents conform in
----------------------
all material respects to the descriptions thereof contained in the
Prospectus.
(xxii) Absence of Defaults and Conflicts. The Trust is not in
---------------------------------
violation of the trust certificate of the Trust filed with the State of
Delaware (the "Trust Certificate") or the Declaration, and neither the
Company nor any of its Subsidiaries is in violation of its respective
Articles of Incorporation or bylaws; none of the Trust, the Company nor any
of its Subsidiaries is in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease
or other agreement or instrument to which it is a party or by which it or
any of them may be bound, or to which any of its property or assets is
subject (collectively, "Agreements and Instruments"), except for such
defaults under Agreements and Instruments that would not result in a
Material Adverse Effect; and the execution, delivery and performance of the
Operative Documents by the Trust or the Company, as the case may be, the
issuance, sale and delivery of the Preferred Securities, the Junior
Subordinated Debentures, the Preferred Securities Guarantee and the Common
Securities Guarantee, the consummation of the transactions contemplated by
the Operative Documents and compliance by the Offerors with the terms of
the Operative Documents to which they are a party have been duly authorized
by all necessary corporate action on the part of the Company and, at the
Closing Time, will have been duly authorized by all necessary action on the
part of the Trust and do not and will not, whether with or without the
giving of notice or passage of time or both, violate, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any security interest,
mortgage, pledge, lien, charge, encumbrance, claim or equitable right upon
any property or assets of the Trust, the Company or any of its Subsidiaries
pursuant to any of the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such action result
in any violation of the provisions of the Articles of Incorporation or
bylaws of the Company or any of its Subsidiaries or the Declaration or the
Trust Certificate, or violation by the Company or any of its Subsidiaries
of any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government authority, agency or instrumentality
or court, domestic or foreign, including, without limitation, the Office of
the Comptroller of the
8
<PAGE>
Currency, the Board of Governors of the Federal Reserve System, and the
Federal Deposit Insurance Corporation, having jurisdiction over the Trust,
the Company, the Subsidiaries, or their respective properties
(collectively, "Governmental Entities"). As used herein, a "Repayment
Event" means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Trust, the
Company or any of its Subsidiaries.
(xxiii) Absence of Labor Disputes. No labor dispute with the
-------------------------
employees of the Company or any of its Subsidiaries exists or, to the
knowledge of the Company, is imminent, which may reasonably be expected to
result in a Material Adverse Effect.
(xxiv) Absence of Proceedings. There is no action, suit,
----------------------
proceeding, inquiry or investigation before or brought by any Governmental
Entity now pending, or, to the knowledge of the Trust or the Company,
threatened, against or affecting the Trust or the Company or any of its
Subsidiaries, which is not disclosed in the Prospectus and which in the
reasonable judgment of the Trust or the Company might result in a Material
Adverse Effect, or which, in the reasonable judgment of the Company might
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated by the Operative Documents or
the performance by the Trust or the Company of its obligations hereunder or
thereunder; the aggregate of all pending legal or governmental proceedings
to which the Trust or the Company or any of its Subsidiaries is a party or
of which any of their respective properties or assets is the subject which
are not described in the Prospectus, including ordinary routine litigation
incidental to the business, are not, in the reasonable judgement of the
Company or the Trust, expected to result in a Material Adverse Effect.
(xxv) Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order, registration,
qualification or decree of, any Governmental Entity, other than those that
have been made or obtained, is necessary or required for the performance by
the Trust or the Company of their obligations under the Operative
Documents, as applicable, or the consummation by the Trust and the Company
of the transactions contemplated by the Operative Documents.
(xxvi) Possession of Licenses and Permits. The Trust, the Company
----------------------------------
and its Subsidiaries possess such permits, licenses, approvals, consents
and other authorizations (collectively, "Governmental Licenses") issued by
the appropriate Governmental Entities necessary to conduct the business now
operated by them; the Trust, the Company and its Subsidiaries are in
compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse
9
<PAGE>
Effect; all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect would
not have a Material Adverse Effect; and neither the Trust, the Company nor
any of its Subsidiaries has received any notice of proceedings relating to
the revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, in the reasonable judgment of the Company, is
likely to result in a Material Adverse Effect.
(xxvii) No Other Agreements. Other than such agreements,
-------------------
contracts and other documents as are described in the Prospectus or
otherwise filed as exhibits to the Company's annual report on Form 10-K or
quarterly reports on Form 10-Q or current reports on Form 8-K incorporated
by reference in the Prospectus, there are no agreements, contracts or
documents of a character described in Item 601 of Regulation S-K of the
Commission to which the Company or any of its Subsidiaries is a party.
(xxviii) Title to Property. Each of the Trust, the Company and
-----------------
its Subsidia ries has good and marketable title to all of their respective
real and personal properties, in each case free and clear of all liens,
encumbrances and defects, except as stated in the Prospectus, or such as do
not materially affect the value of such properties in the aggregate to the
Trust, or to the Company and its Subsidiaries considered as one enterprise;
and all of the leases and subleases material to the business of the Trust,
and to the Company and its Subsidiaries, considered as one enterprise, and
under which either of the Offerors or any of such Subsidiaries holds
properties described in the Prospectus, are in full force and effect and
neither the Offerors nor such Subsidiaries have any notice of any material
claim of any sort that has been asserted by anyone adverse to the rights of
the Offerors or such Subsidiaries under any of the leases or subleases
mentioned above, or affecting or questioning the rights of such entity to
the continued possession of the leased or subleased premises under any such
lease or sublease, which individually or in the aggregate might result in a
Material Adverse Effect.
(xxvix) Regulation M. The Company has not taken and will not
------------
take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of
the price of the Preferred Securities.
(xxx) Intellectual Property. Each of the Trust, the Company
---------------------
and its Subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, licenses, trademarks, service marks, or trade names
(collectively, "Intellectual Property") presently employed by them in
connection with the business now operated by them or reasonably necessary
in order to conduct such business, and neither the Trust, the Company nor
any of its Subsidiaries has received any notice or is otherwise aware of
any infringement of or conflict with asserted rights of others with respect
to any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Trust, the Company or any of its Subsidiaries therein, and
which infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the aggregate,
in the reasonable judgment of the Company, is likely to result in a
Material Adverse Effect.
10
<PAGE>
(xxxi) Year 2000. The computer software operated by the
---------
Company and any Subsidiary which is material to the conduct of the business
of the Company and any Subsidiary is in compliance in all material respects
with all relevant Federal Financial Institutions Examination Council
guidance and requirements relating to the Year 2000 computer issues.
(b) Any certificate signed by any Trustee of the Trust or any duly
authorized officer of the Company or any of its Subsidiaries and delivered to
you or to counsel for the Underwriters shall be deemed a representation and
warranty by the Trust or the Company, as the case may be, to the Underwriters as
to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriter; Closing.
------------------------------------------
(a) Preferred Securities. On the basis of the representations and
--------------------
warranties herein contained and subject to the terms and conditions herein set
forth, the Trust agrees to sell to each Underwriter, severally and not jointly,
and each Underwriter, severally and not jointly, agrees to purchase from the
Trust, at the purchase price of $25 per Preferred Security, the number of
Preferred Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Preferred Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, subject, in each case, to such adjustments among the
Underwriters as they in their sole discretion shall make to eliminate any sales
or purchases of fractional securities. As compensation to the Underwriters for
their commitments hereunder and in view of the fact that the proceeds of the
sale of the Preferred Securities will be used to purchase the Junior
Subordinated Debentures, the Company hereby agrees to pay at the Closing Time to
the Underwriters a commission of $____ per Preferred Security purchased by the
Underwriters by wire transfer of immediately available funds.
(b) Payment. Payment of the purchase price for, and delivery of
-------
certificates for the Preferred Securities shall be made at the offices of Elias,
Matz, Tiernan & Herrick L.L.P. in Washington, D.C., or at such other place as
shall be agreed upon by the Underwriters and the Offerors, at 9:00 a.m.,
Washington, D.C. time, on ________, 1999 (unless postponed in accordance with
the provisions of Section 10 hereof), or such other time not later than ten (10)
business days after such date as shall be agreed upon by the Underwriters and
the Offerors (such time and date of payment and delivery being herein called the
"Closing Time").
Payment shall be made to the Trust by wire transfer of immediately
available funds, to the order of the Trust, to a bank designated by the Company,
against delivery to the Underwriters through the facilities of the Depository
Trust Company ("DTC") of certificates for the Preferred Securities to be
purchased by them.
(c) Denominations, Registration. Certificates for the Preferred
---------------------------
Securities shall be in definitive form, and in such denominations and registered
in such names as the Underwriters may request in writing at least one business
day before the Closing Time. All such certificates shall be
11
<PAGE>
made available for examination and packaging by the Underwriters at the office
of DTC or its designated custodian not later than 10:00 a.m. on the last
business day prior to the Closing Time.
SECTION 3. Covenants of the Offerors. The Offerors jointly and severally
-------------------------
covenant with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
--------------------------------------------------------------
The Company and the Trust, subject to Section 3(b) hereof, will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify the
Underwriters immediately, and confirm the notice in writing, (i) when any post-
effective amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
Preferred Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes. The
Company and the Trust will promptly effect the filings necessary pursuant to
Rule 424(b) and will take such steps as it deems necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Company and the Trust will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company and the Trust will give the
--------------------
Underwriters notice of their intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term Sheet
or any amendment, supplement or revision to either the prospectus included in
the Registration Statement at the time it became effective or to the Prospectus,
whether pursuant to the 1933 Act or otherwise, will furnish the Underwriters
with copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use any such
document to which the Underwriters or counsel for the Underwriters shall
reasonably object.
(c) Delivery of Registration Statements. The Company has furnished or
-----------------------------------
will deliver to the Underwriters and counsel for the Underwriters, without
charge, two copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and copies of all consents and certificates of experts, and
will also deliver to the Underwriters, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriters will be
substantively identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
12
<PAGE>
(d) Delivery of Prospectuses. The Offerors, as promptly as possible,
------------------------
will furnish to the Underwriters, without charge, such number of copies of the
preliminary prospectus, the final Prospectus and any amendments and supplements
thereto and documents incorporated by reference therein as the Underwriter may
reasonably request, and the Company and the Trust hereby consent to the use of
such copies for purposes permitted by the 1933 Act. The Company will furnish to
each Underwriter, without charge, during the period when the Prospectus is
required to be delivered under the 1933 Act or the Securities Exchange Act of
1934 (the "1934 Act"), such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
substantively identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company and the
-----------------------------------------
Trust will comply with the 1933 Act and the 1933 Act Regulations so as to permit
the completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act to be delivered in connection with sales of the Preferred
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company and the Trust will
promptly prepare and file with the Commission, subject to Section 3(b) hereof,
such amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may reasonably
request.
(f) Blue Sky Qualifications. The Company and the Trust will each use
-----------------------
its best efforts, in cooperation with the Underwriters, to qualify the Preferred
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions as the Underwriters may reasonably designate and
to maintain such qualifications in effect for a period of not less than one year
from the later of the effective date of the Registration Statement and any Rule
462(b) Registration Statement, provided, however, that neither the Company nor
-------- -------
the Trust shall be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. In each jurisdiction in which the Preferred Securities have been so
qualified, the Company and the Trust will file such statements and reports as
may be required by the laws of such jurisdiction to continue such qualification
in effect for a period of not less than one year from the later of the effective
date of the Registration Statement and any Rule 462(b) Registration Statement.
13
<PAGE>
(g) Rule 158. The Company will timely file such reports pursuant to
--------
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Notice and Effect of Material Events. The Offerors will
------------------------------------
immediately notify the Underwriters, and confirm such notice in writing, of (x)
any filing made by the Offerors of information relating to the offering of the
Preferred Securities with any securities exchange or any other regulatory body
in the United States, and (y) prior to the completion of the distribution of the
Preferred Securities by the Underwriters as evidenced by a notice in writing
from the Underwriters to the Offerors, any Material Adverse Effect, which (i)
makes any statement in the Prospectus false or misleading or (ii) is not
disclosed in the Prospectus. In such event or if during such time any event
shall occur as a result of which it is necessary, in the reasonable opinion of
the Company, its counsel or the Underwriters or counsel to the Underwriters, to
amend or supplement the final Prospectus in order that the final Prospectus not
include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances then existing, the Company will forthwith amend or supplement
the final Prospectus by preparing and furnishing to the Underwriters an
amendment or amendments of, or a supplement or supplements to, the final
Prospectus (in form and substance satisfactory in the reasonable opinion of
counsel for the Underwriters) so that, as so amended or supplemented, the final
Prospectus will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a subsequent
purchaser, not misleading.
(i) DTC. The Offerors will cooperate with the Underwriters and use
---
their best efforts to permit the Preferred Securities to be eligible for
clearance and settlement through the facilities of DTC.
(j) Use of Proceeds. The Trust will use the proceeds received by it
---------------
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds." The Company will use the net proceeds received by it from
the sale of the Junior Subordinated Debentures, in the manner specified in the
Prospectus under "Use of Proceeds."
(k) Listing. The Company will use its best efforts to effect the
-------
listing of the Preferred Securities on the Nasdaq National Market ("NASDAQ"). If
the Junior Subordinated Debentures are distributed on the occurrence of a Tax
Event (as defined in the Prospectus), the Company will use its best efforts to
effect the listing of the Junior Subordinated Debentures on NASDAQ or such other
exchange where the Preferred Securities are listed.
(l) Restriction on Sale of Securities. During a period of 90 days
---------------------------------
from the date of the Prospectus, neither the Company nor the Trust will, without
the prior written consent of the Representatives, (i) directly or indirectly,
offer, pledge, sell, contract to sell, sell any option or
14
<PAGE>
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of any Preferred
Securities or Junior Subordinated Debentures (or any equity or debt securities
substantially similar to the Preferred Securities or Junior Subordinated
Debentures, respectively), or any securities convertible into or exercisable or
exchangeable for Preferred Securities or Junior Subordinated Debentures (or any
equity or debt securities substantially similar to the Preferred Securities or
Junior Subordinated Debenture, respectively) or file any registration statement
under the 1933 Act with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of Preferred
Securities or Junior Subordinated Debentures (or any equity or debt securities
substantially similar to the Preferred Securities or Junior Subordinated
Debentures, respectively), whether any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of Preferred Securities or
Junior Subordinated Debentures (or any equity or debt securities substantially
similar to the Preferred Securities or Junior Subordinated Debentures,
respectively) or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to the Preferred Securities or Junior Subordinated
Debentures to be sold hereunder.
(m) Reporting Requirements. The Company and the Trust, during the
----------------------
period when the Prospectus is required to be delivered under the 1933 Act or the
1934 Act, will file all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the 1934 Act within the time periods
required by the 1934 Act and the rules and regulations of the Commission under
the 1934 Act.
(n) Furnish Reports. For and during the period ending three years
---------------
after the effective date of the Registration Statement, the Company will furnish
to the Underwriters copies of all reports and other communications (financial or
otherwise) furnished by the Company to its securityholders generally and copies
of any reports or financial statements furnished to or filed by the Company with
the Commission or any national securities exchange on which any class of
securities of the Company may be listed.
SECTION 4. Payment of Expenses.
-------------------
(a) Expenses. The Company, as borrower under the Junior Subordinated
--------
Debentures, will pay all expenses incident to the performance of its, and the
Trust's, obligations under this Agreement, including (i) the preparation,
printing and any filing of the Registration Statement (including financial
statements and any schedules or exhibits and any document incorporated therein
by reference) and of each amendment or supplement thereto, (ii) the preparation,
printing and delivery to the Underwriters of this Agreement, the Operative
Documents and such other documents as may be required in connection with the
offering, purchase, sale and delivery of the Preferred Securities and the Junior
Subordinated Debentures, (iii) the preparation, issuance and delivery of the
certificates for the Preferred Securities to the Underwriters, including any
stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance, or delivery of the Preferred Securities to the Underwriters,
(iv) the fees and disbursements of the Company's counsel,
15
<PAGE>
accountants and other advisors, (v) the fees and expenses of any trustee
appointed under any of the Operative Documents, including the fees and
disbursements of counsel for such trustees in connection with the Operative
Documents, (vi) the printing and delivery to the Underwriter of copies of each
preliminary prospectus, any Term Sheets and of the Prospectus and any amendments
or supplements thereto, if any, (vii) the fees and expenses of any transfer
agent or registrar for the Preferred Securities, (viii) the filing fees incident
to the review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Preferred Securities, (ix) the fees and
expenses incurred in connection with the listing of the Preferred Securities
and, if applicable, the Junior Subordinated Debentures on NASDAQ, and (x) the
cost and charges of qualifying the Preferred Securities with DTC.
(b) Termination of Agreement. If this Agreement is terminated by the
------------------------
Underwriters in accordance with the provisions of Section 5, Section 9(a)(i) or
Section 10 hereof, the Company shall reimburse the Underwriters for all of their
reasonable, actual, accountable out-of-pocket expenses, including the reasonable
fees and disbursements of Elias, Matz, Tiernan & Herrick L.L.P., counsel for the
Underwriters.
SECTION 5. Conditions of Underwriter' Obligations. The obligations of the
--------------------------------------
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Offerors contained in Section 1 hereof or
in certificates of any Trustee of the Trust, officer of the Company or any of
its Subsidiaries delivered pursuant to the provisions hereof, to the performance
by the Offerors of their obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430(a) or, if the Company has elected to rely upon Rule
434, a Term Sheet shall have been filed with the Commission in accordance with
Rule 424(b)).
(b) Opinion of Outside Counsel for Offerors. At the Closing Time, the
---------------------------------------
Underwriters shall have received the favorable opinion, dated as of the Closing
Time, of Kennedy, Baris & Lundy, LLP, counsel for the Offerors, in form and
substance reasonably satisfactory to the Underwriters. Such counsel may state
that, insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of Trustees of the Trust, officers of
the Company or any designated Subsidiary and certificates of public officials.
(c) Opinion of Special Delaware Counsel for Offerors. At the Closing
------------------------------------------------
Time, the Underwriters shall have received the favorable opinion, dated as of
the Closing Time, of Richards,
16
<PAGE>
Layton & Finger P.A., special Delaware counsel for the Offerors, in form and
substance reasonably satisfactory to the Underwriters.
(d) Opinion of Counsel for The Bank of New York. At the Closing Time,
-------------------------------------------
the Underwriters shall have received the favorable opinion, dated as of the
Closing Time, of Emmet, Marvin & Martin, LLP, counsel to The Bank of New York,
as Property Trustee under the Declaration, Guarantee Trustee under the Preferred
Securities Guarantee Agreement and Debenture Trustee under the Indenture, in
form and substance reasonably satisfactory to counsel for the Underwriters.
(e) Opinion of Special Tax Counsel for the Offerors. At the Closing
-----------------------------------------------
Time, the Underwriters shall have received an opinion, dated as of the Closing
Time, of Kennedy, Baris & Lundy, LLP, special tax counsel to the Offerors,
substantially to the effect that (i) the Junior Subordinated Debentures will be
classified as indebtedness for United States federal income tax purposes, (ii)
the Trust will be classified as a grantor trust for United States federal income
tax purposes, and (iii) the statements set forth in the Prospectus under the
caption "Certain Federal Income Tax Consequences" constitute, in all material
respects, a fair and accurate summary of the United States federal income tax
consequences of the ownership and disposition of the Preferred Securities under
current law. Such opinion may be conditioned on, among other things, the initial
and continuing accuracy of the facts, financial and other information, covenants
and representations set forth in certificates of officers of the Company and
other documents deemed necessary for such opinion.
(f) Opinion of Counsel for the Underwriters. At the Closing Time, the
---------------------------------------
Underwriters shall have received the favorable opinion, dated as of the Closing
Time, of Elias, Matz, Tiernan & Herrick L.L.P., counsel for the Underwriters,
with respect to the Preferred Securities, the Operative Documents, the
Prospectus and other related matters as the Underwriters may require. Such
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of Trustees
of the Trust, officers of the Company or the Subsidiaries and certificates of
public officials.
(g) Certificates. At the Closing Time, there shall not have been,
------------
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the financial condition
or in the earnings, business affairs or business prospects of the Trust, or the
Company and its Subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business, and the Underwriters shall have
received a certificate of the Chairman, the Chief Executive Officer, the
President or any Vice President of the Company and of the Chief Financial
Officer of the Company and a certificate of an Administrative Trustee of the
Trust, dated as of the Closing Time, to the effect that, to his or her knowledge
(i) there has been no such material adverse change, (ii) the representations and
warranties in Section 1 hereof were true and correct when made and are true and
correct with the same force and effect as though expressly made at and as of the
Closing Time, and (iii) the Offerors have complied with all agreements and
satisfied all conditions on their part to be performed or satisfied at or prior
to the Closing Time.
17
<PAGE>
(h) Accountant's Comfort Letter. At the time of the execution of this
---------------------------
Agreement, the Underwriters shall have received from Stegman & Company (the
"Accountants") a letter dated such date, in form and substance satisfactory to
the Underwriters, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to Underwriters with respect to the
financial statements and certain financial information included or incorporated
by reference in the Prospectus.
(i) Bring-down Comfort Letter. At the Closing Time, the Underwriters
-------------------------
shall have received from the Accountants a letter dated as of the Closing Time,
to the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (h) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to the
Closing Time.
(j) Approval of Listing. At the Closing Time, the Preferred Securities
-------------------
shall have been approved for listing on NASDAQ.
(k) Additional Documents. At the Closing Time, counsel for the
--------------------
Underwriters shall have been furnished such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Preferred Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties of the
Offerors, or the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Offerors in connection with the issuance and sale of
the Preferred Securities as herein contemplated shall be satisfactory in form
and substance to the Underwriters and counsel for the Underwriters.
(l) Termination of Agreement. If any condition specified in this
------------------------
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Underwriters by notice to the Offerors at any
time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 hereof
and except that Sections 7 and 8 hereof shall survive any such termination and
remain in full force and effect.
SECTION 6. Indemnification.
---------------
(a) Indemnification of Underwriters. The Offerors agree to jointly and
-------------------------------
severally indemnify and hold harmless (x) each Underwriter, (y) each person, if
any, who controls any Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act (each such person, a "Control Person") and (z)
the respective partners, directors, officers and employees of each Underwriter
or any Control Person as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment or supplement
18
<PAGE>
thereto), including the Rule 430A Information and the Rule 434 Information,
if applicable, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or arising out of any untrue statement of a material
fact contained in any preliminary prospectus or the Prospectus (or any
amendment or supple ment thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Offerors; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Underwriters), reasonably incurred in investigating, preparing for or
defending against any litigation or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission or any such
alleged untrue statement or omission to the extent that any such expense is
not paid under (i) or (ii) above; provided, however, that this indemnity
agreement shall not apply to any loss, liability, claim, damage or expense
to the extent arising out of any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Offerors by any Underwriter through
the Representatives expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto). The foregoing indemnity with
respect to any untrue statement or alleged untrue statement contained in or
omission or alleged omission from a preliminary prospectus shall not inure
to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any loss, liability, claim,
damage or expense purchases any of the Preferred Securi ties which are the
subject thereof if the Company shall sustain the burden of proving that
such person was not sent or given a copy of the Prospectus (or the
Prospectus as amended or supplemented) at or prior to the written
confirmation of the sale of such Preferred Securities to such person and
the untrue statement contained in or omission from such preliminary
prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented) and the Company has previously furnished copies thereof to
such Underwriter.
19
<PAGE>
(b) Indemnification of Offerors, Directors, Officers and Employees.
--------------------------------------------------------------
Each Underwriter severally agrees to indemnify and hold harmless the Company,
its directors, officers and employees, the Trust, each of the Trustees and each
person, if any, who controls the Trust, any of the Trustees or the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 6(a) above, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Offerors by any Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary
prospectus, or the Prospectus (or any amendment or supplement thereto).
(c) Actions Against Parties; Notification. Each indemnified party
-------------------------------------
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof, and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. An indemnifying party may participate at its own
expense in the defense of any such action or, if it so elects within a
reasonable time after receipt of such notice, to 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 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 judgement of counsel for the indemnified party or
parties, there may be legal defenses available to such indemnified person which
are different from or in addition to those available to such indemnifying
person, in which event the reasonable fees and expenses of appropriate separate
counsel shall be borne by the indemnifying party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investi gation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim
20
<PAGE>
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.
SECTION 7. Contribution. In order to provide for just and equitable
------------
contribution in circumstances under which the indemnification provided for in
Section 6 hereof is for any reason held to be unenforceable by an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Offerors on the one
hand and the Underwriters on the other hand from the offering of the Preferred
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Offerors, on the one hand, and of the
Underwriters, on the other hand, in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Offerors on the one hand and the
Underwriters on the other hand in connection with the offering of the Preferred
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Preferred Securities pursuant to this Agreement (before deducting expenses)
received by the Offerors and the total commission received by the Underwriters,
bear to the aggregate initial offering price of the Preferred Securities.
The relative fault of the Offerors, on the one hand, and the Underwriters,
on the other hand, shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statements of a material fact of
omission or alleged omission to state a material fact relates to information
supplied by the Offerors or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Offerors and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Preferred Securities purchased by it and distributed to the
public were offered to the public exceeds the amount
21
<PAGE>
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 7, each person, if any, who controls the Underwriters within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act and the respective
partners, directors, officers and employees of the Underwriters shall have the
same rights to contribution as the Underwriters, and each officer, director and
employee of the Company, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
shall have the same rights to contribution as the Company.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or trustees of the Trust submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or con trolling
person, or by or on behalf of the Trust or the Company, and shall survive
delivery of the Preferred Securities to the Underwriters.
SECTION 9. Termination of Agreement.
------------------------
(a) Termination; General. The Underwriters may terminate this
--------------------
Agreement, by notice to the Offerors, at any time at or prior to the Closing
Time (i) if there has occurred, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Prospectus,
any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Trust or the Company and
its Subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business or (ii) if there has occurred any material adverse
change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis, or any change or
development involving a prospective change in national political, financial or
economic conditions, in each case the effect of which is such as to make it, in
the judgment of the Underwriters, impracticable to market the Preferred
Securities or to enforce contracts for the sale of the Preferred Securities, or
(iii) if trading in any securities of the Company has been suspended or limited
by the Commission, or if trading generally on the American Stock Exchange, the
New York Stock Exchange or NASDAQ has been suspended or limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the NASD or any other governmental authority, or (iv) if a banking
moratorium has been declared by either federal or Maryland authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
-----------
Section, such termination shall he without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
6 and 7 hereof shall survive such termination and remain in full force and
effect.
22
<PAGE>
SECTION 10. Default by One or More of the Underwriters. If one of the
------------------------------------------
Underwriters shall fail at Closing Time to purchase the Preferred Securities
which it or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the remaining Underwriters shall have the right, within 24 hours
thereafter, to make arrangement, to purchase all, but not less than all, of the
Defaulted Securities in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, such Underwriters shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of defaulted Securities does not exceed 10% of the
number of Preferred Securities to be purchased on such date, the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of the non-defaulting
Underwriters, or
(b) if the number of Defaulted securities exceeds 10% of the number of
Preferred Securities to be purchased on such date, the obligation of the
Underwriters to purchase and of the Company to sell the Preferred Securities to
be purchased and sold on such Closing Time shall terminate without liability on
the part of the non-defaulting Underwriters.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement and which does not result in a termination of the
obligation of the Underwriters to purchase and the Company to sell the Preferred
Securities, either the Underwriters or the Company shall have the right to
postpone Closing Time for required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives c/o Legg Mason Wood
Walker, Incorporated, 1747 Pennsylvania Avenue N.W., Washington, D.C. 20006,
Attention: Mark C. Micklem, Managing Director, with a copy to Elias, Matz,
Tiernan & Herrick L.L.P. , 734 15th Street, N.W., 12th Floor, Washington, D.C.
20005, Attention: Norman B. Antin Esq.; notices to the Offerors shall be
directed to Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland
20832, Attention: Hunter R. Hollar, with a copy to Kennedy, Baris & Lundy, LLP,
4701 Sangamore Road, Suite P-15, Bethesda, Maryland 20816, Attention: James I.
Lundy, III, Esq.
SECTION 12. Parties. This Agreement shall inure to the benefit of and be
-------
binding upon each of the Underwriters and the Offerors and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or
23
<PAGE>
corporation, other than the Underwriters and the Offerors and their respective
successors and the controlling persons and officers and directors referred to in
Sections 1, 6 and 7 hereof and their heirs and legal representatives, any legal
or equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Underwriters
and the Offerors and their respective successors, and said controlling persons
and officers and directors and their heirs and legal representatives, and for
the benefit of no other person, firm or corporation. No purchaser of Preferred
Securities from the Underwriters shall be deemed to be a successor by reason
merely of such purchase.
The Company, on behalf of itself and its Subsidiaries (including, without
limitation, the Trust), hereby irrevocably submits to the exclusive jurisdiction
of the federal and New York State courts located in the City of New York in
connection with any suit, action or proceeding related 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.
SECTION. 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES.
SECTION 14. Effect of Headings. The Article and Section headings herein are
------------------
for convenience only and shall not affect the construction hereof.
24
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Offerors in accordance with its terms.
Very truly yours,
SANDY SPRING BANCORP, INC.
By:
----------------------------------
Name: Hunter R. Hollar
Title: President and Chief Executive Officer
SANDY SPRING CAPITAL TRUST
By:
----------------------------------
Name: Hunter R. Hollar
Title: Administrative Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
LEGG MASON WOOD WALKER, INCORPORATED
FIRST UNION SECURITIES
FERRIS, BAKER WATTS, INCORPORATED
By: Legg Mason Wood Walker, Incorporated
By:
----------------------------------
Authorized Signatory
For itself and as the Representatives of the several
Underwriters named in Schedule A hereto.
25
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Name of Underwriter Preferred Securities
- -------------------------------------------------------------------------
<S> <C>
Legg Mason Wood Walker, Incorporated.................
First Union Securities...............................
Ferris, Baker Watts, Incorporated....................
Total................................................
</TABLE>
26
<PAGE>
Exhibit 4.1
_________________________
SANDY SPRING BANCORP, INC.
_________________________
INDENTURE
Dated as of _______ __, 1999
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
______ __, 1999 between Sandy Spring Bancorp, Inc. and The Bank of New York,
Trustee:
<TABLE>
<CAPTION>
ACT SECTION INDENTURE SECTION
<S> <C>
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
- -------------------------------------
</TABLE>
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE>
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
ARTICLE I DEFINITIONS
<S> <C>
SECTION 1.01. Definitions ..................................... 1
Additional Sums ................................................... 1
Affiliate ......................................................... 1
Allocable Amounts ................................................. 1
Authenticating Agent .............................................. 2
Bankruptcy Law .................................................... 2
Board of Directors ................................................ 2
Board Resolution .................................................. 2
Business Day ...................................................... 2
Commission ........................................................ 2
Common Securities ................................................. 2
Common Securities Guarantee ....................................... 2
Common Stock ...................................................... 3
Company ........................................................... 3
Company Request ................................................... 3
Compounded Interest ............................................... 3
Custodian ......................................................... 3
Declaration ....................................................... 3
Default ........................................................... 3
Defaulted Interest ................................................ 3
Deferred Interest ................................................. 3
Definitive Securities ............................................. 3
Depositary ........................................................ 3
Dissolution Event ................................................. 3
Event of Default .................................................. 3
Exchange Act ...................................................... 4
Extended Interest Payment Period ................................. 4
Global Security ................................................... 4
Indebtedness ...................................................... 4
Indenture ......................................................... 4
Interest Payment Date ............................................. 4
Investment Company Event ......................................... 4
Maturity Date ..................................................... 4
_________________________
</TABLE>
* THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A PART
OF THE INDENTURE.
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Mortgage .......................................................... 5
Non Book-Entry Preferred Securities ............................... 5
Officers .......................................................... 5
Officers' Certificate ............................................. 5
Opinion of Counsel ................................................ 5
Other Debentures .................................................. 5
Other Guarantees .................................................. 5
Outstanding ....................................................... 5
Person ............................................................ 6
Predecessor Security .............................................. 6
Preferred Securities .............................................. 6
Preferred Securities Guarantee .................................... 6
Principal Office of the Trustee ................................... 7
Property Trustee .................................................. 7
Redemption Date ................................................... 7
Redemption Price .................................................. 7
Regulatory Capital Event .......................................... 7
Responsible Officer ............................................... 7
Sandy Spring Capital Trust I or the Trust ......................... 7
Securities or Security ............................................ 7
Securities Act .................................................... 7
Securityholder or holder of Securities ............................ 7
Security Register ................................................. 8
Senior and Subordinated Indebtedness .............................. 8
Special Event ..................................................... 8
Subsidiary ........................................................ 8
Tax Event ......................................................... 8
Trust Indenture Act of 1939 ....................................... 9
Trustee ........................................................... 9
Trust Securities .................................................. 9
Underwriting Agreement ............................................ 9
U.S. Government Obligations ....................................... 9
<CAPTION>
ARTICLE II SECURITIES
<S> <C> <C>
SECTION 2.01. Forms Generally ................................. 9
SECTION 2.02. Execution and Authentication .................... 10
SECTION 2.03. Form and Payment ................................ 10
SECTION 2.04. Global Security ................................. 10
SECTION 2.05 Interest ........................................ 12
SECTION 2.06. Transfer and Exchange ........................... 13
SECTION 2.07. Replacement Securities .......................... 14
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 2.08. Temporary Securities ............................ 14
SECTION 2.09. Cancellation .................................... 15
SECTION 2.10. Defaulted Interest .............................. 15
SECTION 2.11. CUSIP Numbers.................................... 16
<CAPTION>
ARTICLE III PARTICULAR COVENANTS OF THE COMPANY
<S> <C> <C>
SECTION 3.01. Payment of Principal and Interest ............... 16
SECTION 3.02. Offices for Notices and Payments, etc ........... 17
SECTION 3.03. Appointments to Fill Vacancies in Trustee's
Office .......................................... 17
SECTION 3.04. Provision as to Paying Agent .................... 17
SECTION 3.05. Certificate to Trustee .......................... 18
SECTION 3.06. Compliance with Consolidation Provisions ........ 19
SECTION 3.07. Limitation on Dividends ......................... 19
SECTION 3.08. Covenants as to Sandy Spring Capital Trust I .... 19
SECTION 3.09. Payment of Expenses ............................. 20
SECTION 3.10. Payment Upon Resignation or Removal ............. 21
SECTION 3.11. Corporate Existence ............................. 21
SECTION 3.12. Notice of Default ............................... 21
SECTION 3.13. Listing on an Exchange .......................... 21
<CAPTION>
ARTICLE IV SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
<S> <C> <C>
SECTION 4.01. Securityholders' Lists ......................... 21
SECTION 4.02. Preservation and Disclosure of Lists ........... 22
SECTION 4.03. Reports by Company ............................. 23
SECTION 4.04. Reports by the Trustee ......................... 24
<CAPTION>
ARTICLE V REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
<S> <C> <C>
SECTION 5.01. Events of Default .............................. 25
SECTION 5.02. Payment of Securities on Default; Suit Therefor 27
SECTION 5.03. Application of Moneys Collected by Trustee ..... 29
SECTION 5.04. Proceedings by Securityholders ................. 29
SECTION 5.05. Proceedings by Trustee ......................... 30
SECTION 5.06. Remedies Cumulative and Continuing ............. 30
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders ........ 30
SECTION 5.08. Notice of Defaults ............................. 31
SECTION 5.09. Undertaking to Pay Costs ....................... 32
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 5.10. Waiver of Stay, Extension or Usury Laws ........ 32
<CAPTION>
ARTICLE VI CONCERNING THE TRUSTEE
<S> <C> <C>
SECTION 6.01. Duties and Responsibilities of Trustee .......... 32
SECTION 6.02. Reliance on Documents, Opinions, etc ............ 34
SECTION 6.03. No Responsibility for Recitals, etc ............. 35
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Securities . 36
SECTION 6.05. Moneys to be Held in Trust ...................... 36
SECTION 6.06. Compensation and Expenses of Trustee ............ 36
SECTION 6.07. Officers' Certificate as Evidence ............... 37
SECTION 6.08. Conflicting Interest of Trustee ................. 37
SECTION 6.09. Eligibility of Trustee .......................... 37
SECTION 6.10. Resignation or Removal of Trustee ............... 38
SECTION 6.11. Acceptance by Successor Trustee ................. 40
SECTION 6.12. Succession by Merger, etc ....................... 40
SECTION 6.13. Limitation on Rights of Trustee as a Creditor ... 41
SECTION 6.14. Authenticating Agents ........................... 41
<CAPTION>
ARTICLE VII CONCERNING THE SECURITYHOLDERS
<S> <C> <C>
SECTION 7.01. Action by Securityholders ....................... 42
SECTION 7.02. Proof of Execution by Securityholders ........... 43
SECTION 7.03. Who Are Deemed Absolute Owners .................. 43
SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding ..................................... 43
SECTION 7.05. Revocation of Consents; Future Holders
Bound ........................................... 44
<CAPTION>
ARTICLE VIII SECURITYHOLDERS' MEETINGS
<S> <C> <C>
SECTION 8.01. Purposes of Meetings ............................ 44
SECTION 8.02. Call of Meetings by Trustee ..................... 45
SECTION 8.03. Call of Meetings by Company or Securityholders .. 45
SECTION 8.04. Qualifications for Voting ....................... 45
SECTION 8.05. Regulations ..................................... 45
SECTION 8.06. Voting .......................................... 46
<CAPTION>
ARTICLE IX AMENDMENTS
<S> <C> <C>
SECTION 9.01. Without Consent of Securityholders ............. 47
SECTION 9.02. With Consent of Securityholders ................ 48
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 9.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures ......................... 49
SECTION 9.04. Notation on Securities .......................... 49
SECTION 9.05. Evidence of Compliance of Supplemental Indenture
to be Furnished Trustee ......................... 49
<CAPTION>
ARTICLE X CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
<S> <C> <C>
SECTION 10.01. Company May Consolidate, etc., on Certain Terms . 50
SECTION 10.02. Successor Corporation to be Substituted
for Company ..................................... 50
SECTION 10.03. Opinion of Counsel to be Given Trustee .......... 51
<CAPTION>
ARTICLE XI SATISFACTION AND DISCHARGE OF INDENTURE
<S> <C> <C>
SECTION 11.01. Discharge of Indenture ......................... 51
SECTION 11.02. Deposited Moneys and U.S. Government Obligations
to be Held in Trust by Trustee ................. 52
SECTION 11.03. Paying Agent to Repay Moneys Held .............. 52
SECTION 11.04. Return of Unclaimed Moneys ..................... 52
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations.......................... 53
<CAPTION>
ARTICLE XII IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
<S> <C> <C>
SECTION 12.01. Indenture and Securities Solely Corporate
Obligation .................................... 55
<CAPTION>
ARTICLE XIII MISCELLANEOUS PROVISIONS
<S> <C> <C>
SECTION 13.01. Successors .................................... 55
SECTION 13.02. Official Acts by Successor Corporation ........ 55
SECTION 13.03. Surrender of Company Powers ................... 55
SECTION 13.04. Addresses for Notices, etc .................... 56
SECTION 13.05. Governing Law ................................. 56
SECTION 13.06. Evidence of Compliance with Conditions
Precedent ..................................... 57
SECTION 13.07. Business Days.................................. 57
SECTION 13.08. Trust Indenture Act to Control ................ 57
SECTION 13.09. Table of Contents, Headings, etc .............. 57
SECTION 13.10. Execution in Counterparts ..................... 57
SECTION 13.11. Separability .................................. 57
SECTION 13.12. Assignment .................................... 57
SECTION 13.13. Acknowledgment of Rights ...................... 58
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
ARTICLE XIV REDEMPTION OF SECURITIES
Page
----
<S> <C> <C>
SECTION 14.01. Special Event Redemption ...................... 58
SECTION 14.02. Optional Redemption by Company ................ 58
SECTION 14.03. No Sinking Fund ............................... 59
SECTION 14.04. Notice of Redemption; Selection of Securities . 59
SECTION 14.05. Payment of Securities Called for Redemption .. 60
<CAPTION>
ARTICLE XV SUBORDINATION OF SECURITIES
<S> <C> <C>
SECTION 15.01. Agreement to Subordinate ...................... 61
SECTION 15.02. Default on Senior and Subordinated
Indebtedness .................................. 61
SECTION 15.03. Liquidation; Dissolution; Bankruptcy .......... 62
SECTION 15.04. Subrogation ................................... 63
SECTION 15.05. Trustee to Effectuate Subordination ........... 64
SECTION 15.06. Notice by the Company ......................... 64
SECTION 15.07. Rights of the Trustee; Holders of Senior
and Subordinated Indebtedness ................. 65
SECTION 15.08. Subordination May Not Be Impaired ............. 66
<CAPTION>
ARTICLE XVI EXTENSION OF INTEREST PAYMENT PERIOD
<S> <C> <C>
SECTION 16.01. Extension of Interest Payment Period .......... 66
SECTION 16.02. Notice of Extension ........................... 67
EXHIBIT A ................................................................. A-1
</TABLE>
Testimonium
Signatures
Acknowledgements
<PAGE>
THIS INDENTURE, dated as of _________ __, 1999, between Sandy Spring
Bancorp, Inc., a Maryland 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 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) Direct Action; and (vi) 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
2.05(c).
"Affiliate" shall have the meaning given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Allocable Amounts" when used with respect to any Senior and
Subordinated Indebtedness, means all amounts due or to become due on such Senior
and Subordinated Indebtedness less, if applicable, any amount which would have
been paid to, and retained by, the holders of such Senior and Subordinated
Indebtedness (whether as a result of the receipt of payments
<PAGE>
by the holders of such Senior and Subordinated Indebtedness from the Company or
any other obligor thereon or from any holders of, or trustee in respect of,
other indebtedness that is subordinate and junior in right of payment to such
Senior and Subordinated Indebtedness pursuant to any provision of such
indebtedness for the payment over of amounts received on account of such
indebtedness to the holders of such Senior and Subordinated Indebtedness or
otherwise) but for the fact that such Senior and Subordinated Indebtedness is
subordinated or junior in right of payment to (or subject to a requirement that
amounts received on such Senior and Subordinated Indebtedness be paid over to
obligees on) trade accounts payable or accrued liabilities arising in the
ordinary course of business.
"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 cities of New York, New York or Olney, Maryland are authorized or
required by law or executive order to close.
"Commission" shall mean the Securities and Exchange Commission, as
from time to time constituted or 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 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 Sandy Spring Capital Trust I which rank pari passu with Preferred
Securities issued by Sandy Spring Capital Trust I; provided, however, that if an
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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
Preferred 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 Sandy Spring
Capital Trust I.
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"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 Sandy Spring Bancorp, Inc., a Maryland
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 an Officer of the Company, and
delivered to the Trustee.
"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
Sandy Spring Capital Trust I, dated as of _________ __, 1999, 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 2.10.
"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 2.04(d).
"Dissolution Event" means the liquidation of Sandy Spring 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 Sandy
Spring Capital Trust pro rata in accordance with the Declaration.
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"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.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Extended Interest Payment Period" shall have the meaning set forth
in Section 16.01.
"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 with respect to any Person, whether recourse
is to all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed; (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the acquisition
of property, assets or businesses; (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person; (iv) every obligation of such
Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business); (v) every capital lease obligation of such Person;
(vi) all indebtedness of such Person 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, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.
"Indenture" shall mean this instrument as originally executed or, if
amended as herein provided, as so amended.
"Interest Payment Date" shall have the meaning set forth in Section
2.05(a).
"Investment Company Event" means the receipt by Sandy Spring Capital
Trust and the Company of an Opinion of Counsel, rendered by a law firm
experienced in such matters, to the effect that, as a result of change in law or
regulation or a change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority, Sandy
Spring Capital Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940, as amended,
which change becomes effective on or after the date of original issuance of the
Preferred Securities of Sandy Spring Capital Trust.
"Maturity Date" shall mean __________ __, 2029, or such shorter
period if the Company receives prior regulatory approval if then required under
applicable capital guidelines or regulatory policies.
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"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 Preferred Securities" shall have the meaning set
forth in Section 2.04(a)(ii).
"Officer" shall mean any of the Chairman, a Vice Chairman, the Chief
Executive Officer, the President, the Chief Financial Officer, 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 unless otherwise provided herein, and who shall be
acceptable to the Trustee.
"Other Debentures" means all junior subordinated debentures issued by
the Company from time to time and sold to trusts established or to be
established by the Company, in each case similar to the Trust.
"Other Guarantees" means all guarantees issued or to be issued by the
Company with respect to preferred securities and issued to other trusts to be
established by the Company, in each case similar to the Trust.
"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
5
<PAGE>
proof satisfactory to the Company and the Trustee is presented
that any such Securities are held by bona fide holders in due
course;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee actually knows to be so
owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor. Upon the
written request of the Trustee, the Company shall furnish to the Trustee
promptly an Officers' Certificate listing and identifying all Securities, if
any, known by the Company to be owned or held by or for the account of the
Company, or any other obligor on the Securities or any Affiliate of the Company
or such obligor, and, subject to the provisions of Section 6.01, the Trustee
shall be entitled to accept such Officers' Certificate as conclusive evidence of
the facts therein set forth and of the fact that all Securities not listed
therein are Outstanding for the purpose of any such determination.
"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 as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 2.07 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"Preferred Securities" shall mean undivided beneficial interests in
the assets of Sandy Spring Capital Trust which rank pari passu with the Common
Securities issued by Sandy Spring 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
Preferred Securities shall be paid in full the Distributions and the
liquidation, redemption and other payments to which they are entitled.
"Preferred Securities Guarantee" shall mean any guarantee that the
Company may enter into with The Bank of New York as trustee or other Persons
that operates directly or indirectly for the benefit of holders of Preferred
Securities.
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<PAGE>
"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 principally administered.
"Property Trustee" shall have the same meaning as set forth in the
Declaration.
"Redemption Date" when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price" when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"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, guidelines or policies of applicable regulatory
agencies or (b) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such pronounce ment or decision is announced on or after the date
of this Indenture, the Preferred Securities do not constitute, or within 90 days
of the date thereof, will not constitute, Tier I Capital (or its then
equivalent) for purposes of the capital adequacy guidelines of the Board of
Governors of the Federal Reserve (or any successor regulatory authority with
jurisdiction over bank holding companies), or any capital adequacy guidelines as
then in effect and applicable to the Company; provided, however, that the
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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 in the corporate trust
department 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.
"Sandy Spring Capital Trust" or the "Trust" shall mean Sandy Spring
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.
"Securities" or "Security" mean, any debt securities or debt
security, as the case may be, authenticated and delivered under this Indenture.
"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.
7
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"Security Register" shall have the meaning specified in Section 2.06.
"Senior and Subordinated Indebtedness" means the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not such claim for post-petition interest is allowed in such
proceeding), on Indebtedness of the Company, whether incurred on or prior to the
date of this Indenture or thereafter incurred, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding it
is provided that such obligations are not superior in right of payment to the
Securities or other Indebtedness which is pari passu with, or subordinated to,
the Securities, provided, however, that Senior and Subordinated Indebtedness
-------- -------
shall not be deemed to include (a) any Indebtedness of the Company which, when
incurred and without respect to any election under Section 1111(b) of the
Bankruptcy Reform Act of 1978, as amended, was without recourse to the Company,
(b) any Indebtedness of the Company to any of its Subsidiaries, (c) Indebtedness
to any employee of the Company, and (d) any Securities.
"Special Event" means either an Investment Company Event, a
Regulatory Capital Event or a Tax Event.
"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, participation 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, participation or other
equivalents having such power only by reason of the occurrence of a contingency.
"Tax Event" shall mean the receipt by Sandy Spring 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 the date
of this Indenture, there is more than an insubstantial risk that (i) Sandy
Spring 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) Sandy Spring Capital Trust is, or will be within 90 days
of the date of
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such opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"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,
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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.
"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 Securities" shall mean the Preferred Securities and the Common
Securities, collectively.
"Underwriting Agreement" shall mean the Underwriting Agreement dated
________ __, 1999 among the Company, Sandy Spring Capital Trust and the
underwriters named therein.
"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.
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,
9
<PAGE>
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 $25 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 $__________ aggregate principal amount of the Securities (or
up to $_______ aggregate principal amount of Securities in the event that the
underwriters exercise their over-allotment option granted pursuant to the
Underwriting Agreement), except as provided in Sections 2.06, 2.07, 2.08 and
14.05.
SECTION 2.03. Form and Payment.
Except as provided in Section 2.04, the Securities shall be issued in
fully registered certificated form without interest coupons. Principal of 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.
SECTION 2.04. Global Security.
(a) In connection with a Dissolution Event,
(i) if any Preferred 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 2.06) 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
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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 Preferred Securities are held in certificated form,
the related Definitive Securities may be presented to the Trustee by the
Property Trustee and any Preferred Security certificate which represents
Preferred Securities other than Preferred Securities in book-entry form
("Non Book-Entry Preferred Securities") will be deemed 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 Preferred Securities until such
Preferred Security certificates are presented to the Security Registrar for
transfer or reissuance, at which time such Preferred Security certificates
will be cancelled and a Security, registered in the name of the holder of
the Preferred Security certificate or the transferee of the holder of such
Preferred Security certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
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 2.04.
(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
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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 2.06, 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 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 2.05 Interest.
(a) Each Security will bear interest at the rate of ____% 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
_____ __, 1999, until the principal thereof becomes due and payable on the next
succeeding Interest Payment Date (as defined below), and at the Coupon Rate on
any overdue principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest,
compounded quarterly payable (subject to the provisions of Article XVI)
quarterly in arrears on the last day of March, June, September and December of
each year (each, an "Interest Payment Date") commencing on _____ _____, 1999, 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 Business Day next preceding such
Interest Payment Date; provided, however, that in the event that the Preferred
Securities are no longer in book-entry only form or this Security (or one or
more predecessor Securities) are not represented by a Global Security, the
record date for such payment shall be the fifteenth day of the month in which
such payment is due.
(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 quarter, the number of days lapsed in such quarter based upon 30-day
months. 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 the Trust on the outstanding Trust Securities shall not be reduced as a
result of any additional taxes, duties, assessments and other governmental
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<PAGE>
charges to which Sandy Spring Capital Trust or the Property Trustee has become
subject as a result of a Tax Event ("Additional Sums"). Whenever in this
Indenture or the Securities there is a reference in any context to the payment
of principal of or interest on the Securities, such mention shall be deemed to
include mention of the payments of the Additional Sums provided for in this
paragraph to the extent that, in such context, Additional Sums are, were or
would be payable in respect thereof pursuant to the provisions of this paragraph
and express mention of the payment of Additional Sums (if applicable) in any
provisions hereof shall not be construed as excluding Additional Sums in those
provisions hereof where such express mention is not made; provided, however,
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that the deferral of the payment of interest pursuant to Section 16.01 or the
Securities shall not defer the payment of any Additional Sums that may be due
and payable.
SECTION 2.06. Transfer and Exchange.
The Company shall cause to be kept at the Principal Office of the
Trustee a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register."
To permit registrations of transfers, 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.
Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated for that purpose the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of the same
series of any authorized denominations, of a like aggregate principal amount, of
the same original issue date and Stated Maturity Date and having the same terms.
At the option of the holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of a like
aggregate principal amount, of the same original issue date and Stated Maturity
Date and having the same terms, upon surrender of the Securities to be exchanged
at such office or agency. Whenever any securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the holder making the exchange is entitled to
receive.
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.
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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 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.
SECTION 2.07. 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 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 2.08. 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
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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 2.09. 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.
SECTION 2.10. 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
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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.
SECTION 2.11. 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 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 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 2.05(c), and Compounded Interest, as may be
required pursuant to Section 16.01.
By 10:00 a.m. New York time on the date specified herein for the
payment of principal and interest, the Company will deposit with the Trustee or
with one or more paying agents an amount of money sufficient to cover the
required payment with respect to the Securities.
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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.
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 or interest (including Additional
Sums and Com pounded Interest, if any) 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
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(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 or interest (including
Additional Sums and Compounded Interest, 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 or interest (including
Additional Sums and Compounded Interest, if any) 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 or interest (including Additional Sums and Compounded
Interest, if any) 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 principal of or interest (including Additional Sums and
Compounded Interest, if any) on the Securities when the same shall
become due and payable. Whenever the Company shall have one or
more paying agents for the Securities, it will, on or prior to
each due date of the principal of or interest (including
Additional Sums and Compounded Interest, if any) on the
Securities, deposit with the paying agent a sum sufficient to pay
the principal or interest (including Additional Sums and
Compounded Interest, if any) so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal
or interest (including Additional Sums and Compounded Interest, if
any) and (unless such paying agent is the Trustee) the Company
will promptly notify the Trustee of this action or failure so to
act.
(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
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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 and conditions 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.
For purposes of this section such default shall be determined without regard to
any period of grace or requirement of notice.
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 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 Preferred Securities Guarantee,
(d) the purchase of fractional shares resulting from a reclassification 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 that would constitute an Event of
Default, (2) if such Securities are held by the Property Trustee and the Company
shall be in default with respect to its payment obligations under the Preferred
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 Sandy Spring Capital Trust
In the event Securities are issued to Sandy Spring Capital Trust or a
trustee of such Trust in connection with the issuance of Trust Securities by
Sandy Spring Capital Trust, for so long as such Trust Securities remain
outstanding, the Company (i) will maintain 100% direct or indirect
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ownership of the Common Securities of Sandy Spring 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 not
cause, as Sponsor of the Trust, or permit, as holder of the Common Securities,
the dissolution or winding-up of the Trust, except in connection with the
distribution of the Junior Subordinated Debentures or certain mergers,
consolidations or amalgamation, each as permitted by the Declaration, (iii) will
timely perform its duties as sponsor of the Trust, (iv) will use its reasonable
best efforts to cause Sandy Spring 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 Sandy Spring Capital Trust or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration, 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 (v) will use its
reasonable best 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 Sandy Spring Capital Trust and in connection with the sale of the Trust
Securities by Sandy Spring Capital Trust, the Company, in its capacity as
borrower with respect to the Securities, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Securities, including commissions to the underwriters payable
pursuant to the Underwriting 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 Sandy Spring
Capital Trust, the offering, sale and issuance of the Trust Securities
(including commissions to the underwriters in connection therewith), the fees
and expenses of the Property Trustee and the Delaware Trustee, the costs and
expenses relating to the operation of Sandy Spring 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 Sandy Spring 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 Sandy Spring Capital Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust; and
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(e) pay all other fees, expenses, debts and obligations (other than in
respect of principal and interest on the Trust Securities) related to Sandy
Spring 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.
SECTION 3.11. Corporate Existence.
The Company will, subject to the provisions of Article X, at all times
maintain its corporate existence and right to carry on business and will duly
procure all renewals and extensions thereof, and , to the extent necessary or
desirable in the operation of its business, will use its best efforts to
maintain, preserve and renew all of its rights, powers, privileges and
franchises.
SECTION 3.12. Notice of Default.
The Company shall file with the Trustee written notice of any Event of
Default within 30 days of its becoming aware of such Event of Default or an
event which, with notice or the lapse of time or both, would constitute an Event
of Default.
SECTION 3.13. Listing on an Exchange.
If the Securities are to be distributed to the holders of the
Preferred Securities in connection with a Dissolution Event, the Company will,
if the Securities are not already so listed, use its best efforts to list such
Securities on the NASDAQ National Market or on such other exchange or other
organizations as the Preferred Securities are then listed.
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:
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(a) on a quarterly 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:
(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.
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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 informa tion 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
prompt ness 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 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
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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. The Company also covenants and agrees to comply with
the provisions of Section 3.14(a) of the Trust Indenture Act.
(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 which the Trustee is entitled to rely
exclusively on Officers' Certificates).
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, 2000, deliver to Securityholders a brief
report, dated as of such May 15, which complies with the
provisions of such Section 313(a).
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(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
or any delisting thereof.
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) 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, 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 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 60 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
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ordering the winding-up or liquidation of its affairs and such
decree or order shall remain unstayed and in effect for a period
of 60 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 (other than an Event of Default specified
in Section 5.01(d) or 5.01(e)), 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 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. If the
Trustee or Securityholders fail to declare the principal of all of the
Securities due and payable upon such an Event of Default, so long as the
Property Trustee is holding the Debentures on behalf of Sandy Spring Capital
Trust, the holders of at least 25% in liquidation amount of the Preferred
Securities then outstanding will have the right to declare the Securities
immediately due and payable. If an Event of Default specified in Section 5.01(d)
or 5.01(e) occurs and is continuing, the principal amount of all Securities
shall become immediately due and payable without any declaration or other act on
the part of the Trustee or the holders of Securities.
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) upon all the Securities and the principal of any and
all Securities which shall have become due otherwise than by acceleration (with
interest upon such principal 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
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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) 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 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 or
interest (including Compounded Interest and Additional Sums, if any) or both, as
the case may be, with interest upon the overdue principal and (to the extent
that payment of such interest is enforceable under applicable law and, if the
Securities are held by Sandy Spring Capital Trust or a trustee of such trust,
without duplication of any other amounts paid by Sandy Spring Capital Trust or a
trustee in respect thereof) upon the overdue installments of interest (including
Compounded Interest and Additional Sums, 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
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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 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.
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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 and Subordinate Indebtedness of
the Company if and to the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon
Securities for principal of and interest (including Compounded Interest and
Additional Sums, 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 interest, respectively; and
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.
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<PAGE>
Notwithstanding any other provisions in this Indenture, however, the
right of any holder of any Security to receive payment of the principal of and
interest (including Compounded Interest and Additional Sums, 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. 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 Preferred 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.
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;
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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 interest (including Compounded Interest and Additional Sums, 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; and
provided that, except in the case of default in the payment of the principal of
or interest (including Compounded Interest or Additional Sums, 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.
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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 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
interest (including Compounded Interest and Additional Sums, if any) on any
Security against the Company on or after the same shall have become due and
payable.
SECTION 5.10. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, which would
prohibit or forgive the Company from paying all or any portion of the principal
or any interest on (including Additional Sums and Compounded Interest, if any)
any such amounts, as contemplated herein, or which may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
laws and covenants that will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
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.
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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 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 (but need not confirm
or investigate the accuracy of mathematical calculations or
other facts stated therein);
(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.
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SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may conclusively 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;
(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,
suffered or 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; nothing contained herein shall,
however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default with respect to the Securities
(that has not been cured or waived) to exercise with respect to
the Securities 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.
(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;
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<PAGE>
(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;
(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 or Additional
Sums) and 5.01(b) of the Indenture and the Trustee is the paying
agent hereunder, (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 at the Principal Office of the Trustee by the
Company or any other obligor on the Securities or by any holder of
the Securities and such notice references the Securities and this
Indenture;
(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; and
(j) the rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to
be indemnified, are extended to, and shall be enforceable by, the
Trustee in each of its capacities hereunder, and to each agent,
custodian and other Person employed to act hereunder.
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
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<PAGE>
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.
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.
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 the trust or trusts hereunder, 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
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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.
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.
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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 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, at the expense of the Company, 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
provi sions 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 rehabili tation,
conservation or liquidation, or
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(4) the Trustee shall commence a voluntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or state bankruptcy, insolvency or
similar law or shall consent to the appointment of or taking
possession by a receiver, custodian, liquidator, assignee,
trustee, sequestrator (or similar official) of the Trustee or
its property or affairs, or shall make an assignment for the
benefit of creditors, or shall admit in writing its inability
to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action.
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 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. If a successor trustee shall not have
accepted appointment within 30 days after the removal of the
Trustee, the Trustee, at the expense of the Company, may petition
any court of competent jurisdiction for the 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.
(e) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities and each appointment
of a successor Trustee with respect to the Securities to all
holders of Securities. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
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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 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
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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 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 Authenticat ing
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
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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 Authenticat ing 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.
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,
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and for that purpose the outstanding Securities shall be computed as of the
record date; provided, however, that no such authorization, agreement or
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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.
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 (subject to Section 2.05) 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
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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 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 corporate trust
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
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(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 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.
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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 $25
principal amount of Securities held or represented by him; provided, however,
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that no vote shall be cast or 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.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
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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:
(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 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 cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be
defective or inconsis tent 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 adversely
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affect the interests of the holders of the Securities;
(d) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities;
(e) to make provision for transfer procedures, certification, book-
entry provisions and all other matters required pursuant to
Section 2.06 or otherwise necessary, desirable or appropriate in
connection with the issuance of Securities to holders of Preferred
Securities in the event of a distribution of Securities by Sandy
Spring Capital Trust following a Dissolution Event;
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(f) to qualify or maintain qualification of this Indenture under the
Trust Indenture Act; and
(g) to make any change that does not adversely affect the rights of
any Securityholder.
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
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 Sandy Spring
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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
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outstanding Security is required, such amendment shall not be effective until
each holder of the Trust Securities shall have consented to such amendment.
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
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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.
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 and rely upon, in addition to the document required by Section 13.06, an
Officers' Certificate and an Opinion
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of Counsel as conclusive evidence that any supplemental indenture executed
pursuant hereto complies with the requirements of this Article IX.
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 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, or any event which, after notice or lapse
of time or both, would become a Default or an 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.
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 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
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thereupon may cause to be signed, and may issue either in its own name or in the
name of Sandy Spring Capital Trust, 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 2.07) 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 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 2.07) not theretofore cancelled or
delivered to the Trustee for cancellation, including principal and interest
(including Compounded Interest and Additional Sums, 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 interest
(including Compounded Interest and Additional Sums, 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
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this Indenture shall cease to be of further effect except for the provisions of
Sections 2.02, 2.06, 2.07, 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 and interest (including
Additional Sums and Compounded Interest, if any).
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.
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 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 interest (including Compounded Interest and
Additional Sums, 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.
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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 combina tion 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 on the outstanding Securities on the
dates such installments of principal and interest are due;
(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;
(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;
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(5) the Trustee will not have a conflicting interest within the
meaning of the Trust Indenture Act;
(6) a breach or violation of, or default under, any other agreement or
intrument to which the Company is a party or by which it is bound
will not result;
(7) a trust arising from such deposit will not result which
constitutes an investment company within the meaning of the
Investment Company Act of 1940, as amended, unless such trust
shall be qualified or exempt from regulation thereunder; and
(8) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent with respect to such Discharge have been
complied with.
"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 on the Securities when such
payments are due; (B) the Company's obligations with respect to the Securities
under Sections 2.06, 2.07, 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
Obligations to meet the applicable conditions set forth in this
Section 11.05.
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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 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.
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.
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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 17801 Georgia
Avenue, Olney, Maryland 20832, Attention: James H. Langmead, 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 (which may be by facsimile) at the
office of the Trustee, 101 Barclay Street, 21st Floor West, New York, New York
10286, Attention: Corporate Trust Trustee Administration, facsimile: (212) 815-
5915 (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 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.
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SECTION 13.07. Business Days.
In any case where the date of payment of principal of or interest on
the Securities will not be a Business Day, the payment of such principal of 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.
This Indenture is subject to and shall be governed by the provisions
of the Trust Indenture Act that are required to be a part of this Indenture. If
any provision hereof limits, qualifies or conflicts with a provision of the
Trust Indenture Act that is required under such act to be a part of and govern
this Indenture, the Trust Indenture Act provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 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 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,
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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. Acknowledgment of Rights.
The Company acknowledges that, with respect to any Securities held by
Sandy Spring 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 Sandy Spring Capital Trust, any holder of
Preferred Securities may institute legal proceedings directly against the
Company to enforce such Property Trustee's rights under this Indenture without
first instituting any legal proceedings against such Property Trustee or any
other person or entity. Notwithstanding the foregoing, if an Event of Default
has occurred and is continuing and such event is attributable to the failure of
the Company to pay principal of or interest on the Securities when due, the
Company acknowledges that a holder of Preferred Securities may directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Securities having a principal amount equal to
the aggregate liquidation amount of the Preferred Securities of such holder on
or after the respective due date specified in the Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES
SECTION 14.01. Special Event Redemption.
If 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, 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
Redemption Price. The Redemption Price shall be paid prior to 12:00 noon, New
York time, on the date of such redemption or such earlier time as the Company
determines, provided that the Company shall deposit with the Trustee an amount
--------
sufficient to pay the Redemption Price by 10:00 a.m., New York time, on the date
such Redemption Price is to be paid.
SECTION 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 _______ __, 2004, at the Redemption Price.
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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 by such other method that the Trustee shall deem appropriate not more
than 60 days prior to the date fixed for redemption from the outstanding
Securities not previously called for redemption, provided, however, 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 $25 or integral multiples thereof shall be
redeemed. The Redemption Price shall be paid prior to 12:00 noon, New York
time, on the date of such redemption or at such earlier time as the Company
determines, provided that the Company shall deposit with the Trustee an amount
--------
sufficient to pay the Redemption Price by 10:00 a.m., New York time, on the date
such Redemption Price is to be paid.
(b) Notwithstanding the first sentence of Section 14.02, upon the
entry of an order for dissolution of the Sandy Spring 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 _________ __, 2004, at
the Redemption Price, 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.
(d) The Company shall not effect a partial redemption of the
Securities if such partial redemption would result in a delisting of the
Preferred Securities from the NASDAQ National Market or such other exchange or
organization as the Preferred Securities are then listed.
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.
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
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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 $25, 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 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) 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 Redemption Price, together with interest
(including Compounded Interest and Additional Sums, 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).
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.
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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 and interest (including
Compounded Interest and Additional Sums, 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 in full of principal of all
Allocable Amounts on such Senior and Subordinated 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 and Subordinated Indebtedness.
In the event and during the continuation of any default by the Company
in the payment of principal, interest or any other payment due on any Senior and
Subordinated Indebtedness (after any grace period with respect to such default
has expired and such default has not been cured or waived or ceased to exist),
or in the event that the maturity of any Senior and Subordinated 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 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 interest on the Securities until the
holders of all Senior and Subordinated Indebtedness outstanding at the time of
such acceleration shall receive payment in full of such Senior and Subordinated
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 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 and
Subordinated Indebtedness or their respective representatives, or to the trustee
or trustees under any indenture pursuant to which any of such Senior and
Subordinated Indebtedness may have been issued, as their respective interests
may appear, but only to the extent that the holders of the Senior and
Subordinated Indebtedness (or their representative or representatives or a
trustee)
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notify the Trustee in writing, within 90 days of such payment of the amounts
then due and owing on such Senior and Subordinated Indebtedness and only the
amounts specified in such notice to the Trustee shall be paid to the holders of
such Senior and Subordinated 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 and Subordinated Indebtedness of
the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company on
account of the principal or interest (including Compounded Interest and
Additional Sums, 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 and Subordinated Indebtedness of
the Company (pro rata to such holders on the basis of the respective amounts of
--- ----
Senior and Subordinated 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 and Subordinated Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all such Senior and
Subordinated 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 and Subordinated 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 and Subordinated 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 and Subordinated
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior and Subordinated Indebtedness may have been issued, as their respective
interests may appear, as calculated by the Company, for application to the
payment of all Senior and Subordinated Indebtedness remaining unpaid to the
extent necessary to pay all such Senior and Subordinated 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 and
Subordinated Indebtedness.
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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 and Subordinated Indebtedness that
may at the time be outstanding, provided that (i) such Senior and Subordinated
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 and Subordinated 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 and Subordinated
Indebtedness, the rights of the Securityholders shall be subrogated to the
rights of the holders of such Senior and Subordinated Indebtedness to receive
payments or distributions of cash, property or securities of the Company, as the
case may be, applicable to such Senior and Subordinated Indebtedness until the
principal of 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 and Subordinated 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 pursuant to the provisions of this
Article XV to or for the benefit of the holders of such Senior and Subordinated
Indebtedness by Securityholders or the Trustee, shall, as between the Company,
its creditors other than holders of Senior and Subordinated 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 and Subordinated 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 and Subordinated
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 the holders of Senior and Subordinated 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 interest (including Compounded Interest and Additional Sums, 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
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Company, as the case may be, other than the holders of Senior and Subordinated
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 and Subordinated 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 and
Subordinated 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 and Subordinated 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 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 interest (including Compounded
Interest and Additional Sums, 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
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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 and
Subordinated 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 and Subordinated 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 and Subordinated 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 and Subordinated 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 and
Subordinated 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 and
Subordinated 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 and Subordinated
Indebtedness at any time held by it, to the same extent as any other holder of
Senior and Subordinated Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior and Subordinated 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
and Subordinated 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 and Subordinated Indebtedness and, subject to the
provisions of Article VI of this Indenture, the Trustee shall not be liable to
any holder of such Senior and Subordinated Indebtedness if it shall pay
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over or deliver to Securityholders, the Company or any other Person money or
assets to which any holder of such Senior and Subordinated 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 and
Subordinated 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 and Subordinated 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 and Subordinated 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 and Subordinated Indebtedness, or otherwise
amend or supplement in any manner such Senior and Subordinated Indebtedness or
any instrument evidencing the same or any agreement under which such Senior and
Subordinated Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
Senior and Subordinated Indebtedness; (iii) release any Person liable in any
manner for the collection of such Senior and Subordinated Indebtedness; and (iv)
exercise or refrain from exercising any rights against the Company, as the case
may be, and any other Person.
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 20 consecutive
quarterly periods, including the first such quarterly 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
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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
quarterly for each quarterly 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 20 consecutive quarterly periods, including the
first such quarterly 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 of the Preferred 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 five 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 quarterly 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 20
quarterly 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.
SANDY SPRING BANCORP, INC.
By
-------------------------------
Name: James H. Langmead
Title: Chief Financial Officer
THE BANK OF NEW YORK,
as Trustee
By
-------------------------------
Name:
Title:
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EXHIBIT A
---------
(FORM OF FACE OF SECURITY)
[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 EX CHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUM STANCES 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.
UNLESS THIS DEBENTURE IS PRESENTED BY AN AUTHORIZED REPRESEN TATIVE OF THE
DEPOSITORY TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY PREFERRED SECURITY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF THE CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.]
Principal Amount: $__________
No. 1 CUSIP No. ___________
Sandy Spring Capital Trust I
____% JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURE DUE ________ __, 2029
Sandy Spring Bancorp, Inc., a Maryland 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 Sandy Spring Capital Trust I or registered
assigns, the principal sum of $__________, on ______ __, 2029 (the "Maturity
Date"); provided that the Company may redeem this Security on a date not earlier
than _________ __, 2004, and to pay interest on the outstanding principal amount
hereof from ________ __, 1999, or from the most recent interest payment date
(each such date, an "Interest Payment Date") to which interest has been paid or
duly provided for, quarterly (subject to deferral as set forth herein) in
arrears on the last day of March, June, September and December of each year,
commencing ______ ____, 1999, at the rate of ____% per annum until the principal
hereof shall have become due and payable, and on any
A-1
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overdue principal 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 quarterly. The amount of interest
payable on any Interest Payment Date shall be computed on the basis of a 360-day
year of twelve 30-day months and, for any period less than a full calendar
quarter, the number of days elapsed in such quarter based upon 30-day months. In
the event that any date on which the principal of 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 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.
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 Business Day next preceding such Interest Payment Date;
provided, however, that in the event that the Preferred Securities are no longer
- -------- -------
in book-entry only form or this Security (or one or more predecessor Securities)
are not represented by a Global Security, the record date for such payment shall
be the fifteenth day of the month in which such payment is due. 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 interest (including Compounded Interest and
Additional Sums, 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.
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 and Subordinated 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
A-2
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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 and Subordinated 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.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed and sealed.
Dated: _________ __, 1999
SANDY SPRING BANCORP, INC.
By: ____________________________
Name: James H. Langmead
Title: 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,
as Trustee
By____________________ Dated: _________ __, 1999
Authorized Signatory
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<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 ________
__, 1999 (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, as defined in
the Indenture, 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), a redemption price equal to the accrued and unpaid interest
on the Security (including Compounded Interest and Additional Sums, if any) to
be so redeemed to the date fixed for redemption, plus 100% of the principal
amount thereof (the "Redemption Price").
In addition, subject to the Company having received the prior approval
of the applicable regulatory agencies, if it is then required under applicable
regulatory requirements, the Company shall have the right to redeem this
Security, in whole or in part, at any time on or after _________ __, 2004 at the
Redemption Price; provided, however, that the Company shall not effect a partial
-------- -------
redemption of this Security if such partial redemption would result in a
delisting of the Preferred Securities from the NASDAQ National Market or such
other exchange or organization as the Preferred Securities are then listed.
The Redemption Price shall be paid prior to 12:00 noon, New York City
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
time, 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 or more than 60 days
notice. If the Securities are only partially redeemed by the Company, the
particular Securities to be redeemed shall be selected on a pro rata basis, by
lot or such other method that the Trustee shall deem appropriate not more than
60 days prior to the date fixed for redemption from the outstanding Securities
not previously called for redemption, provided, however, that any such 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 $25 or integral multiples thereof shall be redeemed.
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 this Security by the Company shall be subject to
the receipt of any and all required regulatory approvals.
A-4
<PAGE>
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 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 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, 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 interest (including
Compounded Interest and Additional Sums, if any) on this Security at the time
and place and at the rate and in the money herein prescribed.
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 20 consecutive
quarterly periods, including the first such quarterly 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
<PAGE>
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 20 consecutive
quarterly periods, including the first quarterly 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 Preferred Securities Guarantee, (d) the purchase of
fractional shares resulting from a reclassification 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 would constitute an Event of Default, (2) if the Securities are held by
the Property Trustee, the Company shall be in default with respect to its
payment obligations under the Preferred 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 cause the holders of the Preferred Securities to recognize
gain or loss for Federal income tax purposes, the Company will have the right at
any time to liquidate the Sandy Spring Capital Trust I and cause the Securities
to be distributed to the holders of the Trust Securities in liquidation of the
Trust.
The Indenture contains provisions for satisfaction and discharge of
the entire indebtedness of this Security upon compliance by the Company with
certain conditions set forth in the Indenture.
A-6
<PAGE>
The Securities are issuable only in registered form without coupons in
denominations of $25.00 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 (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
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.
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-7
<PAGE>
EXHIBIT 4.3
Certificate of Trust of Sandy Spring Capital Trust I
<PAGE>
CERTIFICATE OF TRUST
OF
SANDY SPRING CAPITAL TRUST I
This Certificate of Trust is being executed as of November 1, 1999 for the
purposes of organizing a business trust pursuant to the Delaware Business Trust
Act, 12 Del. C. (S)(S) 3801 et seq. (the "Act").
-------- -- ----
The undersigned hereby certifies as follows:
1. Name. The name of the business trust is "Sandy Spring Capital Trust
----
I" (the "Trust").
2. Delaware Trustee. The name and business address of the Delaware
----------------
trustee of the Trust meeting the requirements of Section 3807 of the Act are as
follows:
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
3. Effective. This Certificate of Trust shall be effective immediately
---------
upon filing in the Office of the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned being all of the trustees of the Trust
as of the date of the filing of this Certificate of Trust, have duly executed
this Certificate of Trust in accordance with Section 3811(a) of the Act as of
the day and year first above written.
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Mary jane Morrissey
------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
ADMINISTRATIVE TRUSTEE
/s/ Hunter R. Hollar
---------------------
Name: Hunter R. Hollar
ADMINISTRATIVE TRUSTEE
/s/ James H. Langmead
----------------------
Name: James H. Langmead
ADMINISTRATIVE TRUSTEE
/s/ Lawrence T. Lewis
----------------------
Name: Lawrence T. Lewis
<PAGE>
Exhibit 4.4
________________________________________________
________________________________________________
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
SANDY SPRING CAPITAL TRUST I
Dated as of _________ __, 1999
_______________________________________________
_______________________________________________
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS
<S> <C> <C>
SECTION 1.1 Definitions ................................................................ 1
-----------
<CAPTION>
ARTICLE II
TRUST INDENTURE ACT
<S> <C> <C>
SECTION 2.1 Trust Indenture Act; Application ........................................... 8
--------------------------------
SECTION 2.2 Lists of Holders of Securities ............................................. 8
------------------------------
SECTION 2.3 Reports by the Property Trustee ............................................ 9
-------------------------------
SECTION 2.4 Periodic Reports to Property Trustee ....................................... 9
------------------------------------
SECTION 2.5 Evidence of Compliance with Conditions Precedent ........................... 9
------------------------------------------------
SECTION 2.6 Events of Default; Waiver .................................................. 9
-------------------------
SECTION 2.7 Event of Default; Notice ................................................... 11
------------------------
</TABLE>
ARTICLE III
ORGANIZATION
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 3.1 Name ...................................................................... 11
----
SECTION 3.2 Office .................................................................... 12
------
SECTION 3.3 Purpose ................................................................... 12
-------
SECTION 3.4 Authority ................................................................. 12
---------
SECTION 3.5 Title to Property of the Trust ............................................ 12
------------------------------
SECTION 3.6 Powers and Duties of the Administrative Trustees .......................... 13
------------------------------------------------
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees ...................... 15
----------------------------------------------------
SECTION 3.8 Powers and Duties of the Property Trustee ................................. 16
-----------------------------------------
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee................ 19
-----------------------------------------------------------
SECTION 3.10 Certain Rights of Property Trustee......................................... 21
----------------------------------
SECTION 3.11 Delaware Trustee........................................................... 23
----------------
SECTION 3.12 Execution of Documents .................................................... 23
----------------------
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities .................... 24
------------------------------------------------------
SECTION 3.14 Duration of Trust ......................................................... 24
-----------------
SECTION 3.15 Mergers ................................................................... 24
-------
SECTION 3.16 Property Trustee May File Proofs of Claim ................................. 26
-----------------------------------------
<CAPTION>
ARTICLE IV
SPONSOR
<S> <C> <C>
SECTION 4.1 Sponsor's Purchase of Common Securities ..................................... 27
---------------------------------------
SECTION 4.2 Responsibilities of the Sponsor ............................................. 27
-------------------------------
SECTION 4.3 Right to Proceed ........................................................... 27
----------------
SECTION 4.4 Right to Dissolve Trust .................................................... 28
-----------------------
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ARTICLE V
TRUSTEES
<S> <C> <C>
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee ................................. 28
---------------------------------------------
SECTION 5.2 Delaware Trustee .............................................................. 28
----------------
SECTION 5.3 Property Trustee; Eligibility ................................................. 29
-----------------------------
SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware Trustee
----------------------------------------------------------------------
Generally ..................................................................... 30
---------
SECTION 5.5 Administrative Trustees ....................................................... 30
-----------------------
SECTION 5.6 Delaware Trustee .............................................................. 31
----------------
SECTION 5.7 Appointment, Removal and Resignation of Trustees .............................. 31
------------------------------------------------
SECTION 5.8 Vacancies among Trustees ...................................................... 33
------------------------
SECTION 5.9 Effect of Vacancies ........................................................... 33
-------------------
SECTION 5.10 Meetings ...................................................................... 33
--------
SECTION 5.11 Delegation of Power ........................................................... 34
-------------------
SECTION 5.12 Merger, Conversion, Consolidation or Succession to Business ................... 34
-----------------------------------------------------------
<CAPTION>
ARTICLE VI
DISTRIBUTIONS
<S> <C> <C>
SECTION 6.1 Distributions ................................................................. 34
-------------
<CAPTION>
ARTICLE VII
ISSUANCE OF SECURITIES
<S> <C> <C>
SECTION 7.1 General Provisions Regarding Securities ....................................... 35
---------------------------------------
SECTION 7.2 Execution and Authentication .................................................. 35
----------------------------
SECTION 7.3 Form and Dating ............................................................... 36
---------------
SECTION 7.4 Registrar and Paying Agent .................................................... 37
--------------------------
SECTION 7.5 Paying Agent to Hold Money in Trust ........................................... 38
-----------------------------------
SECTION 7.6 Replacement Securities ........................................................ 38
----------------------
SECTION 7.7 Outstanding Preferred Securities .............................................. 38
--------------------------------
SECTION 7.8 Preferred Securities in Treasury .............................................. 38
--------------------------------
SECTION 7.9 Definitive Securities ......................................................... 39
---------------------
SECTION 7.10 Cancellation .................................................................. 39
------------
SECTION 7.11 CUSIP Numbers ................................................................. 40
-------------
<CAPTION>
ARTICLE VIII
TERMINATION OF TRUST
<S> <C> <C>
SECTION 8.1 Dissolution and Termination of Trust .......................................... 40
------------------------------------
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE IX
TRANSFER OF INTERESTS
<S> <C> <C>
SECTION 9.1 Transfer of Securities ........................................................ 41
----------------------
SECTION 9.2 Transfer Procedures and Restrictions .......................................... 42
------------------------------------
SECTION 9.3 Deemed Security Holders ....................................................... 45
-----------------------
SECTION 9.4 Book Entry Interests .......................................................... 45
--------------------
SECTION 9.5 Notices to Clearing Agency .................................................... 46
--------------------------
SECTION 9.6 Appointment of Successor Clearing Agency ...................................... 46
----------------------------------------
<CAPTION>
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
<S> <C> <C>
SECTION 10.1 Liability ..................................................................... 46
---------
SECTION 10.2 Exculpation ................................................................... 47
-----------
SECTION 10.3 Fiduciary Duty ................................................................ 47
--------------
SECTION 10.4 Indemnification ............................................................... 48
---------------
SECTION 10.5 Outside Businesses ............................................................ 51
------------------
SECTION 10.6 Compensation; Fees ............................................................ 51
------------------
<CAPTION>
ARTICLE XI
ACCOUNTING
<S> <C> <C>
SECTION 11.1 Fiscal Year .................................................................. 52
-----------
SECTION 11.2 Certain Accounting Matters ................................................... 52
--------------------------
SECTION 11.3 Banking ....................................................................... 52
-------
SECTION 11.4 Withholding ................................................................... 52
-----------
<CAPTION>
ARTICLE XII
AMENDMENTS AND MEETINGS
<S> <C> <C>
SECTION 12.1 Amendments ................................................................... 53
----------
SECTION 12.2 Meetings of the Holders; Action by Written Consent ........................... 55
--------------------------------------------------
<CAPTION>
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
<S> <C> <C>
SECTION 13.1 Representations and Warranties of Property Trustee ........................... 56
--------------------------------------------------
SECTION 13.2 Representations and Warranties of Delaware Trustee ........................... 57
--------------------------------------------------
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE XIV
MISCELLANEOUS
<S> <C> <C>
SECTION 14.1 Notices ....................................................................... 58
-------
SECTION 14.2 Governing Law.................................................................. 59
-------------
SECTION 14.3 Intention of the Parties....................................................... 59
------------------------
SECTION 14.4 Headings....................................................................... 59
--------
SECTION 14.5 Successors and Assigns......................................................... 60
----------------------
SECTION 14.6 Partial Enforceability......................................................... 60
----------------------
SECTION 14.7 Counterparts................................................................... 60
------------
ANNEX I TERMS OF SECURITIES ........................................................... I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE ........................................ A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE ........................................... A2-1
EXHIBIT B SPECIMEN OF DEBENTURE ......................................................... B-1
EXHIBIT C UNDERWRITING AGREEMENT ........................................................ C-1
</TABLE>
iv
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act
of 1939, as amended Section of Declaration
------------------- ----------------------
<S> <C>
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
-----------
</TABLE>
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
OF
SANDY SPRING CAPITAL TRUST I
_________ __, 1999
AMENDED AND RESTATED DECLARATION OF TRUST, including Annex I and all
exhibits attached hereto (this "Declaration"), dated and effective as of
_________ __, 1999, 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 assets of the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees (other than the Property Trustee (as defined
herein)) and the Sponsor established Sandy Spring Capital Trust I(the "Trust"),
a trust formed under the Business Trust Act (as defined herein) pursuant to a
Declaration of Trust dated as of ________ __, 1999 (the "Original Declaration"),
and a Certificate of Trust filed with the Secretary of State of the State of
Delaware on ________ __, 1999 (the "Certificate of Trust"), 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 that are necessary 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 in its entirety 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 (as defined herein), 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.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 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;
<PAGE>
(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 or Registrar.
-----
"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 cities of New York, New
York, or Olney, Maryland are authorized or required by law or executive order to
close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
------------------
Code, (S)3801 et seq., as it may be amended from time to time, or any successor
-- ---
legislation.
"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 Preferred 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 Preferred
Securities.
2
<PAGE>
"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 Date" under the Underwriting
------------
Agreement, including pursuant to the exercise of any over-allotment option
granted to the underwriter thereunder.
"Code" means the Internal Revenue Code of 1986, as amended from
----
time to time, or any successor legislation. A reference to a specific section
of the Code refers not only to such specific section but also to any
corresponding provision of any federal tax statute enacted after the date of
this Declaration, as such specific section or corresponding provision is in
effect on the date of application of the provisions of this Declaration
containing such reference.
"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 _________ __, 1999 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, 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.
"Debentures" means the ____% Junior Subordinated Deferrable
-----------
Interest Debentures due _________ __, 2029 of the Debenture Issuer issued
pursuant to the Indenture.
"Debenture Issuer" means Sandy Spring Bancorp, Inc., a Maryland
----------------
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.
3
<PAGE>
"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.
"Default" means an event, act or condition that with notice or
-------
lapse of time, or both, would constitute an Event of Default.
"Definitive Preferred 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.
"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 Preferred 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; provided, however, that in determining whether the Holders of the requisite
liquidation amount of Preferred Securities have voted on any matter provided for
in this Declaration, then for the purpose of such determination only (and not
for any other purpose hereunder), if the Preferred Securities remain in the form
of one or more Global Certificates, the term "Holders" shall mean the holder of
the Global Certificate acting at the direction of the Preferred Security
Beneficial Owners.
"Indemnified Person" means a Company Indemnified Person or a
------------------
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated, as of _________ __, 1999,
---------
between the Debenture Issuer and the Debenture Trustee, as amended or
supplemented from time to time.
4
<PAGE>
"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.
"Investment Company Event" has the meaning set forth in Annex I.
------------------------
"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).
---------------
"Majority in liquidation amount" means, with respect to the Trust
------------------------------
Securities, except as provided in the terms of the Preferred 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 Preferred Securities or Holders of outstanding Common 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.
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by any two of the following: the Chairman, a Vice Chairman,
the Chief Executive Officer, the President, the Chief Financial Officer, 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 Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means 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.
------------
5
<PAGE>
"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.
"Preferred 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).
"Preferred Securities" means the ____% Cumulative Trust
--------------------
Preferred Securities.
"Preferred Securities Guarantee" means the guarantee agreement
------------------------------
dated as of _________ __, 1999 of the sponsor in respect of the Preferred
Securities.
"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).
"Prospectus" has the meaning set forth in Section 3.6(b)(i).
----------
"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 Statement" has the meaning set forth in Section
----------------------
3.6(b)(i).
"Regulatory Capital Event" has the meaning set forth in Annex I.
------------------------
"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.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or
---------
any successor rule or regulation.
6
<PAGE>
"Securities" or "Trust Securities" means the Common Securities and
---------- ----------------
the Preferred 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 Preferred Securities Guarantee.
"Special Event" has the meaning set forth in Section 4(c) of Annex I
-------------
hereto.
"Sponsor" means Sandy Spring Bancorp, Inc., a Maryland corporation,
-------
or any successor entity resulting from any merger, consolidation, amalgamation
or other business combination, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
--------------------------
5.7(b)(ii).
"Successor Entity" has the meaning set forth in Section 3.15(b)(i).
----------------
"Successor Property Trustee" has the meaning set forth in Section
--------------------------
3.8(f)(ii).
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
--------------
"Tax Event" has the meaning set forth in Annex I.
---------
"10% in liquidation amount" means, with respect to the Trust
-------------------------
Securities, except as provided in the terms of the Preferred 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 Preferred 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).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended from time to time, or any successor legislation.
"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.
7
<PAGE>
"Underwriting Agreement" means the Underwriting Agreement for the
----------------------
initial offering and sale of Preferred Securities in the form of Exhibit C.
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
conflicts with the duties imposed by (S)(S) 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the Trust's classification as a grantor trust for United States
federal income tax purposes or 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 10 Business 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
(S)(S) 311(a), 311(b) and 312(b) of the Trust Indenture Act.
8
<PAGE>
SECTION 2.3 Reports by the Property Trustee.
-------------------------------
Within 60 days after May 15 of each year, commencing May 15, 2000, the
Property Trustee shall provide to the Holders of the Preferred Securities such
reports dated as of such May 15 as are required by (S) 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by (S) 313 of the
Trust Indenture Act. The Property Trustee shall also comply with the
requirements of (S) 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 (S) 314 of the Trust Indenture Act (if any) and
the compliance certificate required by (S) 314 of the Trust Indenture Act in the
form, in the manner and at the times required by (S) 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 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 (S) 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to (S) 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 Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
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 Preferred Securities
that the relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding.
9
<PAGE>
The foregoing provisions of this Section 2.6(a) shall be in lieu of (S)
316(a)(1)(B) of the Trust Indenture Act and such (S) 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
Preferred 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 Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
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.
(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 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 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, each Holder 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 until Events of Default with respect to the
Preferred 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 Preferred Securities and only the Holders of the Preferred 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 (S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
(S)(S) 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 to any subsequent or other default or Event of Default with respect
to the Common Securities or impair any right consequent thereon.
10
<PAGE>
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Preferred 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 (S) 316(a)(1)(B) of the Trust Indenture Act and such (S) 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 (as such term is defined in the Indenture) actually known to a
Responsible Officer, transmit by mail, first class postage prepaid, to the
Holders of the Preferred Securities, the Administrative Trustees and the
Sponsor, 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; provided that, except for a default in the payment of principal
-------- ----
of or interest (including Compounded Interest and Additional Sums (as such terms
are defined in the Indenture) if any, 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. 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.
(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 and Additional Sums, each as defined in the Indenture)
and 5.01(b) of the Indenture provided that the Property Trustee is the
Paying Agent under the Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice at the corporate trust office of the Property
Trustee and such notice references the Preferred Securities and this
Declaration or of which a Responsible Officer charged with the
administration of the Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
----
The Trust is named "Sandy Spring 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.
11
<PAGE>
SECTION 3.2 Office.
------
The address of the principal office of the Trust is c/o Sandy Spring
Bancorp, Inc. 17801 Georgia Avenue, Olney, Maryland 20832. 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 the 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 that are necessary 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.
The Trust will be classified as a grantor trust for United States
federal income tax purposes under Subpart E of Subchapter J of the Code,
pursuant to which the owners of the Preferred Securities and the Common
Securities will be the owners of the Trust for United States federal income tax
purposes, and such owners will include directly in their gross income the
income, gain, deduction or loss of the Trust as if the Trust did not exist. By
the acceptance of this Trust, none of the Trustees, the Sponsor or the Holders
of the Securities will take any position which is contrary to the classification
of the Trust as a grantor trust for United States federal income tax purposes.
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.
SECTION 3.5 Title to Property of the Trust.
------------------------------
Except as may be otherwise provided in this Declaration, legal title
to all assets of the Trust shall be vested in the Property Trustee for the
benefit of the Trust and the Holders. 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.
12
<PAGE>
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 execute, enter into and deliver the Common Securities
Subscription Agreement and to execute, deliver, issue and sell the Securities in
accordance with this Declaration and pursuant to the Underwriting Agreement;
provided, however, that except as contemplated in Section 7.1(a), (i) the Trust
- -------- -------
may issue no more than one series of Preferred 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 the Preferred Securities and Common Securities at
the Closing Time;
(b) in connection with the issuance and sale of the Preferred
Securities, to:
(i) prepare and execute a Prospectus (the "Prospectus") in
preliminary and final form prepared by the Sponsor, in relation to the
offering and sale of the Preferred Securities and to execute and file with
the Commission a registration statement on Form S-3(the "Registration
Statement"), including any amendments thereto, for the offering and sale
of the Preferred Securities;
(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 Preferred Securities in any State
in which the Sponsor has determined to qualify or register such Preferred
Securities for sale;
(ii) execute and file an application, prepared by the Sponsor,
to permit the Preferred Securities to trade or be quoted or listed in or
on the Nasdaq National Market or any other securities exchange or
quotation system.
(iv) execute and deliver letters, documents or instruments with
DTC and other Clearing Agencies relating to the Preferred Securities;
(v) 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 Preferred Securities under
Section 12(b) or (g) of the Exchange Act; and
(vi) execute and enter into the Underwriting Agreement providing
for the sale of the Preferred Securities;
(c) to execute, enter into and deliver the Debenture Subscription
Agreement and to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; 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;
13
<PAGE>
(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 (S) 316(c) of the Trust Indenture Act, Distributions,
voting rights, redemptions and exchanges, and to issue relevant notices to the
Holders of Preferred 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 this Declaration and the
Securities;
(g) to the fullest extent permitted by law, 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 to conduct the services that the Administrative Trustees have
authority to conduct directly 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 (S) 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Administrative Trustee;
(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 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;
14
<PAGE>
(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 or causing each Holder to
be treated as owning an undivided beneficial interest in the Debentures;
and
(ii) 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;
provided that such action does not adversely affect the interest of the Holders;
(p) 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
(q) 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.
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 may 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:
15
<PAGE>
(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
(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 (A) 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, and (B) an Opinion of Counsel from a firm
recognized to be experts in such matters, to the effect that the
amendment, modification or termination will not cause more than an
insubstantial risk that the Trust will be deemed to be an investment
company required to be registered under the Investment Company Act of
1940, as amended.
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.
16
<PAGE>
(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
is rated in one of four highest rating categories by a "nationally
recognized statistical rating organization", as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act;
(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 set forth in Sections 2.7 and 8.1 hereof.
(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 this Declaration and 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 and if
the Property Trustee shall have failed to take such Legal Action following a
written request and offer of indemnity or security, satisfactory to the Property
Trustee, from the Holders, the Holders of the Preferred Securities may, to the
fullest extent permitted by law, take such Legal Action, to the same extent as
if such Holders of Preferred Securities held an aggregate principal amount of
Debentures equal to the aggregate liquidation amount of such Preferred
Securities, without first proceeding against the Property Trustee or the Trust;
provided, however, that 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 interest (including Compounded Interest and Additional Sums
(each as defined in Indenture), if any) on the Debentures on the date such
principal or interest (including Compounded Interest and Additional Sums, if
any) is otherwise payable (or in the case of redemption, on the redemption
date), then a Holder of Preferred Securities may directly
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institute a proceeding for enforcement of payment to such Holder of the
principal of or interest (including Compounded Interest and Additional Sums, if
any), if any, on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred 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 Holders of the Common Securities will be
subrogated to the rights of such Holder of Preferred Securities to the extent of
any payment made by the Debenture Issuer to such Holder of Preferred Securities
in such Direct Action. If the Property Trustee fails to declare the principal of
all of the Debentures due and payable upon an Event of Default (as defined in
the Indenture), so long as the Property Trustee is holding the Debentures on
behalf of the Trust, the Holders of at least 25% in liquidation amount of the
Preferred Securities then outstanding will have the right to declare the
Debentures immediately due and payable. Except as provided in this Section
3.8(e), the Holders of Preferred 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, including without limitation, its rights under the Indenture 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 (S) 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 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 (S) 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
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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
(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 require ments of this
Declaration (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein);
(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 upon which such judgment was made;
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(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of 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 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 act, omission, default or misconduct of
the Administrative Trustees or the Sponsor; and
(ix) the Property Trustee shall not be deemed to have notice of
any Event of Default unless a Responsible Officer of the Property Trustee
has actual knowledge thereof or unless written notice of any event which
is in fact such a default is received by the Property Trustee at the
Corporate Trust Office of the Property Trustee.
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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 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 or 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;
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(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 Property Trustee shall determine
to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Trust, personally or by
agent or attorney at the sole cost of the Sponsor 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, custodian, nominee or attorney appointed with due care by it
hereunder;
(ix) any authorized or required 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;
(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;
(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;
(xiii) the rights, privileges, protections, immunities and
benefits given to the Property Trustee, including, without limitation,
its right to be indemnified, are
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extended to, and shall be enforceable by, the Property Trustee in each of
its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder; and
(xiv) If no Event of Default has occurred and is continuing and
the Property Trustee is required to decide between alternative causes of
action, construe ambiguous provisions in this Declaration or is unsure of
the application of any provision of this Declaration, and the matter is
not one on which the Holders are, under this Declaration, entitled to
vote, then the Property Trustee may take the action as is directed by,
and, if not so directed, may take action as it deems advisable and in the
best interests of, the Holders and will have no liability except for its
own bad faith, negligence or willful misconduct.
(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, or any other duties or responsibilities except as expressly stated
in this Section 3.11. 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 (S)3807 of the Business Trust Act; provided that, the Delaware
-------- ----
Trustee shall have the power and authority and is hereby authorized to execute
and file with the Secretary of State of the State of Delaware any certificate
required to be filed under the Business Trust Act, except as provided in Section
8.1(b). 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.
----------------------
Except as otherwise required by the Business Trust Act or this
Declaration, each Administrative Trustee, individually, 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 the
-------- ----
Registration Statement, including any amendments thereto, shall be signed by all
of the Administrative Trustees.
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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 dissolved pursuant to the provisions of Article VIII
hereof, shall continue without dissolution until _________ __, 2030.
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) of this Declaration or Sections 3 and 4 of Annex I.
(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;
(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 Preferred Securities or 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 Preferred Securities are then listed or quoted, if any;
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(iv) if the Preferred 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 Preferred 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);
(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; and
(C) the Trust will continue to be, or the Successor Entity
will be, classified as a grantor trust for United States federal
income tax purposes;
(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 Preferred Securities Guarantee and the
Common Securities Guarantee; and
(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,
25
<PAGE>
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.
SECTION 3.16 Property Trustee May File Proofs of Claim
-----------------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Securities (or, if the
Securities are original issue discount Securities, such portion of the
liquidation amount as may be specified in the terms of such Securities)
and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Property Trustee (including
any claim for the reasonable compensation, expenses, disbursements and
advances of the Property Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding; and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting the
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
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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 Preferred Securities are
issued and sold.
SECTION 4.2 Responsibilities of the Sponsor.
-------------------------------
In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare the Prospectus in preliminary and final form, and to
prepare and file the Registration Statement and any other necessary documents
with the Commission, including any amendments thereto and to pay any
registration fees in connection therewith;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to do
any and all such acts, other than actions which must be taken by 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 Preferred Securities to trade
or be quoted or listed in or on the National Market System or any other
securities exchange or quotation system;
(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 Preferred Securities under Section 12(b) or (g) of
the Exchange Act; and
(e) to negotiate the terms of the Underwriting Agreement providing
for the sale of the Preferred Securities.
SECTION 4.3 Right to Proceed.
----------------
The Sponsor acknowledges the rights of the Holders of Preferred
Securities under Section 3.8(e) of the Declaration and Section 5(b) of Annex I,
in the event that a failure of the Trust to pay Distributions on the Preferred
Securities is attributable to the failure of the Debenture Issuer 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 and the Sponsor irrevocably waives any right or remedy to require
that any such Holder take any action against the Trust or any other Person
before proceeding against the Sponsor.
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SECTION 4.4 Right to Dissolve Trust
-----------------------
The Sponsor will have the right to any time to dissolve the Trust and
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause the Debentures to be distributed to the Holders in
liquidation of the Trust. Such right is subject to the Sponsor's having
received (i) an Opinion of Counsel to the effect that such distribution will not
cause the Holder of Preferred Securities to recognize gain or loss for United
States federal income tax purposes and (ii) all required regulatory approvals.
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 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:
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(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
Section 3807(a) of the Business Trust Act and any other 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, the Person theretofore
serving as Delaware Trustee (if other than the Property Trustee) automatically
shall cease to be a Trustee, the Property Trustee promptly shall provide to the
Person theretofore serving as Delaware Trustee written notice of the same (in
relying on which the Person theretofore serving as Delaware Trustee shall be
fully justified and protected), the number of Trustees automatically shall be
reduced by one (1), the Property Trustee promptly shall cause the certificate of
trust of the Trust to be amended as necessary, 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).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of (S) 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 (S) 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of (S) 310(b) of the Trust Indenture Act.
(d) The Preferred 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.
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(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 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 5.5 Administrative Trustees.
-----------------------
The initial Administrative Trustees shall be:
Hunter R. Hollar
James H. Langmead
Lawrence T. Lewis
(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; provided that the Registration Statement,
-------- ----
including any amendment thereto, shall be signed by all of the Administra tive
Trustees.
(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 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.
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SECTION 5.6 Delaware Trustee.
-----------------
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
23 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 Preferred Securities voting as a class at a
meeting of Holders of the Preferred 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 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.
(c) A Trustee appointed to office shall hold office until its or his
successor shall have been appointed or until his death or its dissolution, or
until his or its 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
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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 Preferred 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, at the expense of the Sponsor, petition any court of competent
jurisdiction for appointment of a Successor Property Trustee or Successor
Delaware Trustee, as applicable. Such court may thereupon, after prescribing
such notice, if any, as it may deem proper, and 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.
(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.
(h) Any successor to an Administrative Trustee shall be an officer,
director, employee or Affiliate of the Sponsor.
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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 Section 5.2, 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,
provided, however, that meetings of the Administrative Trustees shall not be
- -------- -------
held in any jurisdiction which would subject the Trust to taxation under the
laws of such jurisdiction. 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 and without notice by the unanimous
written consent of the Administrative 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.
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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 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. Distributions shall be made on the
Preferred Securities and the Common Securities in accordance with the
preferences set forth in their respective terms. If and to the extent that the
Debenture Issuer makes a payment of interest (including Compounded Interest and
Additional Sums, each as defined in the Indenture) or principal on the
Debentures held by the Property Trustee or any other payments with respect to
the Debentures held by the Property Trustee (the amount of any such payment
being a "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.
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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
"Preferred 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 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 Preferred
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 and the terms of the Securities, the Preferred
Securities Guarantee, the Indenture and the Debentures.
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 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 Preferred Securities for
the Trust by manual or facsimile signature. Unless otherwise determined by the
Administrative Trustees, such signature shall, in the case of Common Securities,
be a manual signature.
A Preferred Security shall not be valid until authenticated by the
manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Preferred 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 Preferred Securities for
original issue. The aggregate number
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of Preferred 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 Preferred Securities. An authenticating agent may
authenticate Preferred 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 Preferred 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 to the Property Trustee in writing. Each Preferred 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 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. The Preferred Securities shall be issued in
-----------------
the form of one or more permanent global Securities in definitive, fully
registered form without distribution coupons as set forth in Exhibit A-1 hereto
(a "Global Preferred Security"), which shall be deposited on behalf of the
purchasers of the Preferred 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 Preferred Securities represented by a Global Preferred 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 Preferred Securities and such other Preferred 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 Preferred 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 Property Trustee to such Clearing Agency or pursuant to
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<PAGE>
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 Preferred
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 Preferred 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 Preferred 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 Preferred Security.
(c) Definitive Preferred Securities. Except as provided in Section
-------------------------------
7.9 or 9.2(d), owners of beneficial interests in a Global Preferred Security
will not be entitled to receive physical delivery of certificated Preferred
Securities ("Definitive Preferred Securities").
(d) Authorized Denominations. The Preferred Securities are issuable
------------------------
only in denominations of and any integral multiple thereof.
SECTION 7.4 Registrar and Paying Agent.
--------------------------
The Trust shall maintain in the Borough of Manhattan, The City of New
York, (i) an office or agency where Preferred Securities may be presented for
registration of transfer ("Registrar") and (ii) an office or agency where
Preferred Securities may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Preferred Securities and of their
transfer. The Administrative Trustees on behalf of the Trust may appoint the
Registrar and the Paying Agent and may appoint one or more co-registrars and one
or more additional paying agents in such other locations as it shall determine.
The term "Registrar" includes any additional registrar and "Paying Agent"
includes any additional paying agent. The Administrative Trustees on behalf of
the Trust may change any Paying Agent, Registrar or co-registrar without prior
notice to any Holder. The Paying Agent or Registrar shall be permitted to
resign as Paying Agent or Registrar, as the case may be, upon 30 days' written
notice to the Administrative Trustees. The Administrative Trustees on behalf of
the Trust shall notify the Property Trustee of the name and address of any Agent
not a party to this Declaration. If the Administrative Trustees on behalf of
the Trust fails to appoint or maintain another entity as Registrar or Paying
Agent, the Property Trustee shall act as such. The Trust or any of its
Affiliates may act as Paying Agent or Registrar. The Trust shall act as Paying
Agent and Registrar for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar and
Paying Agent for the Preferred Securities.
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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 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 monies previously held by it. 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 Preferred 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.
SECTION 7.7 Outstanding Preferred Securities.
--------------------------------
The Preferred Securities outstanding at any time are all the Preferred
Securities authenticated by the Property Trustee except for those canceled by
it, those delivered to it for cancellation and those described in this Section
as not outstanding.
If a Preferred 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 Preferred
Security is held by a protected purchaser.
If Preferred Securities are considered paid in full in accordance with
the terms of this Declaration, they cease to be outstanding and Distributions on
them shall cease to accumulate.
Except as provided in Section 7.8, a Preferred 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 Preferred Securities in Treasury.
--------------------------------
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Preferred
Securities owned by the Trust, the Sponsor
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or an Affiliate of the Sponsor, as the case may be, shall be disregarded and
deemed 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 Definitive Securities.
---------------------
(a) A Global Preferred 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 Preferred 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 Preferred 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 Preferred Securities.
(b) Any Global Preferred Security that is transferable to the
beneficial owners thereof in the form of Definitive Preferred 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 Preferred Security, an equal
aggregate liquidation amount of Preferred Securities of authorized denominations
in the form of certificated Preferred Securities. Any portion of a Global
Preferred Security so transferred pursuant to this Section 7.9(b) shall be
registered in such names as the Clearing Agency shall direct.
(c) Subject to the provisions of Section 7.9(b), the Holder of a
Global Preferred 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.
(d) In the event of the occurrence of any of the events specified in
Section 7.9(a), the Trust will promptly make available to the Property Trustee a
reasonable supply of certificated Preferred Securities in fully registered form
without distribution coupons.
(e) Payments on the Preferred Securities that are not held by the
Depositary will be made by check mailed to the address of the holder certified
thereto at the address which appears on the register.
SECTION 7.10 Cancellation.
------------
The Trust at any time may deliver Preferred Securities to the Property
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Property Trustee any Preferred Securities surrendered to them for registration
of transfer, redemption, or payment. The Property
39
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Trustee shall promptly cancel all Preferred Securities, surrendered for
registration of transfer, redemption, payment, replacement or cancellation and
shall dispose of canceled Preferred Securities in accordance with its customary
procedures unless the Trust otherwise directs. The Trust may not issue new
Preferred Securities to replace Preferred Securities that it has paid or that
have been delivered to the Property Trustee for cancellation.
SECTION 7.11 CUSIP Numbers.
-------------
The Trust in issuing the Preferred 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 Preferred
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 Preferred
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 Preferred
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 VII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1 Dissolution and Termination of Trust.
------------------------------------
(a) The Trust shall automatically dissolve and be wound up in
accordance with applicable law:
(i) upon the occurrence of an Event of Default with respect to
the Sponsor as described in Section 501(d) or (e) of the Indenture;
(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) based upon an election by the Sponsor to dissolve the
Trust, following the distribution of the Debentures from the Trust to the
Holders in exchange for all of the Securities, provided, that the Property
--------
Trustee has received written notice from the Sponsor directing the
Property Trustee to dissolve the Trust (which election 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 by the Sponsor of any and all required
regulatory approvals, and (b) the Sponsor's receipt and delivery to the
Administrative Trustees of an opinion of independent tax counsel
experienced in such matters to the effect that the Holders of the
Preferred Securities 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;
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(iv) upon the entry of a decree of judicial dissolution of the
Sponsor or 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;
(vi) upon redemption or repayment of the Debentures or at such
time as no Debentures are outstanding; or;
(vii) 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), but within 30 days of such event, notice of such
dissolution shall be given to the Holders and upon completion of the winding up
of Trust, the Administrative Trustees shall file a certificate of cancellation
with the Secretary of State of the State of Delaware and the Trust shall
terminate.
(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. To the fullest extent permitted by applicable law,
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
Preferred Securities and of the transfer of Preferred 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 Preferred Securities, the Administrative Trustees shall cause
one or more new Preferred Securities to be issued in the name of the designated
transferee or transferees. Every Preferred Security surrendered for registration
of transfer shall be accompanied by a written instrument of transfer in form
satisfactory to the Administrative Trustees and the Registrar or co-registrar,
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Preferred Security surrendered for registration of transfer shall
be canceled by the Property Trustee. A transferee of a Preferred Security shall
be entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Preferred Security. By acceptance of a
Preferred Security, each transferee shall be bound by this Declaration.
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(c) The Holder of the Common Securities may not transfer the Common
Securities except (a) in connection with transactions permitted under Section
10.01 of the Indenture, or (b) to the Sponsor or an Affiliate thereof in
compliance with applicable law (including the Securities Act and applicable
state securities and blue sky laws); provided that, any such transfer is subject
-------- ----
to the condition precedent that the transferor obtain the written opinion of
qualified independent counsel experienced in such matters that such transfer
would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States federal
income tax purposes as a grantor trust and each Holder of Securities would
not be treated as owning an undivided beneficial interest in the
Debentures; and
(ii) the Trustee would be an Investment Company or the
transferee would become an Investment Company.
To the fullest extent permitted by law, any attempted transfer of the Common
Securities other than as set forth in the immediately preceding sentence shall
be void. 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) Transfer and Exchange of Definitive Preferred Securities. When
--------------------------------------------------------
Definitive Preferred Securities are presented to the Registrar or co-registrar
(x) to register the transfer of such Definitive Preferred
Securities; or
(y) to exchange such Definitive Preferred Securities which
became mutilated, destroyed, defaced, stolen or lost, for an equal number
of Definitive Preferred 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 Preferred Securities surrendered for
- -------- -------
registration of transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to the Administra
tive Trustees and the Registrar or co-registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing;
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(b) Transfer and Exchange of Global Preferred Securities. The
----------------------------------------------------
transfer and exchange of Global Preferred 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.
(c) Restrictions on Transfer and Exchange of Global Preferred
---------------------------------------------------------
Securities. Notwithstanding any other provisions of this Declaration (other than
- ----------
the provisions set forth in this Section 9.2 and subsection (a) of Section 7.9),
a Global Preferred 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.
(d) Authentication of Definitive Preferred Securities. If at any
-------------------------------------------------
time:
(i) the Clearing Agency notifies the Sponsor that it is
unwilling or unable to continue as Clearing Agency for such Global
Preferred 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) there occurs a Default or an Event of Default which is
continuing, or
(iii) the Trust (by the Administrative Trustees), in its sole
discretion, notifies the Property Trustee in writing that it elects to
cause the issuance of Definitive Preferred Securities under this
Declaration,
then an Administrative Trustee on behalf of 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
Preferred Securities to the Persons designated by the Trust, will authenticate
and make available for delivery Definitive Preferred Securities, equal in number
to the number of Preferred Securities represented by the Global Preferred
Securities, in exchange for such Global Preferred Securities.
(e) Cancellation or Adjustment of Global Preferred Security. At such
-------------------------------------------------------
time as all beneficial interests in a Global Preferred Security have either been
exchanged for Definitive Preferred Securities to the extent permitted by this
Declaration or redeemed, repurchased or canceled in accordance with the terms of
this Declaration, such Global Preferred Security shall be canceled by the
Property Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Preferred Security is exchanged for Definitive Preferred
Securities, Preferred Securities represented by such Global Preferred 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.
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(f) Obligations with Respect to Transfers of Preferred Securities.
-------------------------------------------------------------
(i) To permit registrations of transfers, an Administrative
Trustee on behalf of the Trust shall execute and the Property Trustee
shall authenticate Definitive Preferred Securities and Global Preferred
Securities at the Registrar's or co-registrar's request in accordance with
the terms of this Declaration.
(ii) Registrations of transfers 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.
(iii) The Registrar or co-registrar shall not be required to
register the transfer of (a) Preferred 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 Preferred Securities
for redemption and ending at the close of business on the day of such
mailing; or (b) any Preferred Security so selected for redemption in whole
or in part, except the unredeemed portion of any Preferred Security being
redeemed in part.
(iv) Prior to the due presentation for registration of transfer
of any Preferred 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 Preferred Security is registered as the absolute owner of
such Preferred Security for the purpose of receiving Distributions on such
Preferred 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 Preferred Securities issued upon any registration of
transfer 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 Preferred Securities surrendered upon such registration of
transfer.
(g) No Obligation of the Property Trustee.
-------------------------------------
(i) The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Preferred 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 Preferred 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 Preferred Securities. All notices and communications to be given
to the Holders and all payments to be made to Holders under the Preferred
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 Preferred Security). The rights of beneficial owners
in any Global Preferred Security shall be exercised only through the
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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 transfer imposed under this Declaration or under
applicable law with respect to any transfer of any interest in any
Preferred Security (including any transfers between or among Clearing
Agency Participants or beneficial owners in any Global Preferred 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.
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 (subject to the definition of "Holder" contained herein) 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 Preferred 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 Preferred Security Beneficial Owner will receive a definitive
Preferred Security Certificate representing such Preferred Security Beneficial
Owner's interests in such Global Preferred Securities, except as provided in
Section 7.9 and Section 9.2. Unless and until definitive, fully registered
Preferred Securities certificates have been issued to the Preferred Security
Beneficial Owners pursuant to Section 7.9 or Section 9.2:
(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 Preferred Securities and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and shall have
no obligation to the Preferred Security Beneficial Owners;
(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
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(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred 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 Preferred Security
Holders is required under this Declaration, unless and until definitive, fully
registered Preferred Securities certificates have been issued to the Preferred
Security Beneficial Owners pursuant to Section 7.9 or Section 9.2, the Trustees
shall give all such notices and communications specified herein to be given to
the Holders of Global Preferred Securities to the Clearing Agency, and shall
have no notice obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
----------------------------------------
If any Clearing Agency ceases to continue its services as securities
depositary with respect to the Preferred Securities, the Administrative Trustees
may, in their sole discretion, appoint a successor Clearing Agency with respect
to such Preferred 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.
(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 and
interest on the Securities) to the extent not satisfied out of the Trust's
assets.
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(c) Pursuant to (S) 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 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 and Indemnified Persons; or
(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
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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 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
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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 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 determina
tion 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
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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 Preferred
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 Preferred 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 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
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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, the dissolution of the
Trust and the satisfaction and discharge of this Declaration.
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 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 compensa tion 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.
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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.
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
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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 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.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
----------
(a) Except as otherwise provided in this Declaration (including
Section 7 of 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 that the interests of any Holder of Securities will
not be materially affected by such amendment; 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
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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;
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
or
(D) cause a Tax Event.
(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;
(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
by the Sponsor, the Property Trustee and the Administrative Trustees 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
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(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;
provided, however, that in each case such action shall not adversely affect the
- -------- -------
interests of the Holders, and any such amendments of this Declaration shall
become effective when notice thereof is given to the Holders.
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 Preferred
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 Securities
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 there 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 Preferred 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 and without prior notice 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 any action
without a meeting shall be given to Holders entitled to vote who have not
consented to such action in writing. The Administrative Trustees may
specify that any written ballot submitted to the Holder of Securities for
the purpose of taking any action without a meeting shall be returned to
the Trust within the time specified by the Administrative Trustees;
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(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;
(iii) each meeting of the Holders shall be conducted by the
Administra tive 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 Preferred 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 and without prior notice, 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, provided, however, the meetings of Holders shall not be
-------- -------
held in any jurisdiction which would subject the Trust to taxation under
the laws of such jurisdiction.
ARTICLE XII
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, to the Holders of Securities and to the Sponsor at the
date of this Declaration, and each Successor Property Trustee represents and
warrants to the Trust, to the Holders of Securities, and to 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 duly organized, validly existing
and in good standing 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 Property Trustee satisfies the requirements set forth in
Section 5.3(a);
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(c) 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);
(d) 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
(e) No consent, approval or authorization of, or registration with or
notice to, any state or federal banking authority is required for the execution,
delivery or performance by the 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, to the Holders of Securities and to the Sponsor at the
date of this Declaration, and each Successor Delaware Trustee represents and
warrants to the Trust, to the Holders of Securities, and to the Sponsor at the
time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:
(a) The Delaware Trustee satisfies the requirements set forth in
Section 5.2 and, if it is not a natural person, 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
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(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.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 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 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):
Sandy Spring Capital Trust I
c/o Sandy Spring Bancorp, Inc.
17801 Georgia Avenue
Olney, Maryland 20832
Attention: James H. Langmead
Administrative Trustee
Telecopy: (301) 774-8434
(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
Administrative Trustees and the Property Trustee):
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
Telecopy: (212) 815-5917
(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 Administra tive Trustees, the Delaware Trustee and
the Holders):
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<PAGE>
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):
Sandy Spring Bancorp, Inc.
17801 Georgia Avenue
Olney, Maryland 20832
Attention: James H Langmead
Chief Financial Officer
Telecopy: (301) 774-8434
(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 14.2 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 14.3 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.
SECTION 14.4 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.
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SECTION 14.5 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 14.6 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 14.7 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.
SANDY SPRING CAPITAL TRUST I
________________________________________________
Hunter R. Hollar, as Administrative Trustee
________________________________________________
James H. Langmead, as Administrative Trustee
________________________________________________
Lawrence T. Lewis, as Administrative Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: ______________________________________________
Name:
Title:
THE BANK OF NEW YORK,
as Property Trustee
By: ______________________________________________
Name:
Title:
SANDY SPRING BANCORP, INC.
as Sponsor and Debenture Issuer
By: ______________________________________________
James H. Langmead
Chief Financial Officer
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<PAGE>
ANNEX I
TERMS OF
____% CUMULATIVE TRUST PREFERRED SECURITIES
____% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of _______ __, 1999 (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 Prospectus
referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
----------------------
(a) Preferred Securities. ________ __% Cumulative Trust Preferred
--------------------
Securities of the Trust with an aggregate liquidation amount with respect to the
assets of the Trust of ____________ dollars ($_______) and each with a
liquidation amount with respect to the assets of the Trust of per security (if
the underwriters exercise their Option and there is an Option Closing Date (as
such terms are defined in the Underwriting Agreement), then up to an additional
_____ Cumulative Trust Preferred Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of _____________
dollars ($______)), are hereby designated for the purposes of identification
only as Preferred Securities. The certificates evidencing the Preferred
Securities shall be substantially in the form of Exhibit A-1 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice or to conform to the rules of any
exchange or quotation system on or in which the Preferred Securities are listed,
traded or quoted.
(b) Common Securities. ______ Common Securities of the Trust with an
-----------------
aggregate liquidation amount with respect to the assets of the Trust of
______________ dollars ($_______), and a liquidation amount with respect to the
assets of the Trust of per security (if the underwriters exercise their Option
and there is an Option Closing Date (as such terms are defined in the
Underwriting Agreement), then up to an additional _____ Common Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of _____________ dollars ($______)), are hereby designated for the
purposes of identification only as 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 ____% (the "Coupon Rate") of the liquidation amount of per Security
(the "Liquidation Amount"), such rate being the rate of interest payable on the
Debentures to be held
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by the Property Trustee. Distributions in arrears for more than one quarterly
period will bear additional distributions thereon compounded quarterly at the
Coupon Rate (to the extent permitted by applicable law). 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 ______ __, 1999, and will be payable quarterly in arrears on the last day
of March, June, September and December of each year, commencing on _______ __,
1999 (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 quarter on the
basis of the actual number of days elapsed in such 90-day quarter based on 30-
day months. 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 on the Debentures by extending the interest payment period
at any time and from time to time for a period not exceeding 20 consecutive
quarterly periods, including the first such quarterly 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 accrue with interest thereon (to the extent permitted by applicable
law) at the Coupon Rate compounded quarterly 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 further deferment shall only be permitted to the extent that
- -------- ----
such Extension Period, together with all extensions occurring both before and
after such deferment, does not exceed 20 consecutive quarterly periods,
including the first quarterly period during such Extension Period, or extend
beyond the Maturity Date of the Debentures. Payments of deferred Distributions
will be payable to Holders of record as they appear on the books and records of
the Trust on the record date for Distributions due at the end of such 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.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust which for so long
as the Securities remain in book entry form, will be one Business Day prior to
the relevant Distribution Date and, in the event the Securities are not in book
entry form, will be the close of business on the 15th day of the month in which
the relevant Distribution Date occurs. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in respect
of the Global Preferred Securities will be made as described under the heading
"Description of Trust Preferred Securities -- Global Trust Preferred Securities"
and "Book-Entry Issuance" in the Prospectus dated _______ __, 1999, of the
Debenture Issuer and the Trust relating to the Securities and the Debentures.
Payments in respect of Preferred Securities held in certificated form will be
made by check mailed or by wire to the Holder entitled thereto. The relevant
record dates for the Common Securities shall be the same as the record dates for
the Preferred 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
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<PAGE>
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 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 voluntary or involuntary dissolution or
termination of the Trust or the Sponsor otherwise gives notice of its election
to dissolve 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 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 that portion of
principal amount of Debentures to be contemporaneously redeemed in accordance
with their terms allocated to the Common Securities and the Preferred Securities
based upon the relative Liquidation Amounts of such classes and the proceeds of
which will be used to pay the redemption price of such Securities and (ii) with
respect to a distribution of Debentures upon the dissolution or 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.
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 de scribed 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 the
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<PAGE>
accrued and unpaid interest on the Securities to be so redeemed to the date
fixed for redemption, plus 100% of the principal amount thereof (the "Redemption
Price").
(b) In the case of an optional redemption, if fewer than all the
outstanding Secu rities are to be so redeemed, the Securities to be redeemed
will be determined as described in Section 4(f)(ii) below.
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 _________ __, 2004, upon not less than 30 days and not more
than 60 days written notice, at the Redemption Price and, simultaneous with such
redemption, to cause a Like Amount of the Securities to be redeemed by the Trust
at the Redemption Price on a Pro Rata basis or such other method as the Property
Trustee shall deem appropriate, subject to the receipt of prior approval of any
applicable regulatory agency if it is then required under applicable regulatory
requirements.
(c) If at any time an Investment Company Event, a Tax Event or a
Regulatory Capital Event (each as defined below, and each a "Special Event")
occurs and shall be continuing, the Debenture Issuer shall have the right
(subject to the conditions set forth in the Indenture) upon not less than 30 nor
more than 60 days written 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 Redemption Price on a Pro Rata
basis or such other method as the Property Trustee shall deem appropriate, in
each case subject to the receipt of prior approval of any applicable regulatory
agency if it is then required under applicable regulatory requirements.
"Investment Company Event" means the receipt by the Sponsor of an
Opinion of Counsel, rendered by a law firm experienced in such matters, to the
effect that, as a result of change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, the Trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940, as amended, which change becomes effective on or
after the date of original issuance of the Preferred Securities of Sandy Spring
Capital Trust I.
A "Regulatory Capital Event" shall occur at any time that the Sponsor
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, guidelines or
policies of applicable regulatory agencies 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 the date of Declaration, the Preferred
Securities do not constitute, or within 90 days of the date thereof, will not
constitute, Tier 1 Capital (or its then equivalent) applied as if the Sponsor
(or its successor) were a bank holding company for purposes of the capital
adequacy guidelines of the Board of Governors of the Federal Reserve (or any
successor regulatory authority with jurisdiction over bank holding companies),
or any capital adequacy guidelines as then in effect and applicable to the
Sponsor; provided, however, that the
-------- -------
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<PAGE>
distribution of the Junior Subordinated Debentures in connection with a
termination of the Trust by the Sponsor shall not in and of itself constitute a
Regulatory Capital Event.
"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 regula tions thereunder of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of the Declaration, 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.
(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 out standing, (ii) the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee), as the Holder of the
Preferred Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such distribution
and (iii) any certifi cates 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 quarterly Distri bution 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 ex change 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 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.
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(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), or such other method
as the Property Trustee shall deem appropriate, not more than 60 days prior
to the date fixed for redemption from the outstanding Preferred 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 Securi ties or such Holder no longer holds any
Securities and shall use such method (including, without limitation, by
lot) as the Property Trustee 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 Property Trustee deems fair and
appropriate in order that only Securities in denominations of or integral
multiples thereof shall be redeemed. In respect of Preferred 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 Preferred 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 re quires, the Property Trustee will deposit
irrevocably with the Clearing Agency or its nomi nee (or successor
Clearing Agency or its nominee) funds sufficient to pay the Redemption
Price with respect to such Preferred Securities and will give the Clearing
Agency irrevo cable instructions and authority to pay the Redemption Price
to the relevant Clearing Agency Participants, and (B) with respect to
Preferred 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 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,
provided, that any such payment shall become due only upon surrender by the
Holder of the related certificated Preferred Securities. If a Redemp
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.
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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 re demption of Securities is not a Business Day, then payment of
the Redemption Price pay able 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 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 Preferred
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 Preferred 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 Preferred Securities by
tender, in the open market or by private agreement.
5. Voting Rights - Preferred Securities.
------------------------------------
(g) Except as provided under Sections 5(b), 6(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(h) So long as any Debentures are held by the Property Trustee,
subject to the requirement of the Property Trustee obtaining a tax opinion in
certain circumstances set forth in the last sentence of this paragraph, the
Holders of a majority in Liquidation Amount of the Preferred Securities have the
right to (i) direct the time, method and place of conducting any proceeding for
any remedy available to the Debenture Trustee, or direct the exercise of 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, however, 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 Preferred Securities. The Trustees shall
not revoke
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<PAGE>
any action previously authorized or approved by a vote of the Holders of the
Preferred Securities except by subsequent vote of such Holders. Subject to
Section 2.7 of the Declaration, the Property Trustee shall notify each Holder of
Preferred Securities of any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of the Preferred
Securities, prior to taking any of the foregoing actions, except with respect to
directing the time, method and place of conducting a proceeding for a remedy,
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 interest on the Debentures on the due date (or in the
case of redemption, on the redemption date), then a Holder of Preferred
Securities may directly institute a proceeding for enforcement of payment to
such Holder of the principal of or interest on a Like Amount of Debentures (a
"Direct Action") on or after the respective due date specified in the
Debentures, and the amount of the payment will be based on the Holder's pro rata
share of the amount due and owing on all Preferred Securities. In connection
with such Direct Action, the Common Securities Holder will be subrogated to the
rights of such Holder of Preferred Securities to the extent of any payment made
by the Debenture Issuer to such Holder of Preferred Securities in such Direct
Action. Except as provided in the second preceding sentence, the Holders of
Preferred 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 Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent and without prior notice. The Administrative
Trustees will cause a notice of any meeting at which Holders of Preferred
Securities are entitled to vote, to be mailed to each Holder of record of
Preferred Securities. Each such notice will include a statement setting forth
(i) the date of such meeting, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote and (iii)
instructions for the delivery of proxies.
No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the 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 and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
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<PAGE>
(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 Preferred Securities. In no event will the
holders of the Preferred 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 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,
subject to Section 2.6 of the Declaration and only after any Event of Default
with respect to the Preferred Securities has been cured, waived or otherwise
eliminated, 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 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 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 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 Preferred 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 without prior notice. The Administrative Trustees will cause a
notice of any meeting at which Holders of Common Securities
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are entitled to vote 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, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote and (iii) instructions for
the delivery of proxies.
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, 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 or (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 provided, however, that in each case such action shall not adversely
-------- -------
affect the interests of any Holder. Any amendments of the Declaration pursuant
to the immediately preceding sentence 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
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the
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<PAGE>
Holders of the Preferred 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 Property Trustee on behalf of
the Trust may make such adjustments as may be appropriate in order that only
securities in authorized denominations shall be redeemed.
9. Ranking.
-------
The Preferred 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 Preferred 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 Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred 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 or similar rights to subscribe
for any additional securities in the Trust. The issuance of the Securities is
not subject to any preemptive or similar rights.
12. Miscellaneous.
-------------
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
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.
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EXHIBIT A-1
FORM OF ____% CUMULATIVE TRUST PREFERRED SECURITY CERTIFICATE
[FACE OF SECURITY]
[if issued as a Global Security insert:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE DECLARATION
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 DECLARATION 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.
UNLESS THIS PREFERRED SECURITY CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TO THE TRUST OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHO RIZED
REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSONS IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
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<PAGE>
Number of
Preferred Securities:________ CUSIP NO. ___________
Certificate Evidencing ____% Cumulative Trust Preferred Securities
of
Sandy Spring Capital Trust I
____% Cumulative Trust Preferred Securities
(liquidation amount per Preferred Security)
Sandy Spring Capital Trust, 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 __________ Preferred Securities
(as defined below) ($____________ in aggregate liquidation amount of Preferred
Securities) of the Trust representing undivided beneficial interests in the
assets of the Trust designated the ____% Cumulative Trust Preferred Securities
(liquidation amount per Preferred Security) (the "Preferred Securities").
Subject to the Declaration (as defined below), the Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred 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 ________ __, 1999, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
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 Preferred 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.
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 Preferred 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 Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
This Certificate shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to principles of conflict of
laws.
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<PAGE>
IN WITNESS WHEREOF, the Trust has duly executed this certificate this
_________ day of ___________ 1999.
SANDY SPRING CAPITAL TRUST I
By: __________________________________________________
James H. Langmead
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the within-
mentioned Declaration.
THE BANK OF NEW YORK
as Property Trustee
Dated: _____ __, 1999
By: _________________________________________________
Authorized Signatory
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<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at a
rate per annum of ____% (the "Coupon Rate") of the liquidation amount of per
Preferred 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 quarterly period will bear interest thereon compounded quarterly
at the Coupon Rate (to the extent permitted by applicable law). 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 Preferred 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
_______ __, 1999 and will be payable quarterly in arrears, on the last day of
March, June, September and December of each year, commencing on _____ __, 1999,
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 quarter, the number of days elapsed in such 90-day
quarter based on 30-day months. 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
20 consecutive calendar quarterly periods, including the first such quarterly
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, quarterly Distributions will continue to accumulate with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded quarterly 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 further
-------- ----
deferment shall only be permitted to the extent that such Extension Period,
together with all extensions occurring both before and after such deferment,
does not exceed 20 consecutive quarterly periods, including the first quarterly
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.
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 dissolve 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 Preferred Securities shall be redeemable as provided in the
Declaration.
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<PAGE>
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
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 Preferred 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 Preferred 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 Exchange Act of 1934, as amended.
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<PAGE>
Schedule A***
The initial number of Preferred Securities evidenced by the Certificate to
which this Schedule is attached is _______ (having an aggregate liquidation
amount of $______). The notations in the following table evidence decreases and
increases in the number of Preferred Securities evidenced by such Certificate.
<TABLE>
<CAPTION>
Number of Preferred
Decrease in Number Increase in Securities Remaining
of Preferred Number after such Decrease or Notation
Securities of Preferred Increase by
Securities Registrar
<S> <C> <C> <C>
</TABLE>
* Append to Global Preferred Securities only.
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<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 SANDY SPRING BANCORP,
INC. (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 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 INSTITU TIONAL 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 SATISFAC TORY 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 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.
A2-1
79
<PAGE>
THIS COMMON SECURITY IS NOT TRANSFERABLE EXCEPT AS SET FORTH IN SECTION
9.1(c) OF THE AMENDED AND RESTATED DECLARATION OF TRUST OF SANDY SPRING CAPITAL
TRUST I, DATED AS OF _______ __, 1999, AS THE SAME MAY BE AMENDED FROM TIME TO
TIME.
A2-2
80
<PAGE>
Certificate No. 1
Certificate Evidencing Common Securities
of
Sandy Spring Capital Trust I
____% Common Securities
(liquidation amount per Common Security)
Sandy Spring Capital Trust I, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), hereby certifies that Sandy
Spring Bancorp, Inc. (the "Holder") is the registered owner of ______ common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the ____% Common Securities (liquidation amount
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 ________ __,
1999, 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 Preferred 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 Holder 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.
This Certificate shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to principles of conflicts of
laws.
A2-3
81
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this ____
day of _________, 1999.
SANDY SPRING CAPITAL TRUST I
By: _____________________________________________
James H. Langmead
Administrative Trustee
A2-4
82
<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 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
quarterly period will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). 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 ______ __,
1999 and will be payable quarterly in arrears, on the last day of March, June,
September and December of each year, commencing on _____ __, 1999, 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 quarter, the number of days elapsed in such 90-day quarter based
on 30-day months. 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 20
consecutive calendar quarterly periods, including the first such quarterly
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) at the Coupon Rate compounded quarterly
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 further deferment
-------- ----
shall only be permitted to the extent that such Extension Period, together with
all extensions occurring both before and after such deferment, does not exceed
20 consecutive quarterly periods, including the first quarterly 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.
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 dissolve 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.
A2-5
83
<PAGE>
Under certain circumstances, the right of the holders of the Common
Securities shall be subordinate to the rights of the holders of the Preferred
Securities (as defined in the Declaration), as provided in the Declaration.
The Common Securities shall be redeemable as provided in the
Declaration.
_____________________
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 Common Security
Certificate)
84
<PAGE>
EXHIBIT B
SPECIMEN OF DEBENTURE
85
<PAGE>
EXHIBIT C
UNDERWRITING AGREEMENT
86
<PAGE>
Exhibit 4.6
================================================================================
TRUST PREFERRED SECURITIES
GUARANTEE AGREEMENT
SANDY SPRING BANCORP, INC.
Dated as of ______ __, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation............................. 1
------------------------------
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application........................... 5
--------------------------------
SECTION 2.2 Lists of Holders of Trust Preferred Securities............. 6
----------------------------------------------
SECTION 2.3 Reports by the Trust Preferred Securities Guarantee
---------------------------------------------------
Trustee................................................. 6
-------
SECTION 2.4 Periodic Reports to Trust Preferred Securities Guarantee
--------------------------------------------------------
Trustee................................................. 6
-------
SECTION 2.5 Evidence of Compliance with Conditions Precedent........... 7
------------------------------------------------
SECTION 2.6 Guarantee Events of Default; Waiver........................ 7
-----------------------------------
SECTION 2.7 Guarantee Event of Default; Notice......................... 7
----------------------------------
SECTION 2.8 Conflicting Interests...................................... 7
---------------------
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred Securities
---------------------------------------------------
Guarantee Trustee...................................... 8
-----------------
SECTION 3.2 Certain Rights of Trust Preferred Securities Guarantee
------------------------------------------------------
Trustee................................................. 10
-------
SECTION 3.3 Not Responsible for Recitals or Issuance of Trust Preferred
-----------------------------------------------------------
Securities Guarantee....................................... 12
--------------------
ARTICLE IV
TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Securities Guarantee Trustee;
---------------------------------------------------------
Eligibility........................................... 12
-----------
SECTION 4.2 Appointment, Removal and Resignation of Trust Preferred
-------------------------------------------------------
Securities Guarantee Trustee............................ 13
<PAGE>
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
-----------------
SECTION 5.5 Guarantee of Payment....................................... 16
--------------------
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
INDEMNIFICATION
SECTION 8.1 Exculpation................................................ 18
-----------
SECTION 8.2 Indemnification............................................ 18
---------------
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns..................................... 18
----------------------
SECTION 9.2 Amendments................................................. 19
----------
SECTION 9.3 Notices.................................................... 19
-------
SECTION 9.4 Benefit.................................................... 20
-------
SECTION 9.5 Governing Law.............................................. 20
-------------
<PAGE>
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
This Trust Preferred Securities Guarantee Agreement (the "Trust
Preferred Securities Guarantee"), dated as of _________ __, 1999, is executed
and delivered by Sandy Spring Bancorp, Inc., a Maryland corporation (the
"Guarantor"), and The Bank of New York, a New York banking corporation, as
trustee, for the benefit of the Holders (as defined herein) from time to time of
the Trust Preferred Securities (as defined herein) of Sandy Spring 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 _______ __, 1999, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof, _______ trust preferred securities, having an
aggregate liquidation amount of $__________, such trust preferred securities
being designated the ___% Cumulative Trust Preferred Securities (collectively
the "Trust Preferred Securities"); and
WHEREAS, as incentive for the Holders to purchase the Trust Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Trust Preferred Securities Guarantee, to pay to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is executing and delivering a guarantee
agreement (the "Common Securities Guarantee"), with substantially identical
terms to this Trust Preferred Securities Guarantee, for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event of
Default (as defined in the Declaration) has occurred and is continuing, the
rights of holders 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
Trust Preferred Securities to receive Guarantee Payments under this Trust
Preferred Securities Guarantee;
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 Trust Preferred Securities Guarantee for
the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
------------------------------
In this Trust Preferred Securities Guarantee, unless the context
otherwise requires:
<PAGE>
(a) capitalized terms used in this Trust Preferred Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) a term defined in the Declaration as at the date of execution of
this Trust Preferred Securities Guarantee have the same meaning
when used in this Trust Preferred Securities Guarantee unless
otherwise defined in this Trust Preferred Securities Guarantee;
(c) a term defined anywhere in this Trust Preferred Securities
Guarantee has the same meaning throughout;
(d) all references to "the Trust Preferred Securities Guarantee" or
"this Trust Preferred Securities Guarantee" are to this Trust
Preferred Securities Guarantee as modified, supplemented or
amended from time to time;
(e) all references in this Trust Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this Trust
Preferred Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Trust Preferred Securities Guarantee, unless
otherwise defined in this Trust Preferred Securities Guarantee
or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
---------
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday or a Sunday, or a
------------
day on which banking institutions in the cities of New York, New York or Olney,
Maryland are authorized or required by law or executive order to close.
"Common Securities" means the securities representing common undivided
-----------------
beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Trust Preferred
----------------------
Securities Guarantee Trustee at which the corporate trust business of the Trust
Preferred Securities Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this Trust
Preferred Securities Guarantee is located at 101 Barclay Street, New York, New
York 10286.
2
<PAGE>
"Covered Person" means any Holder or beneficial owner of Trust
--------------
Preferred Securities.
"Debentures" means the series of subordinated deferrable interest
----------
debentures of the Guarantor designated the ____% Junior Subordinated Deferrable
Interest Debentures due ______ __, 2029 held by the Property Trustee (as defined
in the Declaration) of the Issuer.
"Guarantee Event of Default" means a default by the Guarantor on any
--------------------------
of its payment or other obligations under this Trust Preferred 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 Trust Preferred 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 Trust Preferred 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 Trust Preferred Securities called for
redemption by the Issuer; and (iii) upon a voluntary or involuntary dissolution
or winding up of the Issuer (other than in connection with the distribution of
Debentures to the Holders in exchange for Trust Preferred Securities as provided
in the Declaration), the lesser of (a) the aggregate of the liquidation amount
and all accumulated and unpaid Distributions on the Trust Preferred Securities
to the date of payment, to the extent the Issuer has funds on hand legally
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer after
satisfaction of liabilities to creditors (in either case, the "Liquidation
Distribution"). 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 Trust Preferred Securities
Guarantee.
"Holder" shall mean any holder, as registered on the books and records
------
of the Issuer, of any Trust Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Trust Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Trust Preferred Securities Guarantee
------------------
Trustee, any Affiliate of the Trust Preferred Securities Guarantee Trustee, or
any officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Trust Preferred
Securities Guarantee Trustee.
3
<PAGE>
"Indenture" means the Indenture dated as of _____ __, 1999, 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 Trust Preferred Securities"
----------------------------------------------------------------
means, except as provided by the Declaration, the terms of the Preferred
Securities or by the Trust Indenture Act, a vote by Holder(s) of more than 50%
of the aggregate liquidation amount of all Trust Preferred Securities. In
determining whether the Holders of the requisite amount of Trust Preferred
Securities have voted, Trust Preferred Securities which are owned by the
Guarantor or any Affiliate of the Guarantor or any other obligor on the Trust
Preferred Securities shall be disregarded for the purpose of any such
determination.
"Officers' Certificate" means, with respect to the Guarantor, a
---------------------
certificate signed by any two of the following: 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 Trust Preferred 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 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, in each case similar to the Issuer.
"Other Guarantees" means all guarantees issued or to be issued by the
----------------
Guarantor with respect to trust preferred securities similar to the Trust
Preferred Securities issued by other trusts established or to be established by
the Guarantor, in each case similar to the Issuer.
4
<PAGE>
"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.
"Responsible Officer" means, with respect to the Trust Preferred
-------------------
Securities Guarantee Trustee, any officer within the Corporate Trust Office of
the Trust Preferred Securities Guarantee Trustee with direct responsibility for
the administration of this Trust Preferred 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 Trust Preferred Securities Guarantee Trustee" means a
------------------------------------------------------
successor Trust Preferred Securities Guarantee Trustee possessing the
qualifications to act as Trust Preferred Securities Guarantee Trustee under
Section 4.1.
"Trust Preferred Securities Guarantee Trustee" means The Bank of New
--------------------------------------------
York, a New York banking corporation, until a Successor Trust Preferred
Securities Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Trust Preferred Securities Guarantee
and thereafter means each such Successor Trust Preferred Securities Guarantee
Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended from time to time, or any successor legislation.
"Trust Securities" means the Common Securities and the Trust
----------------
Preferred Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
--------------------------------
(a) This Trust Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this Trust
Preferred 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 Trust Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
5
<PAGE>
SECTION 2.2 Lists of Holders of Trust Preferred Securities
----------------------------------------------
(a) The Guarantor shall provide the Trust Preferred Securities
Guarantee Trustee (unless the Trust Preferred Securities Guarantee Trustee is
otherwise the registrar of the Trust Preferred Securities) with a list, in such
form as the Trust Preferred Securities Guarantee Trustee may reasonably require,
of the names and addresses of the Holders of the Trust Preferred Securities
("List of Holders") as of such date, (i) within 14 days after each record date
for payment of Distributions, as defined in the Declaration, 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 Trust Preferred 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 Trust Preferred Securities Guarantee Trustee by the Guarantor. The Trust
Preferred Securities Guarantee Trustee shall preserve, in as current a form as
is reasonably practicable, all information contained in a List of Holders given
to it, provided that it may destroy any List of Holders previously given to it
on receipt of a new List of Holders.
(b) The Trust Preferred 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 Trust Preferred Securities Guarantee Trustee
-----------------------------------------------------------
Within 60 days after May 15 of each year, commencing May 15, 2000, the
Trust Preferred 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 Trust Preferred Securities Guarantee Trustee shall also comply with the
other requirements of Section 313 of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Trust Preferred Securities Guarantee Trustee
----------------------------------------------------------------
The Guarantor shall provide to the Trust Preferred Securities
Guarantee Trustee such documents, reports and information as required by Section
314 of the Trust Indenture Act (if any) and the compliance certificate required
by Section 314 of the Trust Indenture Act in the form, in the manner 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.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
------------------------------------------------
The Guarantor shall provide to the Trust Preferred Securities
Guarantee Trustee such evidence of compliance with any conditions precedent, if
any, provided for in this Trust Preferred Securities Guarantee that relate to
any of the matters set forth in Section 314(c) of the Trust
6
<PAGE>
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 Guarantee Events of Default; Waiver
-----------------------------------
The Holders of a Majority in liquidation amount of Trust Preferred
Securities may, by vote or by written consent, on behalf of all Holders, waive
any past Guarantee Event of Default and its consequences. Upon such waiver, any
such Guarantee Event of Default shall cease to exist, and any Guarantee Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Trust Preferred Securities Guarantee, but no such waiver shall extend to
any subsequent or other default or Guarantee Event of Default or impair any
right consequent thereon.
SECTION 2.7 Guarantee Event of Default; Notice
----------------------------------
(a) The Trust Preferred Securities Guarantee Trustee shall, within 90
days after the occurrence of a Guarantee Event of Default, mail by first class
postage prepaid, to all Holders, notices of all Guarantee Events of Default
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 a
Guarantee Event of Default in the timing or payment of any Guarantee Payment,
the Trust Preferred 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 of the
Trust Preferred Securities Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.
(b) The Trust Preferred Securities Guarantee Trustee shall not be
deemed to have knowledge of any Guarantee Event of Default unless the Trust
Preferred Securities Guarantee Trustee shall have received written notice from
the Guarantor, or a Responsible Officer charged with the administration of this
Trust Preferred Securities Guarantee shall have obtained actual knowledge, of
such Guarantee Event of Default.
SECTION 2.8 Conflicting Interests
---------------------
The Declaration shall be deemed to be specifically described in this
Trust Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
7
<PAGE>
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred Securities Guarantee
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Trustee
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(a) This Trust Preferred Securities Guarantee shall be held by the
Trust Preferred Securities Guarantee Trustee for the benefit of the Holders, and
the Trust Preferred Securities Guarantee Trustee shall not transfer this Trust
Preferred Securities Guarantee to any Person except a Holder exercising his, her
or its rights pursuant to Section 5.4(b) or to a Successor Trust Preferred
Securities Guarantee Trustee on acceptance by such Successor Trust Preferred
Securities Guarantee Trustee of its appointment to act as Successor Trust
Preferred Securities Guarantee Trustee. The right, title and interest of the
Trust Preferred Securities Guarantee Trustee shall automatically vest in any
Successor Trust Preferred 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
Trust Preferred Securities Guarantee Trustee.
(b) If a Guarantee Event of Default actually known to a Responsible
Officer has occurred and is continuing, the Trust Preferred Securities Guarantee
Trustee shall enforce this Trust Preferred Securities Guarantee for the benefit
of the Holders.
(c) The Trust Preferred Securities Guarantee Trustee, before the
occurrence of any Guarantee Event of Default and after the curing of all
Guarantee Events of Default that may have occurred, shall undertake to perform
only such duties as are specifically set forth in this Trust Preferred
Securities Guarantee, and no implied covenants shall be read into this Trust
Preferred Securities Guarantee against the Trust Preferred Securities Guarantee
Trustee. In case a Guarantee 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 Trust Preferred Securities Guarantee Trustee shall exercise such of
the rights and powers vested in it by this Trust Preferred Securities Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(d) No provision of this Trust Preferred Securities Guarantee shall be
construed to relieve the Trust Preferred Securities Guarantee Trustee from
liability for its own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(i) prior to the occurrence of any Guarantee Event of Default and
after the curing or waiving of all such Guarantee Events of Default that
may have occurred:
(A) the duties and obligations of the Trust Preferred
Securities Guarantee Trustee shall be determined solely by the express
provisions of this Trust Preferred Securities
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Guarantee, and the Trust Preferred Securities Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Trust Preferred
Securities Guarantee, and no implied covenants or obligations shall be
read into this Trust Preferred Securities Guarantee against the Trust
Preferred Securities Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Trust
Preferred Securities Guarantee Trustee, the Trust Preferred 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 Trust Preferred
Securities Guarantee Trustee and conforming to the requirements of
this Trust Preferred Securities Guarantee; but in the case of any such
certificates or opinions that by any provision hereof are specifically
required to be furnished to the Trust Preferred Securities Guarantee
Trustee, the Trust Preferred Securities Guarantee Trustee shall be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Trust Preferred Securities
Guarantee (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein);
(ii) the Trust Preferred 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 Trust Preferred Securities
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Trust Preferred 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 Trust Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Trust Preferred Securities Guarantee Trustee, or exercising any trust
or power conferred upon the Trust Preferred Securities Guarantee Trustee
under this Trust Preferred Securities Guarantee; and
(iv) no provision of this Trust Preferred Securities Guarantee
shall require the Trust Preferred 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 Trust Preferred 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 Trust
Preferred Securities Guarantee or indemnity, reasonably satisfactory to the
Trust Preferred Securities Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
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SECTION 3.2 Certain Rights of Trust Preferred Securities Guarantee Trustee
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(a) Subject to the provisions of Section 3.1:
(i) The Trust Preferred 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
Trust Preferred Securities Guarantee may be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Trust Preferred
Securities Guarantee, the Trust Preferred Securities Guarantee Trustee
shall deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Trust Preferred
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 Trust Preferred 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 Trust Preferred 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 Trust Preferred Securities Guarantee
Trustee shall have the right at any time to seek instructions concerning
the administration of this Trust Preferred Securities Guarantee from any
court of competent jurisdiction.
(vi) The Trust Preferred Securities Guarantee Trustee shall be
under no obligation to exercise any of the rights or powers vested in it by
this Trust Preferred Securities Guarantee at the request or direction of
any Holder, unless such Holder shall have provided to the Trust Preferred
Securities Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Trust Preferred Securities Guarantee Trustee, against
the costs, expenses (including attorneys' fees and expenses and the
expenses of the Trust Preferred Securities Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Trust Preferred Securities Guarantee
Trustee; provided
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that, nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Trust Preferred Securities Guarantee Trustee, upon the
occurrence of a Guarantee Event of Default, of its obligation to exercise
the rights and powers vested in it by this Trust Preferred Securities
Guarantee.
(vii) The Trust Preferred 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 Trust Preferred
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 Trust Preferred 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 Trust Preferred Securities Guarantee Trustee shall not
be responsible for any misconduct or negligence on the part of any agent,
custodian, nominee or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Trust Preferred Securities Guarantee
Trustee or its agents hereunder shall bind the Holders, and the signature
of the Trust Preferred 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 Trust
Preferred Securities Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Trust Preferred Securities
Guarantee, both of which shall be conclusively evidenced by the Trust
Preferred Securities Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Trust Preferred
Securities Guarantee the Trust Preferred 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 Trust Preferred
Securities Guarantee Trustee (i) may request instructions from the Holders
of a Majority in liquidation amount of the Trust Preferred Securities, (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions.
(xi) The Trust Preferred 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 Trust Preferred Securities Guarantee.
(b) No provision of this Trust Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Trust Preferred Securities
Guarantee Trustee to perform any
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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
Trust Preferred 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 Trust Preferred Securities Guarantee Trustee shall be
construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Trust Preferred
-----------------------------------------------------------
Securities Guarantee
--------------------
The recitals contained in this Trust Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Trust Preferred
Securities Guarantee Trustee does not assume any responsibility for their
correctness. The Trust Preferred Securities Guarantee Trustee makes no
representation as to the validity or sufficiency of this Trust Preferred
Securities Guarantee.
ARTICLE IV
TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Securities Guarantee Trustee; Eligibility
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(a) There shall at all times be a Trust Preferred 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 Trust Preferred Securities Guarantee Trustee
shall cease to be eligible to so act under Section 4.1(a), the Trust Preferred
Securities Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Trust Preferred Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Trust
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Preferred Securities Guarantee Trustee and Guarantor shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Trust Preferred Securities
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Guarantee Trustee
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(a) Subject to Section 4.2(b), the Trust Preferred Securities
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor except during a Guarantee Event of Default.
(b) The Trust Preferred Securities Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor Trust Preferred
Securities Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Trust Preferred
Securities Guarantee Trustee and delivered to the Guarantor.
(c) The Trust Preferred Securities Guarantee Trustee shall hold office
until a Successor Trust Preferred Securities Guarantee Trustee shall have been
appointed or until its removal or resignation. The Trust Preferred Securities
Guarantee Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Trust Preferred
Securities Guarantee Trustee and delivered to the Guarantor, which resignation
shall not take effect until a Successor Trust Preferred Securities Guarantee
Trustee has been appointed and has accepted such appointment by instrument in
writing executed by such Successor Trust Preferred Securities Guarantee Trustee
and delivered to the Guarantor and the resigning Trust Preferred Securities
Guarantee Trustee.
(d) If no Successor Trust Preferred 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
Trust Preferred Securities Guarantee Trustee resigning or being removed may
petition any court of competent jurisdiction for appointment of a Successor
Trust Preferred Securities Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Trust Preferred Securities Guarantee Trustee.
(e) No Trust Preferred Securities Guarantee Trustee shall be liable
for the acts or omissions to act of any Successor Trust Preferred Securities
Guarantee Trustee.
(f) Upon termination of this Trust Preferred Securities Guarantee or
removal or resignation of the Trust Preferred Securities Guarantee Trustee
pursuant to this Section 4.2, the Guarantor shall pay to the Trust Preferred
Securities Guarantee Trustee all amounts due to the Trust Preferred Securities
Guarantee Trustee for fees and reimbursement of expenses which have 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 Trust
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the 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 Trust Preferred Securities Guarantee shall be absolute and
unconditional and shall remain in full force and effect until the entire
liquidation amount of all Trust Preferred Securities shall have been paid and
such obligations, covenants, agreements and duties shall in no way be affected
or impaired by reason of the happening from time to time of any event, including
without limitation the following, whether or not with notice to, or the consent
of, the Guarantor:
(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 Trust Preferred 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 (as
defined in the Declaration) or any other sums payable under the terms of the
Trust Preferred Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the Trust
Preferred Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum payable
that results from the extension of any interest payment period on the Debentures
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Property Trustee or the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred
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on the Property Trustee or the Holders pursuant to the terms of the Trust
Preferred Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Trust
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred;
(g) 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. No set-off, counterclaim, reduction or diminution of any obligation,
or any defense of any kind or nature that the Guarantor has or may have against
any Holder shall be available hereunder to the Guarantor against such Holder to
reduce the payments to it under this Trust Preferred Securities Guarantee.
SECTION 5.4 Rights of Holders
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(a) The Holders of a Majority in liquidation amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trust Preferred
Securities Guarantee Trustee in respect of this Trust Preferred Securities
Guarantee or exercising any trust or power conferred upon the Trust Preferred
Securities Guarantee Trustee under this Trust Preferred Securities Guarantee.
(b) If the Trust Preferred Securities Guarantee Trustee fails to
enforce such Trust Preferred Securities Guarantee, any Holder may institute a
legal proceeding directly against the Guarantor to enforce the Trust Preferred
Securities Guarantee Trustee's rights under this Trust Preferred Securities
Guarantee, without first instituting a legal proceeding against the Issuer, the
Trust Preferred Securities Guarantee Trustee or any other Person or entity.
Notwithstanding the foregoing, if the Guarantor has failed to make a Guarantee
Payment, a Holder may directly institute a proceeding against the Guarantor for
enforcement of the Trust Preferred Securities Guarantee for such payment to the
Holder of the principal of or interest on the Debentures on or after the
respective due dates specified in the Debentures, and the amount of the payment
will be based on the Holder's pro rata share of the amount due and owing on all
of the Trust Preferred Securities. The Guarantor
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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
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This Trust Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
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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 Trust Preferred Securities Guarantee; provided, however,
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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 Trust Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Trust Preferred Securities Guarantee. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
-----------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Trust Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Trust
Preferred Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
--------------------------
So long as any Trust Preferred Securities remain outstanding, if there
shall have occurred a Guarantee Event of Default or an Event of Default, or an
event that, with the giving of notice or the lapse of time, or both, would be a
Guarantee Event of Default or an Event of Default then, prior to the payment of
all accrued interest on outstanding Debentures , 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, interest or premium, if any, on or repay or 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
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payments with respect to any guarantee by the Guarantor of the debt securities
of any Subsidiary (including under Other Guarantees) if such guarantee ranks
equal 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 Trust
Preferred Securities Guarantee, (d) the purchase of fractional shares resulting
from a reclassification 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).
SECTION 6.2 Ranking
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This Trust Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to Senior and Subordinated Indebtedness (as defined in the Indenture),
to the same extent and in the same manner that the Debentures are subordinated
to Senior and Subordinated Indebtedness pursuant to the Indenture, (ii) pari
passu with the Debentures, the Other Debentures, the Common Securities
Guarantee, any Other Guarantee and any Other Common Securities Guarantee, (iii)
senior to the Guarantor's capital stock and (iv) effectively subordinated to the
liabilities and obligations of the Guarantor's subsidiaries. If an Event of
Default has occurred and is continuing, the rights of the holders of the Common
Securities to receive any payments shall be subordinated to the rights of the
Holders to receive Guarantee Payments hereunder.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
-----------
This Trust Preferred Securities Guarantee shall terminate (i) upon
full payment of the Redemption Price (as defined in the Declaration) of all
Trust Preferred Securities or (ii) upon liquidation of the Issuer and 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. Notwithstanding the foregoing, this Trust Preferred 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
Trust Preferred Securities or under this Trust Preferred Securities Guarantee.
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ARTICLE VII
INDEMNIFICATION
SECTION 8.1 Exculpation
-----------
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Trust Preferred
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Trust Preferred Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
---------------
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any 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
Trust Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
----------------------
All guarantees and agreements contained in this Trust Preferred
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.
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SECTION 9.2 Amendments
----------
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Trust Preferred Securities Guarantee may only be amended with the prior approval
of the Holders of a Majority in liquidation amount of the Trust Preferred
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.
Prior to executing any amendment hereto, the Trust Preferred
Securities Guarantee Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Trust Preferred Securities Guarantee Agreement.
SECTION 9.3 Notices
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All notices provided for in this Trust Preferred 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 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 Trust Preferred Securities Guarantee Trustee):
Sandy Spring Capital Trust I
c/o Sandy Spring Bancorp, Inc.
1708 Georgia Avenue
Olney, Maryland 20832
Attention: James H. Langmead
Administrative Trustee
Telecopy: (301) 774-8434
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(b) If given to the Trust Preferred Securities Guarantee Trustee, at
the Trust Preferred Securities Guarantee Trustee's mailing address set forth
below (or such other address as the Trust Preferred Securities Guarantee Trustee
may give notice of to the Holders, the Guarantor 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 Trust Preferred Securities Guarantee Trustee):
Sandy Spring Bancorp, Inc.
17801 Georgia Avenue
Olney, Maryland 20832
Attention: James H. Langmead
Chief Financial Officer
Telecopy: (301) 774-8434
(d) If given to any Holder, 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 9.4 Benefit
-------
This Trust Preferred Securities Guarantee is solely for the benefit of
the Holders and, subject to Section 3.1(a), is not separately transferable from
the Trust Preferred Securities.
SECTION 9.5 Governing Law
-------------
THIS TRUST PREFERRED 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.
20
<PAGE>
THIS TRUST PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.
SANDY SPRING BANCORP, INC., as Guarantor
By:
-----------------------------------------
James H. Langmead
Chief Financial Officer
THE BANK OF NEW YORK, as Trust Preferred
Securities Guarantee Trustee
By:
-----------------------------------------
Name:
Title:
21
<PAGE>
EXHIBIT 5.1
Form of Opinion of Kennedy, Baris & Lundy, L.L.P.
<PAGE>
[Letterhead of Kennedy, Baris & Lundy, L.L.P.]
Sandy Spring Bancorp, Inc. Sandy Spring Capital Trust I
17801 Georgia Avenue 17801 Georgia Avenue
Olney, Maryland 20832 Olney, Maryland 20832
Re: Registration Statement on Form S-3 of Sandy Spring Capital Trust I
and Sandy Spring Bancorp, Inc. (File Nos. 333-_______ and 333-_______-01)
Gentlemen:
We have acted as counsel to Sandy Spring Bancorp, Inc., a Maryland corporation
(the "Company"), and Sandy Spring Capital Trust I, a Delaware statutory business
trust (the "Trust"), in connection with the preparation of a Registration
Statement on Form S-3 (the "Registration Statement") to be filed by the Company
and the Trust with the Securities and Exchange Commission (the "SEC") for the
purpose of registering under the Securities Act of 1933, as amended, preferred
securities (the "Preferred Securities") of the Trust, subordinated debentures
(the "Subordinated Debentures") of the Company and the guarantee of the Company
with respect to the Preferred Securities (the "Guarantee").
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the certificate of
trust (the "Certificate of Trust") filed by the Trust with the Secretary of
State of the State of Delaware on November 2, 1999; (ii) the Declaration of
Trust, dated as of November 1, 1999, with respect to the Trust; (iii) the form
of the Amended and Restated Declaration of Trust with respect to the Trust; (iv)
the form of the Preferred Securities of the Trust; (v) the form of Guarantee
between the Company and The Bank of New York as trustee; (vi) the form of
Subordinated Debentures; and (vii) the form of the indenture (the "Indenture")
between the Company and The Bank of New York as trustee, in each case in the
form filed as an exhibit to the Registration Statement. We have also examined
originals or copies, certified, or otherwise identified to our satisfaction, of
such other documents, certificates, and records as we have deemed necessary or
appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural persons,
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as copies and the authenticity of the originals of such copies.
In examining documents executed by parties other than the Company or the Trust,
we have assumed that such parties had the power, corporate or otherwise, to
enter into and perform all obligations thereunder and have also assumed the due
authorization by all requisite action, corporate or otherwise, and execution and
delivery by such parties of such documents and that, except as set forth in
paragraphs (1) and (2) below, such documents constitute valid and binding
obligations of such parties. In addition, we have assumed that the Amended and
Restated Trust Agreement, the Preferred Securities, the Guarantee, the
Subordinated Debentures and the Indenture, when executed, will be executed in
substantially the form reviewed by us. As to any facts material to the opinions
expressed herein which were not independently established or verified, we
<PAGE>
Sandy Spring Bancorp, Inc.
Sandy Spring Capital Trust I
November , 1999
Page 2
have relied upon oral or written statements and representations of officers,
trustees, and other representatives of the Company, the Trust, and others.
Based upon and subject to the foregoing and to other qualifications and
limitations set forth herein, we are of the opinion that:
1. After the Indenture has been duly executed and delivered, the Subordinated
Debentures, when duly executed, delivered, authenticated and issued in
accordance with the Indenture and delivered and paid for as contemplated by the
Registration Statement, will be valid and binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable against the Company in
accordance with their terms, except to the extent that enforcement thereof may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally,
and (ii) general principles of equity, regardless of whether enforceability is
considered in a proceeding at law or in equity.
2. The Guarantee, when duly executed and delivered by the parties hereto,
will be a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except to the extent that enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, or other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) general principles of equity, regardless
of whether enforceability is considered in a proceeding at law or in equity.
We hereby consent to the use of our name under the caption "Validity of
Securities" in the Prospectus forming a part of the Registration Statement and
to the inclusion of this opinion as an exhibit to the Registration Statement.
Very truly yours,
<PAGE>
EXHIBIT 5.2
Form of Opinion of Richards Layton & Finger, P.A.
<PAGE>
[Letterhead of Richards, Layton & Finger, P.A.]
November __, 1999
Sandy Spring Capital Trust I
c/o Sandy Spring Bancorp, Inc.
17801 Georgia Avenue
Olney, Maryland 20832
Re: Sandy Spring Capital Trust I
----------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for Sandy Spring Bancorp,
Inc., a Maryland corporation (the "Company"), and Sandy Spring Capital Trust I,
a Delaware business trust (the "Trust"), in connection with the matters set
forth herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated as of November 1,
1999 (the "Certificate"), as filed in the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on November 2, 1999;
(b) The Declaration of Trust of the Trust, dated as of November 1,
1999, among the Company and the trustees of the Trust named therein;
(c) A form of Amended and Restated Declaration of Trust of the Trust
(including Annex I and Exhibits A-1 and A-2) (the "Declaration"), to be entered
into among the Company, as sponsor, the trustees of the Trust named therein, and
the holders, from time to time, of undivided beneficial interests in the assets
of the Trust, attached as an exhibit to the Registration Statement (as defined
below);
(d) The Registration Statement on Form S-3 (the "Registration
Statement"), including a prospectus (the "Prospectus"), relating to the trust
preferred securities of the Trust representing undivided beneficial interests in
the assets of the Trust (each, a "Preferred Security" and collectively, the
"Preferred Securities"), as proposed to be filed by the Company and the Trust
with the Securities and Exchange Commission on or about November __, 1999; and
(e) A Certificate of Good Standing for the Trust, dated November __,
1999, obtained from the Secretary of State.
Capitalized terms used herein and not otherwise defined are used as
defined in the Declaration.
<PAGE>
Sandy Spring Bancorp, Inc.
Sandy Spring Capital Trust I
May ___, 1998
Page 2
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular,
we have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our
own but rather have relied solely upon the foregoing documents, the statements
and information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration
and the Certificate are in full force and effect and have not been amended, (ii)
except to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a preferred security certificate for such Preferred
Security and the payment for the Preferred Security acquired by it, in
accordance with the Declaration and the Registration Statement, and (vii) that
the Preferred Securities are issued and sold to the Preferred Security Holders
in accordance with the Declaration and the Registration Statement. We have not
participated in the preparation of the Registration Statement and assume no
responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition,
we hereby consent to the use of our name under the heading "Legal Matters" in
the Prospectus. In giving the foregoing consents, we do not thereby admit that
we come within
<PAGE>
Sandy Spring Bancorp, Inc.
Sandy Spring Capital Trust I
May ___, 1998
Page 2
the category of Persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
BJK/JRS
<PAGE>
EXHIBIT 8
Form of Tax Opinion of Kennedy, Baris & Lundy, L.L.P.
<PAGE>
[Letterhead of Kennedy, Baris & Lundy, L.L.P.]
Sandy Spring Bancorp, Inc.. Sandy Spring Capital Trust I
17801 Georgia Avenue 17801 Georgia Avenue
Olney, Maryland 20832 Olney, Maryland 20832
Re: Registration Statement on Form S-3 of Sandy Spring Capital Trust I
and Sandy Spring Bancorp, Inc. (File Nos. 333-_______ and
333-_______-01)
Gentlemen:
We have acted as special counsel for Sandy Spring Bancorp, Inc., a
Maryland corporation (the "Company"), and Sandy Spring Capital Trust I (the
"Trust"), a statutory business trust created under the laws of Delaware, in
connection with the above-captioned registration statement on Form S-3,
initially filed with the Securities and Exchange Commission (the "Commission")
pursuant to the Securities Act of 1933, as amended (the "Act"), on
_______________, 1999, (such registration statement, as amended, being
hereinafter referred to as the "Registration Statement"), for the purpose of
registering the Preferred Securities issued by the Trust and the Subordinated
Debentures issued by the Company to the Trust in connection with such issuance
of the Preferred Securities. All capitalized terms not otherwise defined herein
shall have the meanings set forth in the Registration Statement.
In rendering this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the certificate of
trust (the "Certificate of Trust") filed by the Trust with the Secretary of
State of the State of Delaware on November 2, 1999; (ii) the Declaration of
Trust, dated as of November 1, 1999, with respect to the Trust; (iii) the form
of the Amended and Restated Declaration of Trust with respect to the Trust; (iv)
the form of the Preferred Securities of the Trust; (v) the form of Guarantee
between the Company and The Bank of New York, as trustee; (vi) the form of
Subordinated Debentures; and (vii) the form of the indenture (the "Indenture")
between the Company and The Bank of New York, as trustee, in each case in the
form filed as an exhibit to the Registration Statement. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such other documents, certificates, and records as we have deemed necessary or
appropriate for purposes of rendering the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed by parties other than the Company or the Trust, we have
assumed that such parties had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and that such documents constitute valid and binding
obligations of such parties. In addition, we have assumed that the Amended and
Restated Trust Agreement, the Preferred Securities, the Guarantee, the
Subordinated Debentures and the Indenture when executed, will be executed in
substantially the form reviewed by us and that the terms of the Subordinated
Debentures when established in conformity with the Indenture will not violate
any applicable law. As to any facts material to the opinions expressed herein
which were not independently established or verified, we have relied upon oral
or written statements and representations of officers, trustees, and other
representatives of the Company, the Trust and others.
We hereby confirm that, although the discussion set forth under the
heading "Certain Federal Income Tax Consequences" in the form of Prospectus for
the offering of Preferred Securities constituting a part of the Registration
Statement ("Prospectus") does not purport to discuss all possible United States
federal income tax consequences of the purchase, ownership and disposition of
Preferred Securities, in our opinion, such discussion constitutes, in all
material
<PAGE>
Sandy Spring Bancorp, Inc.
Sandy Spring Capital Trust
November , 1999
Page 3
respects, a fair and accurate summary of the United States federal income tax
consequences of the purchase, ownership and disposition of the Preferred
Securities, based upon current laws as they relate to holders described therein.
It is possible that contrary positions with regard to the purchase, ownership
and disposition of the Preferred Securities may be taken by the Internal Revenue
Service and that a court may agree with such contrary positions.
Additionally, based upon the facts, assumptions and representations set
forth or referred to herein, and the accuracy of such facts, assumptions and
representations as of the date hereof, it is our opinion that 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, each holder of
Preferred Securities will be treated as owning an undivided beneficial interest
in the Subordinated Debentures.
The opinions expressed in this letter are based on the Internal Revenue
Code of 1986, as amended, the Income Tax Regulations promulgated by the Treasury
Department thereunder and judicial authority reported as of the date hereof. We
have also considered the position of the Internal Revenue Service (the
"Service") reflected in published and private rulings. There can be no
assurances that future legislation or administrative changes, court decisions or
Service interpretations would not significantly modify the statements or
opinions expressed herein.
Our opinion is limited to those federal income tax issues specifically
considered herein and is addressed to and is only for the benefit of the Company
and the Trust in connection with the filing of the Registration Statement and,
except as set forth below, is not to be used, circulated, quoted or otherwise
referred to for any other purpose or relied upon by any other person for any
purpose without our written consent. We do not express any opinion as to any
other United States federal income issues, or any state, local or foreign tax
issues. Although the opinions herein are based upon our best interpretation of
existing sources of law and express what we believe a court would properly
conclude if presented with these issues, no assurance can be given that such
interpretations would be followed if they were to become the subject of judicial
or administrative proceedings.
We hereby consent to the use of our name under the captions "Certain Federal
Income Tax Consequences" and "Validity of Securities" in the Prospectus and the
filing of this opinion as an exhibit to the Registration Statement. In giving
this consent, we do not thereby concede that we are within the category of
persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission promulgated thereunder. This opinion is expressed
as of the date hereof and applies only to the disclosures set forth in the
Prospectus and Registration Statement. We disclaim any undertaking to advise
you of any subsequent changes of the facts stated or assumed herein or any
subsequent changes of the facts stated or assumed herein or any subsequent
changes in applicable law.
Very truly yours,
<PAGE>
EXHIBIT 12.1
Statement Regarding Computation of Ratio
of Earnings to Fixed Charges
<PAGE>
Statement Regarding Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
----------------------- -----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
Fixed Charges:
Interest expense -
deposits $20,320 $21,729 $29,194 $28,700 $27,889 $26,705 $20,032
Other interest expense 9,423 6,827 9,555 5,786 2,344 2,637 1,464
----------------------- ----------------------------------------------------------
Interest Expense $29,743 $28,556 38,749 34,486 30,233 29,342 21,496
Capitalized Interest 0 0 0 0 0 0 0
Estimated interest
component of rental
expenses 317 317 421 347 279 224 221
======================= ==========================================================
Fixed charges -
excluding deposits 9,740 7,144 9,976 6,133 2,623 2,861 1,685
Fixed charges -
including deposits 30,060 28,873 39,170 34,833 30,512 29,566 21,717
======================= ==========================================================
Earnings:
Pretax income $18,433 $17,066 $23,041 $19,783 $17,283 $14,647 $12,597
Fixed changes -
excluding deposits 9,740 7,144 9,976 6,133 2,623 2,861 1,685
Fixed changes -
including deposits 30,060 28,873 39,170 34,833 30,512 24,566 21,717
Less: Capitalized
interest 0 0 0 0 0 0 0
----------------------- ----------------------------------------------------------
Earnings
excluding deposits 28,173 24,210 33,017 25,916 19,905 17,508 14,282
Earnings
including deposits 48,497 45,939 62,211 54,616 47,795 44,213 34,314
======================= ==========================================================
Ratio of earnings to
fixed charges
- excluding deposits 2.89x 3.39x 3.31x 4.23x 7.59x 6.12x 8.48x
Ratio of earnings to
fixed charges
- including deposits 1.61x 1.59x 1.59x 1.57x 1.57x 1.50x 1.58x
</TABLE>
<PAGE>
EXHIBIT 23.1
Consent of Stegman & Company
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Form S-3 of Sandy
Spring Bancorp, Inc. (the "Company") and Sandy Spring Capital Trust I, of our
report, dated January 29, 1999 on the consolidated financial statements of the
Company for the year ended December 31, 1998, which appears on page 48 of the
Company's 1998 Annual Report to Shareholders included in the Company's annual
report on Form 10-K for the year ended December 31, 1998, and to the reference
to us under the caption "Experts" in the Prospectus forming a part of the Form
S-3.
STEGMAN & COMPANY
/s/ Stegman & Company
Baltimore, Maryland
November 4, 1999
<PAGE>
Exhibit 24
POWER OF ATTORNEY
We, the undersigned directors of the Registrant, hereby severally
constitute and appoint Marjorie S. Holsinger our true and lawful attorney and
agent, to do any and all things in our names in the capacities indicated below
which said person may deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the registration statement on Form S-3 relating to issuance of Trust Preferred
Securities, Debentures, and the related Guarantee, including specifically, but
not limited to, power and authority to sign for us in our names in the
capacities indicated below the registration statement and any all amendments
(including pre- and post-effective amendments) thereto; and we hereby approve,
ratify and confirm all that said person and/or persons shall do or cause to be
done by virtue thereof.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------ ---------------------- ----------------
<S> <C> <C>
/s/ John Chirtea Director October 27, 1999
- ------------------------------
John Chirtea
/s/ Susan D. Goff Director October 27, 1999
- ------------------------------
Susan D. Goff
/s/ Solomon Graham Director October 27, 1999
- ------------------------------
Solomon Graham
/s/ Gilbert L. Hardesty Director October 27, 1999
- ------------------------------
Gilbert L. Hardesty
/s/ Joyce R. Hopkins Director October 27, 1999
- ------------------------------
Joyce R. Hawkins
/s/ Thomas O. Keech Director October 27, 1999
- ------------------------------
Thomas O. Keech
/s/ Charles F. Mess Director October 27, 1999
- ------------------------------
Charles F. Mess
/s/ Robert L. Mitchell Director October 27, 1999
- ------------------------------
Robert L. Mitchell
/s/ Robert L. Orndorff, Jr. Director October 27, 1999
- ------------------------------
Robert L. Orndorff, Jr.
/s/ David E. Rippeon Director October 27, 1999
- ------------------------------
David E. Rippeon
/s/ Lewis R, Schumann Director October 27, 1999
- ------------------------------
Lewis R. Schumann
/s/ W. Drew Stabler Chairman of the Board, October 27, 1999
- ------------------------------
W. Drew Stabler Director
</TABLE>
<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.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
___________________________
SANDY SPRING CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
Delaware Applied for
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
17801 Georgia Avenue
Olney, Maryland 20832
(Address of principal executive offices) (Zip code)
___________________________
Trust Preferred 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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Name Address
- ------------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York, N.Y.
New York 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
</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.)
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.
-2-
<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 3rd day of November, 1999.
THE BANK OF NEW YORK
By: /s/MICHAEL CULHANE
--------------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
-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 3rd day of November, 1999.
THE BANK OF NEW YORK
By: /s/ Michael Culhane
-------------------
Name: Michael Culhane
Title: Vice President
<PAGE>
EXHIBIT-7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One 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, 1999,
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>
ASSETS Dollar Amounts
In Thousands
Cash and balances due from depository
institutions:
<S> <C>
Noninterest-bearing balances and currency and $ 5,597,807
coin...........................................
Interest-bearing balances....................... 4,075,775
Securities:
Held-to-maturity securities..................... 785,167
Available-for-sale securities................... 4,159,891
Federal funds sold and Securities purchased 2,476,963
under agreements to resell......................
Loans and lease financing receivables:
Loans and leases, net of unearned
income...............38,028,772
LESS: Allowance for loan and
lease losses............568,617
LESS: Allocated transfer risk
reserve........................16,352
Loans and leases, net of unearned income, 37,443,803
allowance, and reserve.........................
Trading Assets................................... 1,563,671
Premises and fixed assets (including capitalized 683,587
leases).........................................
Other real estate owned.......................... 10,995
Investments in unconsolidated subsidiaries and 184,661
associated companies............................
Customers' liability to this bank on acceptances 812,015
outstanding.....................................
Intangible assets................................ 1,135,572
Other assets..................................... 5,607,019
-----------
Total assets..................................... $64,536,926
===========
LIABILITIES
Deposits:
In domestic offices............................. $26,488,980
Noninterest-bearing 10,626,811
Interest-bearing 15,862,169
In foreign offices, Edge and Agreement 20,655,414
subsidiaries, and IBFs.........................
Noninterest-bearing 156,471
Interest-bearing 20,498,943
Federal funds purchased and Securities sold 3,729,439
under agreements to repurchase..................
Demand notes issued to the U.S.Treasury.......... 257,860
Trading liabilities.............................. 1,987,450
Other borrowed money:
With remaining maturity of one year or less..... 496,235
With remaining maturity of more than one year 465
through three years............................
With remaining maturity of more than three years 31,080
Bank's liability on acceptances executed and 822,455
outstanding.....................................
Subordinated notes and debentures................ 1,308,000
Other liabilities................................ 2,846,649
-----------
Total liabilities................................ 58,624,027
-----------
EQUITY CAPITAL
Common stock..................................... 1,135,284
Surplus.......................................... 815,314
Undivided profits and capital reserves........... 4,001,767
Net unrealized holding gains (losses) on
available-for-sale securities................... (7,956)
Cumulative foreign currency translation
adjustments..................................... (31,510)
-----------
Total equity capital............................. 5,912,899
-----------
Total liabilities and equity capital............. $64,536,926
===========
</TABLE>
I, Thomas J. Mastro, 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.
Thomas J. Mastro
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.
<TABLE>
<S> <C>
Thomas A. Reyni )
Alan R. Griffith ) Directors
Gerald L. Hassell)
</TABLE>
<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.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
___________________________
SANDY SPRING BANCORP, INC.
(Exact name of obligor as specified in its charter)
Maryland 52-1532952
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
17801 Georgia Avenue
Olney, Maryland 20832
(Address of principal executive offices) (Zip code)
___________________________
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 New York 2 Rector Street, 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
</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.)
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.
-2-
<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 the3rd day of November, 1999.
THE BANK OF NEW YORK
By: /s/ MICHAEL CULHANE
---------------------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
-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 3rd day of November, 1999.
THE BANK OF NEW YORK
By: /s/ Michael Culhane
-------------------
Name: Michael Culhane
Title: Vice President
<PAGE>
EXHIBIT-7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One 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, 1999,
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>
ASSETS Dollar Amounts
In Thousands
Cash and balances due from depository
institutions:
<S> <C>
Noninterest-bearing balances and currency and $ 5,597,807
coin...........................................
Interest-bearing balances....................... 4,075,775
Securities:
Held-to-maturity securities..................... 785,167
Available-for-sale securities................... 4,159,891
Federal funds sold and Securities purchased 2,476,963
under agreements to resell......................
Loans and lease financing receivables:
Loans and leases, net of unearned
income...............38,028,772
LESS: Allowance for loan and
lease losses............568,617
LESS: Allocated transfer risk
reserve........................16,352
Loans and leases, net of unearned income, 37,443,803
allowance, and reserve.........................
Trading Assets................................... 1,563,671
Premises and fixed assets (including capitalized 683,587
leases).........................................
Other real estate owned.......................... 10,995
Investments in unconsolidated subsidiaries and 184,661
associated companies............................
Customers' liability to this bank on acceptances 812,015
outstanding.....................................
Intangible assets................................ 1,135,572
Other assets..................................... 5,607,019
-----------
Total assets..................................... $64,536,926
===========
LIABILITIES
Deposits:
In domestic offices............................. $26,488,980
Noninterest-bearing 10,626,811
Interest-bearing 15,862,169
In foreign offices, Edge and Agreement 20,655,414
subsidiaries, and IBFs.........................
Noninterest-bearing 156,471
Interest-bearing 20,498,943
Federal funds purchased and Securities sold 3,729,439
under agreements to repurchase..................
Demand notes issued to the U.S.Treasury.......... 257,860
Trading liabilities.............................. 1,987,450
Other borrowed money:
With remaining maturity of one year or less..... 496,235
With remaining maturity of more than one year 465
through three years............................
With remaining maturity of more than three years 31,080
Bank's liability on acceptances executed and 822,455
outstanding.....................................
Subordinated notes and debentures................ 1,308,000
Other liabilities................................ 2,846,649
-----------
Total liabilities................................ 58,624,027
-----------
EQUITY CAPITAL
Common stock..................................... 1,135,284
Surplus.......................................... 815,314
Undivided profits and capital reserves........... 4,001,767
Net unrealized holding gains (losses) on
available-for-sale securities................... (7,956)
Cumulative foreign currency translation
adjustments..................................... (31,510)
Total equity capital............................. 5,912,899
-----------
Total liabilities and equity capital............. $64,536,926
===========
</TABLE>
I, Thomas J. Mastro, 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.
Thomas J. Mastro
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.
<TABLE>
<S> <C>
Thomas A. Reyni )
Alan R. Griffith ) Directors
Gerald L. Hassell)
</TABLE>
<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.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
___________________________
SANDY SPRING BANCORP, INC.
(Exact name of obligor as specified in its charter)
Maryland 52-1532952
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
17801 Georgia Avenue
Olney, Maryland 20832
(Address of principal executive offices) (Zip code)
___________________________
Guarantee of Trust Preferred Securities of Sandy Spring Capital Trust I
(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.
New York 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
</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.)
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.
2
<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 3rd day of November, 1999.
THE BANK OF NEW YORK
By: /s/MICHAEL CULHANE
--------------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
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 3rd day of November, 1999.
THE BANK OF NEW YORK
By: /s/ Michael Culhane
-------------------
Name: Michael Culhane
Title: Vice President
<PAGE>
EXHIBIT-7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One 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, 1999,
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>
ASSETS Dollar Amounts
In Thousands
Cash and balances due from depository
institutions:
<S> <C>
Noninterest-bearing balances and currency and $ 5,597,807
coin...........................................
Interest-bearing balances....................... 4,075,775
Securities:
Held-to-maturity securities..................... 785,167
Available-for-sale securities................... 4,159,891
Federal funds sold and Securities purchased 2,476,963
under agreements to resell......................
Loans and lease financing receivables:
Loans and leases, net of unearned
income...............38,028,772
LESS: Allowance for loan and
lease losses............568,617
LESS: Allocated transfer risk
reserve........................16,352
Loans and leases, net of unearned income, 37,443,803
allowance, and reserve.........................
Trading Assets................................... 1,563,671
Premises and fixed assets (including capitalized 683,587
leases).........................................
Other real estate owned.......................... 10,995
Investments in unconsolidated subsidiaries and 184,661
associated companies............................
Customers' liability to this bank on acceptances 812,015
outstanding.....................................
Intangible assets................................ 1,135,572
Other assets..................................... 5,607,019
-----------
Total assets..................................... $64,536,926
===========
LIABILITIES
Deposits:
In domestic offices............................. $26,488,980
Noninterest-bearing 10,626,811
Interest-bearing 15,862,169
In foreign offices, Edge and Agreement 20,655,414
subsidiaries, and IBFs.........................
Noninterest-bearing 156,471
Interest-bearing 20,498,943
Federal funds purchased and Securities sold 3,729,439
under agreements to repurchase..................
Demand notes issued to the U.S.Treasury.......... 257,860
Trading liabilities.............................. 1,987,450
Other borrowed money:
With remaining maturity of one year or less..... 496,235
With remaining maturity of more than one year 465
through three years............................
With remaining maturity of more than three years 31,080
Bank's liability on acceptances executed and 822,455
outstanding.....................................
Subordinated notes and debentures................ 1,308,000
Other liabilities................................ 2,846,649
-----------
Total liabilities................................ 58,624,027
===========
EQUITY CAPITAL
Common stock..................................... 1,135,284
Surplus.......................................... 815,314
Undivided profits and capital reserves........... 4,001,767
Net unrealized holding gains (losses) on
available-for-sale securities................... (7,956)
Cumulative foreign currency translation
adjustments..................................... (31,510)
Total equity capital............................. 5,912,899
-----------
Total liabilities and equity capital............. $64,536,926
===========
</TABLE>
I, Thomas J. Mastro, 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.
Thomas J. Mastro
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.
<TABLE>
<S> <C>
Thomas A. Reyni )
Alan R. Griffith ) Directors
Gerald L. Hassell)
</TABLE>
