<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: June 30, 1998
Commission file number 0-17539
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MADISON BANCSHARES GROUP, LTD.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issue as Specified In Its Charter)
Pennsylvania 23-2512079
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1767 Sentry Parkway West, Blue Bell, PA 19422
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(Address of principal executive offices) (Zip Code)
(215) 641-1111
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(Registrant's telephone number, including area code)
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N/A
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter periods that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
-- --
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's classes
of common stock, as of the latest practicable date.
1,554,788 shares of Issuer's Common Stock, par value $1 per share, issued
and outstanding as of August 7, 1998.
<PAGE>
PART 1
ITEM 1 - FINANCIAL STATEMENTS
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SEE ANNEX A
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ------ ---------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
This report contains "forward-looking" statements. Madison
Bancshares Group, Ltd. is including this statement for the express
purpose of availing itself of the protections of the safe harbor
provided by the Private Securities Litigation Reform Act of 1995
with respect to all such forward-looking statements. Examples of
forward-looking statements include, but are not limited to (a)
projections of changes in capital-to-assets ratio, (b) statements
of plans and objectives of the Company or its management or Board
of Directors, (c) statements of future economic performance and
(d) statements of assumptions underlying other statements and
statements about the Company or its business. In order to comply
with the terms of the safe harbor, the Company notes that a
variety of factors could cause the Company's actual results and
experience to differ materially from the anticipated results or
other expectations expressed in the Company's forward looking
statements. The risks and uncertainties that may affect the
operations, performance, development and results of the Company's
business include: (i) the ability of the Company to implement its
growth strategy and manage growth; (ii) the adequacy of allowances
for loan losses and possible continued growth in delinquency
ratios; (iii) the effect of the Company's comparatively high
operating expenses and high efficiency ratios; (iv) credit risks
related to operating activities; (v) possible adverse effect of
failure to resolve "millenium bug" or "year 2000" issues; (vi)
reliance on existing management personnel; and (vii) risks
relating to federal and state government regulation.
Presented herein are the results of operations of Madison
Bancshares Group, Ltd. (the "Company") and its wholly owned
subsidiary, The Madison Bank (the "Bank"), for the quarters ended
June 30, 1998 and 1997, respectively. The Bank commenced
operations in August, 1989.
CAPITAL RESOURCES
The total number of shares of common stock outstanding on June 30,
1998 was 1,554,788 as compared to 1,252,773 at December 31, 1997.
On June 17, 1998, 259,040 shares of common stock were issued
pursuant to a 20% stock dividend declared on May 19, 1998. During
the second quarter of 1998 42,975 shares of common stock were
issued in conjunction with the exercise of options. The book value
per share of the Company's common stock at December 31, 1997 was
$5.62 and $5.88 per share at June 30, 1998, as adjusted for the
stock dividend.
During the six month period, January 1, 1998 to June 30, 1998, the
Company's total assets decreased by approximately $3,900,000 or
approximately 3% to $129,627,399, due to the Bank repaying its
borrowings.
The chart below depicts various capital ratios applicable to state
chartered Federal Reserve member banks and compares the Bank's
actual ratios at June 30, 1998 and December 31, 1997,
respectively, each of which exceeded the levels required for a
bank to be classified as "well-capitalized".
<PAGE>
<TABLE>
<CAPTION>
Regulatory Actual Actual
Ratio Minimum 12/31/97 6/30/98
<S> <C> <C> <C>
Qualifying Total Capital to
Risk Weighted Assets 8.0% 9.98% 9.71%
Tier 1 Capital, net of intangibles
to Risk Weighted Assets 4.0% 9.02% 8.73%
Tier 1 Leverage Ratio of Capital to
Total Adjusted Average Assets 4.0% 7.17% 7.55%
</TABLE>
The Company's capital-to-assets ratio increased from 6.55% as of
December 31, 1997 to 7.05% as of June 30, 1998. The increase in
the capital-to-assets ratio for the six months and quarter ended
June 30, 1998, was attributable to the repayment of borrowed
funds, thereby decreasing cash and assets. Management anticipates
that its capital-to-assets ratio will decline in future periods as
the Company's core assets continue to grow. The Company's average
return on equity for the year ended December 31, 1997, was 9.05%;
and its return on average assets was .67%. For the six month
period ended June 30, 1998, the Company's average return on equity
was 3.93% and its return on average assets was .27%. The decrease
in the Company's return on average equity and average assets is
directly attributable to the costs associated with the commencing
of the Company's mortgage lending business and the opening of its
sixth branch (see discussion in "Results of Operations").
LIQUIDITY
The Bank's liquidity, represented by cash and cash equivalents, is
a product of its cash flows from operation. The Bank's primary
sources of funds are deposits, borrowings, amortization and
maturities of outstanding loans, sales of loans, maturities of
investment securities and other short-term investments and income
from operations. Changes in the cash flows of these instruments
are greatly influenced by economic conditions and competition. The
Bank attempts to balance supply and demand by managing the pricing
of its loan and deposit products consistent with the conservative
operating philosophy of its management and board of directors. Any
excess funds are invested in overnight and other short-term
interest-earning accounts. The Bank generates cash flow through
the retail deposit market, its traditional funding source, for use
in investing activities. In addition, the Bank may utilize
borrowings such as Federal Home Loan Bank advances for liquidity
or profit enhancement. At June 30, 1998, the Bank had no
outstanding advances.
The primary use of funds is to meet ongoing loan and investment
commitments, to pay maturing certificates of deposits and savings
withdrawals and expenses related to general operations of the
Bank. At June 30, 1998, the total approved loan commitments
outstanding amounted to approximately $3 million. At the same
date, commitments under unused lines
<PAGE>
of credit and the unadvanced portion of commercial credit line
amounted to approximately $5,200,000. Certificates of deposit
scheduled to mature in one year or less at June 30, 1998 totaled
$58,326,000. Investment securities totaled $3,809,071 at June 30,
1998, of which $1,031,682 are scheduled to mature or reprice in
one year or less. Management believes that a significant portion
of maturing deposits will remain with the Bank. The Bank
anticipates that it will continue to have sufficient cash flows to
meet its current and future commitments.
The Bank's Asset/Liability Management Committee, comprised of the
members of the Bank's Executive Committee and its Treasurer, are
responsible for managing the liquidity position and interest rate
sensitivity of the Bank. The Committee's function is to balance
the Bank's interest sensitive assets and liabilities, while
providing adequate liquidity for projected needs. The primary
objective of the Asset/Liability Committee is to optimize net
interest margin in an ever changing rate environment.
Due to the nature of the Company's business, some degree of
interest rate risk is inherent and appropriate. Management
attempts to manage the level of earnings exposure arising from
interest rate movements.
Management attempts to structure the Balance Sheet to provide for
repricing of assets and liabilities in approximately equal
amounts. In the opinion of the Company's management, the effect of
any future inflation, reflected in a higher costs of funds
environment, would be minimal since the Bank has the ability to
quickly increase yields on its interest earning assets (primarily
short term investments and commercial loans) through the matching
of funds.
At June 30, 1998, the risk management review included an "earnings
at risk" analysis as well as a "risk sensitivity" analysis.
Potential monthly net revenue change indicated that in a static
rate environment, increased earnings would be approximately
$15,300 or 3.10% annually. If rates fell 200 basis points, monthly
revenues would increase approximately $27,900 or 5.65% annually
and a rise in rates by 200 basis points would represent a monthly
increase in revenues of approximately $300 or .06% annually.
Management believes that any impact will not be significant.
ANALYSIS OF FINANCIAL CONDITION
As of June 30, 1998, the Company held deposits aggregating
$119,316,407, representing an increase of approximately 3.9% from
deposits of $114,832,410 held at December 31, 1997. Of the
deposits held at June 30, 1998, $19,124,772, or approximately 16%,
were non-interest bearing deposits. At June 30, 1998 total deposit
accounts numbered 8,741 and outstanding loans receivable in
connection with loans made to 1,458 loan accounts totaled
approximately $107,835,803 (excluding loan loss reserve and
deferred loan fees). The following tables and graphs set forth a
comparative breakdown of the Company's deposits and loans
outstanding as of June 30, 1998 and December 31, 1997,
respectively.
<PAGE>
<TABLE>
<CAPTION>
Deposit Liabilities
June 30, 1998 December 31, 1997
% of % of
Type of Account Balance Portfolio Balance Portfolio
--------------- ------- --------- -------- ---------
<S> <C> <C> <C> <C>
Non-Interest bearing (1) 19,124,772 16% 16,076,381 14%
Interest bearing (2) 9,136,775 8 8,164,080 7
Money Market (3) 15,499,741 13 14,039,724 12
Savings (4) 7,168,001 6 5,270,011 5
CD's Under 100M (5) 26,432,318 22 32,244,281 28
CD's Over 100M (6) 41,954,800 35 39,037,933 34
-------------- ------ -------------- ---
Totals $119,316,407 100% $114,832,410 100%
------------ --- ------------ ---
------------ --- ------------ ---
</TABLE>
[graph] [graph]
<PAGE>
<TABLE>
<CAPTION>
Loans Outstanding
June 30, 1998 December 31, 1997
% of % of
Type of Account Balance Portfolio Balance Portfolio
--------------- ------- --------- ------- ---------
<S> <C> <C> <C> <C>
Real Estate Loans, Mortgages(1) $ 39,772,908 37% $40,594,799 39%
Commercial Loans (2) 58,643,840 54 52,722,906 51
Consumer Loans (3) 8,987,112 8 10,055,470 1
Residential Loans Held for
Sale (4) 434,595 1 290,900 0
--------------- ------ -------------- -----
Totals $107,838,455 100% $103,664,075 100%
--------------- ------ -------------- -----
--------------- ------ -------------- -----
</TABLE>
[graph] [graph]
RESULTS OF OPERATIONS
For the six months ended June 30, 1998, the Company had net income
of $175,719, or $.12 per share, as compared to net income of
$326,986 or $.22 per share during the six months ended June 30,
1997. For the quarter ended June 30, 1998, the Company had a loss
of ($12,311) or ($.01) per share as compared to net income of
$164,329, or $.11 per share for the quarter ended June 30, 1997.
The decrease in net income from the quarter and six months ended
June 30, 1998 was primarily attributable to expenses relating to
the opening of the Bank's Mortgage Department and the opening of
the Bank's sixth branch.
Analysis of Net Interest Income
Net interest income, the difference between the interest earned on
loans and other investments and the interest paid on deposits and
other borrowings, is the primary source of the Bank's and the
Company's earnings.
<PAGE>
The graph below sets forth the Bank's interest income and interest
expense growth for the period from June 30, 1997, through June 30,
1998:
[In the printed version appears a graph depicting the following plot points]
<TABLE>
<CAPTION>
June Jul Aug Sep Oct Nov Dec Jan Feb Mar
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net int Inc. 433,135 461,143 461,652 427,027 435,543 429,595 477,973 446,001 418,580 455,459
Tot Non Int Exp 387,757 426,032 368,616 373,509 404,996 383,485 407,048 426,613 446,676 436,117
Apr May Jun
<C> <C> <C>
422,425 463,853 464,190
451,809 484,300 563,549
</TABLE>
The Company's net interest income, after provision for loan losses
was $2,595,478 and $2,348,438 for the six months ended June 30,
1998 and June 30, 1997, respectively. Interest income was
$5,229,878 for the six months ended June 30, 1998, as compared to
$4,600,980 for the six months ended June 30, 1997. For the
quarters ended June 30, 1998 and 1997, the Company's interest
income was $2,596,151 and $2,339,168, respectively. Interest
expense on deposits and borrowed funds increased from $2,072,542
for the six months ended June 30, 1997, to $2,404,400 for the six
months ended June 30, 1998, a 16% increase.
Interest income on investment securities relates primarily to
interest on U.S. Government Obligations and Municipal Bonds.
Interest income on the securities for the six months ended June
30, 1998 was $109,439 as compared to $124,002 for the six months
ended June 30, 1997. For the quarter ended June 30, 1998, interest
income on investment securities was $49,500 as compared to $58,753
at June 30, 1997. The slight decrease resulted in called Agency
Bonds. The funds were placed in Federal Funds sold to be utilized
for loan funding.
Interest income on other securities is comprised primarily of
Federal Home Loan Bank stock dividends and Federal Reserve Bank
stock dividends. For the six months and quarter ended June 30,
1998, the dividend amounts were $21,510 and $11,174 as compared to
$30,853 and $13,720 for the six months and quarter ended June 30,
1997. This decrease was due to a decrease of Federal Home Loan
Bank borrowings, thereby reducing the amount of required Federal
Home Loan Stock the bank had to hold in order to comply with
regulatory guidelines.
<PAGE>
Interest income on temporary investments represents federal funds
sold. For the six months and quarter ended June 30, 1998, interest
income on federal funds sold was $229,022 and $94,264 as compared
to $52,856 and $29,199 for the six months and quarter ended June
30, 1997. The increase in interest income on federal funds sold is
attributable to management employing more secondary earning assets
in overnight investments for purposes of loan funding.
Total interest and fees on loans as of June 30, 1998 was
$4,869,907 as compared to $4,393,269 for the six months ended June
30, 1997. For the quarter ended June 30, 1998 interest and fees on
loans was $2,441,213 as compared to $2,237,496 for the quarter
ended June 30, 1997. The Bank experienced minimal loan growth
while the yield on the portfolio remained constant during this
same period.
The increase in interest income was due primarily to growth in
loans. The increase in interest expense was due to growth in
deposits, as the graph below depicts. Interest expense for the six
months ended June 30, 1998 represented 46% of gross interest
income or $2,404,400, as compared to $2,072,542 or 45% for the six
months ended June 30, 1997. For the three months ended June 30,
1998, interest expense was $1,185,654 as compared to $1,062,554
for the three months ended June 30, 1997.
[In the printed version appears a graph depicting the following plot points]
<TABLE>
<CAPTION>
June Jul Aug Sep Oct Nov Dec Jan Feb
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans 98,310,704 97,986,629 99,292,381 101,325,891 102,090,826 102,792,196 103,664,075 103,041,472 104,417,919
Deposits 95,503,949 95,617,568 96,591,742 108,443,328 108,929,554 112,753,001 114,838,976 119,220,649 116,291,775
Mar Apr May Jun
<C> <C> <C> <C>
107,431,093 106,098,394 107,107,469 107,835,803
115,256,664 115,380,730 115,075,313 119,491,311
</TABLE>
Provision for loan losses
For the six and three months ended June 30, 1998, the Bank added
to its provision for loan losses $230,000 and $110,000,
respectively. During the six and three months ended June 30, 1997,
the Bank added $180,000 and $90,000 to its provision for loan
losses, respectively.
As of December 31, 1997, the Bank had $936,974 in its allowance
for loan losses, representing .92% of outstanding loans
receivable. During the first six
<PAGE>
months ended June 30, 1998 the Bank added $230,000 to the reserve.
Loans charged off against the reserve during second quarter of
1998 amounted to $150,000. There were recoveries to previously
charged off loans during the six months ended June 30, 1998 of
$8,269. The allowance for loan loss reserve was $1,025,243 at June
30, 1998, representing .95% of outstanding loans receivable.
Management believes that the allowance for loan losses is
reasonable and adequate to cover any known losses or any losses
reasonably expected in the portfolio.
Other real estate owned at June 30, 1998 totaled $466,097. This
represents one property in Bryn Mawr, Pennsylvania in connection
with which the Bank has entered into a lease purchase agreement.
The Bank receives a monthly rental fee.
Non-Interest Income
Other income of $444,993 for the six months ended June 30, 1998,
was primarily comprised of service charges on deposit accounts and
gains on sales of mortgage loans in the secondary market. During
the same period in 1997, other income totaled $345,498. The
increase was due to refinancings of mortgage loans and growth in
service charges and ATM fees on deposit accounts. For the quarter
ended June 30, 1998, other income increased to $213,589 from
$190,218 for the quarter ended June 30, 1997, primarily due to
growth in service charges on deposit accounts.
Non-Interest Expense
During the six months ended June 30, 1998, non-interest expense
was $2,766,508 as compared to $2,188,950 during the same period in
1997. Of this amount, $1,349,616, or approximately 49%, was
attributable to salary and related employee benefits as compared
to $1,113,360 or approximately 51% during the first six months of
1997. For the quarter ended June 30, 1998, non-interest expense
totaled $1,500,397 as compared to $1,120,503 during the same
quarter of 1997, an increase of 34%. Salary and employee related
benefits expense was $696,325 for the quarter ended June 30, 1998
as compared to $561,744 in the same period in 1997, a 24%
increase. The increase in salary and related expenses was due to
increased staffing for branch expansion and the establishment of
the Bank's mortgage department.
Combined occupancy and equipment expenses for the six months ended
June 30, 1998 were $533,565 as compared to $458,277, a 16%
increase, during the same period in 1997. For the quarter ended
June 30, 1998, occupancy and equipment expenses were $279,874 as
compared to $234,107 for the quarter ended June 30, 1997. The
increase was due to annual increases in rent expenses, the lease
of additional space at the Bank's main office for the Mortgage
Department and the addition of 2 new branches since June 30, 1997.
<PAGE>
For the six months ended June 30, 1998, computer expense totaled
$157,280 as compared to $122,062 for the six months ended June 30,
1997. For the quarter ended June 30, 1998, computer expense
totaled $85,061 as compared to $62,644 for the quarter ended June
30, 1997. The increase in computer expense is a result of the
increased account and item processing volumes that the Bank has
experienced.
For the six months ended June 30, 1998, legal expense totaled
$53,086 as compared to $14,924 for the six months ended June 30,
1997, a 255% increase. For the quarter ended June 30, 1998 legal
expenses totaled $31,670 as compared to $8,874 for the quarter
ended June 30, 1997. Legal expense increased due to loan and
collection expenses related to the non-accrual loans and certain
collection related expenses that the Company incurred.
For the six months ended June 30, 1998 professional fees totaled
$41,639 as compared to $34,000 for the six months ended June 30,
1997. For the quarter ended June 30, 1998 professional fees
totaled $26,275 as compared to $16,795 for the quarter ended June
30, 1997. Professional fees increased over 1997 comparatives due
to Year 2000 expenses and Bank management contracting external
loan review services.
For the six months ended June 30, 1998, business development
expenses totaled $95,214 as compared to $78,344 for the six months
ended June 30, 1997. For the quarter ended June 30, 1998, business
development expenses totaled $50,605 as compared to $45,907 for
the quarter ended June 30, 1997. The increased expense was
directly attributed to a higher level of community involvement and
sales promotions in connection with branch expansion.
For the six months ended June 30, 1998, stationary and supplies
expense was $79,496 as compared to $85,624 for the six months
ended June 30, 1997. For the quarter ended June 30, 1998, supplies
expense was $51,980 as compared to $54,005 for the quarter ended
June 30, 1997. Supplies expense decreased due to the Bank
utilizing certain supplies in stock while undergoing a bankwide
computer conversion. This decreased expense is not anticipated in
the future operations of the Bank and was merely a timing
difference in the re-order of ongoing supplies due to the computer
conversion. As the Bank's assets and volume grow, this expense
will increase.
For the six months ended June 30, 1998, other operating expenses
totaled $340,047, or approximately 12% of total other expenses, as
compared to $189,123, or 9%, during the same period in 1997. For
the quarter ended June 30, 1998, these expenses totaled $214,318
as compared to $98,442 for the quarter ended June 30, 1997. Other
operating expenses were comprised primarily of business
promotional materials, telephone, fidelity insurance premium,
shares and loan taxes, ATM expenses, accounting fees, loan
expenses, and other nominal miscellaneous expenses, as well as the
contra expenses related to FASB 91 costs on loan origination. The
increase in other operating expenses are primarily attributable to
offsetting fees related to loan originations decreasing in excess
of $50,000, ATM expenses increasing by approximately $22,000,
telephone expense increases of approximately
<PAGE>
$15,000, accounting fees increasing by approximately $10,000 and
loans expense increasing by approximately $10,000. Other expenses
increased marginally to the rate of growth and volume of the Bank.
Income tax expense for the six months and quarter ended June 30,
1998 was $98,244 and $26,000 as compared to $178,000 and $92,000
for the six months and quarter ended June 30, 1997. The tax
provision decreased 45% due to the decreased net income of the
Bank.
YEAR 2000 MATTERS
The "Year 2000" issue is the result of computer programs being
written using two digits rather than four to define the applicable
year. Any of the Company's computer programs that have
time-sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions or operations,
including, among other things, a temporary inability to process
transactions and engage in similar normal business activities.
The Company has undertaken a comprehensive upgrade of its computer
systems for Year 2000 compliance which included the completion in
June, 1998 of a conversion of the Bank's computer systems to
systems that meet Year 2000 requirements. Testing is planned for
the third and fourth quarters of 1998 to ensure year 2000
readiness. The Company is currently on schedule with its year 2000
efforts and plans to continue to allocate appropriate resources to
ensure company-wide compliance.
The total cost of the Company of these Year 2000 Compliance
activities has not been and is not anticipated to be material to
its financial position or results of operations in any given year.
These costs and the date on which the Company plans to complete
the Year 2000 modifiation and testing processes are based on
management's best estimates, which were derived utilizing numerous
assumptions of future events including the continued availability
of certain resources, third party modification plans and other
factors. However, there can be no guarantee that these estimates
will be achieved and actual results could differ from those plans.
Based upon current information, the Company continues to believe
that its Year 2000 expenditures for 1998 will be approximately
$50,000.
The Company cannot assure that its vendors and customers will take
appropriate measures to upgrade their systems to ensure Year 2000
readiness. Failure by such vendors and customers to complete such
upgrades on a timely basis could have material effect on the
Company's financial condition and results of operations.
<PAGE>
RECENT DEVELOPMENTS
The Company opened its own mortgage department which commenced
operations on May 11, 1998.
The Company opened its sixth branch, located at the intersections
of Rhawn and Verree streets, Northeast Philadelphia, on June 2,
1998.
On July 13, 1998, Madison Capital Trust I, a Delaware business
trust established by the Company (the "Trust"), sold $5,000,000 in
liquidation amount of 9.00% Capital Securities, representing
preferred beneficial interest in the assets of the Trust, to seven
institutional accredited investors in a private offering exempt
from registration under Regulation D under the Securities Act of
1933. (See "Changes in Securities", Item 2, contained in Part II
of this report.)
On May 19, 1998, the Company's Board of Directors declared a 20%
stock dividend, payable June 17, 1998 to shareholders of record as
of June 3, 1998.
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 1 LEGAL PROCEEDINGS
- ------ -----------------
None.
ITEM 2 CHANGES IN SECURITIES
- ------ ---------------------
On July 13, 1998, Madison Capital Trust I, a Delaware business
trust established by the Company (the "Trust"), sold $5,000,000 in
liquidation amount of 9.00% Capital Securities, representing
preferred beneficial interest in the assets of the Trust, to seven
institutional accredited investors in a private offering exempt
from registration under Regulation D under the Securities Act of
1933. Hopper Soliday & Co., Inc. received a fee of $150,000 for
its services as placement agent in the transaction. The Trust
contemporaneously sold $150,000 in liquidation amount of Common
Securities of the Trust to the Company. The Trust used the
proceeds of the offering of the Capital Securities and the Common
Securities to purchase a 9.00% junior subordinated deferrable
interest debenture issued by the Company in the principal amount
of $5,150,000 (the "Debenture"). The Trust will pay semi-annual
distributions to the holders of capital securities in amounts
equal to the interest payments made by the Company with respect to
the Debentures. The obligations of the Trust to pay distributions
on the Capital Securities and the Common Securities have been
fully and unconditionally guaranteed by the Company, to the extent
that the Trust as funds available for distribution. The first
distribution will be payable by the Trust on December 31, 1998.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
- ------ -------------------------------
None.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
(a) On May 19, 1998 the Company held its Annual Meeting of
Shareholders. As of the record date the total number of votes
eligible to cast at the Annual Meeting was 1,252,773. The
following proposals were presented for a vote by the company's
stockholders:
PROPOSAL I - Election of Three (3) Class III Directors.
PROPOSAL II - Ratification of the Appointment of Deloitte &
Touche LLP as the Company's independent auditors for the
1998 fiscal year.
<PAGE>
(b) At the Company's Annual Meeting, all nominees were re-elected
to a three year term.
(c) PROPOSAL I. ELECTION OF DIRECTORS. Three directors were nominated by the
Company to stand for re-election to the Board. As set forth below each of
the Company's nominees were re-elected.
<TABLE>
<CAPTION>
Name of Nominee Votes For Votes Withheld Abstain
--------------- --------- -------------- -------
<S> <C> <C> <C>
Vito A. DeLisi 913,180 12 0
Donald J. Reape 913,180 12 0
Francis R. Iacobucci, Sr. 913,180 12 0
</TABLE>
PROPOSAL II. RATIFICATION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE 1998 FISCAL YEAR.
<TABLE>
<CAPTION>
Votes For Votes Withheld Abstain
- --------- -------------- -------
<S> <C> <C>
913,180 12 0
</TABLE>
ITEM 5 OTHER INFORMATION
- ------ -----------------
Notice Relating to Shareholder Proposals under Rule 14a-4
A shareholder of the Company may wish to have a proposal presented
at the 1999 Annual Meeting of Shareholders, but not have such
proposal included in the Company's proxy statement and form of
proxy relating to that meeting. If notice of any such proposal is
not received by the Company at the address appearing on the first
page of this Report by March 5, 1999 then such proposal shall be
deemed "untimely" for purposes of Rule 14a-4(c) promulgated under
the Exchange Act and, therefore, the Company will have the right
to exercise discretionary voting authority with respect to such
proposal.
<PAGE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
(a) Exhibits Filed
<TABLE>
<CAPTION>
Page Number in
Exhibit Number Sequential Numbering System
- -------------- ---------------------------
<S> <C> <C>
3 Amended and Restated Articles *
of Incorporation, as amended, and
Amended and Restated Bylaws of
the Issuer
10 (1) Amended and Restated Declaration ----
of Trust of Madison Capital Trust I
dated July 13, 1998.
(2) Indenture between Madison Bancshares
Group, Ltd. and Christiana Bank and
Trust Company, as Trustee, dated
July 13, 1998.
(3) Capital Securities Guarantee between Madison
Bancshares Group, Ltd. and Christiana Bank
and Trust Company, as Trustee, dated
July 13, 1998.
27 Financial Data Schedule ----
(b) Reports on Form 8-K
On May 28, 1998, the Company filed a Current Report on Form
8-K reporting the declaration of a 20% stock dividend by the
Company's Board of Directors, payable June 17, 1998 to
shareholders of record as of June 3, 1998.
</TABLE>
- -------------------
* Incorporated by reference from the Issuer's Registration Statement on
Form S-1 No. 33-27146
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Issuer
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Madison Bancshares Group, Ltd.
------------------------------
Vito A. DeLisi
Executive Vice President
------------------------------
E. Cheryl Hinkle
Vice President
Date Executed: August 12, 1998
<PAGE>
ANNEX A
-------
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Cash and Cash Equivalents:
Cash and amounts due from banks $ 5,609,298 $ 3,944,986
Federal funds sold 10,380,000 19,500,000
--------------- -------------------
Total cash and cash equivalents 15,989,298 23,444,986
Investment Securities:
Held to maturity (market value - 1998
$1,614,365; 1997 $1,617,371) 1,603,965 1,605,407
Available for sale (amortized cost
1998 $2,203,135; 1997 $3,655,536) 2,205,106 3,656,446
Loans (Net of allowance for loan losses -
1998, $1,025,243; 1997, $936,974) 106,110,047 102,180,556
Mortgage loans held for sale 434,595 290,900
Real Estate Owned 466,097 465,312
Furniture, Equipment and Leasehold Improvements 1,520,078 916,484
Accrued interest receivable 904,471 706,448
Other Assets 393,742 240,274
--------------- -------------------
TOTAL $ 129,627,399 $ 133,506,813
--------------- -------------------
--------------- -------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand deposits $ 19,124,772 $ 16,076,381
Interest-bearing demand deposits 9,136,775 8,164,080
Savings deposits 7,168,001 5,270,011
Money market deposits 15,499,741 14,039,724
Time deposits 68,387,118 71,282,214
---------- ----------
Total Deposits 119,316,407 114,832,410
Borrowed Funds 0 9,000,000
Accrued Interest Payable 1,103,698 838,513
Accrued Expenses and Other Liabilities 63,462 97,672
--------------- -------------------
Total Liabilities 120,483,567 124,768,595
--------------- -------------------
Commitments
Shareholders Equity:
Preferred stock, $5 par value - authorized
5,000,000 shares; issued and outstanding,
0 shares. Common stock, $1 par value -
authorized 20,000,000 shares; issued and
outstanding, 1998, 1,554,788 shares;
1997, 1,252,733 shares 1,554,788 1,252,773
Capital surplus 7,539,791 7,612,835
Retained earnings (deficit) 47,728 (127,991)
Net unrealized losses on available for sale
securities 1,525 601
--------------- -------------------
Total shareholders' equity 9,143,832 8,738,218
--------------- -------------------
TOTAL $ 129,627,399 $ 133,506,813
--------------- -------------------
--------------- -------------------
</TABLE>
See notes to consolidated financial statements
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 2,441,213 $ 2,237,496 $ 4,869,907 $ 4,393,269
Interest and dividends on investment securities:
US Government obligations 37,332 46,557 85,096 99,602
Municipal bonds 12,168 12,196 24,343 24,400
Other securities 11,174 13,720 21,510 30,853
Interest on temporary investments 94,264 29,199 229,022 52,856
----------------- ----------- ----------------- -----------
2,596,151 2,339,168 5,229,878 4,600,980
----------------- ----------- ----------------- -----------
Interest expense:
Interest on:
Demand deposits 45,141 28,421 93,043 54,345
Savings and money market deposits 162,475 151,059 316,394 295,097
Time deposits 978,038 750,913 1,993,275 1,466,253
Federal Funds Purchased 0 132,161 1,688 256,847
----------------- ----------- ----------------- -----------
1,185,654 1,062,554 2,404,400 2,072,542
----------------- ----------- ----------------- -----------
Net interest income before provision for loan losses 1,410,497 1,276,614 2,825,478 2,528,438
Provision for loan losses 110,000 90,000 230,000 180,000
----------------- ----------- ----------------- -----------
Net interest income after provision for loan losses 1,300,497 1,186,614 2,595,478 2,348,438
----------------- ----------- ----------------- -----------
Other noninterest income:
Gain on sale of mortgage loans 12,484 11,942 16,780 49,343
Service charges on deposit accounts 168,786 161,047 363,271 257,548
Other 32,319 17,229 64,942 38,607
----------------- ----------- ----------------- -----------
Total noninterest income 213,589 190,218 444,993 345,498
----------------- ----------- ----------------- -----------
Other noninterest expenses:
Salary and employee benefits 696,325 561,744 1,349,616 1,113,360
Occupancy 208,616 176,147 401,248 343,424
Equipment 71,258 57,960 132,317 114,853
Computer processing 85,061 62,644 157,280 122,062
Deposit insurance 2,613 4,368 6,794 6,368
Legal 31,670 8,874 53,086 14,924
Professional fees 26,275 16,795 41,639 34,000
Business development 50,605 45,907 95,214 78,344
Office and stationary supplies 51,980 54,005 79,496 85,624
Director Fees 50,625 27,800 85,375 57,900
Advertising 11,051 5,817 24,396 28,968
Other operating 214,318 98,442 340,047 189,123
----------------- ----------- ----------------- -----------
Total other noninterest expenses 1,500,397 1,120,503 2,766,508 2,188,950
----------------- ----------- ----------------- -----------
Income before income taxes 13,689 256,329 273,963 504,986
Provision for income taxes 26,000 92,000 98,244 178,000
----------------- ----------- ----------------- -----------
Net income (loss) $ (12,311) $ 164,329 $ 175,719 $ 326,986
----------------- ----------- ----------------- -----------
----------------- ----------- ----------------- -----------
Net income (loss) per share - basic $ (0.01) $ 0.11 $ 0.12 $ 0.22
----------------- ----------- ----------------- -----------
----------------- ----------- ----------------- -----------
Net income (loss) per share - diluted $ (0.01) $ 0.10 $ 0.11 $ 0.20
----------------- ----------- ----------------- -----------
----------------- ----------- ----------------- -----------
Weighted average number of shares - basic 1,540,860 1,504,853 1,522,956 1,504,853
----------------- ----------- ----------------- -----------
----------------- ----------- ----------------- -----------
Weighted average number of shares - diluted 1,639,303 1,617,423 1,622,247 1,619,144
----------------- ----------- ----------------- -----------
----------------- ----------- ----------------- -----------
</TABLE>
See notes to consolidated financial statements
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 175,719 326,986
Adjustments for non-cash items included in
net income:
Depreciation and amortization 97,641 71,399
Provision for loan losses 230,000 180,000
Net amortization of bond premium/discount 1,206 (2,683)
Amortization of deferred fees & costs, net 12,925 (55,801)
Gain on sale of mortgage notes (16,780) (49,343)
Changes in assets and liabilities which provided
(used) cash:
Mortgage loans held for resale 307,680 1,094,434
Interest receivable (198,023) (30,984)
Other assets (153,468) (93,487)
Accrued interest payable 265,185 256,000
Accrued expenses and other liabilities (34,211) (57,271)
----------- -----------
Net cash provided by operating activities 687,874 1,639,250
----------- -----------
INVESTING ACTIVITIES:
Proceeds from sale of investment securities
available for sale 1,000,000 129,300
Proceeds from maturity of investment securities
available for sale 500,000 500,000
Purchase of investment securities (47,500)
Net change in loans to customers (4,607,011) (5,397,904)
Purchase of furniture, equipment and leasehold
improvements (701,235) (34,422)
Additions to real estate owned (785) 2,500
----------- -----------
Net cash used in investing activities (3,856,531) (4,800,526)
----------- -----------
FINANCING ACTIVITIES:
Increase in demand, savings and
time deposits 4,483,998 8,285,475
Decrease in borrowed funds (9,000,000) (600,000)
Exercise of stock warrants 228,971 0
----------- -----------
Net cash provided (used in) financing activities (4,287,031) 7,685,475
----------- -----------
Net increase (decrease) in cash and cash equivalents (7,455,688) 4,524,199
Cash and cash equivalents, beginning of period 23,444,986 5,306,957
----------- -----------
Cash and cash equivalents, end of period $15,989,298 $9,831,156
----------- -----------
----------- -----------
Supplemental disclosures of cash flow information:
Interest paid $ 2,139,215 $1,816,542
----------- -----------
----------- -----------
Taxes paid $ 172,000 $ 275,000
----------- -----------
----------- -----------
Supplemental disclosures of noncash investing activities
Unrealized loss (gain) on available for sale securities $ 924 $ (3,838)
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
1. Basis of presentation:
The accompanying unaudited consolidated financial statements were
prepared in accordance with instructions for quarterly reports on Form
10-Q and, therefore, do not include information or footnotes necessary
for a complete presentation of financial condition, results of
operations, shareholders' equity and cash flows in conformity with
generally accepted accounting principles. However, the financial
statements reflect all adjustments which in the opinion of management
are necessary for fair presentation of financial results and that all
adjustments are of a normal recurring nature. The results of operations
for the six month period ended June 30, 1998 are not necessarily
indicative of the results which may be expected for the entire fiscal
year.
2. Principles of consolidation:
The consolidated financial statements include the accounts of Madison
Bancshares Group, Ltd. (the Company) and its wholly owned subsidiary,
The Madison Bank (the Bank). All material intercompany balances and
transactions have been eliminated.
3. Stock dividends:
On May 19, 1998, the Board of Directors declared a stock dividend in
the amount of twenty percent (20%), payable in shares of the Company's
common stock. Such dividend was payable on or about June 17, 1998 to
holders of the Company's shares of common stock on June 3, 1998. No
fractional shares were issued in connection with such dividend. Per
share computations reflect the changes in the number of shares
resulting from these dividends.
4. Net Income Per Share:
Basic net income per share is based upon the weighted average number of
common shares outstanding, while diluted net income per share is based
upon the weighted average number of common shares outstanding and
common share equivalents that would arise from the exercise of stock
options and stock warrants.
5. Comprehensive Income:
The Company adopted Statement of Financial Accounting Standards No.
130, Reporting Comprehensive Income, effective January 1, 1998. The
statement requires disclosure of amounts from transactions and other
events which are currently excluded from the statement of operations
and are recorded directly to shareholders' equity. Comprehensive income
(loss) for the three and six month periods ended June 30, 1998 was
$(12,532) and $176,643, respectively and $171,318 and $330,067,
respectively, for the three and six month periods ended June 30, 1997.
6. Accounting Pronouncement Issued:
In June, 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
Accounting for Derivative Instruments and Hedging Activities, which is
effective for all fiscal quarters of fiscal years beginning after June
15, 1999. SFAS No. 133, established accounting and reporting standards
for derivative instruments, including certain derivative instruments
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
6. Accounting Pronouncement Issued (Continued):
embedded in other contracts, (collectively referred to as derivatives)
and for hedging activities. Management has not completed an analysis of
the potential impact, if any, the adoption of SFAS No. 133 will have on
the Company's financial position or results of operations.
<PAGE>
FINAL
-----------------------
-----------------------
AMENDED AND RESTATED DECLARATION
OF TRUST
OF
MADISON CAPITAL TRUST I
Dated as of July 13, 1998
-----------------------
-----------------------
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MADISON CAPITAL TRUST I
Dated as of July 13, 1998
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of July 13, 1998, by the Trustees (as defined herein), the Sponsor
(as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, the Withdrawing Trustees (as defined herein) and the Sponsor
established Madison Capital Trust I (the "Trust"), a statutory business trust
formed under the Delaware Business Trust Act pursuant to a Declaration of Trust
dated as of June 25, 1998 (the "Original Declaration"), and a Certificate of
Trust filed with the Secretary of State of the State of Delaware on June 25,
1998, 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 the Junior Subordinated Debentures of the
Debenture Issuer (each as hereinafter defined);
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, the Withdrawing Trustees are resigning as Trustees upon the
execution of this Declaration and the Administrative Trustees (as defined
herein) are being appointed as Trustees upon the execution of this Declaration.
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory business trust under the Business Trust Act
and that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration and, in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Trustees, intending to be legally bound hereby, agree as follows:
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declairation but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits
to this Declaration unless otherwise specified; and
(e) a reference to the singular includes the plural and vice versa.
"Administrative Trustee" has the meaning set forth in Section 5.1.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Agency Agreement" means the Agency Agreement between the Sponsor, the
Trust and Hopper Soliday & Company, Inc., as placement agent for the sale of the
Capital Securities.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Authorized Officer" of a Person means any other Person that is
authorized to legally bind such former Person.
"Business Day" means any day other than a Saturday or a Sunday or a day
on which banking institutions in Philadelphia, PA are authorized or required by
law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code 3801 et seq., as it may be amended from time to time or any
successor legislation.
2
<PAGE>
"Capital Securities" has the meaning specified in Section 7.1(a).
"Capital Securities Guarantee" means the Capital Securities Guarantee
Agreement dated as of July 13, 1998 between the Sponsor and Christiana Bank &
Trust Company, as guarantee trustee, in respect of the Capital Securities.
"Capital Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Capital Security Certificate" has the meaning set forth in Section
9.4.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Capital Securities and which shall undertake to effect
book entry transfers and pledges of the Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Time" means the "Closing Time" under the Agency Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission as from time to time constituted, or if any time after the
execution of this Declaration such Commission is not existing and performing
the duties now assigned to it under applicable Federal securities laws, then
the body performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
"Common Securities Guarantee" means the Common Securities Guarantee
Agreement dated as of July 13, 1998 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.
3
<PAGE>
"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 Greenville Center, 3801 Kennett Pike,
Greenville, DE 19807.
"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 Holders of Securities.
"Debenture Issuer" means Madison Bancshares Group, Ltd., a Pennsylvania
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.
"Debenture Trustee" means Christiana Bank & Trust Company, a Delaware
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Debentures" means 9.00% Junior Subordinated Deferrable Interest
Debentures due June 30, 2028 at the Debenture Issues issued pursuant to the
Indenture.
"Default" means an event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set forth in
Section 7.3(d).
"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 of Securities in
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) that has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
4
<PAGE>
"Exchange Offer Registration Statement" has the meaning set
forth in Section 14.1.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10. 4(b).
"Holder" means a Person in whose name a Security is registered, such
Person being a beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture dated as of July 13, 1998, among the
Debenture Issuer and the Debenture Trustee, as amended from time to time.
"Initial Optional Redemption Date" has the meaning set forth in Section
4(b) of Annex I hereto.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Like Amount" has the meaning set forth in Section 3 of Annex I hereto.
"Majority in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Offering Memorandum" has the meaning set forth in Section 3.6(b).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Treasurer, the Comptroller, or the
Secretary or an Assistant Secretary of such
5
<PAGE>
Person. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read
the covenant or condition and the definitions relating thereto:
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
be an employee of the Sponsor, and who shall be acceptable to the Property
Trustee.
"Participants" has the meaning set forth in Section 7.3(b).
"Paying Agent" has the meaning specified in Section 7.4.
"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.
"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).
"QIBs" shall mean qualified institutional buyers as defined in Rule
144A.
"Quorum" means a majority of the Administrative Trustees or, if there
are only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
"Responsible Officer" means, with respect to the Property Trustee, 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.
6
<PAGE>
"Restricted Definitive Capital Securities" has the meaning set forth in
Section 7.3(d).
"Restricted Capital Security" means a Capital Security required by
Section 9.2 to contain a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning set forth in Section
9.2.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any
successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
"Rule 144A" means Rule 144A under the Securities Act, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Securities" or "Trust Securities" means the Common Securities
and the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and the
Capital Securities Guarantee.
"Special Event" has the meaning set forth in Section 4(c) of Annex I
hereto.
"Special Event Redemption Price" has the meaning set forth in Section
4(c) of Annex I hereto.
"Sponsor" means Madison Bancshares Group, Ltd., a Pennsylvania
corporation, or any successor Person resulting from any merger, consolidation,
amalgamation or other business combination, in its capacity as sponsor of the
Trust.
"Subscription Agreements" means the Subscription Agreements for the
offering and sale of Capital Securities.
"Successor Entity" has the meaning specified in Section 3.15(b).
7
<PAGE>
"Successor Property Trustee" has the meaning specified in
Section 3.8(f).
"Successor Securities" has the meaning specified in Section
3.15(b).
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"10% in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of 10% or more of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue as trustee of
the Trust in accordance with the terms hereof, and all other Persons who may
from time to time be duly appointed, qualified and serving as Trustees in
accordance with the provisions hereof, and references herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Withdrawing Trustees" means the Trustees other than the Delaware
Trustee who executed the Original Declaration.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital Securities
and its consequences, provided that, if the underlying Event of Default under
the Indenture:
8
<PAGE>
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority
in aggregate principal amount of the holders of the Debentures (a
"Super Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in aggregate liquidation amount of
the Capital Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.1(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such Default shall cease to exist, and any Event of Default with respect
to the Capital Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend
to any subsequent or other Default or an Event of Default with respect to the
Capital Securities or impair any right consequent thereon. Any waiver by the
Holders of the Capital Securities of an Event of Default with respect to the
Capital Securities shall also be deemed to constitute a waiver by the Holders
of the Common Securities of any such Event of Default with respect to the
Common Securities for all purposes of this Declaration without any further
act, vote, or consent of the Holders of the Common Securities.
(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
2.1(b), the Event of Default under the Declaration shall also not be
waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Declaration as provided
below in this Section 2.1(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, that 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 its consequences if all Events of Default with respect to
the Capital Securities have been cured,
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waived or otherwise eliminated, and until such Events of Default have been so
cured, waived or otherwise eliminated, the Property Trustee will be deemed to
be acting solely on behalf of the Holders of the Capital Securities and only
the Holders of the Capital Securities will have the right to direct the
Property Trustee in accordance with the terms of the Securities. The
foregoing provisions of this Section 2.1(b) shall be in lieu of Sections
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such Sections
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.1(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.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.1(c) shall be in lieu
of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.2 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after a Responsible
Officer obtains knowledge of the occurrence of an Event of Default, transmit
by mail, first class postage prepaid, to the Holders of the Securities,
notices of all Defaults with respect to the Securities actually known to a
Responsible Officer of the Property Trustee, 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 premium, if any) or interest on any of the
Debentures, the Property Trustee shall be protected in withholding such
notice if and so long as a Responsible Officer of the Property Trustee in
good faith determines that the withholding of such notice is in the interests
of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of any
Default or Event of Default except:
(i) a Default under Sections 5.01(a) and 5.01(b) of the
Indenture; or
(ii) any Default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of the
Property Trustee charged with the administration of the Declaration
shall have actual knowledge.
(c) Within five Business Days after the occurrence of any Event of
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Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Event of Default to the holders of the Capital
Securities, the Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee a certification as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Madison Capital Trust I" as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Property Trustee, the Delaware Trustee and the Holders of
Securities. The Trust's activities may be conducted under the name of the Trust
or any other name deemed advisable by the Administrative Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is 3513 Concord Pike,
Suite 3758, Wilmington, DE 19803. On ten Business Days, prior written notice to
the Property Trustee, the Delaware 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 to (a) 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 necessary, advisable or incidental thereto,
including without limitation, those activities specified in Section 3.6. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, mortgage or pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified for United States federal income tax purposes as a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Administrative Trustees in accordance with their powers
shall constitute the act of and serve to bind the Trust and an action taken by
the Property Trustee on behalf of the Trust in accordance with its powers shall
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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 provided in Section 3.8 with respect to the Debentures and
the Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Capital Securities and the Common Securities
in accordance with this Declaration; provided, however, that except, in the case
of (i) and (ii), as contemplated in Section 7.1(a), (i) the Trust may issue no
more than one series of Capital Securities and no more than one series of Common
Securities, (ii) there shall be no interests in the Trust other than the
Securities and (iii) the issuance of Securities shall be limited to a
simultaneous issuance of both Capital Securities and Common Securities at any
Closing Time,
(b) in connection with the issue and sale of the Capital Securities, at
the direction of the Sponsor, to:
(i) prepare and execute, if necessary, an offering memorandum (the
"Offering Memorandum") in preliminary and final form prepared by the Sponsor, in
relation to the offering and sale of Capital Securities to "accredited
investors" (as defined in Rule 501(a) under the Securities Act);
(ii) execute and file any documents prepared by the Sponsor, or take
any acts as determined by the Sponsor to be necessary in order to qualify or
register all or part of the Capital Securities in any State in which the Sponsor
has determined to qualify or register such Capital Securities for sale; and
(iii) execute and enter into the Subscription Agreements and the Agency
Agreement providing for the sale of the Capital Securities and take any and all
actions necessary, advisable or appropriate to satisfy the Trust's obligations
thereunder;
it being acknowledged that Initial Individual Trustees have performed the
actions described in clause (i) on behalf of the Trust prior to the date hereof
and that such actions are hereby ratified,
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approved and confirmed in all respects.
(c) to acquire the Debentures with the proceeds of the sale of the
Capital 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 of the
Capital Securities and the Holders of Common Securities;
(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, Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Capital Securities and Holders of Common
Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Administrative Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) [Intentionally omitted.]
(j) [Intentionally omitted.]
(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 the Securities 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;
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(n) 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;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(p) to take any action, not inconsistent with this Declaration or with
applicable law, that the Administrative Trustees determine in their discretion
to be necessary, advisable or incidental to carrying out the activities of the
Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for United
States federal income tax purposes; and
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Administrative Trustees, on behalf of
the Trust.
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.
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.
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The Trust shall not, and the Trustees (including the Property Trustee)
shall not, engage in any activity other than as required or authorized by this
Declaration. The Trust shall not:
(a) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of Securities
pursuant to the terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly provided herein:
(c) possess Trust property for other than a Trust purpose;
(d) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(e) 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;
(f) issue any securities or other evidences of beneficial ownership of,
or beneficial interest in, the Trust other than the Securities; or
(g) other than as provided in this Declaration or Annex I to this
Declaration, (i) 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, (ii) waive any past default that is waivable under the Indenture,
(iii) exercise any right to rescind or annul any declaration that the principal
of all the Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Debentures where such
consent shall be required unless the Trust shall have received an opinion of a
nationally recognized independent tax counsel experienced in such matters to the
effect that such modification will not cause more than an insubstantial risk
that for United States federal income tax purposes the Trust will not be
classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and
held of record in the name of the Property Trustee in trust for the benefit of
the Holders of the Securities. 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 5.6. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered
provided that such transfer complies with the terms of the Indenture.
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(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 also acts as the Delaware Trustee, legal title
to the Debentures will be held by the Property Trustee solely in its capacity as
Property 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 of the
Securities 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 to the Holders of the Capital Securities and
Holders of the Common Securities 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;
(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect the redemption of the Capital Securities and the Common
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 of Securities upon the occurrence
of certain events.
(d) The Property Trustee shall take all actions and perform such duties
as may be specifically required of the Property Trustee pursuant to the terms of
the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer of the Property Trustee has actual knowledge or the
Property Trustee's duties and obligations under this Declaration or the Trust
Indenture Act, if applicable, and if the Property Trustee shall have failed to
take such Legal Action, the Holders of the Capital Securities may take such
Legal Action, to the same extent as if such Holders of Capital Securities held
an aggregate principal amount of Debentures equal to the aggregate liquidation
amount of such Capital 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 premium, if any, or interest on the
Debentures on the date such principal, premium, if any, or interest is otherwise
payable (or in the case of redemption, on the redemption date), then a Holder of
Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or interest on
the Debentures having a principal amount equal to the aggregate liquidation
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amount of the Capital Securities of such Holder (a "Direct Action") on or after
the respective due date specified in the Debentures. In connection with such
Direct Action, the rights of the Holders of the Common Securities will be
subrogated to the rights of such Holder of Capital Securities to the extent of
any payment made by the Debenture Issuer to such Holder of Capital Securities in
such Direct Action. Except as provided in the preceding sentences, the Holders
of Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
(f) The Property Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a successor Trustee possessing the qualifications to act as
Property Trustee under Section 5.3 (a "Successor Property Trustee") has been
appointed and has accepted that appointment in accordance with Section 5.6(b).
(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 of the
Property Trustee occurs and is continuing, the Property Trustee shall, for the
benefit of Holders of the Securities, enforce its rights as holder of the
Debentures subject to the rights of the Holders pursuant to the terms of the
Securities.
(h) The Property Trustee shall be authorized to undertake any actions
set forth in ss.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 ss.317(b) of the Trust Indenture Act, if the Trust Indenture
Act is then applicable to the Trust. 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.
(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.
The Property Trustee must exercise the powers set forth in this Section
3.8 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3,
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and 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 or waiving 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 of the Property Trustee 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 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
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property Trustee,
unless it shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance with
the direction of the
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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, if the Trust Indenture Act is
applicable to the Trust;
(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; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the Property Trustee
be liable for any default or misconduct of the Administrative Trustees or the
Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, 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;
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(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, and 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;
(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, unless requested in writing to do so by the holders of a Majority in
aggregate principal amount of the Debentures, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see
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fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Property Trustee shall
not be responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, 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 of the Securities which
instructions may only be given by the Holders of the same proportion in
liquidation amount of the Securities as would be entitled to direct the Property
Trustee under the terms of the Securities in respect of such remedy, right or
action, (ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received and (iii) shall be protected
in conclusively relying on or acting in or accordance with such instructions;
(xi) except as otherwise expressly provided by this Declaration,
the Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration; and
(xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without negligence
or willful misconduct, and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty
or obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
SECTION 3.11 Delaware Trustee.
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Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Administrative Trustees or the Property Trustee described in this
Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of
ss.3807 of the Business Trust Act. When the Delaware Trustee takes such actions
pursuant to this Declaration, the Delaware Trustee shall be entitled to the
benefits of Sections 3.9(b)(ii), (iii), (iv), (vi), (vii) and (viii) and Section
3.10 as if such sections referred to the Delaware Trustee rather than the
Property Trustee, provided that to the extent any of such provisions impose
liability on the Property Trustee for its "negligence", such provisions shall
provide for liability of the Delaware Trustee only in the case of its "gross
negligence." No implied covenants or obligations shall be read into this
Declaration against the Delaware Trustee.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Administrative Trustees, and except
as otherwise required by the Business Trust Act, any Administrative Trustee 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 referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by all of the
Administrative Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article VIII
hereof, shall have existence up to June 30, 2028.
SECTION 3.15 Mergers.
(a) The Trust may not merge with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with the consent of
the Administrative Trustees or, if there are more than two, a majority of the
Administrative
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Trustees and without the consent of the Holders of the Securities, 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 Successor Securities are listed or included for
trading, or any Successor Securities will be listed or included for trading upon
notification of issuance, on any national securities exchange or with another
organization on which the Capital Securities are then listed or included;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization if at the time of such transaction the Capital
Securities are rated by such an organization;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the Holders of the Securities (including 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 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 of the Securities (including any Successor
Securities) in any material
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respect (other than with respect to any dilution of the Holders' interest in the
new entity); and
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor the Successor
Entity will be required to register as an Investment Company; and
(viii) the Sponsor or any permitted successor or assignee owns
all of the common securities of such Successor Entity and guarantees the
obligations of such Successor Entity under the Successor Securities at least to
the extent provided by the Capital Securities Guarantee and the Common
Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to, any other Person or permit any other Person to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or the Successor Entity not to be classified as a grantor trust for United
States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
At the Closing Time, the Sponsor will purchase all of the Common
Securities then issued by the Trust, in an amount at least equal to 3.00% of the
capital of the Trust, at the same time as the Capital Securities are issued and
sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare the Offering Memorandum;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do any
and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(c) if deemed necessary or advisable by the Sponsor, to prepare for
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filing by the Trust with the Commission a registration statement on Form 8-A
relating to the registration of the Capital Securities under Section 12(b) or
12(g) of the Exchange Act, as the case may be, including any amendments thereto;
and
(d) to negotiate the terms of the Subscription Agreements providing for
the sale of the Capital Securities.
SECTION IV.3 Right to Proceed.
The Sponsor acknowledges the rights of the Holders of Capital
Securities, in the event that a failure of the Trust to pay Distributions on the
Capital Securities is attributable to the failure of the 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.
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; provided, further, that (i) one Trustee shall be the Delaware Trustee; (ii)
there shall be at least one Trustee who is an employee or officer of, or is
affiliated with, the Sponsor (an "Administrative Trustee"); and (iii) 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
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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.
For so long as required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of
business in the State of Delaware and otherwise meets the requirements of the
Business Trust Act.
The initial Delaware Trustee shall be the initial Property Trustee indentified
in Section 5.3(e).
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 other 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 five million U.S. dollars ($5,000,000), 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 5.6(c).
(c) [Intentionally omitted.]
(d) The Capital Securities Guarantee shall be deemed to be specifically
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described in this Declaration for purposes of clause (i) of the proviso
contained in paragraph (1) of Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
Christiana Bank & Trust Company
Greenville Center
3801 Kennett Pike
Greenville, DE 19807
Attention: Robert G. Elder
SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware
Trustee Generally.
Each Administrative Trustee and the Delaware Trustee shall be either a
natural person who is at least 21 years of age or a legal entity that shall act
through one or more Authorized Officers.
SECTION 5.5 Administrative Trustees.
(a) The Withdrawing Trustees shall cease to be Trustees as of the
execution of this Declaration and, effective as of such time, the Administrative
Trustees shall be the Persons identified as such on the signature pages of this
Declaration.
(b) 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.
(c) Unless otherwise determined by the Administrative Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Administrative Trustee is authorized 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; and
(d) 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.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
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without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the Holders of a
Majority in liquidation amount of the Common Securities voting as a class at a
meeting of the Holders of the Common Securities; and
(iii) if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, with respect to the Property
Trustee or the Delaware Trustee, by vote of Holders of a Majority in liquidation
amount of the Capital Securities voting as a class at a meeting of Holders of
the Capital Securities.
(b) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.6(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 predecessor Property
Trustee, the Administrative Trustees and the Sponsor; and
(c) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with this Section 5.6(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 predecessor Delaware Trustee, the Administrative
Trustees and the Sponsor.
(d) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation. Any
Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing signed by the Trustee and delivered to the Sponsor
and the Trust and by mailing notice thereof to the Holders of the Securities at
their addresses as they shall appear in the books and records of the Trust,
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 of the
Securities; and
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(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee that meets the
requirements of the Business Trust Act 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.
(e) The Holders of the Common 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 5.6.
(f) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(g) 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.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Administrative Trustees or, if
there are more than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee that has been appointed and has accepted such appointment
by an instrument executed by such Trustee and delivered to the Administrative
Trustees.
SECTION 5.8 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 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 5.6, 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
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the Administrative Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees.
Notice of any in-person meetings of the Administrative Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 24 hours before such meeting. Notice of
any telephonic meetings of the Administrative Trustees or any committee thereof
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of an Administrative Trustee at a meeting shall constitute a waiver
of notice of such meeting except where an Administrative Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Administrative
Trustees may be taken at a meeting by vote of a majority of the Administrative
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that a Quorum is present, or without a meeting
by the unanimous written consent of the Administrative Trustees. In the event
there is only one Administrative Trustee, any and all action of such
Administrative Trustee shall be evidenced by a written consent of such
Administrative Trustee.
SECTION 5.10 Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney, to the extent
permitted by 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 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee or the Delaware Trustee
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or any Administrative Trustee that is not a natural person, as the case may be,
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Property Trustee, an Administrative Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Property Trustee, an Administrative
Trustee or the Delaware Trustee, as the case may be, shall be the successor of
the Property Trustee, an Administrative Trustee or the Delaware Trustee, as the
case may be, hereunder, provided such corporation shall be otherwise qualified
and eligible under this Article V, without the execution or filing of any paper
or any further act on the part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions in accordance with the applicable
terms of the relevant Holder's Securities. If and to the extent that the
Debenture Issuer makes a payment of interest (including Compounded Interest (as
defined in the Indenture) and Additional Interest (as defined in the
Indenture)), premium and/or principal on 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.
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 "Capital
Securities") and one class of common securities representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the "Common Securities"). The Trust shall issue no securities
or other interests in the assets of the Trust other than the Capital Securities
and the Common 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.
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(d) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
SECTION 7.2 Execution and Authentication.
(a) The Securities shall be signed on behalf of the Trust by an
Administrative Trustee. 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 a Administrative Trustee.
(b) One Administrative Trustee shall sign the Capital Securities for
the Trust by manual or facsimile signature. Unless otherwise determined by the
Trust, such signature shall, in the case of Common Securities, be a manual
signature.
A Capital Security shall not be valid until authenticated by the manual
signature of an authorized signatory of the Property Trustee. The signature
shall be conclusive evidence that the Capital Security has been authenticated
under this Declaration.
Upon a written order of the Trust signed by one Administrative Trustee,
the Property Trustee shall authenticate the Capital Securities for original
issue. The number of Capital Securities outstanding at any time shall not exceed
the number set forth in Annex I hereto except as provided in Section 7.6.
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Capital Securities. An authenticating agent may
authenticate Capital Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights with
respect to authentication as the Property Trustee to deal with the Sponsor or an
Affiliate.
SECTION 7.3 Form and Dating.
(a) In General. The Capital Securities and the Property Trustee's
certificate of authentication shall be substantially in the form of Exhibit A-1
and the Common Securities shall be substantially in the form of Exhibit A-2,
each of which is hereby incorporated in and expressly made a part of this
Declaration. Certificates representing the Securities may be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
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acceptable to the Trust, as evidenced by the execution thereof by one or more
Administrative Trustees. 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 one or more Administrative
Trustees, as evidenced by their execution thereof). The Trust at the direction
of the Sponsor shall furnish any such legend not contained in Exhibit A-1 to the
Property Trustee in writing. Each Capital Security shall be dated the date of
its authentication. The terms and provisions of the Securities set forth in
Annex I and the forms of 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.
(b) Restricted Securities Legend. Purchasers of Securities who are
"accredited investors" (as defined in Rule 501(a) under the Securities Act) will
receive Capital Securities in the form of individual certificates in definitive,
fully registered form without distribution coupons and with the Restricted
Securities Legend set forth in Exhibit A-1 hereto. Capital Securities will bear
the Restricted Securities Legend set forth on Exhibit A-1 unless removed in
accordance with this Section 7.3 or Section 9.2.
SECTION 7.4 Registrar and Paying Agent.
The Trust shall maintain (i) an office or agency where Capital
Securities may be presented for registration of transfer ("Registrar") and (ii)
an office or agency where Capital Securities may be presented for payment
("Paying Agent"). The Registrar shall keep a register of the Capital Securities
and of their transfer. 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 the term "Paying Agent" includes any
additional paying agent. The Trust may change any Paying Agent or Registrar,
co-registrar without prior notice to any Holder. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees. The Trust shall notify the Property Trustee of the name
and address of any Agent not a party to this Declaration. If the Trust fails to
appoint or maintain another entity as Registrar 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 Administrative Trustees shall act as Paying Agent and
Registrar or co-registrar for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar and
Paying Agent for the Capital Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the Property
Trustee
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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 on the Securities, 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 money. If the
Trust or the Sponsor or an Affiliate of the Trust or the Sponsor acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent.
SECTION 7.6 Replacement Securities.
If the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Capital Securities to the
Property Trustee, the Administrative Trustees on behalf of the Trust shall issue
and the Property Trustee shall authenticate a replacement Security if the
Property Trustee's requirements 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 or any authenticating agent from any loss
which any of them may suffer if a Security is replaced. The Trust may charge
such Holder for its expenses in replacing a Security.
Every replacement Security is a beneficial interest in the Trust.
SECTION 7.7 Outstanding Capital Securities.
The Capital Securities outstanding at any time are all the Capital
Securities authenticated by the Property Trustee except for those canceled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding.
If a Capital Security is replaced, paid or purchased pursuant to
Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Capital
Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the terms
of this Declaration, they cease to be outstanding and Distributions on them
shall cease to accumulate.
A Capital Security does not cease to be outstanding because one of the
Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8 Capital Securities in Treasury.
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In determining whether the Holders of the required amount of Securities
have concurred in any direction, waiver or consent, Capital Securities owned by
the Trust, the Sponsor or an Affiliate of the Sponsor, as the case may be, shall
be disregarded and deemed not to be outstanding, except that for the purposes of
determining whether the Property Trustee shall be fully protected in relying on
any such direction, waiver or consent, only Securities which a Responsible
Officer of the Property Trustee actually knows are so owned shall be so
disregarded.
SECTION 7.9 Temporary Securities.
(a) Until Definitive Securities are ready for delivery, the Sponsor may
prepare and, in the case of the Capital Securities, the Property Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of Definitive Securities but may have variations that the Trust
considers appropriate for temporary Securities. Without unreasonable delay, the
Trust shall prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate Definitive Securities in exchange for temporary
Securities.
(b) In the event of the occurrence of any of the events specified in
Section 7.9(b), the Trust will promptly make available to the Property Trustee a
reasonable supply of certificated Capital Securities in fully registered form
without distribution coupons.
SECTION 7.10 Cancellation.
The Trust at any time may deliver Capital Securities to the Property
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Property Trustee any Capital Securities surrendered to them for registration of
transfer, redemption, exchange or payment. The Property Trustee shall promptly
cancel all Capital Securities, surrendered for registration of transfer,
redemption, exchange, payment, replacement or cancellation and shall dispose of
canceled Capital Securities in accordance with its customary procedures unless
any Administrative Trustee otherwise directs the Property Trustee in writing.
The Trust may not issue new Capital Securities to replace Capital Securities
that it has paid or that have been delivered to the Property Trustee for
cancellation or that any Holder has exchanged.
SECTION 7.11 CUSIP Numbers.
The Trust in issuing the Capital Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Property Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided, that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Capital
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property Trustee
of any change in the "CUSIP" numbers.
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ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall automatically terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) following the distribution of a Like Amount of the
Debentures to the Holders of the Securities, provided, that the Property Trustee
has received written notice from the Sponsor directing the Property Trustee to
terminate the Trust (which direction is optional, and except as otherwise
expressly provided below, wholly within the discretion of the Sponsor) and
provided, further, that such direction and such distribution is conditioned on
the Administrative Trustees' receipt of an opinion of an independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may rely
on published rulings of the Internal Revenue Service, to the effect that the
Holders of the 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;
(iii) upon the entry of a decree of judicial dissolution of the
Trust by a court of competent jurisdiction;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been paid
to the Holders in accordance with the terms of the Securities; or
(v) the expiration of the term of the Trust provided in Section
3.14.
(b) As soon as is practicable after the occurrence of an event referred
to in Section 8.1(a), the Administrative Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
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(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. Any transfer or purported transfer of any Capital
Security not made in accordance with this Declaration shall be null and void.
(c) The Sponsor may not transfer the Common Securities.
(d) The Property Trustee shall provide for the registration of Capital
Securities and of the transfer of Capital Securities, which will be effected
without charge but only upon payment (with such indemnity as the Property
Trustee may require) in respect of any tax or other governmental charges that
may be imposed in relation to it. Upon surrender for registration of transfer of
any Capital Securities, the Property Trustee shall cause one or more new Capital
Securities to be issued in the name of the designated transferee or transferees.
Every Capital Security surrendered for registration of transfer shall be
accompanied by a written instrument of transfer in form satisfactory to the
Property Trustee duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Capital Security surrendered for registration of
transfer shall be delivered to the Property Trustee and canceled in accordance
with Section 7.10. A transferee of a Capital Security shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Capital Security. By acceptance of a Capital Security, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.2 Transfer Procedures and Restrictions.
(a) General. Except as otherwise provided in Section 9.2(b), if Capital
Securities are issued upon the registration of transfer or replacement of
Capital Securities bearing the Restricted Securities Legend set forth in Exhibit
A-1 hereto, or if a request is made to remove such Restricted Securities Legend
on Capital Securities, the Capital Securities so issued shall bear the
Restricted Securities Legend, or the Restricted Securities Legend shall not be
removed, as the case may be, unless there is delivered to the Trust and the
Property Trustee such satisfactory evidence, which shall include an Opinion of
Counsel, as may be reasonably required by the Trust and the Property Trustee,
that neither the legend nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof are made pursuant to an exception from
the registration requirements of the Securities Act or, with respect to
Restricted Securities, that such Securities are not "restricted" within the
meaning of Rule 144. Upon provision of such satisfactory evidence, the Property
Trustee, at the written direction of the Trust, shall authenticate and deliver
Capital Securities that do not bear the legend.
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(b) Transfer and Exchange of Capital Securities. When Capital
Securities are presented to the Registrar or co-registrar
(x) to register the transfer of such Capital Securities or
(y) to exchange such Capital Securities which became
mutilated, destroyed, defaced, stolen or lost, for an equal number of
Capital Securities,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Capital Securities surrendered for registration of
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Trust and
the Registrar or co-registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing; and
(ii) if such Capital Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect; or
(iii) if such Capital Securities are being transferred: (i) a
certification from the transferor in a form substantially similar to that
attached hereto as the "Form of Assignment" in Exhibit A-1, and (ii) if the
Trust or Registrar so requests, evidence reasonably satisfactory to them as to
the compliance with the restrictions set forth in the Restricted Securities
Legend (as defined below).
(c) Legend.
(i) Except as permitted by the following paragraph (ii), each
certificate evidencing the Capital Securities (and all Capital Securities issued
in exchange therefor or substitution thereof) shall bear a legend (the
"Restricted Securities Legend") in substantially the following form:
THIS CAPITAL 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
CAPITAL SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED,
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TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS CAPITAL SECURITY,
PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS THREE YEARS
AFTER THE LATER OF THE ORIGINAL ISSUANCE
DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY "AFFILIATE" OF THE COMPANY
WAS THE OWNER OF THIS CAPITAL SECURITY (OR
ANY PREDECESSOR OF THIS CAPITAL SECURITY)
ONLY (A) TO THE COMPANY (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) SO LONG AS THIS CAPITAL SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE
501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES
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AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (E)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
TRUST AND THE COMPANY PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND (ii) PURSUANT TO CLAUSE (D), TO
REQUIRE THAT A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE REVERSE OF THIS
CAPITAL SECURITY IS COMPLETED AND DELIVERED
BY THE TRANSFEREE TO THE TRUST. SUCH HOLDER
FURTHER AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS CAPITAL SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.
(ii) Upon any sale or transfer of a Capital Security pursuant
to an effective registration statement under the Securities Act or
pursuant to Rule 144 under the Securities Act after such registration
statement ceases to be effective, the Registrar shall permit the Holder
thereof to exchange such Capital Security for a Capital Security that
does not bear the Restricted Securities Legend and rescind any
restriction on the transfer of such Capital Security.
(d) Obligations with Respect to Transfers and Exchanges of Capital
Securities.
(i) To permit registrations of transfers and exchanges, the
Trust shall execute and the Property Trustee shall authenticate Capital
Securities and at the Registrar's or co-registrar's request in
accordance with the terms of this Declaration.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Trust
or the
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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 or exchange (a) Capital Securities during a
period beginning at the opening of business 15 days before the day of
mailing of a notice of redemption or any notice of selection of Capital
Securities for redemption and ending at the close of business on the
day of such mailing; or (b) any Capital Security so selected for
redemption in whole or in part, except the unredeemed portion of any
Capital Security being redeemed in part.
(iv) Prior to the due presentation for registration of
transfer of any Capital Security, the Trust, the Property Trustee, the
Paying Agent, the Registrar or any co-registrar may deem and treat the
Person in whose name a Capital Security is registered as the absolute
owner of such Capital Security for the purpose of receiving
Distributions on such Capital Security and for all other purposes
whatsoever, and none of the Trust, the Property Trustee, the Paying
Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.
(v) All Capital Securities issued upon any registration of
transfer or exchange pursuant to the terms of this Declaration shall
evidence the same security and shall be entitled to the same benefits
under this Declaration as the Capital Securities surrendered upon such
registration of transfer or exchange.
(e) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or
obligation to a 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 Participant thereof, with respect to any ownership
interest in the Capital Securities or with respect to the delivery to
any Participant, beneficial owner or other Person (other than the
Clearing Agency) of any notice (including any notice of redemption) or
the payment of any amount, under or with respect to such Capital
Securities. All notices and communications to be given to the Holders
and all payments to be made to Holders under the Capital Securities
shall be given or made only to or upon the order of the registered
Holders.
(ii) The Property Trustee and 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 Capital Security other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms
of this Declaration,
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and to examine the same to determine substantial compliance as to form
with the express requirements hereof.
(f) Minimum Transfers. Capital Securities may only be transferred in
minimum blocks of $100,000 aggregate liquidation amount until such Capital
Securities are registered pursuant to an effective registration statement filed
under the Securities Act.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Security shall be
registered on the books and records of the Trust as the sole owner of such
Security for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Security on the part of any Person, whether
or not the Trust shall have actual or other notice thereof.
SECTION 9.4 [Intentionally omitted.]
SECTION 9.5 [Intentionally omitted.]
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 of the
Securities which shall be made solely from assets of the Trust; or
(ii) required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Sponsor shall be liable for all of the debts and obligations of
the Trust (other than with respect to the Securities) to the extent not
satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Capital Securities 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.
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(d) Under no circumstance shall the Delaware Trustee or the Property
Trustee be personally liable for any representation, warranty, covenant,
agreement, or indebtedness of the Trust, except for such representations,
warranties, covenants or agreements made by it in connection with performing the
functions described herein.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or 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 of Securities 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, are agreed by the
parties hereto to replace such other duties and liabilities of such Indemnified
Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a
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manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Securities;
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no
duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Sponsor 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.
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(ii) The Sponsor shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in
its favor by reason of the fact that he is or was a Company Indemnified
Person against expenses (including attorneys' fees and expenses)
actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust
unless and only to the extent that the Court of Chancery of Delaware or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
all the circumstances of the case, such Person is fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery or
such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full
extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the
Sponsor 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
Sponsor in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or
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on behalf of such Company Indemnified Person to repay such amount if it
shall ultimately be determined that he is not entitled to be
indemnified by the Sponsor as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Sponsor
if a determination is reasonably and promptly made (i) by the
Administrative Trustees by a majority vote of a quorum of disinterested
Administrative Trustees, (ii) if such a quorum is not obtainable, or,
even if obtainable, if a quorum of disinterested Administrative
Trustees so directs, by independent legal counsel in a written opinion
or (iii) the Common Security Holder of the Trust, that, based upon the
facts known to the Administrative Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such Person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Administrative Trustees, independent legal counsel
or Common Security Holder reasonably determine that such Person
deliberately breached his duty to the Trust or its Common or Capital
Security Holders.
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section
10.4(a) shall not be deemed exclusive of any other rights to which
those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Sponsor or Capital Security Holders of the Trust or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Sponsor 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 Sponsor 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,
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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 Sponsor shall indemnify, to full extent permitted by law, 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 those arising
under the Federal and state securities law and for 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,
administration or termination 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 or the
transactions contemplated hereby. The obligation to indemnify as set forth in
this Section 10.4(b) shall survive the resignation or removal of the Property
Trustee or the Delaware Trustee and the satisfaction and discharge of this
Declaration.
SECTION 10.5 Compensation of Property Trustee and Delaware Trustee.
The Sponsor agrees to pay the Property Trustee and the Delaware
Trustee, from time to time such compensation for all services rendered by the
Property Trustee and the Delaware Trustee hereunder as may be mutually agreed
upon in writing by the Sponsor and the Property Trustee or the Delaware Trustee,
as the case may be, and, except as otherwise expressly provided herein, to
reimburse the Property Trustee and the Delaware Trustee upon its or their
request for all reasonable expenses, disbursements and advances incurred or made
by the Property Trustee or the Delaware Trustee, as the case may be, in
accordance with the provisions of this Declaration, except any such expense,
disbursement or advance as may be attributable to its or their negligence or bad
faith.
SECTION 10.6 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
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Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders of Securities 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.
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 Trust shall use the accrual method of accounting for
United States federal income tax purposes. 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 prepared and
delivered to each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related statements of income or loss;
(c) The Administrative Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States federal
income tax
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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.
(d) 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 shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall be
designated by the Administrative Trustees; provided, however, that the Property
Trustee shall designate the signatories for the Property Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Administrative Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Administrative Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall direct the Property
Trustee to remit from the Property Trustee Account amounts withheld with respect
to the Holder to applicable jurisdictions, provided that the Property Trustee
shall not be obligated to remit any amounts unless Property Trustee has received
such certifications and documentation as it shall reasonably request. 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
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AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration 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, in the case of any proposed amendment, the
Property Trustee shall have first received 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);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Property Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms
of the Securities); and
(B) an Opinion of Counsel (who may be counsel to
the Sponsor or the Trust) that
(x) such amendment is permitted by, and
conforms to, the terms of this Declaration (including
the terms of the Securities) and
(y) all conditions precedent 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, and
(iii) to the extent the result of such amendment would be to:
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(A) cause the Trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers
of the Property Trustee in contravention of the Trust
Indenture Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company
Act;
(c) At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder of Securities 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 of the Securities;
(e) Article IV 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 V
to increase or decrease the number of, and appoint and remove Trustees shall not
be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity, correct or supplement any
provision in this Declaration that may be inconsistent with any
other provision of this Declaration or to make any other
provisions with respect to matters or questions arising under
this Declaration which shall not be inconsistent with the other
provisions of the Declaration; and
(ii) to modify, eliminate or add to any provisions
of the Declaration to such extent as shall be necessary to ensure
that the Trust will be classified for United States federal
income tax purposes as a grantor trust at all times that any
Securities are outstanding or to ensure that the Trust will not
be required to register as an Investment Company under the
Investment Company Act;
provided, however, that in the case of clause (i), such action shall not
adversely affect in any
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material respect the interests of the Holders of the Securities, and any
amendments of this Declaration shall become effective when notice thereof is
given to the Holders of the Securities.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called at
any time by the Administrative Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Administrative Trustees shall
call a meeting of the Holders of such class if directed to do so by the Sponsor,
pursuant to a resolution of its Board of Directors, or 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 a
writing stating that the Sponsor or the signing Holders of Securities wish to
call a meeting and indicating the general or specific purpose for which the
meeting is to be called. Any Holders of Securities calling a meeting shall
specify in writing the Security certificates held by the Holders of Securities
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 of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least 20 days
and not more than 180 days before the date of such meeting. Whenever a
vote, consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on
which the Capital Securities are listed or admitted for trading, such
vote, consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of
Securities 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 of Securities having a right
to vote thereon were present and voting. Prompt notice of the taking of
action without a meeting shall be given to the Holders of Securities
entitled to vote who have not consented in writing. The Administrative
Trustees may specify that any written ballot submitted to the Security
Holder for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Administrative
Trustees;
(ii) each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Securities is
entitled to
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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 of Securities 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 of the Securities
were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Administrative Trustees or by such other Person that
the Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities or the listing rules of any stock exchange on
which the Capital Securities are then listed or trading, otherwise
provides, the Administrative Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a Delaware banking corporation with trust
powers and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Property Trustee of
this Declaration has been duly authorized by all necessary corporate action on
the part of the Property Trustee. This Declaration has been duly executed and
delivered by the Property Trustee and constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against
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it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
(c) The execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the charter or
by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration with or
notice to, any Delaware State or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is duly organized, validly existing and in
good standing under the laws of the State of Delaware, 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 or Delaware banking authority is required for the
execution, delivery or performance by the Delaware Trustee of this Declaration;
and
(d) The Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware.
ARTICLE XIV
[INTENTIONALLY OMITTED.]
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ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrative Trustees at
the Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Holders of the Securities):
Madison Capital Trust I
3513 Concord Pike, Suite 3758
Wilmington, DE 19803
Attention: Sarah G. Neiffer
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to the
Holders of the Securities):
Christiana Bank & Trust Company
Greenville Center
3801 Kennett Pike
Greenville, DE 19807
Attention: Robert G. Elder
(c) if given to the Property Trustee, at the Property Trustee's mailing
address set forth below (or such other address as the Property Trustee may give
notice of to the Holders of the Securities):
Christiana Bank & Trust Company
Greenville Center
3801 Kennett Pike
Greenville, DE 19807
Attention: Robert G. Elder
(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 Trust):
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Madison Bancshares Group, Ltd.
1767 Sentry Park West
Blue Bell, PA 19422
Attention: E. Cheryl Hinkle
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 15.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The provisions
of this Declaration shall be interpreted to further this intention of the
parties.
SECTION 15.4 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 15.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 15.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to Persons or
circumstances other than those to which it is held
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invalid, shall not be affected thereby.
SECTION 15.7 Counterparts.
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
- ---------------------------------- ---------------------------------
Tina DeLeo, as Withdrawing Trustee , as Administrative Trustee
- ---------------------------------- ---------------------------------
Vincent L. Roth, as Withdrawing Trustee , as Administrative Trustee
- ---------------------------------- ---------------------------------
Richard Vivola, as Withdrawing Trustee , as Administrative Trustee
MADISON BANCSHARES GROUP, LTD. CHRISTIANA BANK & TRUST COMPANY,
as Sponsor as Delaware Trustee
By: By:
------------------------------ ------------------------
Name: Name: Robert G. Elder
Title: Title: President
CHRISTIANA BANK & TRUST COMPANY,
as Property Trustee
By:
------------------------
Name: Robert G. Elder
Title: President
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ANNEX I
TERMS OF
9.00% CAPITAL SECURITIES
9.00% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of July 13, 1998 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities and the Common
Securities (collectively, the "Securities") are set out below (each capitalized
term used but not defined herein has the meaning set forth in the Declaration
or, if not defined in such Declaration, as defined in the Offering Memorandum
referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
(a) Capital Securities. 5,000 Capital Securities of the Trust, with a
liquidation amount with respect to the assets of the Trust of Five Million
Dollars ($5,000,000) as provided in the Subscription Agreements, and with a
liquidation amount with respect to the assets of the Trust of $1,000 per
Security, are hereby designated for the purposes of identification only as
"9.00% Capital Securities" (the "Capital Securities"). The certificates
evidencing the Capital Securities shall be substantially in the form of Exhibit
A-1 to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to conform
to the rules of any stock exchange on which the Capital Securities are listed.
(b) Common Securities. 150 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of One
Hundred Fifty Thousand Dollars ($150,000) and a liquidation amount with respect
to the assets of the Trust of $1,000 per Security, are hereby designated for the
purposes of identification only as "9.00% Common Securities" (the "Common
Securities"). The certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security shall be fixed at a rate per
annum of 9.00% (the "Coupon Rate") of the liquidation amount of $1,000 per
Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one semi-annual period shall bear additional Distributions
thereon compounded semi-annually at the Coupon Rate (to the extent permitted by
applicable law). The term "Distributions," as used herein, includes
distributions of any such interest and Liquidated Damages payable unless
otherwise stated. A Distribution shall be 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.
A-1
<PAGE>
(b) Distributions on the Securities shall be cumulative, shall
accumulate from June 30, 1998 and shall be payable semi-annually in arrears on
June 30 and December 31 of each year (each, a "Distribution Date"), except as
otherwise described below. Distributions shall be computed on the basis of a
360-day year consisting of twelve 30-day months and for any period less than a
full calendar month on the basis of the actual number of days elapsed in such
month. As long as no Event of Default has occurred and is continuing under the
Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
semi-annual periods (each an "Extension Period"), during which Extension Period
no interest shall be due and payable on the Debentures, provided that no
Extension Period shall extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions shall also be deferred. Despite such
deferral, Distributions shall continue to accumulate with additional
Distributions thereon (to the extent permitted by applicable law but not at a
rate greater than the rate at which interest is then accruing on the Debentures)
at the Coupon Rate compounded semi-annually during any such Extension Period.
Prior to the termination of any such Extension Period, the Debenture Issuer may
further defer payments of interest by further extending such Extension Period;
provided, that such Extension Period, together with all such previous and
further extensions within such Extension Period, may not exceed 10 consecutive
semi-annual periods, or extend beyond the Maturity Date of the Debentures. Upon
the termination of any Extension Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Extension Period, subject to the above
requirements.
(c) Distributions on the Securities shall be payable to the Holders
thereof as they appear on the books and records of the Trust on the first day of
the month in which the relevant Distribution Date occurs, which Distribution
Dates correspond to the interest payment dates on the Debentures. Subject to any
applicable laws and regulations and the provisions of the Declaration, each such
payment in respect of the Capital Securities shall be made as described under
the heading "Description of the Capital Securities -- Payment and Paying Agent"
in the Offering Memorandum dated June 26, 1998, of the Debenture Issuer and the
Trust relating to the Securities and the Debentures. The relevant record dates
for the Common Securities shall be the same as the record dates for the Capital
Securities. Distributions payable on any Securities that are not punctually paid
on any Distribution Date, as a result of the Debenture Issuer having failed to
make a payment under the Debentures, shall cease to be payable to the Holder on
the relevant record date, and such defaulted Distribution shall instead be
payable to the Person in whose name such Securities are registered on the
special record date or other specified date determined in accordance with the
Indenture. If any date on which Distributions are payable on the Securities is
not a Business Day, then payment of the Distribution payable on such date shall
be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), with the same force and
effect as if made on such date.
(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)
A-2
<PAGE>
among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any termination of the Trust or the Sponsor otherwise
gives notice of its election to liquidate the Trust pursuant to Section
8.1(a)(ii) 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 of the
Securities 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 shall be entitled to receive out of the assets of the
Trust legally available for distribution to Holders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an amount
equal to the aggregate of the liquidation amount of $1,000 per Security plus
accumulated and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the Securities,
Securities having a Liquidation Amount equal to the principal amount of
Debentures to be paid in accordance with their terms and (ii) with respect to a
distribution of Debentures upon the liquidation of the Trust, Debentures having
a principal amount equal to the Liquidation Amount of the Securities of the
Holder to whom such Debentures are distributed.
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 prepayment (either at the option of the Debenture Issuer or
pursuant to a Special Event, as described below), the proceeds from such
repayment or prepayment shall be simultaneously applied by the Property Trustee
(subject to the Property Trustee having received notice no less than 30 and no
more than 60 days prior to such repayment) to redeem a Like Amount of the
Securities at a redemption price equal to (i) in the case of the repayment of
the Debentures at maturity, the Maturity Redemption Price (as defined below),
(ii) in the case of the optional prepayment of the Debentures upon the
occurrence and continuation of a Special Event, the Special Event Redemption
Price (as defined below) and (iii) in the case of the optional prepayment of the
Debentures other than as contemplated under Section 4(a)(ii), the Optional
Redemption Price (as defined below). The Maturity Redemption Price, the Special
Event Redemption Price and the Optional Redemption Price are referred to
collectively as the "Redemption Price." Holders shall be given not less than 30
nor more than 60 days prior written notice of such redemption.
A-3
<PAGE>
(b) (i) The "Maturity Redemption Price", with respect to a redemption
of Securities, shall mean an amount equal to the principal of and accrued
interest on the Debentures as of the maturity date thereof.
(ii) In the case of an optional prepayment, if fewer than all the
outstanding Securities are to be so redeemed, the Common Securities and the
Capital Securities shall be redeemed Pro Rata and the Capital Securities to be
redeemed shall be determined as described in Section 4(f)(ii) below. Upon the
entry of an order for the dissolution of the Trust by a court of competent
jurisdiction, the Debentures thereafter will be subject to optional repayment,
in whole, but not in part, on or after June 30, 2003.
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 June 30, 2003 (the "Initial Optional Redemption Date"), upon not
less than 30 days and not more than 60 days notice, at the Optional Redemption
Price and, simultaneous with such redemption, to cause a Like Amount of the
Securities to be redeemed by the Trust at the Optional Redemption Price on a Pro
Rata basis. "Optional Redemption Price" shall mean a price equal to 100% of the
liquidation amount of Securities to be redeemed plus accumulated and unpaid
Distributions thereon, if any, to the date of such redemption:
(c) If at any time a Special Event (as defined below) occurs prior to
the Initial Optional Redemption Date, 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 notice, to redeem the Debentures in whole, but not in part,
within the 90 days following the occurrence of such Special Event (the "90 Day
Period"), and, simultaneous with such redemption, to cause a Like Amount of the
Securities to be redeemed by the Trust at the Special Event Redemption Price on
a Pro Rata basis.
"Special Event" shall occur upon the occurrence of a Tax Event or a
Regulatory Capital Event.
"Tax Event" shall occur upon receipt by the Debenture Issuer and an
Administrative Trustee 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
July 13, 1998, there is more than an insubstantial risk that (i) the Trust is,
or will be within 90 days of the date of such opinion, subject to United States
federal income tax with respect to income received or accrued on the Debentures,
(ii) interest payable by the Debenture Issuer on the Debentures is not, or
within 90 days of the date of such opinion, will not be, deductible by the
Debenture Issuer, in whole or in part, for United States federal income tax
purposes or (iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
A-4
<PAGE>
"Regulatory Capital Event" shall mean that the Corporation 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 the
Federal Reserve or any state banking regulatory authority 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 Issue Date, the Capital
Securities do not constitute, or within 90 days of the date thereof, will not
constitute, Tier I Capital (or its then equivalent); provided, however, that the
distribution of the Junior Subordinated Debentures in connection with the
liquidation of the Trust by the Corporation shall not in and of itself
constitute a Regulatory Capital Event unless such liquidation shall have
occurred in connection with a Tax Event.
"Special Event Redemption Price" shall mean a price equal to 100% of
the liquidation amount of Securities to be redeemed plus, in each case,
accumulated and unpaid Distributions thereon, if any, to the date of such
redemption.
(d) On and from the date fixed by the Administrative Trustees for any
distribution of Debentures and liquidation of the Trust: (i) the Securities will
no longer be deemed to be outstanding and (ii) any certificates representing
Securities shall be deemed to represent beneficial interests in a Like Amount of
Debentures until such certificates are presented to the Debenture Issuer or its
agent for transfer or reissue.
(e) The Trust may not redeem fewer than all the outstanding Securities
unless all accumulated and unpaid Distributions have been paid on all Securities
for all semi-annual Distribution periods terminating on or before the date of
redemption.
(f) The procedure with respect to redemptions or distributions of
Debentures shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") shall be given by the Trust by mail to each Holder of
Securities 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, shall 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 of Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of
Securities 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
A-5
<PAGE>
respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Capital Securities.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, (which notice will be irrevocable),
then with respect to Capital Securities 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 shall pay the relevant Redemption
Price to the Holders of such Securities by check mailed to the address
of the relevant Holder appearing on the books and records of the Trust
on the redemption date. If a Redemption/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 shall cease to
accumulate on the Securities so called for redemption and all rights of
Holders of such Securities so called for redemption shall 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 shall be subject to the rights of
Holders of Securities on the close of business on a regular record date
in respect of a Distribution Date occurring on or prior to such
Redemption Date.
Neither the Administrative Trustees nor the Trust shall be required to
register or cause to be registered the transfer of (i) any Securities beginning
on the opening of business 15 days before the day of mailing of a notice of
redemption or any notice of selection of Securities for redemption or (ii) any
Securities selected for redemption except the unredeemed portion of any Security
being redeemed. If any date fixed for redemption of Securities is not a Business
Day, then payment of the Redemption Price payable on such date shall be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), with the same force and effect as
if made on such date fixed for redemption. If payment of the Redemption Price in
respect of any Securities is improperly withheld or refused and not paid either
by the Property Trustee or by the Sponsor as guarantor pursuant to the relevant
Securities Guarantee, Distributions on such Securities shall continue to
accumulate from the original redemption date to the actual date of payment, in
which case the actual payment date shall be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
(v) Redemption/Distribution Notices shall be sent by the
Property Trustee on behalf of the Trust to (A) in respect of the
Capital Securities, if Definitive Capital Security Certificates have
been issued, to the Holder thereof, and (B) in respect of the Common
Securities to the Holder thereof.
(vi) Subject to the foregoing and applicable law (including,
without limitation,
A-6
<PAGE>
United States federal securities laws and banking laws and to the
provisions contained in the Subscription Agreements), the Sponsor or
any of its subsidiaries may at any time and from time to time purchase
outstanding Capital Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Capital Securities.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities shall
have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive certain past defaults under the Indenture, (iii) exercise
any right to rescind or annul a declaration of acceleration of the maturity of
the principal of the Debentures or (iv) consent to any amendment, modification
or termination of the Indenture or the Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the Holders of
a Majority in liquidation amount of all outstanding Capital Securities;
provided, however, that where a consent under the Indenture would require the
consent of each holder of Debentures affected thereby, no such consent shall be
given by the Property Trustee without the prior approval of each Holder of the
Capital Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital Securities except
by subsequent vote of such Holders. The Property Trustee shall notify each
Holder of Capital Securities of any notice of default with respect to the
Debentures. In addition to obtaining the foregoing approvals of such Holders of
the Capital Securities, prior to taking any of the foregoing actions, the
Trustees shall obtain an opinion of counsel experienced in such matters to the
effect that the Trust shall not be classified as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or interest on a
Like Amount of Debentures (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Common Securities Holder shall be subrogated to the rights of such
Holder of Capital Securities to the extent of any payment made by the Debenture
Issuer to such Holder of Capital Securities in such Direct Action. Except as
provided in the second preceding sentence, the Holders of Capital Securities
shall not be able to exercise directly any other remedy available to the holders
of the Debentures.
Any approval or direction of Holders of Capital Securities may be given
at a separate meeting of Holders of Capital Securities convened for such
purpose, at a meeting of all of the
A-7
<PAGE>
Holders of Securities in the Trust or pursuant to written consent. The Property
Trustees shall cause a notice of any meeting at which Holders of Capital
Securities are entitled to vote, or of any matter upon which action by written
consent of such Holders is to be taken, to be mailed to each Holder of record of
Capital Securities. Each such notice shall include a statement setting forth (i)
the date of such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought and (iii) instructions for the delivery of proxies or consent.
No vote or consent of the Holders of the Capital Securities shall be
required for the Trust to redeem and cancel Capital Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Capital Securities are entitled to vote
or consent under any of the circumstances described above any of the Capital
Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall
not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), 6(c), and 7 as otherwise
required by law and the Declaration, the Holders of the Common Securities shall
have no voting rights.
(b) Unless a Debenture 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 a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
Holders of a Majority in liquidation amount of the outstanding Capital
Securities. In no event shall the holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Sponsor as the holder of the Common
Securities. No resignation or removal of a Trustee and no appointment of a
successor trustee shall be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive certain past defaults under the Indenture, (iii) exercise
any right to rescind or annul a declaration of acceleration of the maturity of
the principal of the 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
A-8
<PAGE>
previously authorized or approved by a vote of the Holders of the Common
Securities except by subsequent vote of such Holders. 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 shall not be classified as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Common Securities may institute a Direct Action for enforcement of payment to
such Holder of the principal of or premium, if any, or interest on a Like Amount
of Debentures on or after the respective due date specified in the Debentures.
In connection with Direct Action, the rights of the Common Securities Holder
shall be subordinated to the rights of such Holder of Capital Securities to the
extent of any payment made by the Debenture Issuer to such Holder of Common
Securities in such Direct Action. Except as provided in the second preceding
sentence, the Holders of Common Securities shall not be able to exercise
directly any other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Administrative Trustees shall cause a notice of any meeting
at which Holders of Common Securities are entitled to vote, or of any matter
upon which action by written consent of such Holders is to be taken, to be
mailed to each Holder of record of Common Securities. Each such notice shall
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities shall 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 of the Securities (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
A-9
<PAGE>
modify, eliminate or add to any provisions of the Declaration to such extent as
shall be necessary to ensure that the Trust shall be classified for United
States federal income tax purposes as a grantor trust at all times that any
Securities are outstanding or to ensure that the Trust shall not be required to
register as an "Investment Company" under the Investment Company Act; provided,
however, that in the case of clause (i), such action shall not adversely affect
in any material respect the interests of any Holder of Securities, and any
amendments of the Declaration shall become effective when notice thereof is
given to the Holders of the Securities. The Declaration may be amended by the
Trustees and the Sponsor (i) with the consent of Holders representing a Majority
in liquidation amount of all outstanding Securities, and (ii) upon receipt by
the Trustees of an Opinion of Counsel to the effect that such amendment or the
exercise of any power granted to the Trustees in accordance with such amendment
shall not affect the Trust's status as a grantor trust for United States federal
income tax purposes or the Trust's exemption from status 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, or the payment required to
be made in respect of the Securities or any redemption provisions or otherwise
adversely affect the amount of any Distribution or other payment required to be
made in respect of the Securities as of a specified date or (ii) restrict the
right of a Holder of 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
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the Capital
Securities pro rata according to the aggregate liquidation amount of Capital
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Capital Securities outstanding, and only after satisfaction of all
amounts owed to the Holders of the Capital Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Common Securities outstanding.
9. Ranking.
The Capital Securities rank pari passu with the Common Securities and
payment thereon shall be made Pro Rata with the Common Securities, except that,
if an Event of Default under the Declaration occurs and is continuing, no
payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full the
Distributions, Redemption Price, Liquidation Distribution and other payments to
which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture.
A-10
<PAGE>
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities Guarantee
and the Common Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
12. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor shall provide a copy of the Declaration, the Capital
Securities Guarantee or the Common Securities Guarantee (as may be appropriate),
the Indenture (including any supplemental indenture) to a Holder without charge
on written request to the Sponsor at its principal place of business.
A-11
<PAGE>
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
THIS CAPITAL 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 CAPITAL SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT
TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE REVERSE OF THIS CAPITAL SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH HOLDER FURTHER AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS
A1-1
<PAGE>
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
A1-2
<PAGE>
Certificate Number: Number of Capital Securities
Certificate Evidencing Capital Securities
of
MADISON CAPITAL TRUST I
9.00% Capital Securities
(liquidation amount of $1,000 per Capital Security)
MADISON CAPITAL TRUST I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that _________(the
"Holder") is the registered owner of ________securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 9.00% Capital Securities (liquidation amount of $1,000 per
Capital Security) (the "Capital Securities"). The Capital Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of July 13, 1998
as the same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Capital Securities as set forth in Annex I to
the Declaration. Capitalized terms used but not defined herein shall have the
meaning given them in the Declaration. The Sponsor will provide a copy of the
Declaration, the Capital Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
A1-3
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this 13th
day of July, 1998.
MADISON CAPITAL TRUST I
By:
--------------------------------
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
Dated: ,
---------------
CHRISTIANA BANK & TRUST COMPANY,
as Property Trustee
By:
--------------------------------
Authorized Officer
A1-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate
per annum of 9.00% (the "Coupon Rate") of the liquidation amount of $1,000 per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
semi-annual period will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions," as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if any Distributions have been paid, from June 30, 1998 and will be payable
semi-annually in arrears, on June 30 and December 31 of each year, commencing on
December 31, 1998, except as otherwise described below. Distributions shall be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month. As long as no Event of Default has occurred and is continuing under
the Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
calendar semiannual periods (each an "Extension Period"), provided that no
Extension Period shall extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred. Despite such
deferral, semi-annual Distributions will continue to accumulate with interest
thereon (to the extent permitted by applicable law, but not at a rate exceeding
the rate of interest then accruing on the Debentures) at the Coupon Rate
compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further defer
payments of interest by further extending such Extension Period; provided, that
such Extension Period, together with all such previous and further extensions
within such Extension Period, may not exceed 10 consecutive semi-annual periods
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 certain conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and cause the Debentures to be distributed to the
holders of the Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
A1-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
- -------------------------------------
- -------------------------------------
- -------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------
- -------------------------------------
- -------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- -------------------------------------
- -------------------------------------
- -------------------------------------agent to transfer this Capital
Security Certificate on the books of the Trust. The agent may substitute another
to act for him or her.
Date:
---------------
Signature:
---------------------
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee:
---------------------
- -----------------
* Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities and Exchange Act of 1934, as amended.
A1-6
<PAGE>
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) |_| exchanged for the undersigned's own account without transfer; or
(2) |_| transferred pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(3) |_| to an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities
Act of 1933 that is acquiring the Capital Securities for its own
account, or for the account of such an institutional "accredited
investor," for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation of the
Securities Act of 1933; or
(4) |_| transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(5) |_| transferred pursuant to an effective registration statement.
Unless one of the boxes is checked, the Registrar will refuse to register any of
the Capital Securities evidenced by this certificate in the name of any person
other than the registered Holder thereof; provided, however, that if box (3) or
(4) is checked, the Registrar may require, prior to registering any such
transfer of the Capital Securities such legal opinions, certifications and other
information as the Trust has reasonably requested to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act of 1933, such as the
exemption provided by Rule 144 under such Act; provided, further, that (i) if
box (2) is checked, the transferee must also certify that it is a qualified
institutional buyer as defined in Rule 144A or (ii) if box (3) is checked, the
transferee must also provide to the Registrar a Transferee Letter of
Representation in a form reasonably acceptable to the Registrar; provided,
further, that after the date that a Registration Statement has been filed and so
long as such Registration Statement continues to be effective, the Registrar may
only permit transfers for which box (5) has been checked.
---------------------------------
Signature
A1-7
<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 THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL SECURITY
(OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) SO LONG AS THIS COMMON SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS ACQUIRING THIS COMMON SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS COMMON SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH HOLDER 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
<PAGE>
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
Madison Capital Trust I
9.00% Common Securities
(liquidation amount of $1,000 per Common Security)
MADISON CAPITAL TRUST I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that Madison
Bancshares Group, Ltd., a Pennsylvania corporation (the "Holder"), is the
registered owner of One Hundred Fifty (150) common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 9.00% Common Securities (liquidation amount of $1,000 per Common
Security) (the "Common Securities"). 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 July 13, 1998 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 and the Indenture (including any
supplemental indenture) to a Holder without charge upon written request to the
Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
A2-2
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate
this 13th day of July, 1998.
MADISON CAPITAL TRUST I
By:
--------------------------
Name:
Administrative Trustee
A2-3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of 9.00% (the "Coupon Rate") of the liquidation amount of $1,000 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
semi-annual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions," as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds available therefor.
Distributions on the Common Securities will be cumulative, will accrue
from the most recent date to which Distributions have been paid or, if no
Distributions have been paid, from June 30, 1998 and will be payable
semi-annually in arrears, on June 30 and December 31 of each year, commencing on
December 31, 1998, except as otherwise described below. Distributions will be
computed on the basis of a 360-day year consisting of twelve 30 day months and,
for any period less than a full calendar month, the number of days elapsed in
such month. As long as no Event of Default has occurred and is continuing under
the Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
calendar semi-annual periods (each an "Extension Period"), provided that no
Extension Period shall extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred. Despite such
deferral, Distributions will continue to accumulate with interest thereon (to
the extent permitted by applicable law, but not at a rate exceeding the rate of
interest then accruing on the Debentures) at the Coupon Rate compounded
semi-annually during any such Extension Period. Prior to the termination of any
such Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; provided that such
Extension Period, together with all such previous and further extensions within
such Extension Period, may not exceed 10 consecutive semi-annual periods, 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 certain conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and cause the Debentures to be distributed to the
holders to the Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-4
<PAGE>
Final
MADISON BANCSHARES GROUP, LTD.
------------------
------------------
INDENTURE
Dated as of July 13, 1998
------------------
------------------
CHRISTIANA BANK & TRUST COMPANY,
as Trustee
------------------
9.00% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
DUE JUNE 30, 2028
----------------------------
----------------------------
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS.............................................................................................1
SECTION 1.01. Definitions............................................................................1
Additional Interest.............................................................................1
Affiliate.......................................................................................1
Authenticating Agent............................................................................1
Bankruptcy Law..................................................................................2
Board of Directors..............................................................................2
Board Resolution................................................................................2
Business Day....................................................................................2
Capital Securities..............................................................................2
Capital Securities Guarantee....................................................................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
Deferred Interest...............................................................................3
Definitive Securities...........................................................................3
Dissolution Event...............................................................................3
Event of Default................................................................................3
Exchange Act....................................................................................3
Extended Interest Payment Period................................................................3
Indebtedness for Money Borrowed.................................................................4
Indenture.......................................................................................4
Initial Optional Redemption Date................................................................4
Interest Payment Date...........................................................................4
Liquidated Damages..............................................................................4
Madison Capital Trust...........................................................................4
Maturity Date...................................................................................4
Non Book-Entry Capital Securities...............................................................4
Officers .......................................................................................4
Officers' Certificate...........................................................................4
Opinion of Counsel..............................................................................4
Optional Redemption Price.......................................................................4
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Other Debentures................................................................................4
Other Guarantees................................................................................4
outstanding.....................................................................................4
Person .......................................................................................5
Predecessor Security............................................................................5
Principal office of the Trustee,................................................................5
Property Trustee................................................................................5
Redemption Price................................................................................5
Regulatory Capital Event........................................................................5
Responsible Officer,............................................................................6
Restricted Security.............................................................................6
Rule 144A.......................................................................................6
Securities......................................................................................6
Securities Act..................................................................................6
Securityholder..................................................................................6
Security Register...............................................................................6
Senior Indebtedness.............................................................................6
Special Event...................................................................................6
Special Event Redemption Price..................................................................6
Agreements......................................................................................7
Subsidiary......................................................................................7
Tax Event.......................................................................................7
Trustee .......................................................................................7
Trust Indenture Act.............................................................................7
Trust Securities................................................................................8
U.S. Government Obligations.....................................................................8
ARTICLE II SECURITIES.............................................................................................8
SECTION 2.01. Forms Generally........................................................................8
SECTION 2.02. Execution and Authentication...........................................................8
SECTION 2.03. Form and Payment.......................................................................9
SECTION 2.04. Legends................................................................................9
SECTION 2.05. [Intentionally Omitted]................................................................9
SECTION 2.06. Interest...............................................................................9
[SECTION 2.07. Transfers.............................................................................10
SECTION 2.08. Replacement Securities................................................................11
SECTION 2.09. Treasury Securities...................................................................11
SECTION 2.10. Temporary Securities..................................................................11
SECTION 2.11. Cancellation..........................................................................12
[SECTION 2.12. Defaulted Interest....................................................................12
ARTICLE III PARTICULAR COVENANTS OF THE COMPANY..................................................................13
SECTION 3.01. Payment of Principal, Premium and Interest............................................13
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 3.02. Offices for Notices and Payments, etc.................................................13
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office....................................14
SECTION 3.04. Provision as to Paying Agent..........................................................14
SECTION 3.05. Certificate to Trustee................................................................15
SECTION 3.06. Compliance with Consolidation Provisions..............................................15
SECTION 3.07. Limitation on Dividends...............................................................15
SECTION 3.08. Covenants as to Madison Capital Trust.................................................16
SECTION 3.09. Payment of Expenses...................................................................16
SECTION 3.10. Payment Upon Resignation or Removal...................................................17
ARTICLE IV SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE
TRUSTEE.................................................................................................17
SECTION 4.01. Securityholders' Lists................................................................17
SECTION 4.02. Preservation and Disclosure of Lists..................................................17
SECTION 4.03 Reports of the Company................................................................19
SECTION 4.04. Reports by the Trustee................................................................20
ARTICLE V REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT........................................20
SECTION 5.01. Events of Default.....................................................................20
SECTION 5.02. Payment of Securities on Default; Suit Therefor.......................................22
SECTION 5.03. Application of Moneys Collected by Trustee............................................24
SECTION 5.04. Proceedings by Securityholders........................................................24
SECTION 5.05. Proceedings by Trustee................................................................25
SECTION 5.06. Remedies Cumulative and Continuing....................................................25
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by Majority of
Securityholders.......................................................................26
SECTION 5.08. Notice of Defaults....................................................................26
SECTION 5.09. Undertaking to Pay Costs..............................................................27
ARTICLE VI CONCERNING THE TRUSTEE................................................................................27
SECTION 6.01. Duties and Responsibilities of the Trustee............................................27
SECTION 6.02. Reliance on Documents, Opinions, etc..................................................28
SECTION 6.03. No Responsibility for Recitals, etc...................................................30
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or
Registrar May Own Securities..........................................................30
SECTION 6.05. Moneys to be Held in Trust............................................................30
SECTION 6.06. Compensation and Expenses of Trustee..................................................30
SECTION 6.07. Officers' Certificate as Evidence.....................................................31
SECTION 6.08. Conflicting Interest of Trustee.......................................................31
SECTION 6.09. Eligibility of Trustee................................................................31
SECTION 6.10. Resignation or Removal of Trustee.....................................................32
SECTION 6.11. Acceptance by Successor Trustee.......................................................33
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 6.12. Successor by Merger, etc..............................................................34
SECTION 6.13. [Intentionally Omitted]...............................................................34
SECTION 6.14. Authenticating Agents.................................................................34
ARTICLE VII CONCERNING THE SECURITYHOLDERS.......................................................................35
SECTION 7.01. Action by Securityholders.............................................................35
SECTION 7.02. Proof of Execution by Securityholders.................................................36
SECTION 7.03. Who Are Deemed Absolute Owners........................................................36
SECTION 7.04. Securities Owned by Company Deemed Not Outstanding....................................37
SECTION 7.05. Revocation of Consents; Future Holders Bound..........................................37
ARTICLE VIII SECURITYHOLDERS' MEETINGS...........................................................................37
SECTION 8.01. Purpose of Meetings...................................................................37
SECTION 8.02. Call of Meetings by Trustee...........................................................38
SECTION 8.03. Call of Meetings by Company or Securityholders........................................38
SECTION 8.04. Qualifications for Voting.............................................................38
SECTION 8.05. Regulations...........................................................................39
SECTION 8.06. Voting................................................................................39
ARTICLE IX AMENDMENTS............................................................................................40
SECTION 9.01. Without Consent of Securityholders....................................................40
SECTION 9.02. With Consent of Securityholders.......................................................41
SECTION 9.03. [Intentionally Omitted]...............................................................42
SECTION 9.04. Notation on Securities................................................................42
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished Trustee.....................................................................42
ARTICLE X CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE......................................................43
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.......................................43
SECTION 10.02. Opinion of Counsel to be Given Trustee................................................43
ARTICLE XI SATISFACTION AND DISCHARGE OF INDENTURE...............................................................43
SECTION 11.01. Discharge of Indenture................................................................43
SECTION 11.02. Deposited Moneys and U.S. Government Obligations to be Held in
Trust by Trustee......................................................................44
SECTION 11.03. Paying Agent to Repay Moneys Held.....................................................44
SECTION 11.04. Return of Unclaimed Moneys............................................................45
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S. Government
Obligations...........................................................................45
SECTION 11.06. Reinstatement.........................................................................46
ARTICLE XII IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND
DIRECTORS...............................................................................................47
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
SECTION 12.01. Indenture and Securities Solely Corporate Obligations.................................47
ARTICLE XIII MISCELLANEOUS PROVISIONS............................................................................47
SECTION 13.01. Successors............................................................................47
SECTION 13.02. Official Acts by Successor Corporation................................................47
SECTION 13.03. Surrender of Company Powers...........................................................47
SECTION 13.04. Address for Notices, etc..............................................................47
SECTION 13.05. Governing Law.........................................................................48
SECTION 13.06. Evidence of Compliance with Conditions Precedent......................................48
SECTION 13.07. Business Days.........................................................................48
SECTION 13.08. [Intentionally Omitted]...............................................................48
SECTION 13.09. Table of Contents, Headings, etc......................................................49
SECTION 13.10. Execution in Counterparts.............................................................49
SECTION 13.11. Separability..........................................................................49
SECTION 13.12. Assignment............................................................................49
SECTION 13.13. Acknowledgment of Rights..............................................................49
ARTICLE XIV REDEMPTION OF SECURITIES; NO SINKING FUND............................................................50
SECTION 14.01. Special Event Redemption..............................................................50
SECTION 14.02. Optional Redemption by Company........................................................50
SECTION 14.03. No Sinking Fund.......................................................................50
SECTION 14.04. Notice of Redemption; Selection of Securities.........................................51
SECTION 14.05. Payment of Securities Called for Redemption...........................................51
ARTICLE XV SUBORDINATION OF SECURITIES...........................................................................52
SECTION 15.01. Agreement to Subordinate..............................................................52
SECTION 15.02. Default on Senior Indebtedness........................................................52
SECTION 15.03. Liquidation; Dissolution; Bankruptcy..................................................53
SECTION 15.04. Subrogation...........................................................................54
SECTION 15.05. Trustee to Effectuate Subordination...................................................55
SECTION 15.06. Notice by the Company.................................................................55
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness.................................56
SECTION 15.08. Subordination May Not Be Impaired.....................................................57
ARTICLE XVI EXTENSION OF INTEREST PAYMENT PERIOD.................................................................57
SECTION 16.01. Extension of Interest Payment Period..................................................57
SECTION 16.02. Notice of Extension...................................................................58
</TABLE>
v
<PAGE>
THIS INDENTURE, dated as of July 13, 1998, between Madison
Bancshares Group, Ltd., a Pennsylvania corporation (hereinafter sometimes called
the "Company"), and Christiana Bank & Trust Company, as trustee (hereinafter
"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. The following terms have the meanings given to them in the Declaration:
(i) Clearing Agency; (ii) Delaware Trustee; (iii) Capital Security Certificate;
(iv) Property Trustee; (v) Administrative Trustees; (vi) Direct Action; and
(vii) Paying Agent. 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 Interest" shall have the meaning set forth in Section
2.06(c).
"Affiliate"shall mean, with respect to a specified Person, (a) any
Person directly or indirectly owning, controlling or holding the power to vote
10% or more of the outstanding voting securities or other ownership interests of
the specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with,
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person, and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"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.
1
<PAGE>
"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 Philadelphia, Pennsylvania, or Wilmington, Delaware are authorized or
required by law or executive order to close.
"Capital Securities" shall mean undivided beneficial interests in the
assets of Madison Capital Trust which rank pari passu with the Common Securities
issued by Madison Capital Trust; provided, however, that if an Event of Default
has occurred and is continuing, no payments in respect of Distributions on, or
payments upon liquidation, redemption or otherwise with respect to, the Common
Securities shall be made until the holders of the Capital Securities shall be
paid in full the Distributions and the liquidation, redemption and other
payments to which they are entitled.
"Capital Securities Guarantee" shall mean any guarantee that the
Company may enter into with Christiana Bank & Trust Company or other Persons
that operate directly or indirectly for the benefit of holders of the Capital
Securities.
"Commission" shall mean the United States Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act, or
if at any time after the execution of this Indenture such Commission is not
existing and performing the duties now 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 Madison Capital Trust that rank pari passu with Capital Securities
issued by Madison Capital Trust; provided, however, that if an Event of Default
has occurred and is continuing, no payments in respect of Distributions on, or
payments upon liquidation, redemption or otherwise with respect to, the Common
Securities shall be made until the holders of the Capital Securities shall be
paid in full the Distributions and the liquidation, redemption and other
payments to which they are entitled.
"Common Securities Guarantee" shall mean any guarantee that the Company
may enter into with any Person or Persons that operate directly or indirectly
for the benefit of holders of the Common Securities.
2
<PAGE>
"Common Stock" shall mean the common stock, par value $0.01 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 Madison Bancshares Group, Ltd., a Pennsylvania
corporation, and, subject to the provisions of Article X, shall include its
successors and assigns.
"Company Request" or "Company Order" shall mean a written request or
order signed in the name of the Company by the Chairman, the Chief Executive
Officer, the President, a Vice Chairman, a Vice President or Treasurer 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" shall mean the Amended and Restated Declaration of Trust
of Madison Capital Trust, dated as of July 13, 1998.
"Default" shall mean any event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in Section 16.01.
"Definitive Securities" shall mean those securities issued in fully
registered certificated form.
"Direct Action" shall have the meaning set forth in the Declaration.
"Dissolution Event" shall mean the liquidation of Madison 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 Madison
Capital Trust pro rata in accordance with the Declaration.
"Event of Default" shall mean any event specified in Section 5.01,
continued for the period of time, if any, and after the giving of the notice, if
any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 16.01.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
3
<PAGE>
"Indebtedness for Money Borrowed" shall mean any obligation of, or any
obligation guaranteed by, the Company for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments.
"Indenture" shall mean this instrument as originally executed or, if
amended as herein provided, as so amended.
"Initial Optional Redemption Date" shall mean June 30, 2003.
"Interest Payment Date" shall have the meaning set forth in Section
2.06.
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Madison Capital Trust" shall mean Madison 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.
"Maturity Date" shall mean June 30, 2028.
"Non Book-Entry Capital Securities" shall have the meaning set forth in
Section 2.05.
"Officers" shall mean any of the Chairman, a Vice Chairman, the Chief
Executive Officer, the President, a Vice President or the Treasurer of the
Company.
"Officers' Certificate" shall mean a certificate signed by two Officers
and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
be an employee of the Company, and who shall be acceptable to the Trustee.
"Optional Redemption Price" shall have the meaning set forth in Section
14.02.
"Other Debentures" shall mean all junior subordinated debentures (other
than the Securities) issued by the Company from time to time and sold to trusts
to be established by the Company (if any), in each case similar to Madison
Capital Trust.
"Other Guarantees" shall mean all guarantees to be issued by the
Company with respect to capital securities (if any) and issued to other trusts
to be established by the Company (if any), in each case similar to Madison
Capital Trust.
The term "outstanding" when used with reference to Securities, shall,
subject to the
4
<PAGE>
provisions of Section 7.04, mean, as of any particular time, all Securities
authenticated and delivered by the Trustee or an Authenticating Agent under this
Indenture, except
(a) Securities theretofore canceled by the Trustee or an
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 Fourteen provided or
provision satisfactory to the Trustee shall have been
made for giving such notice; and
(c) Securities in lieu of or in substitution for which
other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.08
unless proof satisfactory to the Company and the
Trustee is presented that any such Securities are
held by bona fide holders in due course.
"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 shall mean every
previous Security evidencing all or a portion of the same debt and as that
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 2.08 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"Principal office of the Trustee," or other similar term, shall mean
the principal office of the Trustee, at which at any particular time its
corporate trust business shall be administered.
"Property Trustee" shall have the same meaning as set forth in the
Declaration.
"Redemption Price" shall mean the Special Event Redemption Price or the
Optional Redemption Price, as the context requires.
"Regulatory Capital Event" shall mean that the Corporation 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
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laws (or any regulations thereunder) of the United States or any rules,
guidelines or policies of the Federal Reserve or any state banking regulatory
authority 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 Issue Date,
the Capital Securities do not constitute, or within 90 days of the date thereof,
will not constitute, Tier I Capital (or its then equivalent); provided, however,
that the distribution of the Junior Subordinated Debentures in connection with
the liquidation of the Trust by the Corporation shall not in and of itself
constitute a Regulatory Capital Event unless such liquidation shall have
occurred in connection with a Tax Event.
"Responsible Officer," when used with respect to the Trustee, shall
mean any officer of the Trustee with direct responsibility for the
administration of this Indenture and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Restricted Security" shall mean Securities that bear or are required
to bear the legends set forth in Exhibit A hereto.
"Rule 144A" shall mean Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or under any similar rule or regulation
hereafter adopted by the Commission.
"Securities" shall mean the Company's 9.00% Junior Subordinated
Deferrable Interest Debentures due June 30, 2028, as authenticated and issued
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.
"Security Register" shall mean (i) prior to a Dissolution Event, the
list of holders provided to the Trustee pursuant to Section 4.01, and (ii)
following a Dissolution Event, any security register maintained by a security
registrar for the Securities appointed by the Company following the execution of
a supplemental indenture providing for transfer procedures as provided for in
Section 2.07(a).
"Senior Indebtedness" shall mean all Indebtedness for Money Borrowed,
whether outstanding on the date of execution of this Indenture or hereafter
created, assumed or incurred, unless the terms thereof specifically provide that
it is not superior in right of payment to the Securities, and any deferrals,
renewals or extensions of such Senior Indebtedness.
"Special Event" shall mean either a Tax Event or a Regulatory Capital
Event.
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"Special Event Redemption Price" shall mean, with respect to any
redemption of the Securities pursuant to Section 14.01 hereof, an amount in cash
equal to 100% of the principal amount of the Securities plus any accrued and
unpaid interest thereon, including Compounded Interest and Additional Interest,
if any, to the date of such redemption.
"Subscription Agreements" shall mean the Subscription Agreements dated
July 13, 1998 among the Company, Madison Capital Trust and the subscribers named
therein.
"Subsidiary" shall mean, with respect to any Person, (i) any
corporation at least a majority of whose outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned by
such Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner. For the purposes of this
definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.
"Tax Event" shall mean the receipt by Madison 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 July 13, 1998, there is
more than an insubstantial risk that (i) Madison 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) Madison Capital
Trust is, or will be within 90 days of the date of such opinion, subject to more
than a de minimis amount of other taxes, duties or other governmental charges.
"Trustee" shall mean the Person identified as "Trustee" in the first
paragraph hereof, and, subject to the provisions of Article Six hereof, shall
also include its successors and assigns as Trustee hereunder.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939 as in
force at the date of execution of this Indenture except as provided in Section
9.03; provided, however, that, in the
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event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" shall mean, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trust Securities" shall mean the Capital Securities and the Common
Securities, collectively.
"U.S. Government Obligations" shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clause (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, agreements to which the
Company is subject or usage. Each Security shall be dated the date of its
authentication. The Securities shall be issued in denominations of $1,000 and
integral multiples thereof.
SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. 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
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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, $5,150,000 aggregate principal amount of the Securities,
except as provided in Sections 2.07, 2.08, 2.10 and 14.05.
SECTION 2.03. Form and Payment.
The Securities shall be issued in fully registered certificated form
without interest coupons. Principal of and premium, if any, and interest on the
Securities issued in certificated form will be payable, the transfer of such
Securities will be registrable and such Securities will be exchangeable for
Securities bearing identical terms and provisions at the office or agency of the
Trustee or at the office of such paying agent(s) as the Company may designate
from time to time; 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) 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. Notwithstanding the
foregoing, so long as the holder of any Securities is the Property Trustee, the
payment of the principal of and premium, if any, and interest (including
Compounded Interest and Additional Interest, if any) on such Securities held by
the Property Trustee will be made in immediately available funds at such place
and to such account as may be designated by the Property Trustee.
SECTION 2.04. Legends.
Except as permitted by subsection (b) of this Section 2.04 or as
otherwise determined by the Company in accordance with applicable law, each
Security shall bear the applicable legends relating to restrictions on transfer
pursuant to the securities laws in substantially the form set forth on Exhibit A
hereto.
SECTION 2.05. [Intentionally Omitted]
SECTION 2.06. Interest.
(a) Each Security will bear interest at the rate of 9.00% per
annum (the "Coupon Rate") from June 30, 1998, until the principal thereof
becomes due and payable, and on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the Coupon Rate, compounded semi-annually, payable
(subject to the provisions of Article Fourteen) semi-annually in arrears on June
30 and December 31 of each year (each, an "Interest Payment Date"); commencing
on December 31, 1998, 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
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shall be the first day of the month in which the relevant Interest Payment Date
falls.
(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. 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), 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 Madison Capital Trust on the outstanding Securities shall not be
reduced as a result of any additional taxes, duties and other governmental
charges to which Madison Capital Trust has become subject as a result of a
Special Event ("Additional Interest").
SECTION 2.07. Transfers.
(a) Transfer Restrictions. The Securities may not be
transferred except in blocks having an aggregate principal amount of not less
than $100,000, and except in compliance with any legend contained in Exhibit A;
unless otherwise determined by the Company in accordance with applicable law.
Upon any distribution of the Securities following a Dissolution Event, the
Company and the Trustee shall enter into a supplemental indenture pursuant to
Section 9.01 to provide for the transfer restrictions and procedures with
respect to the Securities substantially similar to those contained in the
Declaration to the extent applicable in the circumstances existing at such time.
(b) General Provisions Relating to Transfers. To permit
registrations of transfers and exchanges, the Company shall execute, and the
Trustee shall authenticate, Definitive Securities. All Definitive Securities
issued upon any registration of transfer of Definitive 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 surrendered
upon such registration of transfer.
No service charge shall be made to a holder for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith.
The Company shall not be required to (i) issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption or any
notice of selection of Securities for redemption under Article Fifteen 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.
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Prior to due presentment for the registration of a transfer of
any Security, the Company, the Trustee and any agent of the Company or the
Trustee may deem and treat the Person in whose name any Security is registered
as the absolute owner of such Security for the purpose of receiving payment of
principal of and premium, if any, and interest on such Securities, and neither
the Company or the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 2.08. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Security, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements for
replacements of Securities are met. An indemnity bond 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 or any authenticating agent from any
loss that any of them may suffer if a Security is replaced. The Company or the
Trustee may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Company and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Securities duly issued hereunder.
SECTION 2.09. Treasury Securities.
In determining whether the holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only
Securities that a Responsible Officer of the Trustee actually knows to be so
owned shall be so considered.
SECTION 2.10. 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
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prepared without unreasonable delay. The Definitive Securities shall be printed,
typewritten, lithographed or engraved, or provided by any combination thereof,
or in any other manner permitted by the rules and regulations of any applicable
securities exchange, all as determined by the officers executing such Definitive
Securities. After the preparation of Definitive Securities, the temporary
Securities shall be exchangeable for Definitive Securities upon surrender of the
temporary Securities at the office or agency maintained by the Company for such
purpose pursuant to Section 3.02 hereof, without charge to the holder. Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery in exchange therefor, the same aggregate principal amount of Definitive
Securities of authorized denominations. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as Definitive Securities.
SECTION 2.11. 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 destroy canceled 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. All canceled
Securities not destroyed by the Trustee shall be delivered to the Company.
SECTION 2.12. 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
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be more than 15 nor less than ten days prior to the date of the proposed payment
and not less than ten days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such special
record date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the special record
date therefor to be mailed, first class postage prepaid, to each Securityholder
at his or her address as it appears in the Security Register, not less than ten
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 Trustees of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
SECTION 2.13. CUSIP Numbers.
The Company in issuing the Securities may use CUSIP numbers (if then
generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Securityholders; provided, that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees, for the benefit of the holders of the
Securities, that it will duly and punctually pay or cause to be paid the
principal of and premium, if any, and interest on the Securities at the place,
at the respective times and in the manner provided herein.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remains outstanding, the Company will
maintain 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
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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 written notice to the Trustee, any such office or agency for
all of the above purposes shall be the office or agency of the Trustee. In case
the Company shall fail to give such written 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 corporate trust 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, where the Securities may be
presented for 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.
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 provisions of this Section 3.04,
(i) that it will hold all sums held by it as
such agent for the payment of the principal
of and premium, if any, or interest on the
Securities (whether such sums have been paid
to it by the Company or by any other obligor
on the Securities of such series) in trust
for the benefit of the holders of the
Securities; and
(ii) that it will give the Trustee notice of any
failure by the Company (or by any other
obligor on the Securities) to make any
payment of the principal of and premium or
interest on the Securities when the same
shall be due and payable.
(b) If the Company shall act as its own paying agent, it will,
on or before each due date of the principal of and premium, if any, or interest
on the Securities, set aside, segregate and hold in trust for the benefit of the
holders of the Securities a sum sufficient to pay such principal, premium or
interest so becoming due and will notify the Trustee of any failure to take such
action and of any failure by the Company (or by any other obligor under the
Securities) to make any payment of the principal of and premium, if any, or
interest on the Securities when the same shall become due and payable.
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(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
the Securities by 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, with respect to each fiscal
year, on or before 120 days after the end of each fiscal 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 (i) that in the course of the performance by the
signers of their duties as officers of the Company they would normally have
knowledge of any default by the Company in the performance of any covenants
contained herein and (ii) whether or not they have knowledge of any such default
and, if they do have such knowledge, specifying each such default of which the
signers have knowledge and the nature thereof.
SECTION 3.06. Compliance with Consolidation Provisions.
The Company will not, while any of the Securities remain outstanding,
consolidate with or merge into any other Person, or sell or convey all or
substantially all of its property to any other Person, unless the provisions of
Article Ten 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, interest or premium, if any, on or repay or
repurchase or redeem any debt securities of the Company (including any 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
under any 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, the Common Stock, (b) any declaration of a dividend in connection with the
implementation of a shareholder'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
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the Capital Securities Guarantee, (d) as a result of a reclassification of the
Company's capital stock or the exchange or the conversion of one class or series
of the Company's capital stock for another class or series of the Company's
capital stock, (e) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged and (f)
purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Company's benefit plans for its directors, officers or
employees or any of the Company's dividend reinvestment plans) if at such time
(1) there shall have occurred any event of which the Company has actual
knowledge that (A) constitutes, or with the giving of notice or the lapse of
time, or both, would constitute, an Event of Default and (B) in respect of which
the Company shall not have taken reasonable steps to cure, (2) if such
Securities are held by the Company shall be in default with respect to its
payment of any obligations under the Capital Securities Guarantee or (3) the
Company shall have given notice of its election to exercise its right to extend
the interest payment period pursuant to Section 16.01 and any such extension
shall have commenced.
SECTION 3.08. Covenants as to Madison Capital Trust.
In the event Securities are issued to Madison Capital Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
Madison Capital Trust, for so long as such Trust Securities remain outstanding,
the Company will (i) maintain 100% direct ownership of the Common Securities of
Madison Capital Trust; provided, however, that any successor of the Company,
permitted pursuant to Article Ten, may succeed to the Company's ownership of
such Common Securities, (ii) use its reasonable efforts to cause Madison Capital
Trust (a) to remain a business trust, except in connection with a distribution
of Securities, the redemption of all of the Trust Securities of Madison Capital
Trust or certain mergers, consolidations or amalgamations, each as permitted by
the Declaration, and (b) to continue to be treated as a grantor trust and not as
an association taxable as a corporation for United States federal income tax
purposes and (iii) use its reasonable efforts to cause each holder of Trust
Securities to be treated as owning an individual beneficial interest in the
Securities.
SECTION 3.09. Payment of Expenses.
In connection with the offering, sale and issuance of the Securities to
the Madison Capital Trust and in connection with the sale of the Trust
Securities by the Madison 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 initial purchasers
payable pursuant to the Purchase Agreement and compensation of the Trustee in
accordance with the provisions of Section 6.06;
(b) pay all costs and expenses of the Madison Capital Trust
(including, but not limited to, costs and expenses relating to the organization
of the Madison Capital Trust, the offering, sale and issuance of the Trust
Securities (including commissions to the initial
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purchasers in connection therewith), the fees and expenses of the Property
Trustee and the Delaware Trustee, the costs and expenses relating to the
operation of Madison 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 Madison
Capital Trust assets;
(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 Madison Capital Trust or its assets) and all
liabilities, costs and expenses with respect to such taxes of Madison Capital
Trust; and
(e) pay all other fees, expenses, debts and obligations (other
than the Trust Securities) related to Madison 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.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE
TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish or cause to be
furnished to the Trustee:
(a) on a semi-annual basis on each regular record date for the
Securities, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Securityholders as of such record date; and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a
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date not more than 15 days prior to the time such list is furnished;
provided, however, 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:
(i) 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
(ii) inform such applicants as to the approximate
number of holders of all Securities, whose
names and addresses appear in the
information preserved at the time by the
Trustee in accordance with the provisions of
subsection (a) of this Section 4.02, and as
to the approximate cost of mailing to such
Securityholders the form of proxy or other
communication, if any, specified in such
application.
If the Trustee shall elect not to afford such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder whose name and address appears in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.02 a copy of the form of proxy or
other communication which is specified in such request with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material to
be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would
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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 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 of the 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 the Commission may from time to time by rules and regulations prescribe) that
the Company may be required to file with the Commission pursuant to Section 13
or Section 15(d) of the Exchange Act; or, if the Company is not required to file
information, documents or reports pursuant to either of such sections, then to
file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports that may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee
and the Commission, in accordance with the rules and regulations prescribed from
time to time by the Commission, such additional information, documents and
reports with respect to compliance by the Company with the conditions and
covenants provided for in this Indenture as may be required from time to time by
such rules and regulations.
(c) The Company covenants and agrees to transmit by mail 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
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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).
(e) So long as is required for an offer or sale of the
Securities to qualify for an exemption under Rule 144A under the Securities Act,
the Company shall, upon request, provide the information required by clause
(d)(4) thereunder to each holder and to each beneficial owner and prospective
purchaser of Securities identified by any holder of Restricted Securities,
unless such information is furnished to the Commission pursuant to Section 13 or
15(d) of the Exchange Act.
SECTION 4.04. Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the
Trustee shall, within sixty days after each May 15 following the date of this
Indenture, commencing May 15, 1999, deliver to Securityholders a brief report,
dated as of such May 15, which complies with the provisions of such Section
313(a) subject to all such information being provided to the Trustee by the
Company.
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with each stock
exchange, if any, upon which the Securities are listed, with the Commission and
with the Company. The Company will promptly notify the Trustee when the
Securities are listed on any stock exchange.
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF
DEFAULT
SECTION 5.01. Events of Default.
One or more of the following events of default shall constitute an
Event of Default hereunder (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Security
or Other
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Debenture 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;
(b) default in the payment of all or any part of the principal
of or premium, if any, on any Security or Other Debenture as and when the same
shall become due and payable either at maturity, upon redemption, by declaration
of acceleration of maturity or otherwise;
(c) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Company in this Indenture (other
than a covenant or warranty a default in the performance of which or the breach
of which is elsewhere in this Section specifically dealt with), and continuance
of such default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the holders of at least 25% in aggregate principal amount of
the outstanding Securities, a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder;
(d) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Company or for any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days; or
(e) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due.
If an Event of Default with respect to Securities at the time
outstanding occurs and is continuing, then in every such case the Trustee or the
holders of not less than 25% in aggregate principal amount of the Securities
then outstanding may declare the principal amount of all Securities to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the holders of the outstanding Securities), and upon any
such declaration the same shall become immediately due and payable.
The foregoing provisions, however, are subject to the condition that,
if at any time after the principal of the Securities shall have been so declared
due and payable, and before any judgment or decree for the payment of the moneys
due shall have been obtained or entered as
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hereinafter provided, (i) the Company shall pay or shall deposit with the
Trustee a sum sufficient to pay (A) all matured installments of interest upon
all the Securities and the principal of and premium, if any, on any and all
Securities that shall have become due otherwise than by acceleration (with
interest upon such principal and premium, if any, and, to the extent that
payment of such interest is enforceable under applicable law, on overdue
installments of interest, at the same rate as the rate of interest specified in
the Securities to the date of such payment or deposit) and (B) such amount as
shall be sufficient to cover reasonable compensation to the Trustee and each
predecessor Trustee, their respective agents, attorneys and counsel, and all
other expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee except as a result of negligence or bad faith, and
(ii) any and all Events of Default under the Indenture shall have been cured,
waived or otherwise remedied as provided herein, then, in every such case, the
holders of a majority in aggregate principal amount of the Securities then
outstanding, by written notice to the Company and to the Trustee, may rescind
and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission and 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 upon any of the Securities as and when
the same shall become due and payable, and such default shall have continued for
a period of 30 days, or (b) in case default shall be made in the payment of the
principal of or premium, if any, on any of the Securities as and when the same
shall have become due and payable, whether at maturity of the Securities or upon
redemption or by declaration or otherwise, then, upon demand of the Trustee, the
Company will pay to the Trustee, for the benefit of the holders of the
Securities, the whole amount that then shall have become due and payable on all
such Securities for principal and premium, if any, or interest, or both, as the
case may be, with interest upon the overdue principal and premium, if any, and
(to the extent that payment of such interest is enforceable under applicable law
and, if the Securities are held by Madison Capital Trust or a trustee of such
trust, without duplication of any other amounts paid by Madison Capital Trust or
trustee in respect thereof) upon the overdue installments of interest 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 expenses or liabilities incurred by the Trustee hereunder other than through
its negligence or bad faith.
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In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the
Securities and collect in the manner provided by law out of the property of the
Company or any other obligor on the Securities wherever situated the moneys
adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Securities under
Title 11, United States Code, or any other applicable law, or in case a receiver
or trustee shall have been appointed for the property of the Company or such
other obligor, or in the case of any other similar judicial proceedings relative
to the Company or other obligor upon the Securities, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 5.02,
shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount of principal
and interest owing and unpaid in respect of the Securities and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee and each
predecessor Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee, except as a result of negligence or
bad faith) 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 expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee except as a result of negligence or bad faith.
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
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such proceeding.
All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof on any trial or
other proceeding relative thereto, and any such suit or proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall be for the ratable benefit of the holders of the
Securities.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Securities, and it shall not be necessary to make any holders of the
Securities parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee shall be applied in the order
following, at the date or dates fixed by the Trustee for the distribution of
such moneys, upon presentation of the Securities in respect of which moneys have
been collected, and stamping thereon the payment, if only partially paid, and
upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section
6.06, including the costs and expenses of collection applicable to the
Securities and reasonable compensation to the Trustee, its agents, attorneys and
counsel, and of all other expenses and liabilities incurred, and all advances
made, by the Trustee except as a result of its negligence or bad faith;
Second: To the payment of all Senior Indebtedness of the Company if and
to the extent required by Article Fifteen;
Third: In case the principal of the outstanding Securities in respect
of which moneys have been collected shall not have become due and be unpaid, to
the payment of the amounts then due and unpaid upon Securities for principal of
(and premium, if any) and interest on the Securities, in respect of which or for
the benefit of which money has been collected, ratably, without preference of
priority of any kind, according to the amounts due on such Securities for
principal (and premium, if any) and interest, respectively; and
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
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with respect to this Indenture or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless such holder previously shall have
given to the Trustee written notice of an Event of Default and of the
continuance thereof with respect to the Securities specifying such Event of
Default, as hereinbefore provided, and unless also the holders of not less than
25% in aggregate principal amount of the Securities then outstanding shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity shall have
failed to institute any such action, suit or proceeding, it being understood and
intended, and being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Trustee, that no one or more
holders of Securities shall have any right in any manner whatever by virtue of
or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of any other holder of Securities, or to obtain or seek to
obtain priority over or preference to any other such holder, or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all holders of Securities.
Notwithstanding any other provisions in this Indenture, however, the
right of any holder of any Security to receive payment of the principal of
(premium, if any) and interest on such Security, on or after the same shall have
become due and payable, or to institute suit for the enforcement of any such
payment, shall not be impaired or affected without the consent of such holder,
and by accepting a Security hereunder it is expressly understood, intended and
covenanted by the taker and holder of every Security with every other such taker
and holder and the Trustee, that no one or more holders of Securities shall have
any right in any manner whatsoever by virtue or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of the holders of any
other Securities, or to obtain or seek to obtain priority over or preference to
any other such holder, or to enforce any right under this Indenture, except in
the manner herein provided and for the equal, ratable and common benefit of all
holders of Securities. For the protection and enforcement of the provisions of
this Section, each and every Securityholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
The Company and the Trustee acknowledge that pursuant to the
Declaration, the holders of Capital Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to commence a
Direct Action with respect to any Event of Default under this Indenture and the
Securities.
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
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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 Five 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 Five or
by law to the Trustee or to the Securityholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders.
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; provided,
however, that (subject to the provisions of Section 6.01) the Trustee shall have
the right to decline to follow any such direction if the Trustee shall determine
that the action so directed would be unjustly prejudicial to the holders not
taking part in such action or proceeding so directed, if the Trustee being
advised by counsel determines that the action or proceeding so directed may not
lawfully be taken or if the Trustee in good faith by its board of directors or
trustees, executive committee, or a trust committee of directors or trustees
and/or Responsible Officers shall determine that the action or proceedings so
directed would involve the Trustee in personal liability. Prior to any
declaration accelerating the maturity of the Securities, the holders of a
majority in aggregate principal amount of the Securities at the time outstanding
may on behalf of the holders of all of the Securities waive any past default or
Event of Default and its consequences, except a default (a) in the payment of
principal of or premium, if any, or interest on any of the Securities or (b) in
respect of covenants or provisions hereof that 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
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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; no such waiver, however, 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 Trustee's actual knowledge
of the occurrence of a default with respect to the Securities, mail to all
Securityholders, as the names and addresses of such holders appear upon the
Security register, notice of all defaults known to the Trustee, unless such
defaults shall have been cured before the giving of such notice (the term
"defaults" for the purpose of this Section 5.08 being hereby defined to be the
events specified in clauses (a), (b), (c), (d) and (e) of Section 5.01, not
including periods of grace, if any, provided for therein, and irrespective of
the giving of written notice specified in clause (c) of Section 5.01); provided
that, except in the case of default in the payment of the principal of or
premium, if any, or interest 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 determines in good faith that the withholding of such
notice is in the interests of the Securityholders; provided further, that in the
case of any default of the character specified in Section 5.01(c) no such notice
to Securityholders shall be given until at least 60 days after the occurrence
thereof, but shall be given within 90 days after such occurrence.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such 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;
provided, however, that the provisions of this Section 5.09 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders, holding in the aggregate more than
10% in aggregate principal amount of the Securities outstanding, or to any suit
instituted by any Securityholder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any Security against the
Company on or after the same shall have become due and payable.
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ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of the 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 that 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 (that has not been cured or
waived) the Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default which may have occurred:
(i) 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
(ii) 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; 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 Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Officers of the Trustee, 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.
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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, even 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 and that adequate indemnity against such risk is not
reasonably assured to it.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely, and shall be protected in acting or
refraining from acting, upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, note, debenture or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein may be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically prescribed),
and any Board Resolution may be evidenced to the Trustee by a copy thereof
certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection and
any advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered omitted by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; provided,
however, that nothing contained herein shall 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 person would exercise or use under the circumstances in the conduct of
his own affairs;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, coupon or other paper or document, unless
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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 either (1) a
Responsible Officer shall have actual knowledge of such Default or Event of
Default or (2) written notice of such Default or Event of Default shall have
been given to the Trustee by the Company or any other obligor on the Securities
or by any holder of the Securities; and
(i) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith, without negligence or willful
misconduct and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Indenture.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in the
certificate of authentication of the Trustee or the Authenticating Agent) shall
be taken as the statements of the Company, and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the same.
The Trustee and the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Securities. The Trustee and
the Authenticating Agent shall not be accountable for the use or application by
the Company of any Securities or the proceeds of any Securities authenticated
and delivered by the Trustee or the Authenticating Agent in conformity with the
provisions of this Indenture.
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.
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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.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company, as borrower, covenants and agrees to pay to the Trustee
from time to time, and the Trustee shall be entitled to, such compensation as
shall be agreed to in writing between the Company and the Trustee (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust), and the Company will pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith. The Company also covenants to indemnify each of the
Trustee or any predecessor Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any and all loss, damage,
claim, liability or expense including taxes (other than taxes based on the
income of the Trustee) incurred without negligence or bad faith on the part of
the Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim of liability in the premises. The obligations of the
Company under this Section 6.06 to compensate and indemnify the Trustee and to
pay or reimburse the Trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder. Such additional indebtedness shall
be secured by a lien prior to that of the Securities upon all property and funds
held or collected by the Trustee as such, except funds held in trust for the
benefit of the holders of particular Securities.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 5.01(d) or Section 5.01(e), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the resignation or removal
of the Trustee and the defeasance or other termination of this Indenture.
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
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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 five million U.S. dollars ($5,000,000 ) and subject to supervision or
examination by federal, state, territorial, or District of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 6.09 the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
The Company may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Company, serve as
Trustee.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice of such resignation
to the Company and by mailing notice thereof to the holders of the Securities at
their addresses as they shall appear on the Security register. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee or trustees by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 60 days after the mailing of such notice of
resignation to the affected Securityholders, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor trustee,
or any Securityholder who has been a bona fide holder of a Security for at least
six months may, subject to the
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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 --
(i) 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;
(ii) the Trustee shall cease to be eligible in
accordance with the provisions of Section
6.09 and shall fail to resign after written
request therefor by the Company or by any
such Securityholder; or
(iii) the Trustee shall become incapable of
acting, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or
of its property shall be appointed, or any
public officer shall take charge or control
of the Trustee or of its property or affairs
for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee, or, subject to the provisions of Section 5.09, any
Securityholder who has been a bona fide holder of a Security for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may 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 ten days after such nomination the Company objects
thereto; provided, however, that if no successor trustee shall have been so
appointed and shall have accepted appointment within 30 days after such removal,
the Trustee so removed or any Securityholder, upon the terms and conditions and
otherwise as in subsection (a) of this Section 6.10 provided, may petition any
court of competent jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section 6.10
shall become effective upon acceptance of appointment by the successor trustee
as provided in Section 6.11.
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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; provided,
however, that 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. Successor 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. If at such time any of the Securities shall not have been
authenticated, any successor to the Trustee may authenticate such Securities
either in the name of any predecessor hereunder or in the name of the successor
trustee, and in all such cases such
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certificates shall have the full force that 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. [Intentionally Omitted]
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 registration of 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 five
million U.S. dollars ($5,000,000) and being subject to supervision or
examination by federal, state, territorial or District of Columbia authority. If
such corporation publishes reports of condition at least annually pursuant to
law or the requirements of such authority, then for the purposes of this Section
6.14 the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of such Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 6.14, without the execution or filing of any paper or any further act on
the part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this Section 6.14, the
Trustee may, and upon the request of the Company shall, promptly appoint a
successor
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Authenticating Agent eligible under this Section 6.14, shall give written notice
of such appointment to the Company and shall mail notice of such appointment to
all Securityholders as the names and addresses of such holders appear on the
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all rights, powers, duties and
responsibilities of its predecessor hereunder, with like effect as if originally
named as Authenticating Agent herein.
The Company, as borrower, agrees to pay to any Authenticating Agent
from time to time reasonable compensation for its services. Any Authenticating
Agent shall have no responsibility or liability for any action taken by it as
such in accordance with the directions of the Trustee.
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, (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 Eight or
(c) by a combination of such instrument or instruments and any such record of
such a meeting of such Securityholders.
If the Company shall solicit from the Securityholders any request,
demand, authorization, direction, notice, consent, waiver or other action, the
Company may, at its option, as evidenced by an Officers' Certificate, fix in
advance a record date for the determination of Securityholders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or other
action, but the Company shall have no obligation to do so. If such a record date
is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action may be given before or after the record date, but only
the Securityholders of record at the close of business on the record date shall
be deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of outstanding Securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
outstanding Securities shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such
Securityholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than six
months after the record date.
SECTION 7.02. Proof of Execution by Securityholders.
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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 premium, if any, and 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 that 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 that a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded. Securities so owned
that have been pledged in good faith may be regarded as outstanding for the
purposes of this Section 7.04 if the pledgee shall establish to the satisfaction
of the Trustee the pledgee's right to vote such Securities and that the pledgee
is not the Company or any such other obligor or person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any such other obligor. In the case of a dispute as to such right,
any decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.
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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 Security 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) the
serial number of which is shown by the evidence to be included in the Securities
the holders of which have consented to such action may, by filing written notice
with the Trustee at its principal office and upon proof of holding as provided
in Section 7.02, revoke such action so far as concerns such Security (or so far
as concerns the principal amount represented by any exchanged or substituted
Security). Except as aforesaid any such action taken by the holder of any
Security shall be conclusive and binding upon such holder and upon all future
holders and owners of such Security, and of any Security issued in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon such Security or any Security issued in exchange or
substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purpose of Meetings.
A meeting of Securityholders may be called at any time and from time to
time pursuant to the provisions of this Article Eight 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 Five;
(b) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article Six;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of such
Securities under any other provision of this Indenture or under applicable law.
SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders to take
any action specified in Section 8.01, to be held at such time and at such place,
as the Trustee shall
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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 Security 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 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
be (a) 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 deems appropriate.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 8.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 8.04, at any meeting each holder
of Securities or proxy therefor shall be entitled to one vote for each $1,000
principal amount of Securities held or
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represented by him; provided, however, 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, whether or not constituting a
quorum, and the meeting may be held as so adjourned without further notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 8.02. The record shall show the serial numbers of the
Securities voting in favor of or against any resolution. The record shall be
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one of the duplicates shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. The holders of the Securities shall
vote for all purposes as a single class.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders.
The Company 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
Ten hereof;
(b) to add to the covenants of the Company such further
covenants,
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restrictions or conditions for the protection of the Securityholders as the
Board of Directors and the Trustee shall consider to be for the protection of
the Securityholders, and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants, restrictions or
conditions a default or an Event of Default permitting the enforcement of all or
any of the remedies provided in this Indenture as herein set forth; provided,
however, that in respect of any such additional covenant, restriction or
condition such amendment may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;
(c) to provide for the issuance under this Indenture of
Securities in coupon form (including Securities registrable as to principal
only) and to provide for exchangeability of such Securities with the Securities
issued hereunder in fully registered form and to make all appropriate changes
for such purpose;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters or
questions arising under this Indenture; provided, that any such action shall
not, as evidenced by an Opinion of Counsel delivered to the Trustee, materially
adversely affect the interests of the holders of the Securities;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities;
(f) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends, if any, to be
placed on Securities, and all other matters required pursuant to Section 2.07 or
otherwise necessary, desirable or appropriate in connection with the issuance of
Securities to holders of Capital Securities in the event of a distribution of
Securities by Madison Capital Trust following a Dissolution Event;
(g) to qualify or maintain qualification of this Indenture
under the Trust Indenture Act; or
(h) to make any change that does not adversely affect the
rights of any Securityholder in any material respect.
The Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture to effect such amendment, to make any
further appropriate agreements and stipulations which may be therein contained
and to accept the conveyance, transfer and assignment of any property
thereunder, but the Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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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 hereby (i) extend the Maturity Date of any Security, or reduce the rate
or extend the time of payment of interest thereon (except as contemplated by
Article Sixteen), or reduce the principal amount thereof, or change any of the
redemption provisions applicable thereto, or make the principal thereof or any
interest or premium thereon payable in any coin or currency other than that
provided in the Securities, or impair or affect the right of any Securityholder
to institute suit for payment thereof, or (ii) reduce the aforesaid percentage
of Securities the holders of which are required to consent to any such amendment
to the Indenture; provided, however, that if the Securities are held by Madison
Capital Trust, such amendment shall not be effective until the holders of a
majority in liquidation amount of Trust Securities shall have consented to such
amendment; provided, further, that if the consent of the holder of each
outstanding Security is required, such amendment shall not be effective until
each holder of the Trust Securities shall have consented to such amendment.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any supplemental indenture affecting such
amendment, and upon the filing with the Trustee of evidence of the consent of
Securityholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture, unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, prepared by the
Company, setting forth in general terms the substance of such supplemental
indenture, to the Securityholders as their names and addresses appear upon the
Security Register. Any failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section 9.02 to
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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. [Intentionally Omitted]
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 Nine 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 an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant to this Article is
authorized or permitted by, and conforms to, the terms of this Article and that
it is proper for the Trustee under the provisions of this Article to join in the
execution thereof.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Company with or into any other Person
(whether or not affiliated with the Company, as the case may be), or successive
consolidations or mergers in which the Company, as the case may be, or its
successor or successors shall be a party or parties, or shall prevent any sale,
conveyance, transfer or lease of the property and assets as an entirety or
substantially as an entirety to any Person if the securities issued in exchange
for the Securities in such transaction 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;
provided, however, that the Company shall not consolidate with or merge into any
other Person or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Company or sell, convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety to the
Company,
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unless (i) in case the Company consolidates with or merges into another Person
or conveys or transfers its properties and assets substantially as an entirety
to any Person, the successor Person is organized under the laws of the United
States or any State or the District of Columbia, and such successor Person
expressly assumes the Company's obligations on the Securities and (ii)
immediately after giving effect thereto, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have occurred and be continuing.
SECTION 10.02. 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 Ten complies with the provisions of this
Article Ten.
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 or paid as
provided in Section 2.08) and not theretofore canceled, or (b) all the
Securities not theretofore canceled 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 or paid as provided in Section 2.08) not theretofore canceled
or delivered to the Trustee for cancellation, including principal and premium,
if any, and interest due or to become due to the Maturity Date or redemption
date, as the case may be, but excluding, however, the amount of any moneys for
the payment of principal of or premium, if any, or interest on the Securities
(i) theretofore repaid to the Company in accordance with the provisions of
Section 11.04, or (ii) paid to any State or to the District of Columbia pursuant
to its unclaimed property or similar laws, and if in either case the Company
shall also pay or cause to be paid all other sums payable hereunder by the
Company, then this Indenture shall cease to be of further effect except for the
provisions of Sections 2.02, 2.07, 2.08, 3.01, 3.02, 3.04, 6.06, 6.10 and 11.04
hereof 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 to
the effect that all conditions to the satisfaction and discharge of this
Indenture pursuant to this Section 11.01 have been satisfied, 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
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reimburse the Trustee for any costs or expenses thereafter reasonably and
properly incurred by the Trustee in connection with this Indenture or the
Securities.
SECTION 11.02. Deposited Moneys and U.S. Government Obligations to
be Held in Trust by Trustee.
Subject to the provisions of Section 11.04, all moneys and U.S.
Government Obligations deposited with the Trustee pursuant to Sections 11.01 or
11.05 shall be held in trust and applied by it to the payment, either directly
or through any paying agent (including the Company if acting as its own paying
agent), to the holders of the particular Securities for the payment of which
such moneys or U.S. Government Obligations have been deposited with the Trustee,
of all sums due and to become due thereon for principal, premium, if any, and
interest.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 11.05 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the holders of outstanding Securities.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys then
held by any paying agent of the Securities (other than the Trustee) shall, upon
written demand of the Company, be repaid to it or paid to the Trustee, and
thereupon such paying agent shall be released from all further liability with
respect to such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying agent
for payment of the principal of or premium, if any, or interest on Securities
and not applied but remaining unclaimed by the holders of Securities for two
years after the date upon which the principal of or premium, if any, or interest
on such Securities, as the case may be, shall have become due and payable, shall
be repaid to the Company by the Trustee or such paying agent on written demand;
and the holder of any of the Securities shall thereafter look only to the
Company for any payment which such holder may be entitled to collect and all
liability of the Trustee or such paying agent with respect to such moneys shall
thereupon cease.
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S. Government
Obligations.
The Company shall be deemed to have been Discharged (as defined below)
from its respective obligations with respect to the Securities on the 91st day
after the applicable conditions set forth below have been satisfied with respect
to the Securities any time after the applicable conditions set forth below have
been satisfied:
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(a) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee or the Defeasance Agent (as defined below) as trust
funds in trust, specifically pledged as security for, and dedicated solely to,
the benefit of the holders of the Securities (i) money in an amount, or (ii)
U.S. Government Obligations which through the payment of interest and principal
in respect thereof in accordance with their terms will provide, not later than
one day before the due date of any payment, money in an amount, or (iii) a
combination of (i) and (ii), sufficient, in the opinion (with respect to (ii)
and (iii)) of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee and the
Defeasance Agent, if any, to pay and discharge each installment of principal of
and interest and premium, if any, on the outstanding Securities on the dates
such installments of principal, interest or premium are due;
(b) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such deposit;
(c) 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 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; and
(d) the Company has delivered to the Trustee and the
Defeasance Agent, if any, an Officers' Certificate and an Opinion of Counsel
each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.
"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 (i)
the rights of holders of Securities to receive, from the trust fund described in
clause (a) above, payment of the principal of and the premium, if any, and
interest on the Securities when such payments are due; (ii) the Company's
obligations with respect to the Securities under Sections 2.07, 2.08, 5.02 and
11.04; and (iii) 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
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Trustee to act hereunder. In the event such a Defeasance Agent is appointed
pursuant to this Section, the following conditions shall apply:
(i) 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;
(ii) 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.
SECTION 11.06. Reinstatement.
If the Trustee or any Defeasance Agent is unable to apply any money in
accordance with Section 11.05 by reason of any legal proceeding or by reason of
any order or judgement of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to 11.05 until such time as the Trustee
or any Defeasance Agent is permitted to apply all such money in accordance with
Section 11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND
DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corporate
Obligations.
No recourse for the payment of the principal of or premium, if any, or
interest on any Security, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture, or in any Security, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor Person to the Company, either directly or through
the Company under 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.
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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.
SECTION 13.04. Address for Notices, etc.
Any notice or demand that by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the holders of
Securities on the Company may be given or served by being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
(until another address is filed by the Company with the Trustee for the purpose)
to the Company, The Madison Bank Building, 1767 Sentry Parkway West, Blue Bell,
PA 19422 Attention: E. Cheryl Hinkle. Any notice, direction, request or demand
by any Securityholder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at the
office of the Trustee, addressed to the Trustee, Christiana Bank & Trust
Company, Greenville Centre, 3801 Kennett Pike, Greenville, DE 19807, Attention:
Robert G. Elder.
SECTION 13.05. Governing Law.
This Indenture and each Security shall be deemed to be a contract made
under the laws of the Commonwealth of Pennsylvania, and for all purposes shall
be governed by and construed in accordance with the laws of said Commonwealth,
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
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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 shall include (a) a statement that the person
making such certificate or opinion has read such covenant or condition; (b) 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; (c) 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 (d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 13.07. Business Days.
In any case where the date of payment of principal of or premium, if
any, or interest on the Securities will not be a Business Day, the payment of
such principal of or premium, if any, or interest on the Securities need not be
made on such date but may be made on the next succeeding Business Day, with the
same force and effect as if made on the date of payment and no interest shall
accrue for the period from and after such date.
SECTION 13.08. [Intentionally Omitted]
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.
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The Company will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly owned Subsidiary of the Company, provided that, in the event of any such
assignment, the Company, as the case may be, will remain 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
Madison 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 Madison Capital Trust, any holder of Capital
Securities may institute legal proceedings directly against the Company to
enforce such Property Trustee's rights under this Indenture without first
instituting any legal proceedings against such Property Trustee or any other
Person. Notwithstanding the foregoing, if an Event of Default has occurred and
is continuing and such event is attributable to the failure of the Company to
pay principal of or premium, if any, or interest on the Securities when due, the
Company acknowledges that a holder of Capital Securities may directly institute
a Direct Action against the Company for enforcement of payment to such holder of
the principal of or premium, if any, or interest on the Securities having a
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such holder on or after the respective due date specified in the
Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES; NO SINKING FUND
SECTION 14.01. Special Event Redemption.
Subject to the provisions of this Article Fourteen, if a Special Event
has occurred and is continuing prior to the Initial Optional Redemption Date,
then the Company shall have the right, 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), within 90 days following the occurrence of such Special Event at
the Special Event Redemption Price. Following a Special Event, the Company shall
take such action as is necessary to promptly determine the Special Event
Redemption Price. The Special Event Redemption Price shall be paid prior to
12:00 noon, Philadelphia time, on the date of such redemption or such earlier
time as the Company determines, provided that the Company shall deposit with the
Trustee an amount sufficient to pay the Special Event Redemption Price by 10:00
a.m., Philadelphia time, on the date such Special Event Redemption Price is to
be paid.
SECTION 14.02. Optional Redemption by Company.
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(a) Subject to the provisions of this Article Fourteen, the
Company shall have the right to redeem the Securities, in whole or in part, from
time to time, on or after the Initial Optional Redemption Date, at a redemption
price equal to 100% of the principal amount of the Securities, plus, in each
case, accrued and unpaid interest thereon (including Additional Interest and
Compounded Interest, if any) to the applicable date of redemption (the "Optional
Redemption Price").
If the Securities are only partially redeemed pursuant to this
Section 14.02, the Securities will be redeemed pro rata or by lot or by any
other method as the Trustee shall determine. The Optional Redemption Price shall
be paid prior to 12:00 noon, Philadelphia time, on the date of such redemption
or at such earlier time as the Company determines, provided that the Company
shall deposit with the Trustee an amount sufficient to pay the Optional
Redemption Price by 10:00 a.m., Philadelphia time, on the date such Optional
Redemption Price is to be paid.
(b) Notwithstanding the first sentence of Section 14.02(a),
upon the entry of an order for dissolution of the Madison 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 the Initial
Optional Redemption Date, at the applicable optional redemption price set forth
in Section 14.02(a) and otherwise in accordance with this Article Fourteen.
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, if any,
of the Securities to be redeemed, the date fixed for redemption, the redemption
price at which the Securities are to be redeemed (or the method by which such
redemption price is to be calculated), the place or places of payment that
payment will be made upon presentation and surrender of the Securities, that
interest accrued to the date fixed for redemption will be paid as specified in
said notice, and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to
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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.
Prior to 10:00 a.m., Philadelphia time, on the redemption date
specified in the notice of redemption given as provided in this Section, the
Company will deposit with the Trustee or with one or more paying agents an
amount of money sufficient to redeem on the redemption date all the Securities
so called for redemption at the appropriate Redemption Price, together with
accrued interest to the date fixed for redemption.
The Company will give the Trustee notice not less than 45 days prior to
the redemption date as to the aggregate principal amount of Securities to be
redeemed and the Trustee shall select, in such manner as in its sole discretion
it shall deem appropriate and fair, the Securities or portions thereof (in
integral multiples of $1,000, except as otherwise set forth in the applicable
form of Security) to be redeemed.
SECTION 14.05. Payment of Securities Called for Redemption.
If notice of redemption has been given as provided in Section 14.04,
the Securities or portions of Securities with respect to which such notice has
been given shall become due and payable on the date and at the place or places
stated in such notice at the applicable Redemption Price, together with interest
accrued to the date fixed for redemption (subject to the rights of holders of
Securities on the close of business on a regular record date in respect of an
Interest Payment Date occurring on or prior to the redemption date), and on and
after said date (unless the Company shall default in the payment of such
Securities at the Redemption Price, together with interest accrued to said date)
interest on the Securities or portions of Securities so called for redemption
shall cease to accrue. On presentation and surrender of such Securities at a
place of payment specified in said notice, the said Securities or the specified
portions thereof shall be paid and redeemed by the Company at the applicable
Redemption Price, together with interest 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.
ARTICLE XV
SUBORDINATION OF SECURITIES
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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 Fifteen, 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 premium, if any, and
interest on all Securities issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment to
the prior payment in full of all Senior Indebtedness, whether outstanding at the
date of this Indenture or thereafter incurred.
No provision of this Article Fifteen shall prevent the occurrence of
any Default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
In the event and during the continuation of any default by the Company
in the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness, or in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then, in either case, no
payment shall be made by the Company with respect to the principal (including
redemption payments) of or premium, if any, or interest on the Securities.
In the event of the acceleration of the maturity of the Securities,
then no payment shall be made by the Company with respect to the principal
(including redemption payments) of or premium, if any, or interest on the
Securities until the holders of all Senior Indebtedness outstanding at the time
of such acceleration shall receive payment in full of all Senior Indebtedness
(including any amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph 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
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, but only to the extent
that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing, within 90 days of
such payment, of the amounts then due and owing on such Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of such Senior Indebtedness.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
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Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Senior Indebtedness of the Company shall
first be paid in full, or payment thereof provided for in money in accordance
with its terms, before any payment is made by the Company on account of the
principal (and premium, if any) or interest 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 Fifteen, shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the Securityholders or by the Trustee under the
Indenture if received by them or it, directly to the holders of Senior
Indebtedness of the Company (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, as calculated by
the Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all such Senior Indebtedness in full, in
money or money's worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Securityholders or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all Senior Indebtedness is paid in full, or provision is made for
such payment in money in accordance with its terms, such payment or distribution
shall be held in trust for the benefit of and shall be paid over or delivered to
the holders of such Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
and their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all Senior Indebtedness in full in money in accordance
with its terms, after giving effect to any concurrent payment or distribution to
or for the benefit of the holders of such Senior Indebtedness.
For purposes of this Article Fifteen, 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 Fifteen with
respect to the Securities to the payment of Senior Indebtedness that may at the
time be outstanding, provided that (i) such Senior Indebtedness is assumed by
the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of such Senior Indebtedness are
not, without the consent of such holders, altered by such
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<PAGE>
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 Ten 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 Ten of this Indenture. Nothing in Section 15.02 or in this Section
15.03 shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 6.06 of this Indenture.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the rights
of the Securityholders shall be subrogated to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash, property or
securities of the Company, as the case may be, applicable to such Senior
Indebtedness until the principal of (and premium, if any) and interest on the
Securities shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of such Senior Indebtedness of any
cash, property or securities to which the Securityholders or the Trustee would
be entitled except for the provisions of this Article Fifteen, and no payment
over pursuant to the provisions of this Article Fifteen to or for the benefit of
the holders of such Senior Indebtedness by Securityholders or the Trustee,
shall, as between the Company, its creditors other than holders of Senior
Indebtedness of the Company, and the holders of the Securities, be deemed to be
a payment by the Company to or on account of such Senior Indebtedness. It is
understood that the provisions of this Article Fifteen are and are intended
solely for the purposes of defining the relative rights of the holders of the
Securities, on the one hand, and the holders of such Senior Indebtedness on the
other hand.
Nothing contained in this Article Fifteen 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 Indebtedness of the
Company, and the holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the holders of the Securities
and creditors of the Company, as the case may be, other than the holders of
Senior Indebtedness of the Company, as the case may be, nor shall anything
herein or therein prevent the Trustee or the holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default under
the Indenture, subject to the rights, if any, under this Article Fifteen of the
holders of such Senior Indebtedness in respect of cash, property or securities
of the Company, as the case may be, received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article Fifteen, the Trustee, subject to the provisions of Article Six
of this Indenture, and the
55
<PAGE>
Securityholders shall be entitled to conclusively rely upon any order or decree
made by any court of competent jurisdiction in which such dissolution,
winding-up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent
or other Person making such payment or distribution, delivered to the Trustee or
to the Securityholders, for the purposes of ascertaining the Persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
indebtedness of the Company, as the case may be, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article Fifteen.
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 Fifteen 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 Fifteen. Notwithstanding the
provisions of this Article Fifteen 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 Fifteen,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof from the Company or a holder or holders of Senior
Indebtedness or from any trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Article Six 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 premium, if
any) or interest on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Article Six of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company, as the case may be (or a trustee or representative
on behalf of such holder), to establish that such notice has been given by a
holder of such Senior Indebtedness or a trustee or representative 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
56
<PAGE>
of any Person as a holder of such Senior Indebtedness to participate in any
payment or distribution pursuant to this Article Fifteen, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article Fifteen, 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 Fifteen, the Trustee and the Securityholders shall be entitled
to rely upon any order or decree entered by any court of competent jurisdiction
in which such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, liquidating trustee, custodian,
receiver, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Trustee or to the
Securityholders, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Fifteen.
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Fifteen in respect of any Senior Indebtedness
at any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Fifteen, and no
implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of such Senior
Indebtedness and, subject to the provisions of Article Six of this Indenture,
the Trustee shall not be liable to any holder of such Senior Indebtedness if it
shall pay over or deliver to Securityholders, the Company or any other Person
money or assets to which any holder of such Senior Indebtedness shall be
entitled by virtue of this Article Fifteen or otherwise.
Nothing in this Article Fifteen shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.06.
SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness of
the Company to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired
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by any act or failure to act on the part of the Company, as the case may be, or
by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company, as the case may be, with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof that any such
holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness of the Company may, at any time and from time
to time, without the consent of or notice to the Trustee or the Securityholders,
without incurring responsibility to the Securityholders and without impairing or
releasing the subordination provided in this Article Fifteen or the obligations
hereunder of the holders of the Securities to the holders of such Senior
Indebtedness, do any one or more of the following: (a) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument evidencing the same or any agreement under which
such Senior Indebtedness is outstanding; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
Senior Indebtedness; (c) release any Person liable in any manner for the
collection of such Senior Indebtedness; and (d) 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 the payment of interest at any time or from time to
time for a period not exceeding ten consecutive semi-annual periods, including
the first such semi-annual period during such extension period (the "Extended
Interest Payment Period"), during which Extended Interest Payment Period no
interest shall be due and payable; provided, that no Extended Interest Payment
Period may extend beyond the Maturity Date. To the extent permitted by
applicable law, interest, the payment of which has been deferred because of the
extension of the interest payment period pursuant to this Section 16.01, will
bear interest thereon at the Coupon Rate compounded semi-annually for each
semi-annual period of the Extended Interest Payment Period ("Compounded
Interest"). At the end of the Extended Interest Payment Period, the Company
shall pay all interest accrued and unpaid on the Securities, including any
Additional Interest 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 after the end
of the Extended Interest Payment Period. Before the termination of any Extended
Interest Payment Period, the Company may further defer payments of interest by
further extending such period; provided, that such period, together with all
such previous and further extensions within such Extended Interest Payment
Period, shall not exceed 10 consecutive semi-annual periods, [including the
first such semi-annual period during such Extended Interest
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Payment Period], 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 election of such Extended Interest
Payment Period at least five Business Days before the earlier of (i) the next
succeeding date on which distributions on the Trust Securities issued by Madison
Capital Trust would have been payable except for such election, or (ii) the date
the Madison Capital 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 Capital Securities issued by Madison Capital 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 elects an Extended Interest Payment Period,
the Company shall give the holders of the Securities and the Trustee written
notice of its election of such Extended Interest Payment Period at least 10
Business Days before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Company is required to give notice of the record or
payment date of such interest payment to any national securities exchange.
(c) The semi-annual period in which any notice is given
pursuant to paragraphs (a) or (b) of this Section 16.02 shall be counted as one
of the 10 semi-annual periods permitted in the maximum Extended Interest Payment
Period permitted under Section 16.01.
________________________________ hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
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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.
MADISON BANCSHARES GROUP, LTD.
By:
----------------------------------
Name:
Title:
CHRISTIANA BANK & TRUST COMPANY,
AS TRUSTEE
By:
----------------------------------
Name: Robert G. Elder
Title: President
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EXHIBIT A
(FORM OF FACE OF SECURITY)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE CORPORATION PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE
CORPORATION, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEREE TO THE COMPANY. SUCH HOLDER FURTHER AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY
I
<PAGE>
TO THE EFFECT OF THIS LEGEND.
II
<PAGE>
No.
MADISON BANCSHARES GROUP, LTD.
9.00% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE JUNE 30, 2028
Madison Bancshares Group, Ltd., a Pennsylvania corporation (the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to or
registered assigns, the principal sum of Five Million One Hundred Fifty Thousand
Dollars ($5,150,000) on June 30, 2028 (the "Maturity Date"), unless previously
redeemed, and to pay interest on the outstanding principal amount hereof from
June 30, 1998, (subject to deferral as set forth herein) in arrears on June 30
and December 31 of each year, commencing December 31, 1998, at the rate of 9.00%
per annum until the principal hereof shall have become due and payable, and on
any overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum compounded
semi-annually. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months and, for any
period less than a full calendar month, the number of days elapsed in such
month. In the event that any date on which the principal of (or premium, if any)
or interest on this Security is payable is not a Business Day, then payment
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
with the same force and effect as if made on such date.
The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date 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 the
first day of the month in which the relevant interest payment date falls. Any
such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the holders on such regular record date and may
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a special record date to
be fixed by the Trustee for the payment of such defaulted interest, notice
whereof shall be given to the holders of Securities not less than ten days prior
to such special record date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture.
The principal of (and premium, if any) and interest on this Security
shall be payable at the office or agency of the Trustee in Greenville, Delaware
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
III
<PAGE>
at the option of the Company by (i) check mailed to the holder at such address
as shall appear in the Security Register or (ii) by transfer to an account
maintained by the Person entitled thereto, provided that proper written transfer
instructions have been received by the relevant record date. Notwithstanding the
foregoing, so long as the Holder of this Security is the Property Trustee, the
payment of the principal of (and premium, if any) and interest on this Security
will be made in immediately available funds at such place and to such account as
may be designated by the Property Trustee.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Security are continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as though
fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
MADISON BANCSHARES GROUP, LTD.
By:
-----------------------------
Name:
Title:
Dated:
Attest:
By:
------------------------------
Name:
Title:
IV
<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
CHRISTIANA BANK & TRUST COMPANY,
as Trustee
By:
----------------------------------
Authorized Officer
V
<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 July 13, 1998 (the
"Indenture"), duly executed and delivered between the Company and Christiana
Bank & Trust Company, as Trustee (the "Trustee"), to which Indenture reference
is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Securities.
Upon the occurrence and continuation of a Special Event prior to June
30, 2003, the Company shall have the right to redeem this Security in whole (but
not in part) at the Special Event Redemption Price. "Special Event Redemption
Price" shall mean an amount in cash equal 100% of the principal amount hereof
plus, in each case, any accrued and unpaid interest thereon, including
Compounded Interest and Additional Interest, if any, to the date of such
redemption.
In addition, the Company shall have the right to redeem this Security,
in whole or in part, at any time on or after June 30, 2003, at the Optional
Redemption Price plus accrued and unpaid interest thereon (including Additional
Interest and Compounded Interest, if any) to the applicable date of redemption.
The Optional Redemption Price or the Special Event Redemption Price, as
the case requires, shall be paid prior to 12:00 noon, Philadelphia 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., Philadelphia 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 nor more than 60 days notice.
If the Securities are only partially redeemed by the Company pursuant to an
Optional Redemption, the Securities will be redeemed pro rata or by lot or by
any other method as the Trustee shall determine.
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.
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
VI
<PAGE>
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) extend the Maturity Date of any Securities, or reduce the principal
amount thereof, or change any redemption provisions applicable thereto, or
reduce the rate or extend the time of payment of interest thereon (subject to
Article Sixteen of the Indenture), or make the principal of, or interest or
premium on, the Securities payable in any coin or currency other than U.S.
dollars, or impair or affect the right of any holder of Securities to institute
suit for the payment thereof, or (ii) reduce the aforesaid percentage of
Securities, the holders of which are required to consent to any such
supplemental indenture. The Indenture also contains provisions permitting the
holders of a majority in aggregate principal amount of the Securities at the
time outstanding affected thereby, on behalf of all of the holders of the
Securities, to waive any past default in the performance of any of the covenants
contained in the Indenture, or established pursuant to the Indenture, and its
consequences, except a default in the payment of the principal of or premium, if
any, or interest on any of the Securities or a default in respect of any
covenant or provision under which the Indenture cannot be modified or amended
without the consent of each holder of Securities then outstanding. Any such
consent or waiver by the holder of this Security (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such holder and upon all
future holders and owners of this Security and of any Security issued in
exchange heretofore or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Security at the time and place and at the rate and in the money
herein prescribed.
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 ten
consecutive semi-annual periods, including the first such semi-annual period
during such extension period, and not to extend beyond the Maturity Date of the
Securities (an "Extended Interest Payment Period" ), at the end of which period
the Company shall pay all interest then accrued and unpaid together with
interest thereon at the rate specified for the Securities to the extent that
payment of such interest is enforceable under applicable law). Before the
termination of any such Extended Interest Payment Period, the Company may
further defer payments of interest by further extending such Extended Interest
Payment Period, provided that such Extended Interest Payment Period, together
with all such previous and further extensions within such Extended Interest
Payment Period, shall not exceed 10 consecutive semi-annual periods, including
the first semi-annual period during such Extended Interest Payment Period, or
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.
VII
<PAGE>
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) or (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 make any guarantee payments with respect to any
guarantee by the Company of the debt securities or 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 shareholder's rights plan, or the issuance of stock under any such plan in
the future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Capital Securities Guarantee, (d) as a result of a
reclassification of the Company's capital stock or the exchange or the
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock, (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the exchange or
conversion of such capital stock or the security being exchanged or converted
and (f) purchases of Common Stock related to the issuance of Common Stock or
rights under any of the Company's benefit plans for its directors, officers or
employees or any of the Company's dividend reinvestment plans) if at such time
(i) there shall have occurred any event of which the Company has actual
knowledge that (a) is, or with the giving of notice or the lapse of time, or
both, would be, an Event of Default and (b) in respect of which the Company
shall not have taken reasonable steps to cure, (ii) if such Securities are held
by Advanta Capital Trust, the Company shall be in default with respect to its
payment of any obligations under the Capital Securities Guarantee or (iii) 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.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 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
Trustee in Greenville, Delaware 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 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 paying 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
VIII
<PAGE>
of receiving payment of or on account of the principal hereof and premium, if
any, and interest due hereon and for all other purposes, and neither the Company
nor the Trustee nor any paying agent nor any registrar shall be affected by any
notice to the contrary.
No recourse shall be had for the payment of the principal of or
premium, if any, or interest on this Security, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture, against
any incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor Person, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
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 COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO
CONFLICT OF LAW PROVISIONS THEREOF.
IX
<PAGE>
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CAPITAL SECURITIES GUARANTEE AGREEMENT
Madison Bancshares Group, Ltd.
Dated as of July 13, 1998
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<PAGE>
TABLE OF CONTENTS
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Page
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<S> <C>
ARTICLE I DEFINITIONS AND INTERPRETATION........................................................................-1-
SECTION 1.1 Definitions and Interpretation..............................................-1-
ARTICLE II TRUST INDENTURE ACT..................................................................................-4-
SECTION 2.1 [Intentionally Omitted].....................................................-4-
SECTION 2.2 Lists of Holders of Securities..............................................-4-
SECTION 2.3 [Intentionally Omitted.]....................................................-5-
SECTION 2.4 [Intentionally Omitted.]....................................................-5-
SECTION 2.5 [Intentionally Omitted.]....................................................-5-
SECTION 2.6 Events of Default; Waiver...................................................-5-
SECTION 2.7 Event of Default; Notice....................................................-5-
SECTION 2.8 [Intentionally Omitted].....................................................-5-
ARTICLE III POWERS, DUTIES AND RIGHTS OF CAPITAL SECURITIES GUARANTEE TRUSTEE...................................-6-
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee...............-6-
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee......................-8-
SECTION 3.3. Not Responsible for Recitals or Issuance of Capital Securities
Guarantee..................................................................-10-
ARTICLE IV CAPITAL SECURITIES GUARANTEE TRUSTEE................................................................-10-
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility..........................-10-
SECTION 4.2 Appointment, Removal and Resignation of Capital Securities
Guarantee Trustee..........................................................-10-
ARTICLE V GUARANTEE............................................................................................-11-
SECTION 5.1 Guarantee..................................................................-11-
SECTION 5.2 Waiver of Notice and Demand................................................-12-
SECTION 5.3 Obligations Not Affected...................................................-12-
SECTION 5.4 Rights of Holders..........................................................-13-
SECTION 5.5 Guarantee of Payment.......................................................-13-
SECTION 5.6 Subrogation................................................................-13-
SECTION 5.7 Independent Obligations....................................................-13-
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION...........................................................-14-
SECTION 6.1 Limitation of Transactions.................................................-14-
SECTION 6.2 Ranking....................................................................-14-
</TABLE>
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<TABLE>
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<S> <C>
ARTICLE VII TERMINATION........................................................................................-15-
SECTION 7.1 Termination................................................................-15-
ARTICLE VIII INDEMNIFICATION...................................................................................-15-
SECTION 8.1 Exculpation................................................................-15-
SECTION 8.2 Indemnification............................................................-16-
ARTICLE IX MISCELLANEOUS.......................................................................................-16-
SECTION 9.1 Successors and Assigns.....................................................-16-
SECTION 9.2 Amendments.................................................................-16-
SECTION 9.3 Notices....................................................................-16-
SECTION 9.4 Benefit....................................................................-17-
SECTION 9.5 Governing Law..............................................................-18-
</TABLE>
<PAGE>
CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Capital Securities Guarantee"), dated
as of July13, 1998, is executed and delivered by Madison Bancshares Group, Ltd.,
a Pennsylvania corporation (the "Guarantor"), and Christiana Bank & Trust
Company, as trustee (sometimes referred to hereinafter as the "Capital
Securities Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of
Madison 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 July 13, 1998, among the trustees of the Issuer, the
Guarantor, as sponsor, and the holders from time to time of undivided beneficial
interests in the assets of the Issuer, the Issuer is issuing on the date hereof
5,000 capital securities, having an aggregate liquidation amount of $5,000,000,
such capital securities being designated the 9.00% Capital Securities
(collectively, the "Capital Securities").
WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Capital Securities Guarantee, to pay to the Holders
of the Capital Securities the Guarantee Payments (as defined below), and the
Guarantor agrees to make certain other payments on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Capital Securities, which purchase the Guarantor hereby acknowledges shall
benefit the Guarantor, the Guarantor executes and delivers this Capital
Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Capital Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Capital Securities
Guarantee but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as at the date of
execution of this Capital Securities Guarantee have the same meaning when used
in this Capital Securities Guarantee unless otherwise defined in this Capital
Securities Guarantee;
(c) a term defined anywhere in this Capital Securities
Guarantee has the same meaning throughout;
<PAGE>
(d) all references to "the Capital Securities Guarantee" or
"this Capital Securities Guarantee" are to this Capital Securities Guarantee as
modified, supplemented or amended from time to time;
(e) all references in this Capital Securities Guarantee to
Articles and Sections are to Articles and Sections of this Capital Securities
Guarantee, unless otherwise specified; and
(f) 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" shall mean any day other than a Saturday or a
Sunday, or a day on which banking institutions in Philadelphia, Pennsylvania or
Wilmington, Delaware are authorized or required by law or executive order to
close.
"Capital Securities Guarantee Trustee" shall mean the
Christiana Bank & Trust Company, until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Capital Securities Guarantee and thereafter means each such
Successor Capital Securities Guarantee Trustee.
"Common Securities" shall mean the securities representing
common undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" shall mean the office of the Capital
Securities Guarantee Trustee at which the corporate trust business of the
Capital Securities Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Agreement is located at Greenville Center, 3801 Kennett Pike, Greenville, DE
19807.
"Covered Person" shall mean any Holder or beneficial owner of
Capital Securities.
"Debentures" shall mean the series of subordinated debt
securities of the Guarantor designated the 9.00% Junior Subordinated Deferrable
Interest Debentures due June 30, 2028 held by the Property Trustee (as defined
in the Declaration) of the Issuer.
"Event of Default" shall mean a default by the Guarantor on
any of its payment or other obligations under this Capital Securities Guarantee.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Capital Securities to the extent the Issuer has funds on hand legally
2
<PAGE>
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 Capital Securities called for redemption by the
Issuer, and (iii) upon a voluntary or involuntary termination and liquidation of
the Issuer (other than in connection with the distribution of Debentures to the
Holders in exchange for Capital Securities as provided in the Declaration), the
lesser of (a) the aggregate of the liquidation amount and all accumulated and
unpaid Distributions on the Capital 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. 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 of Capital Securities
shall be paid in full the Guarantee Payments to which they are entitled under
this Capital Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" shall mean the Capital Securities
Guarantee Trustee, any Affiliate of the Capital Securities Guarantee Trustee, or
any officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Capital Securities
Guarantee Trustee.
"Indenture" shall mean the Indenture dated as of July 13, 1998
among the Guarantor (the "Debenture Issuer") and Christiana Bank & Trust
Company, as trustee, pursuant to which the Debentures are to be issued to the
Property Trustee of the Issuer.
"Majority in liquidation amount of the Capital Securities"
shall mean, except as provided by the Trust Indenture Act, a vote by Holder(s)
of Capital Securities, voting separately as a class, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all outstanding
Capital Securities.
"Officers' Certificate" shall mean, with respect to any
person, a certificate signed by the Chairman, a Vice Chairman, the Chief
Executive Officer, the President, a Vice President or the Treasurer of the
Guarantor. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Capital Securities Guarantee shall
include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
3
<PAGE>
(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" in the Common Securities Guarantee.
"Other Debentures" shall mean all junior subordinated
debentures issued by the Guarantor from time to time and sold to trusts other
than the Issuer to be established by the Guarantor (if any), in each case
similar to the Issuer.
"Other Guarantees" shall mean all guarantees to be issued by
the Guarantor with respect to capital securities (if any) similar to the Capital
Securities issued by trusts other than the Issuer to be established by the
Guarantor (if any), in each case similar to the Issuer.
"Person" shall mean 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" shall mean, with respect to the Capital
Securities Guarantee Trustee, any officer within the Corporate Trust Office of
the Capital Securities Guarantee Trustee with direct responsibility for the
administration of this Capital Securities Guarantee and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Successor Capital Securities Guarantee Trustee" shall mean a
successor Capital Securities Guarantee Trustee possessing the qualifications to
act as Capital Securities Guarantee Trustee under Section 4.1.
ARTICLE II
[Intentionally Omitted]
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
4
<PAGE>
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Capital Securities Guarantee shall be held by the
Capital Securities Guarantee Trustee for the benefit of the Holders of the
Capital Securities, and the Capital Securities Guarantee Trustee shall not
transfer this Capital Securities Guarantee to any Person except a Holder of
Capital Securities exercising his or her rights pursuant to Section 5.4(b) or to
a Successor Capital Securities Guarantee Trustee on acceptance by such Successor
Capital Securities Guarantee Trustee of its appointment to act as Successor
Capital Securities Guarantee Trustee. The right, title and interest of the
Capital Securities Guarantee Trustee shall automatically vest in any Successor
Capital Securities Guarantee Trustee, and such vesting and succession of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Capital Securities
Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the Capital Securities Guarantee Trustee has occurred and is
continuing, the Capital Securities Guarantee Trustee shall enforce this Capital
Securities Guarantee for the benefit of the Holders of the Capital Securities.
(c) The Capital Securities Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Capital Securities Guarantee, and no implied
covenants shall be read into this Capital Securities Guarantee against the
Capital Securities Guarantee Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) and is actually
known to a Responsible Officer of the Capital Securities Guarantee Trustee, the
Capital Securities Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Capital Securities Guarantee, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Capital Securities Guarantee shall be
construed to relieve the Capital Securities Guarantee Trustee from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of Default
that may have occurred:
(A) the duties and obligations of the
Capital Securities Guarantee Trustee shall be
determined solely by the express provisions of this
Capital Securities Guarantee, and the Capital
Securities Guarantee Trustee shall not be liable
except for the performance of such duties and
5
<PAGE>
obligations as are specifically set forth in this
Capital Securities Guarantee, and no implied
covenants or obligations shall be read into this
Capital Securities Guarantee against the Capital
Securities Guarantee Trustee; and
(B) in the absence of bad faith on the part
of the Capital Securities Guarantee Trustee, the
Capital Securities Guarantee Trustee may conclusively
rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Capital
Securities Guarantee Trustee and conforming to the
requirements of this Capital Securities Guarantee;
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
Capital Securities Guarantee Trustee, the Capital
Securities Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they
conform to the requirements of this Capital
Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall
not be liable for any error of judgment made in good faith by
a Responsible Officer of the Capital Securities Guarantee
Trustee, unless it shall be proved that the Capital Securities
Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii) the Capital Securities Guarantee Trustee shall
not be liable with respect to any action taken or omitted to
be taken by it in good faith in accordance with the direction
of the Holders of a Majority in liquidation amount of the
Capital Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Capital Securities Guarantee Trustee, or exercising any trust
or power conferred upon the Capital Securities Guarantee
Trustee under this Capital Securities Guarantee; and
(iv) no provision of this Capital Securities
Guarantee shall require the Capital Securities Guarantee
Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if
the Capital Securities Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of
this Capital Securities Guarantee or indemnity, reasonably
satisfactory to the Capital Securities Guarantee Trustee,
against such risk or liability is not reasonably assured to
it.
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
6
<PAGE>
(i) The Capital Securities Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or
refraining from acting, upon any resolution, certificate,
statement instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed
by it to be genuine and to have been signed, sent or presented
by the proper party or parties.
(ii) Any direction or act of the Guarantor
contemplated by this Capital Securities Guarantee may be
sufficiently evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this Capital
Securities Guarantee, the Capital Securities Guarantee Trustee
shall deem it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder, the
Capital Securities Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad
faith on its part, request and conclusively rely upon an
Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Guarantor.
(iv) The Capital Securities Guarantee Trustee shall
have no duty to see to any recording, filing or registration
of any instrument (or any rerecording, refiling or
registration thereof).
(v) The Capital Securities Guarantee Trustee may
consult with counsel of its selection, and the advice or
opinion of such counsel with respect to legal matters shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Capital
Securities Guarantee Trustee shall have the right at any time
to seek instructions concerning the administration of this
Capital Securities Guarantee from any court of competent
jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall
be under no obligation to exercise any of the rights or powers
vested in it by this Capital Securities Guarantee at the
request or direction of any Holder, unless such Holder shall
have provided to the Capital Securities Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Capital
Securities Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of
the Capital Securities Guarantee Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such
reasonable advances as may be requested by the Capital
Securities Guarantee Trustee; provided, that nothing
contained in this Section 3.2(a)(vi)
7
<PAGE>
shall be taken to relieve the Capital Securities Guarantee
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it
by this Capital Securities Guarantee.
(vii) The Capital Securities Guarantee Trustee shall
not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Capital
Securities Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as
it may see fit.
(viii) The Capital Securities Guarantee Trustee may
execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents,
nominees, custodians or attorneys, and the Capital Securities
Guarantee Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(ix) Any action taken by the Capital Securities
Guarantee Trustee or its agents hereunder shall bind the
Holders of the Capital Securities, and the signature of the
Capital Securities Guarantee Trustee or its agents alone shall
be sufficient and effective to perform any such action. No
third party shall be required to inquire as to the authority
of the Capital Securities Guarantee Trustee to so act or as to
its compliance with any of the terms and provisions of this
Capital Securities Guarantee, both of which shall be
conclusively evidenced by the Capital Securities Guarantee
Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Capital
Securities Guarantee the Capital Securities Guarantee Trustee
shall deem it desirable to receive instructions with respect
to enforcing any remedy or right or taking any other action
hereunder, the Capital Securities Guarantee Trustee (i) may
request instructions from the Holders of a Majority in
liquidation amount of the Capital Securities, (ii) may refrain
from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall
be protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Capital Securities Guarantee Trustee shall
not be liable for any action taken, suffered, or omitted to be
taken by it in good faith, without negligence, and reasonably
believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Capital Securities
Guarantee.
(b) No provision of this Capital Securities Guarantee shall be
deemed to impose any duty or obligation on the Capital Securities Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction
8
<PAGE>
in which it shall be illegal, or in which the Capital Securities Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Capital Securities
Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Capital Securities
Guarantee
The recitals contained in this Capital Securities Guarantee
shall be taken as the statements of the Guarantor, and the Capital Securities
Guarantee Trustee does not assume any responsibility for their correctness. The
Capital Securities Guarantee Trustee makes no representation as to the validity
or sufficiency of this Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities
Guarantee Trustee that 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, authorized
under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 5 million U.S.
dollars ($5,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section
4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Capital Securities Guarantee Trustee
shall cease to be eligible to so act under Section 4.1(a), the Capital
Securities Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
SECTION 4.2 Appointment, Removal and Resignation of Capital Securities Guarantee
Trustee
(a) Subject to Section 4.2(b), the Capital Securities
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
9
<PAGE>
(b) The Capital Securities Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Securities Guarantee
Trustee and delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office
until a Successor Capital Securities Guarantee Trustee shall have been appointed
or until its removal or resignation. The Capital Securities Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Capital Securities Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Capital Securities Guarantee Trustee and delivered to the Guarantor and the
resigning Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery of an instrument of removal or resignation, the
Capital Securities Guarantee Trustee resigning or being removed may petition any
court of competent jurisdiction for appointment of a Successor Capital
Securities Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Capital Securities
Guarantee Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable
for the acts or omissions to act of any Successor Capital Securities Guarantee
Trustee.
(f) Upon termination of this Capital Securities Guarantee or
removal or resignation of the Capital Securities Guarantee Trustee pursuant to
this Section 4.2, the Guarantor shall pay to the Capital Securities Guarantee
Trustee all amounts due to the Capital Securities Guarantee Trustee accrued to
the date of such termination, removal or resignation.
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
10
<PAGE>
The Guarantor hereby waives notice of acceptance of this
Capital Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Capital Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all
or any portion of the Distributions, Redemption Price, Liquidation Distribution
or any other sums payable under the terms of the Capital Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Capital Securities (other than an extension of
time for payment of Distributions, Redemption Price, Liquidation Distribution or
other sum payable that results from the extension of any interest payment period
on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Capital
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
Capital Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, 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.
11
<PAGE>
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Capital Securities Guarantee or exercising
any trust or power conferred upon the Capital Securities Guarantee Trustee under
this Capital Securities Guarantee.
(b) If the Capital Securities Guarantee Trustee fails to
enforce such Capital Securities Guarantee, any Holder of Capital Securities may
institute a legal proceeding directly against the Guarantor to enforce the
Capital Securities Guarantee Trustee's rights under this Capital Securities
Guarantee, without first instituting a legal proceeding against the Issuer, the
Capital Securities Guarantee Trustee or any other person or entity. The
Guarantor waives any right or remedy to require that any action be brought first
against the Issuer or any other person or entity before proceeding directly
against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Capital Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Capital Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Capital Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Capital Securities Guarantee. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in
12
<PAGE>
subsections (a) through (h), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Capital Securities remain outstanding, the
Guarantor shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Guarantor's capital stock (which includes common and preferred stock) or
(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 payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks pari passu 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 stockholder's rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Capital Securities Guarantee,
(d) as a result of a reclassification of the Guarantor's capital stock or the
exchange or the conversion of one class or series of the Guarantor's capital
stock for another class or series of the Guarantor's capital stock, (e) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (f) purchases of common stock related
to the issuance of common stock or rights under any of the Guarantor's benefit
plans for its directors, officers or employees or any of the Guarantor's
dividend reinvestment plans) if at such time (i) there shall have occurred any
event of which the Guarantor has actual knowledge that (a) is, or with the
giving of notice or the lapse of time, or both, would be, an Event of Default
and (b) in respect of which the Guarantor shall not have taken reasonable steps
to cure, (ii) if such Debentures are held by the Property Trustee, the Guarantor
shall be in default with respect to its payment of any obligations under this
Capital Securities Guarantee or (iii) the Guarantor shall have given notice of
its election of the exercise of its right to extend the interest payment period
pursuant to Section 16.01 of the Indenture and any such extension shall be
continuing.
SECTION 6.2 Ranking
This Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to Senior Indebtedness (as defined in the Indenture), to the same extent
and in the same manner that the Debentures are subordinated to Senior
Indebtedness pursuant to the Indenture (except as indicated below), it being
understood that the terms of Article XV of the Indenture shall apply to the
obligations of
13
<PAGE>
the Guarantor under this Capital Securities Guarantee as if (x) such Article XV
were set forth herein in full and (y) such obligations were substituted for the
term "Securities" appearing in such Article XV, except that with respect to
Section 15.03 of the Indenture only, the term "Senior Indebtedness" shall mean
all liabilities of the Guarantor, whether or not for money borrowed (other than
obligations in respect of Other Guarantees), (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by the Guarantor
and with any Other Guarantee (as defined herein) and any Other Common Securities
Guarantee and any guarantee now or hereafter entered into by the Guarantor in
respect of any preferred or preference stock of any Affiliate of the Guarantor,
and (iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Capital Securities Guarantee shall terminate (i) upon
full payment of the Redemption Price (as defined in the Declaration) of all
Capital Securities, or (ii) upon liquidation of the Issuer, the full payment of
the amounts payable in accordance with the Declaration or the distribution of
the Debentures to the Holders of all of the Capital Securities. Notwithstanding
the foregoing, this Capital Securities Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any Holder of Capital
Securities must restore payment of any sums paid under the Capital Securities or
under this Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Capital
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 Capital Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any
14
<PAGE>
other facts pertinent to the existence and amount of assets from which
Distributions to Holders of Capital Securities might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any 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, accounting or other expert 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 Capital Securities Guarantee. In the event that the Capital Securities
Guaranty Trustee requests a cash advance to secure indemnity obligations, and
does not receive such advance, such failure shall be conclusive evidence that
the Capital Securities Guaranty Trustee was not reasonably assured of receiving
indemnity pursuant to this Agreement and the Indenture. The provisions of this
Section shall survive the resignation or removal of the Capital Securities
Guaranty Trustee and the defeasance or other termination of this Indenture.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Capital Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Capital Securities Guarantee may only be amended with the
prior approval of the Holders of a Majority in liquidation amount of the
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 Section 12.2 of
the Declaration with respect to meetings of Holders of the Securities apply to
the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
15
<PAGE>
(a) If given to the Issuer, in care of the Administrative
Trustee at the Issuer's mailing address set forth below (or such other address
as the Issuer may give notice of to the Capital Securities Guarantee Trustee and
the Holders of the Capital Securities):
Madison Capital Trust I
3513 Concord Pike, Suite 3758
Wilmington, DE 19803
Attention: Sarah G. Neiffer
Telecopy: (___) ___-____
(b) If given to the Capital Securities Guarantee Trustee, at
the Capital Securities Guarantee Trustee's mailing address set forth below (or
such other address as the Capital Securities Guarantee Trustee may give notice
of to the Holders of the Capital Securities):
Christiana Bank & Trust Company
Greenville Center
3801 Kennett Pike
Greenville, DE 19807
Attention: Robert G. Elder
Telecopy: (302) 421-5815
(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 Capital Securities Guarantee Trustee and the Holders of the Capital
Securities):
Madison Bancshares Group, Ltd.
1767 Sentry Parkway West
Blue Bell, Pennsylvania 19477
Attention: E. Cheryl Hinkle
Telecopy: (610) 653-0699
(d) If given to any Holder of Capital Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit
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<PAGE>
This Capital Securities Guarantee is solely for the benefit of
the Holders of the Capital Securities and, subject to Section 3.1(a), is not
separately transferable from the Capital Securities.
SECTION 9.5 Governing Law
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
THIS CAPITAL SECURITIES GUARANTEE is executed as of the day
and year first above written.
MADISON BANCSHARES GROUP, LTD.,
as Guarantor
By:
------------------------------------------
Name:
Title:
CHRISTIANA BANK & TRUST COMPANY,
as Capital Securities Guarantee Trustee
By:
------------------------------------------
Name: Robert G. Elder
Title: President
17
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