<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1999
REGISTRATION NOS. 333-_____ AND 333-_____-01
====================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
ALLEGIANT BANCORP, INC.
ALLEGIANT CAPITAL TRUST I
(Exact name of registrants as specified in their respective charters)
<TABLE>
<S> <C> <C>
MISSOURI 6712 43-1519382
DELAWARE 6719 TO BE APPLIED FOR
(State or other jurisdictions of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Numbers) Nos.)
</TABLE>
2122 KRATKY ROAD
ST. LOUIS, MISSOURI 63114
(314) 692-8200
(Address, including zip code, and telephone number, including area
code, of registrants' principal executive offices)
SHAUN R. HAYES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ALLEGIANT BANCORP, INC.
2122 KRATKY ROAD
ST. LOUIS, MISSOURI 63114
(314) 692-8200
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
<TABLE>
<S> <C> <C>
THOMAS A. LITZ, ESQ. Copies to: EDWIN S. DEL HIERRO, ESQ.
THOMPSON COBURN LLP BARACK FERRAZZANO KIRSCHBAUM
SUITE 3400 PERLMAN & NAGELBERG
ONE MERCANTILE CENTER 333 WEST WACKER DRIVE, SUITE 2700
ST. LOUIS, MISSOURI 63101 CHICAGO, ILLINOIS 60606
(314) 552-6000 (TELEPHONE) (312) 984-3100 (TELEPHONE)
(314) 552-7000 (FAX) (312) 984-3150 (FAX)
</TABLE>
Approximate date of commencement of proposed sale of the
securities to the public: As soon as practicable after the effective
date of this Registration Statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box: / /
If the Registrant elects to deliver its latest annual report to
security holders, or a complete and legal facsimile thereof,
pursuant to Item 11(a)(1) of this form, check the following box. / /
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933,
please check the following box and list the Securities Act of 1933
registration statement number of the earlier effective registration
statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act of 1933, check the following
box and list the Securities Act of 1933 registration statement
number of the earlier effective registration statement for the same
offering. / /
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. / /
<TABLE>
CALCULATION OF REGISTRATION FEE
================================================================================================================================
<CAPTION>
PROPOSED
MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED<F1> PER UNIT PRICE<F2> REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
------% Trust Preferred Securities of
Allegiant Capital Trust I.......... 1,725,000 securities $10.00 $17,250,000 $4,795.50
- --------------------------------------------------------------------------------------------------------------------------------
------% Junior Subordinated
Debentures of Allegiant Bancorp,
Inc.<F2><F3>....................... -- -- -- N/A
- --------------------------------------------------------------------------------------------------------------------------------
Guarantee of Allegiant Bancorp, Inc.
with respect to trust preferred
securities<F3>..................... -- -- -- N/A
- --------------------------------------------------------------------------------------------------------------------------------
Total................................ 1,725,000 securities $10.00 $17,250,000 $4,795.50
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Includes 225,000 trust preferred securities which may be sold pursuant to
the underwriters' over-allotment option.
<F2> The junior subordinated debentures will be purchased by Allegiant Capital
Trust I with the proceeds of the sale of the trust preferred securities.
No separate consideration will be received for such debentures which may
be distributed to the holders of the trust preferred securities upon any
liquidation of Allegiant Capital Trust I.
<F3> This Registration Statement is deemed to cover the trust preferred
securities of Allegiant Capital Trust I, the rights of holders of the
junior subordinated debentures and the guarantee. No separate
consideration will be received for the trust preferred securities
guarantee.
</TABLE>
------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF
1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT
TO SAID SECTION 8(A), MAY DETERMINE.
====================================================================
<PAGE>
********************************************************************
Information contained herein is subject to completion or
amendment. A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission. These securities may not be sold nor may offers
to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in
any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such State.
********************************************************************
PROSPECTUS Subject to completion, dated July 2, 1999
- --------------------------------------------------------------------
1,500,000 TRUST PREFERRED SECURITIES
ALLEGIANT CAPITAL TRUST I
- ---% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER TRUST PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED IN THIS
PROSPECTUS, BY
ALLEGIANT BANCORP, INC.
The trust preferred securities represent undivided beneficial
interests in the assets of Allegiant Capital Trust I. The Trust will
invest the proceeds of this offering of trust preferred securities
in the --% junior subordinated debentures of Allegiant Bancorp, Inc.
For each of the trust preferred securities that you own, you
are entitled to receive cumulative cash distributions at an annual
rate of --% on March 31, June 30, September 30 and December 31 of each year,
beginning September 30, 1999 from payments on the debentures. We may
defer payment of distributions at any time for up to 20 consecutive
quarters. The trust preferred securities are effectively
subordinated to all of our senior and subordinated indebtedness and
the senior and subordinated indebtedness of our subsidiaries. The
debentures mature, and the trust preferred securities must be
redeemed, on -------------, 2029. The Trust may redeem the trust preferred
securities, at a redemption price of $10 per trust preferred
security plus accumulated and unpaid distributions, at any time on
or after -------------, 2004, or earlier under certain circumstances.
The Trust intends to apply for listing of the trust preferred
securities on the American Stock Exchange under the trading symbol
"--------."
--------------------------------
WE URGE YOU TO CAREFULLY READ THE "RISK FACTORS" SECTION
BEGINNING ON PAGE 11, WHERE WE DESCRIBE SPECIFIC RISKS RELATED TO AN
INVESTMENT IN THE TRUST PREFERRED SECURITIES AND RISKS RELATING TO
ALLEGIANT BANCORP, INC., ALONG WITH THE REMAINDER OF THIS
PROSPECTUS, BEFORE YOU MAKE YOUR INVESTMENT DECISION.
--------------------------
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR
OBLIGATIONS OF ANY BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Per Trust
Preferred Security Total
------------------ -----------
<S> <C> <C>
Public offering price....................................... $10.000 $15,000,000
Underwriting fees to be paid by Allegiant Bancorp, Inc...... 0.375 562,500
Proceeds to the Trust....................................... 10.000 15,000,000
</TABLE>
----------------------------
EVEREN SECURITIES, INC.
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
BANKING FACILITIES
[Map of the locations of the banking facilities of Allegiant Bank superimposed
over a diagram of the states of Missouri and Illinois indicating the locations
of the banking facilities in the St. Louis metropolitan area.]
<TABLE>
<S> <C> <C> <C>
AFFTON DES PERES ST. PETERS WARRENTON
8930 Gravois 12100 Manchester Road 3551 Harvester Road 236 East Booneslick Road
Affton, MO 63123 Des Peres, MO 63131 St. Peters, MO 63303 Warrenton, MO 63383
314/631-7500 314/822-7000 314/939-9000 314/456-3431
BALLWIN<F1> HAZELWOOD SOUTH COUNTY WEST PORT
15061 Manchester Road 7600 North Lindbergh 7421 South Lindbergh Blvd. 157 Westport Plaza Drive
Ballwin, MO 63011 Hazelwood, MO 63042 Mehlville, MO 63125 Maryland Heights, MO 63146
314/692-8800 314/837-2000 314/892-4000 314/576-8800
CLAYTON ST. LOUIS, DOWNTOWN TOWN & COUNTRY HEADQUARTERS
7801 Forsyth Blvd. 119 North Broadway 157 Lamp and Lantern Village 2122 Kratky Road
Clayton, MO 63105 St. Louis, MO 63102 Town & Country, MO 63017 St. Louis, MO 63114
314/726-5000 314/621-2220 314/227-2223 314/692-8200
CRESTWOOD ST. LOUIS, GRAND UNION
9792 Watson Road 4323 North Grand Blvd. 509 Highway 50 West
Crestwood, MO 63126 St. Louis, MO 63107 Union, MO 63084
314/965-0600 314/534-3000 314/583-4155
<FN>
<F1> Planned opening in August 1999
</TABLE>
2
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have
based these forward-looking statements on our current expectations
and projections about future events. These forward-looking
statements are subject to risks, uncertainties and assumptions,
including, among other things:
* the results of our efforts to implement our business strategy;
* adverse changes in the bank's loan portfolio and the resulting
credit risk-related losses and expenses;
* our ability to manage our growth, including the successful
expansion of the customer support, administrative
infrastructure and internal management systems necessary to
manage such growth;
* our ability to attract core deposits;
* adverse changes in the economy of our market area that could
increase credit-related losses and expenses;
* adverse changes in real estate market conditions that could
negatively affect credit risk;
* the consequences of continued bank acquisitions and mergers in
our market area, resulting in fewer but much larger and
financially stronger competitors, which could increase
competition for financial services to our detriment;
* fluctuations in interest rates and market prices, which could
negatively affect net interest margins, asset valuations and
expense expectations;
* changes in regulatory requirements of federal and state
agencies applicable to bank holding companies and our present
and future banking subsidiaries;
* general economic conditions;
* year 2000 (Y2K) computer, embedded chip and related data
processing issues; and
* other factors discussed in "Risk Factors."
We undertake no obligation to publicly update or otherwise
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks,
uncertainties and assumptions, the events discussed in any
forward-looking statements in this prospectus might not occur.
------------------------
You should rely on the information contained or incorporated by
reference in this prospectus only. We have not, and our underwriters
have not, authorized any person to provide you with different
information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not, and our
underwriters are not, making an offer to sell the trust preferred
securities in any jurisdiction where the offer or sale is not
permitted.
You should assume that the information appearing in this
prospectus is accurate as of the date on the front cover of this
prospectus only.
Certain persons participating in this offering may engage in
transactions that stabilize, maintain, or otherwise affect the price
of the trust preferred securities being offered, including
over-allotting the trust preferred securities and bidding for and
purchasing trust preferred securities at a level above that which
otherwise might prevail in the open market. For a description of
these activities, see "Underwriting." Such stabilizing transactions,
if commenced, may be discontinued at any time. In connection with
this offering, certain underwriters (and selling group members) may
engage in passive market making transactions in the trust preferred
securities on the American Stock Exchange or otherwise in accordance
with Rule 103 of Regulation M. See "Underwriting."
3
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. Because this is a summary, it may not contain all of the
information that is important to you. To understand the offering
fully, you should read the entire prospectus, including the
financial statements and related notes, before making a decision to
invest in the trust preferred securities. The terms "Allegiant,"
"company," "we," "our" and "corporation" as used in this prospectus
refer to Allegiant Bancorp, Inc. and its subsidiaries as a
consolidated entity, except where it is made clear that it means
only Allegiant. Also, sometimes we refer to our bank subsidiary as
the "bank."
ALLEGIANT BANCORP, INC.
We are a bank holding company headquartered in St. Louis,
Missouri. Our bank subsidiary, Allegiant Bank, offers full-service
community banking and personal trust services to individuals,
businesses and municipalities in the St. Louis metropolitan area.
Our services include commercial, real estate and installment loans,
checking, savings and time deposit accounts, trust and other
personal fiduciary services and various other financial services
such as securities brokerage, insurance and safe deposit boxes. As
of March 31, 1999, we reported, on a consolidated basis, total
assets of $620.86 million, loans of $513.54 million, deposits of
$481.04 million and shareholders' equity of $49.06 million.
Since 1989, when we were organized, we have been committed to
building a strong, customer-friendly community bank. As a community
bank, we are able to respond quickly to our customers through local
decision-making and to tailor products and services to meet their
needs. We believe this customer-friendly approach provides us with a
competitive advantage over many of the larger financial institutions
in the St. Louis metropolitan area. In addition, we believe that we
have benefited from recent acquisitions of locally headquartered
financial institutions by larger regional or national out-of-town
financial institutions. Recent acquisitions of financial
institutions in our market area include: Bank America Corporation's
acquisition of Boatmen's Bancshares, Inc.; Union Planters
Corporation's acquisition of Magna Group, Inc.; and the pending
acquisition by Firstar Corp. of Mercantile Bancorporation Inc.
We currently are the fourth largest St. Louis-based bank holding
company. We have expanded rapidly through internal growth and
acquisitions. We believe that market coverage is necessary, and our
goal is to have a banking facility within a 20-minute drive from all
principal sectors of the St. Louis metropolitan area.
Since the beginning of 1998, we have focused primarily on
improving the profitability of our banking operations. As a result,
we have reduced the amount of one- to four-family mortgages that we
hold in our loan portfolio and increased the amount of higher
yielding commercial loans. We also have hired several banking
professionals with experience in the St. Louis metropolitan area to
help us grow our commercial loans and deposits. We have refined our
market focus to concentrate exclusively on opportunities in the
higher-growth St. Louis metropolitan area and, accordingly, we sold
three retail banking offices outside the St. Louis metropolitan area
in December 1998. We also have implemented company-wide cost-control
efforts to enhance efficiencies of our entire operations.
Our management team is comprised of experienced individuals who
average more than 15 years in the banking or financial services
industries. Our directors and executive officers own approximately
35% of our outstanding common stock.
The St. Louis metropolitan area is the 17th largest metropolitan
area in the United States, with a population of approximately 2.45
million. The St. Louis metropolitan area is home to 19 Fortune 1000
companies, such as Anheuser-Busch Companies, Inc., Monsanto Company,
Ralston Purina Company and Trans World Airlines, Inc. The St. Louis
metropolitan area ranks fifth in the United States as a headquarters
location for Fortune 500 companies. In 1998, the St. Louis
metropolitan area ranked second in Entrepreneur Magazine's listing
of the top places in the United States for small business, marking
four straight years on that publication's top ten list, and Inc.
magazine placed St. Louis among its top ten areas for growing firms.
Our principal executive offices are located at 2122 Kratky Road,
St. Louis, Missouri 63114, and our telephone number is (314)
692-8200.
4
<PAGE>
ALLEGIANT CAPITAL TRUST I
Allegiant Capital Trust I is a Delaware statutory business trust
that we created for the limited purposes of:
* issuing the trust preferred securities and the trust common
securities that we will purchase in connection with the
offering;
* investing the proceeds it receives from the issuance of the
trust preferred securities and the trust common securities in
an equivalent amount of junior subordinated debentures issued
by us; and
* engaging in activities related to the activities described
above.
The Trust will issue all of the trust preferred securities to
the purchasers in this offering. We will purchase all of the trust
common securities. The trust common securities will represent an
aggregate liquidation amount equal to at least 3.75% of the total
capital of the Trust.
The junior subordinated debentures and payments received
thereunder will be the only assets of the Trust, and payments under
the junior subordinated debentures will be the only revenue of the
Trust.
The Trust will be governed by the trust agreement among us, as
depositor, Bankers Trust (Delaware), as Delaware trustee, and the
administrators, who are selected by us.
The principal executive office of the Trust is c/o Allegiant
Bancorp, Inc. at 2122 Kratky Road, St. Louis, Missouri 63114, and
its telephone number is (314) 692-8200.
<TABLE>
THE OFFERING
<S> <C>
THE ISSUER........................................... Allegiant Capital Trust I, a Delaware statutory business
trust.
THE SECURITIES BEING OFFERED......................... 1,500,000 trust preferred securities having a liquidation
amount of $10 per trust preferred security. The trust
preferred securities represent preferred undivided beneficial
interests in the assets of the Trust, which will consist
solely of the junior subordinated debentures and payments
received thereunder. We will guarantee payments on the trust
preferred securities to the extent of funds in the Trust. We
have granted the underwriters an option, exercisable within 30
days after the date of this prospectus, to purchase up to an
additional 225,000 trust preferred securities at the initial
offering price, solely to cover over-allotments, if any.
THE OFFERING PRICE................................... $10 per trust preferred security.
THE PAYMENT OF DISTRIBUTIONS......................... The Trust will pay cash distributions to you on each trust
preferred security at an annual rate of --%. The distributions
will be cumulative, will accumulate from ------------, 1999,
and will be payable in arrears at the end of each calendar
quarter, commencing September 30, 1999.
5
<PAGE>
WE HAVE THE OPTION TO DEFER INTEREST
PAYMENTS........................................... At any time we are not in default under the junior
subordinated debentures, we may defer payments of interest on
the junior subordinated debentures for up to 20 consecutive
quarters, but not beyond their stated maturity date. The Trust
will defer quarterly distributions on the trust preferred
securities during any time that we defer payments on the
junior subordinated debentures. Deferred quarterly
distributions will continue to accumulate distributions at an
annual rate of --% and unpaid distributions will accumulate
additional distributions at an annual rate of --% compounded
quarterly. During any period that we defer interest payments,
we may not declare or pay any cash distributions on our
capital stock or repay any debt securities that rank equal to
or lower than the junior subordinated debentures. After the
end of any period in which we defer interest payments, if we
have paid all deferred and current interest under the junior
subordinated debentures, we may defer interest payments again.
If we defer interest payments, you will be required to include
deferred distributions in your gross income for United States
federal income tax purposes and you may be required to pay
taxes on the deferred distributions before you receive the
deferred distributions.
MATURITY............................................. The junior subordinated debentures are scheduled to mature on
------------, 2029 unless we shorten the maturity date to a
date no earlier than ------------, 2004. We will not shorten
the maturity date unless we have first received any required
regulatory approvals. The Trust must redeem the trust
preferred securities when the junior subordinated debentures
are paid on the maturity date.
REDEMPTION OF THE TRUST PREFERRED SECURITIES IS
POSSIBLE........................................... The Trust must redeem the trust preferred securities if we
repay the junior subordinated debentures. Subject to any
regulatory approvals that may then be required, we may redeem
the junior subordinated debentures prior to their scheduled
maturity (1) on or after ------------, 2004, in whole at any
time or in part from time to time, or (2) at any time, in
whole, but not in part, within 90 days after:
* certain tax events occur or become likely to occur;
* the Trust is or becomes likely to be deemed to be an
investment company; or
* there is an adverse change in the treatment of the trust
preferred securities as Tier 1 capital for bank regulatory
purposes.
6
<PAGE>
Upon any redemption of the junior subordinated debentures we
will use the cash proceeds of the redemption to pay you the
liquidation amount of $10 per trust preferred security plus
any accumulated and unpaid distributions through the date of
redemption.
HOW THE SECURITIES WILL RANK IN RIGHT OF
PAYMENT............................................ The trust preferred securities, junior subordinated debentures
and guarantee will rank as follows with regard to right of
payment:
* The trust preferred securities will rank equally with the
trust common securities. The Trust will pay distributions on
the trust preferred securities and the trust common
securities pro rata. However, if we fail to pay interest
payments on the junior subordinated debentures, then no
distributions on the trust common securities will be paid
until all accumulated and unpaid distributions on the trust
preferred securities have been paid.
* Our obligations under the junior subordinated debentures are
unsecured and generally will rank junior in priority to our
existing and future senior and other subordinated
indebtedness.
* Our obligations under the guarantee are unsecured and
generally will rank junior in priority to our existing and
future senior and other subordinated indebtedness.
* Because we are a holding company, the junior subordinated
debentures and the guarantee will effectively be
subordinated to all existing and future liabilities of our
subsidiaries.
THE JUNIOR SUBORDINATED DEBENTURES MAY BE DISTRIBUTED
TO YOU............................................. Under certain circumstances and after we obtain any necessary
regulatory approvals, we may dissolve the Trust. If we
dissolve the Trust, after satisfaction of any of the Trust's
liabilities to creditors, the Trust will distribute to you
your pro rata share of the junior subordinated debentures in
liquidation of the Trust.
OUR GUARANTEE OF PAYMENT............................. We will fully and unconditionally guarantee that the Trust
will pay you distributions quarterly, if not deferred, and the
liquidation amount upon liquidation of the Trust, but only, in
each case, to the extent funds are held by the Trust. We will
guarantee the trust preferred securities based on:
* our obligations to make payments on the junior subordinated
debentures;
* our obligations under a guarantee executed for the benefit
of the holders of the trust preferred securities; and
7
<PAGE>
* our obligations under the indenture and trust agreement.
If we do not make payments on the junior subordinated
debentures, the Trust will not have sufficient funds to make
payments on the trust preferred securities. The guarantee does
not cover payments when the Trust does not have sufficient
funds.
LIMITED VOTING RIGHTS................................ You will have no voting rights except in limited
circumstances.
USE OF PROCEEDS...................................... The Trust will invest all of the proceeds from the sale of the
trust preferred securities and the trust common securities in
our junior subordinated debentures. We intend to use the net
proceeds from our sale of the junior subordinated debentures
(1) to infuse approximately $8.00 million of capital into the
bank, (2) to repay approximately $2.50 million of corporate
indebtedness, including a revolving line of credit with a balance
of $2.00 million, the proceeds of which were used to repurchase
shares of our common stock and (3) for general corporate purposes,
including possible future repurchases of our common stock.
Funds retained for general corporate purposes will be temporarily
invested in short-term investment securities.
LACK OF RATING....................................... The trust preferred securities will not be rated by a
nationally recognized statistical rating organization and are
not anticipated to be rated in the future.
AMERICAN STOCK EXCHANGE SYMBOL....................... We will apply to list the trust preferred securities on the
American Stock Exchange under the symbol "---------."
BOOK-ENTRY........................................... The trust preferred securities will be represented by a global
security that will be deposited with and registered in the
name of The Depository Trust Company, New York, New York, or
its nominee. This means that you will not receive a
certificate for your trust preferred securities.
ERISA CONSIDERATIONS................................. You should carefully consider the information set forth under
"Certain ERISA Considerations."
</TABLE>
RISK FACTORS
Before purchasing the trust preferred securities offered by this
prospectus you should carefully consider the "Risk Factors"
beginning on page 11.
8
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following is our summary consolidated financial information.
The balance sheet and income statement data as of or for the five
years ended December 31, 1998 are taken from our audited
consolidated financial statements as of the end of and for each such
year. The balance sheet and income statement data as of or for the
three months ended March 31, 1999 and 1998 are taken from our
unaudited condensed consolidated financial statements as of the
end of and for each such three-month period. The quarterly data
include all adjustments which are, in our opinion, necessary to present
a fair statement of these periods and are of a normal recurring nature.
Results for the three months ended March 31, 1999 are not
necessarily indicative of results for the entire year. You should
read this summary consolidated financial information in conjunction
with our consolidated financial statements and notes that appear in
this prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income............................ $ 11,925 $ 12,270 $ 49,218 $ 37,765 $ 25,056 $ 19,252 $ 9,994
Interest expense........................... 6,088 6,841 27,267 21,466 14,999 11,206 4,584
-------- -------- -------- -------- -------- -------- --------
Net interest income...................... 5,837 5,429 21,951 16,299 10,057 8,046 5,410
Provisions for loan losses................. 562 400 2,420 2,397 1,448 977 849
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision...... 5,275 5,029 19,531 13,902 8,609 7,069 4,561
-------- -------- -------- -------- -------- -------- --------
Other income............................... 1,254 1,109 9,324 3,298 1,393 654 513
Other expense.............................. 4,858 5,118 21,295 13,069 7,019 5,625 3,764
-------- -------- -------- -------- -------- -------- --------
Income before income taxes............... 1,671 1,020 7,560 4,131 2,938 2,098 1,310
Provision for income taxes................. 669 393 3,026 1,716 1,175 823 509
-------- -------- -------- -------- -------- -------- --------
Net income............................... $ 1,002 $ 627 $ 4,534 $ 2,415 $ 1,808 $ 1,275 $ 801
======== ======== ======== ======== ======== ======== ========
COMMON SHARE DATA:
Book value per share at period-end......... $ 7.48 $ 6.87 $ 7.36 $ 6.88 $ 4.80 $ 4.25 $ 3.60
Basic earnings per share................... 0.15 0.10 0.72 0.54 0.55 0.42 0.35
Diluted earnings per share................. 0.15 0.09 0.68 0.49 0.48 0.42 0.35
Cash dividends declared per share.......... 0.05 0.03 0.12 0.08 0.06 0.04 0.02
Dividend payout ratio...................... 32.73% 24.56% 20.22% 13.77% 10.34% 8.86% 7.24%
BALANCE SHEET DATA (AT PERIOD-END):
Total assets............................... $620,857 $617,600 $596,274 $608,237 $377,564 $280,386 $171,927
Total loans................................ 520,306 507,156 495,668 484,863 291,926 181,544 121,393
Indebtedness:
Short-term borrowings.................... 10,039 11,038 14,542 15,729 11,637 4,108 14,756
Federal Home Loan Bank advances.......... 64,125 64,625 66,125 47,475 31,500 21,100 7,750
Other borrowings......................... 13,150 13,650 13,150 13,650 7,663 8,619 4,704
Total deposits............................. 481,038 479,776 450,766 484,641 308,670 231,309 134,884
Shareholders' equity....................... 49,059 43,017 48,104 42,071 16,386 13,938 8,453
SELECTED FINANCIAL RATIOS AND OTHER DATA:
Performance Ratios:
Net interest margin...................... 4.17% 3.81% 3.82% 3.71% 3.39% 3.71% 4.27%
Net interest spread...................... 3.66 3.33 3.33 3.20 2.92 3.22 3.84
Other income to average assets........... 0.83 0.72 1.51 0.71 0.45 0.29 0.38
Other expense to average assets.......... 3.22 3.34 3.44 2.82 2.27 2.47 2.82
Return on average total assets........... 0.67 0.41 0.73 0.52 0.59 0.56 0.60
Return on average shareholders' equity... 8.41 5.98 10.14 9.55 12.17 10.86 9.91
Total loans to total deposits at
period-end.............................. 108.16 105.71 109.96 100.05 94.58 78.49 90.00
Average interest earning assets to
average interest bearing liabilities.... 111.90 110.01 110.34 110.33 109.27 109.55 111.90
Efficiency ratio......................... 68.51 78.28 68.07 66.69 61.30 64.66 63.55
Average assets per employee.............. $ 2,680 $ 2,438 $ 2,879 $ 2,835 $ 2,835 $ 2,480 $ 2,301
Asset Quality Ratios (at period-end):
Allowance for loan losses to total
loans................................... 1.30% 1.07% 1.30% 1.07% 1.06% 1.17% 1.20%
Non-performing loans to total loans...... 0.37 0.20 0.36 0.28 0.24 0.17 0.14
Allowance for loan losses to total
non-performing loans.................... 354.24 547.43 362.32 377.12 447.98 691.56 841.04
Net charge offs to average loans......... 0.05 0.03 0.25 0.19 0.21 0.19 0.19
Non-performing assets to total assets.... 0.31 0.23 0.30 0.28 0.18 0.11 0.12
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Including deposit interest............... 1.27x 1.16x 1.28x 1.19x 1.20x 1.19x 1.28x
Excluding deposit interest............... 2.31x 1.81x 2.38x 1.96x 1.99x 1.95x 2.64x
Allegiant Capital Ratios (at period-end):
Total risk-based capital................. 8.49% 8.29% 8.68% 8.14% 8.55% 11.51% 8.51%
Tier 1 risk-based capital................ 7.24 6.52 7.42 6.39 6.10 7.98 7.24
Tier 1 leverage capital.................. 6.14 4.84 5.83 6.15 4.38 5.12 4.98
Allegiant Bank Capital Ratios (at
period-end):
Total risk-based capital................. 10.63 9.18 10.93 9.35 10.06 14.40 13.10
Tier 1 risk-based capital................ 9.38 8.11 9.68 8.27 8.87 13.13 11.77
Tier 1 leverage capital.................. 7.81 6.31 7.61 7.76 6.37 8.63 8.02
Other Data:
Number of banking facilities at
period-end.............................. 14 15 13 14 8 7 6
Goodwill amortization.................... $250 $233 $910 $358 $67 $104 $68
</TABLE>
All share and per share amounts included above have been
restated to reflect: (1) a six-for-five stock split effected in
January 1994; (2) a five-for-three stock split effected in January
1995; (3) a 10% stock dividend paid in January 1996; (4) a 10% stock
dividend paid in January 1997; (5) a five-for-four stock split
effected in January 1998; and (6) a six-for-five stock split
effected in January 1999.
For purposes of the above table: (1) short-term borrowings
consist of federal funds purchased, repurchase agreements and
amounts due in 12 months or less on our term debt; and (2) other
borrowings consist of amounts due in more than 12 months on our term
debt and our outstanding subordinated debentures and convertible
subordinated debentures.
Our efficiency ratio is the quotient of our other expense over
the sum of our net interest income and other income.
For purposes of calculating the ratio of earnings to combined
fixed charges, earnings consist of earnings before income taxes plus
interest and one-half of rental expense. Fixed charges, excluding
interest on deposits, consist of interest on indebtedness and
one-half of rental expense (which is deemed representative of the
interest factor). Fixed charges, including interest on deposits,
consists of the foregoing items plus interest on deposits.
10
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors before
purchasing the trust preferred securities offered by this
prospectus. There could be other factors not listed below that may
affect the Trust and us.
RISK FACTORS RELATING TO THE TRUST PREFERRED SECURITIES
THE TRUST WILL RELY SOLELY UPON PAYMENTS BY US AND, INDIRECTLY, ON
PAYMENTS BY THE BANK FOR FUNDS TO MAKE DISTRIBUTIONS ON THE TRUST
PREFERRED SECURITIES.
The Trust will depend solely on our payments on the junior
subordinated debentures to pay amounts due to you on the trust
preferred securities. We are a separate legal entity from our
subsidiaries and do not have significant operations of our own. We
will depend primarily on any dividends we receive from our
subsidiaries, which may be limited by regulations, and our cash and
liquid investments, to pay interest to the Trust on the junior
subordinated debentures. We anticipate that an additional source of
funds for payments of interest on the junior subordinated debentures
will be borrowings, including future borrowings from time to time
under our revolving line of credit. Prospective investors should be
aware that our existing revolving line of credit is short-term in
nature, and we may not be able to renew the line of credit in order
to pay interest on the junior subordinated debentures.
OUR OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR SUBORDINATED
DEBENTURES ARE SUBORDINATE TO MOST OF OUR OTHER CREDITORS AND ALL OF
THE CREDITORS OF THE BANK.
Our obligations under the guarantee and the junior subordinated
debentures are unsecured and are subordinate in right of payment to
all of our existing and future senior debt, subordinated debt and
additional senior obligations, which totaled $87.31 million at March
31, 1999.
Because we are a holding company, the creditors of our
subsidiaries also will have priority over you in any distribution of
our subsidiaries' assets in a liquidation, reorganization or
otherwise. Therefore, the junior subordinated debentures will be
effectively subordinated to all existing and future liabilities of
our subsidiaries, and you should look only to our assets for
payments on the junior subordinated debentures. The junior
subordinated debentures do not limit our ability or the ability of
our subsidiaries to incur additional debt. See "Description of
Junior Subordinated Debentures--Subordination."
WE MAY DEFER INTEREST PAYMENTS UNDER THE JUNIOR SUBORDINATED
DEBENTURES.
So long as we are not in default under the junior subordinated
debentures, we may defer the payment of interest on the junior
subordinated debentures at any time or from time to time for up to
20 consecutive quarters. Any deferral, however, cannot extend beyond
the stated maturity date of the junior subordinated debentures.
During any period in which we defer interest payments, the Trust
will defer quarterly distributions on the trust preferred
securities, which will continue to accumulate distributions at an
annual rate of --% and unpaid distributions will accumulate additional
distributions at the annual rate of --% compounded quarterly from the
relevant distribution payment date. During a deferral period you will
continue to accumulate income, in the form of original issue discount,
for federal income tax purposes on the trust preferred securities, but
you will not receive distributions attributable to that income. In
addition, during a deferral period, your tax basis in the trust preferred
securities will increase by the amount of accumulated but unpaid
distributions. If you sell the trust preferred securities during a
deferral period, your increased tax basis will decrease the amount
of any capital gain or increase the amount of any capital loss that
you may have otherwise recognized on the sale. A capital loss,
except in certain limited circumstances, cannot be applied to offset
ordinary income. As a result, deferral of distributions could result
in ordinary income, a related tax liability for the holder, and a
capital loss that may only be used to offset a capital gain. See
"Description of Junior Subordinated Debentures--Option to Extend
Interest Payment Period" and "Certain United States Federal Income
Tax Consequences."
11
<PAGE>
Should we elect to exercise our right to defer interest payments
on the junior subordinated debentures, the market price for the
trust preferred securities would likely be adversely affected. If
you dispose of trust preferred securities during a deferral period,
you might not recover the same return on your investment as someone
who continues to hold trust preferred securities. Due to our right
to defer interest payments, the market price of the trust preferred
securities may be more volatile than the market prices of other
securities without the deferral feature.
THE GUARANTEE COVERS PAYMENTS ONLY IF THE TRUST HAS CASH AVAILABLE.
If we do not make payments on the junior subordinated
debentures, the Trust will not have sufficient funds to pay
distributions or the $10 per trust preferred security liquidation
amount. Because the guarantee does not cover payments when the Trust
does not have sufficient funds, you will not be able to rely on the
guarantee for payment of these amounts. Instead, you or the property
trustee may enforce the rights of the Trust under the junior
subordinated debentures directly against us. See "Description of
Guarantee."
IN CERTAIN CIRCUMSTANCES THE TRUST MAY REDEEM THE TRUST PREFERRED
SECURITIES, WHICH WOULD REQUIRE YOU TO REINVEST YOUR PRINCIPAL
SOONER THAN EXPECTED.
Under the following circumstances and, subject to regulatory
approvals, we may redeem the junior subordinated debentures before
the stated maturity of the junior subordinated debentures:
* We may redeem the junior subordinated debentures in whole, but
not in part, prior to maturity within 90 days after certain
occurrences at any time during the life of the Trust. These
occurrences include certain adverse tax, Investment Company
Act or bank regulatory developments. If we redeem the junior
subordinated debentures due to the occurrence of one of these
events, the Trust will redeem the trust preferred securities.
* We may also at any time shorten the maturity of the junior
subordinated debentures to a date not earlier than
-----------------, 2004.
If we redeem the junior subordinated debentures, the Trust will
redeem a pro rata amount of the trust preferred securities, and you
may be required to reinvest your principal at a time when you may
not be able to earn a return that is as high as you were earning on
the trust preferred securities. See "Description of Trust Preferred
Securities--Redemption."
YOU WILL HAVE ONLY LIMITED VOTING RIGHTS, AND WE CAN AMEND THE TRUST
AGREEMENT UNDER CERTAIN CIRCUMSTANCES WITHOUT YOUR CONSENT.
You will have limited voting rights as a holder of trust
preferred securities. Your voting rights will relate only to the
modification of the trust preferred securities and the exercise of
the Trust's rights as holder of the junior subordinated debentures.
You will not usually be able to appoint, remove or replace the
property trustee or the Delaware trustee because these rights
generally reside with us as the holder of the trust common
securities. However, if an event of default under the trust
agreement occurs and is continuing, the holders of a majority in
aggregate liquidation amount of the trust preferred securities may
remove the trustees. Even if it would adversely affect your rights,
we, together with the property trustee and the trust administrators
may amend the trust agreement without your consent to ensure that
the Trust will be classified as a grantor trust for United States
federal income tax purposes or to ensure that the Trust will not be
required to register as an investment company.
WE CAN DISTRIBUTE THE JUNIOR SUBORDINATED DEBENTURES TO YOU, WHICH
MAY HAVE ADVERSE TAX CONSEQUENCES FOR YOU AND WHICH MAY AFFECT THE
MARKET PRICE OF THE TRUST PREFERRED SECURITIES.
The Trust may be dissolved at any time before maturity of the
junior subordinated debentures on ------------, 2029. As a result, and
subject to the terms of the trust agreement, the trustees may distribute
the junior subordinated debentures to the holders of the trust preferred
securities. See "Description of Trust Preferred Securities--Liquidation
Distribution Upon Dissolution."
12
<PAGE>
We cannot predict the market price for the junior subordinated
debentures that may be distributed. Accordingly, the junior
subordinated debentures that you receive upon a distribution, or the
trust preferred securities you hold pending such a distribution, may
trade at a price that is less than you paid to purchase the trust
preferred securities. Because you may receive junior subordinated
debentures, you must also make an investment decision with regard to
the junior subordinated debentures. You should carefully review all
of the information regarding the junior subordinated debentures
contained in this prospectus.
Under current United States federal income tax laws, a
distribution of the junior subordinated debentures to you upon the
dissolution of the Trust would not be a taxable event to you.
Nevertheless, if the Trust is classified for United States federal
income tax purposes as an association taxable as a corporation at
the time it is dissolved, the distribution of the junior
subordinated debentures would be a taxable event to you. In
addition, if there is a change in law, a distribution of junior
subordinated debentures upon the dissolution of the Trust could be a
taxable event to you. See "Certain United States Federal Income Tax
Consequences."
If the junior subordinated debentures are distributed by the
Trust, we will apply to list the junior subordinated debentures for
trading on the American Stock Exchange. However, we may not be able
to achieve that listing and a market for the junior subordinated
debentures may not develop.
THE HOLDERS OF THE TRUST PREFERRED SECURITIES AND THE JUNIOR
SUBORDINATED DEBENTURES ARE NOT PROTECTED BY COVENANTS IN THE
INDENTURE OR THE TRUST AGREEMENT.
Neither the indenture, which sets forth the terms of the junior
subordinated debentures, nor the trust agreement, which sets forth
the terms of the trust preferred securities and the trust common
securities, protects holders of junior subordinated debentures or
the trust preferred securities, respectively, in the event we
experience significant adverse changes in our financial condition or
results of operations. In addition, neither the indenture nor the
trust agreement limits our ability or the ability of any subsidiary
to incur additional indebtedness. Therefore, the provisions of these
governing instruments should not be considered a significant factor
in evaluating whether we will be able to comply with our obligations
under the junior subordinated debentures or the guarantee.
YOU MUST RELY ON THE PROPERTY TRUSTEE TO ENFORCE YOUR RIGHTS IF
THERE IS AN EVENT OF DEFAULT UNDER THE INDENTURE.
You may not be able to directly enforce your rights against us
if an event of default under the indenture occurs. If an event of
default under the indenture occurs and is continuing, the event also
will be an event of default under the trust agreement. In that case,
you would rely on the enforcement by the property trustee of its
rights against us as holder of the junior subordinated debentures.
The holders of a majority in liquidation amount of the trust
preferred securities will have the right to direct the property
trustee to enforce its rights. If the property trustee does not
enforce its rights following an event of default and a request by
the record holders to do so, any record holder may take action
directly against us to enforce the property trustee's rights. If an
event of default occurs under the trust agreement that is
attributable to our failure to pay interest or principal on the
debentures, or if we default under the guarantee, you may proceed
directly against us. You will not be able to exercise directly any
other remedies available to the holders of the junior subordinated
debentures unless the property trustee fails to do so.
THE MARKET PRICE FOR THE TRUST PREFERRED SECURITIES MAY DECLINE
AFTER YOU INVEST.
The market price for the trust preferred securities may decline
during any period that we are deferring interest payments on the
junior subordinated debentures. If this were the case, the trust
preferred securities would not trade at a price that accurately
reflects the value of accumulated but unpaid interest on the
underlying junior subordinated debentures.
There is no current public market for the trust preferred
securities. Although we plan to list the trust preferred securities
on the American Stock Exchange, there is no guarantee that an active
or liquid public trading market will develop for the trust preferred
securities or that listing of the trust preferred securities will
continue on the American Stock Exchange. If an active trading market
does not develop, the market
13
<PAGE>
price and liquidity of the trust preferred securities will be
adversely affected. Even if an active public market does develop,
there is no guarantee that the market price for the trust preferred
securities will equal or exceed the price you pay for the trust
preferred securities.
Future trading prices of the trust preferred securities may be
subject to significant fluctuations in response to prevailing
interest rates, our future operating results and financial
condition, the market for similar securities and general economic
and market conditions. The initial public offering price of the
trust preferred securities has been set by negotiations between us
and our underwriters and may be greater than the market price
following the offering.
THE TRUST PREFERRED SECURITIES ARE NOT FDIC INSURED.
Neither the Federal Deposit Insurance Corporation nor any other
governmental agency has insured the trust preferred securities.
WE HAVE NOT SOUGHT AN INVESTMENT RATING FOR THE TRUST PREFERRED
SECURITIES.
The trust preferred securities are not rated by any rating
agency and are not anticipated to be rated in the future. We
believe, however, that if the trust preferred securities were to be
rated at this time, the rating determined would be that of
speculative grade.
RISK FACTORS RELATING TO ALLEGIANT AND ITS INDUSTRY
WE MAY EXPERIENCE DIFFICULTIES IN MANAGING OUR GROWTH.
As part of our general strategy, we may acquire banks and
related businesses that we believe provide a strategic fit with our
business. To the extent that we do grow, we cannot assure you that
we will be able to adequately and profitably manage such growth. In
addition, we may not be able to obtain regulatory approval for
acquisitions we want to make. Acquiring other banks and businesses
will involve risks commonly associated with acquisitions, including:
* potential exposure to liabilities of banks and businesses we
acquire;
* difficulty and expense of integrating the operations and
personnel of banks and businesses we acquire;
* potential disruption to our business;
* potential diversion of our management's time and attention;
* impairment of relationships with and the possible loss of key
employees and customers of the banks and businesses we
acquire; and
* incurrence of amortization expense if we account for an
acquisition as a purchase and dilution to our shareholders if
we use our common stock as consideration for the acquisition.
We recognized operating losses in the fourth quarter of 1997
totaling approximately $0.75 million in connection with two branch
acquisitions and upgrading our computer system to an entirely new
operating system. We believe these losses were systemic and
non-recurring. Throughout 1998, we invested significant resources in
reengineering several operational processes and in additional
training in an effort to address the problems that resulted in the
losses.
IT MAY BE DIFFICULT FOR US TO MAINTAIN OUR HISTORICAL GROWTH RATE.
We have completed various acquisitions and opened additional
branches in the past few years that have significantly enhanced our
rate of growth. We cannot provide you assurances that we will
continue to sustain this rate of growth or grow at all. Competition
for suitable acquisition candidates is intense. We may target
acquisition candidates that a variety of larger financial
institutions with substantially greater resources than us also may
be interested in acquiring, which may make it more difficult for us
to acquire any candidate.
14
<PAGE>
THE LOSS OF CERTAIN KEY PERSONNEL COULD ADVERSELY AFFECT OUR
OPERATIONS.
Our success depends in large part on the retention of key
personnel, including Shaun R. Hayes, our President and Chief
Executive Officer, Marvin S. Wool, our Chairman, and certain other
executive officers.
We will likely undergo a difficult transition period if we lose
the services of any of these individuals. In recognition of this
risk, we own and are the beneficiary of an insurance policy on the
life of Mr. Hayes providing death benefits of $2.00 million.
Our success also depends on the experience of the managers of
our banking facilities and on their relationships with the communities
they serve. The loss of these key persons could negatively impact the
affected banking operations. We may not be able to retain our current
key personnel or attract additional qualified key persons as needed.
CHANGES IN THE LOCAL ECONOMIC CONDITIONS COULD ADVERSELY AFFECT OUR
LOAN PORTFOLIO.
Our success depends to a great extent upon the general economic
conditions of the St. Louis metropolitan area. Unlike larger banks
that are more geographically diversified, we primarily provide
banking and financial services to customers in the St. Louis
metropolitan area. Our commercial, real estate and construction
loans, and the ability of the borrowers to repay these loans and the
value of the collateral securing these loans, are impacted by our
local economic conditions. We cannot assure you that favorable
economic conditions will exist in our market.
OUR ALLOWANCE FOR LOAN LOSSES MAY NOT BE ADEQUATE TO COVER ACTUAL
LOAN LOSSES.
As a lender, we are exposed to the risk that our customers will
be unable to repay their loans according to their terms and that any
collateral securing the payment of their loans may not be sufficient
to assure repayment. Credit losses are inherent in the lending
business and could have a material adverse effect on our operating
results. Our credit risk with respect to our real estate and
construction loan portfolio relates principally to the general
creditworthiness of individuals and the value of real estate serving
as security for the repayment of loans. Our credit risk with respect
to our commercial and consumer installment loan portfolio relates
principally to the general creditworthiness of businesses and
individuals within our local market.
We make various assumptions and judgments about the
collectibility of our loan portfolio and provide an allowance for
potential losses based on a number of factors. If our assumptions
are wrong, our allowance for loan losses may not be sufficient to
cover our loan losses. We may have to increase the allowance in the
future. Additions to our allowance for loan losses would decrease
our net income.
WE MAY BE UNABLE TO MANAGE INTEREST RATE RISKS THAT COULD REDUCE OUR
NET INTEREST INCOME.
Like other financial institutions, our results of operations are
affected principally by net interest income which is the difference
between interest earned on loans and investments and interest
expense paid on deposits and other borrowings. We cannot predict or
control changes in interest rates. Regional and local economic
conditions and the policies of regulatory authorities, including
monetary policies of the Board of Governors of the Federal Reserve
System, affect interest income and interest expense. While we
continually take measures intended to manage the risks from changes
in market interest rates, changes in interest rates can still have a
material adverse effect on our profitability.
In addition, certain assets and liabilities may react in
different degrees to changes in market interest rates. For example,
interest rates on some types of assets and liabilities may fluctuate
prior to changes in broader market interest rates, while rates on
other types may lag behind. Further, some of our assets, such as
adjustable rate mortgages, have features, including rate caps, which
restrict changes in their interest rates.
Factors such as inflation, recession, unemployment, money
supply, international disorders, instability in domestic and foreign
financial markets, and other factors beyond our control may affect
interest rates. Changes in market interest rates also will affect
the level of voluntary prepayments on our loans and the receipt of payments
on our mortgage-backed securities resulting in the receipt of proceeds that
may be
15
<PAGE>
reinvested at a lower rate than the loan or mortgage-backed security
being prepaid. Although we pursue an asset-liability management
strategy designed to control our risk from changes in market interest
rates, changes in interest rates can still have a material adverse
effect on our profitability.
INSIDERS MAY CONTROL OUR FUTURE OPERATIONS AS A RESULT OF THE
CONCENTRATION OF CONTROL OF OUR COMMON STOCK.
Our executive officers and directors beneficially own
approximately 35% of our outstanding common stock. As a result,
these insiders may be able to control the election of our Board of
Directors and thus our direction and future operations, and our
other shareholders may lack an effective vote with respect to such
matters. See "Beneficial Ownership."
WE CANNOT PREDICT HOW CHANGES IN TECHNOLOGY WILL IMPACT OUR
BUSINESS.
The financial services industry, including the banking sector,
is increasingly affected by advances in technology, including
developments in:
* telecommunications;
* data processing;
* automation;
* Internet banking;
* telebanking; and
* debit cards and so-called "smart cards."
Our ability to compete successfully in the future will depend on
whether we can anticipate and respond to technological changes. To
develop these and other new technologies we will likely have to make
additional capital investments. Although we continually invest in
new technology, we cannot assure you that we will have sufficient
resources or access to the necessary technology to remain
competitive in the future.
THE BANKING BUSINESS IS HIGHLY COMPETITIVE.
We operate in a competitive environment. In the St. Louis
metropolitan area, other commercial banks, savings and loan
associations, credit unions, finance companies, mutual funds,
insurance companies, brokerage and investment banking firms and
other financial intermediaries offer similar services. Many of these
competitors have substantially greater resources and lending limits
and may offer certain services we do not currently provide. In
addition, some of our nonbank competitors are not subject to the
same extensive regulations that govern our subsidiary bank and
businesses. Our profitability depends upon the ability of the bank
to compete in our market area. See "Business--Competition."
OUR OPERATIONS MAY BE ADVERSELY AFFECTED IF WE, OR CERTAIN PERSONS
WITH WHOM WE DO BUSINESS, FAIL TO ADEQUATELY ADDRESS THE YEAR 2000
ISSUE.
A critical issue has emerged in the banking industry and for the
economy overall regarding how existing application software programs
and operating systems can accommodate the date value for the year
2000. The "year 2000 issue" arose because many of these existing
programs and systems use only the last two digits in referring to a
year. Therefore, these computer programs do not properly recognize a
year beginning with "20" instead of the familiar "19." If not
corrected, many computer applications and other technology-based
systems could fail or create erroneous results. The effects of this
problem will vary from system to system, and the extent of the
potential impact of the year 2000 problem is not yet known. The year
2000 problem may adversely affect a bank's operations. We could
experience interruptions in our business and suffer significant
losses if we, or a supplier or vendor with whom we contract, are
unable to achieve year 2000 readiness before January 1, 2000. We are
in the process of working with our third party service providers and
software vendors to assure both Allegiant and the bank are prepared
for the year 2000. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Year 2000."
16
<PAGE>
WE ARE SUBJECT TO EXTENSIVE REGULATION.
The banking industry is heavily regulated under both federal and
state law. These regulations are primarily intended to protect
depositors and the Federal Deposit Insurance Corporation, not our
creditors or shareholders. We and our nonbank subsidiaries also are
subject to the supervision of the Federal Reserve Board, in addition
to other regulatory and self-regulatory organizations. Regulations
affecting banks and financial services companies undergo continuous
change, and the ultimate effect of such changes cannot be predicted.
Regulations and laws may be modified at any time, and new
legislation may be enacted that affects us, our bank or our nonbank
subsidiaries. We cannot assure you that such modifications or new
laws will not adversely affect us. See "Business--Supervision and
Regulation."
We will depend primarily upon dividends from the bank to meet
our obligations under the junior subordinated debentures. Banking
regulations may restrict or even prevent us from receiving dividends
from the bank in the future.
USE OF PROCEEDS
The Trust will invest all the proceeds from the sale of the
trust preferred securities in the junior subordinated debentures. We
will use the net proceeds we receive from the sale of the junior
subordinated debentures, which we estimate to be approximately
$14,087,500 ($16,253,125 if the underwriters' over-allotment option
is exercised in full):
* to infuse approximately $8.00 million of capital into the
bank;
* to repay approximately $2.50 million of corporate indebtedness
consisting of $2.00 million under a revolving line of credit
and a $0.50 million principal repayment on term debt. The
revolving line of credit bears interest at the prime
rate (currently 8.00% per annum) and matures in November 1999.
The term loan bears interest at the rate of 7.00% per annum
and matures in November 2001. Proceeds of the line of credit,
together with cash on hand of $0.32 million, were used to
repurchase 232,010 shares of our common stock for $2.32
million; and
* for general corporate purposes, including possible future
repurchases of our common stock.
Funds retained for general corporate purposes will be temporarily
invested in short-term investment securities.
17
<PAGE>
CAPITALIZATION
The following tables set forth (1) our consolidated
capitalization at March 31, 1999, (2) our consolidated
capitalization giving effect to the issuance of the trust preferred
securities, (3) our actual consolidated regulatory capital ratios as
of March 31, 1999, and (4) our capital ratios after giving effect to
the issuance of the trust preferred securities. The tables assume
application of the net proceeds from the corresponding sale of the
junior subordinated debentures to the Trust as if the sale of the
trust preferred securities had been completed on March 31, 1999, and
as if the underwriters' over-allotment was not exercised. The tables
do not include the effects of the common stock repurchase described
below.
<TABLE>
<CAPTION>
MARCH 31, 1999
----------------------------
ACTUAL AS ADJUSTED
--------- ------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE
AND PER SHARE AMOUNTS)
<S> <C> <C>
DEPOSITS:
Noninterest-bearing deposits................................ $ 51,627 $ 51,627
Interest-bearing deposits................................... 429,411 429,411
-------- --------
Total deposits.......................................... $481,038 $481,038
======== ========
INDEBTEDNESS:
Short-term borrowings....................................... $ 10,039 $ 10,039
Federal Home Loan Bank advances............................. 64,125 64,125
Company Obligated Mandatorily Redeemable Trust Preferred
Securities of Subsidiary Trust Holding Solely Subordinated
Debentures................................................ -- 15,000
Other borrowings............................................ 13,150 13,150
-------- --------
Total indebtedness...................................... $ 87,314 $102,314
======== ========
SHAREHOLDERS' EQUITY:
Common Stock, $0.01 par value; 20,000,000 shares authorized;
6,558,015 shares issued and outstanding................... $ 65 $ 65
Capital surplus............................................. 42,026 42,026
Retained earnings........................................... 7,057 7,057
Accumulated other comprehensive income...................... (89) (89)
-------- --------
Total shareholders' equity.............................. $ 49,059 $ 49,059
======== ========
</TABLE>
In July 1999, we repurchased 232,010 shares of our common stock
in a privately negotiated transaction. The aggregate purchase price
was $2.32 million, which primarily was funded by a $2.00 million
borrowing under our revolving line of credit which had a zero
balance as of March 31, 1999 and will have a zero balance after the
application of $2.00 million of the net proceeds of this offering.
<TABLE>
<CAPTION>
MARCH 31, 1999
-------------------------------------------------------------
ACTUAL AS ADJUSTED
------------------------------------------- -----------
"WELL- EXCESS/
CAPITALIZED" (DEFICIT)
CAPITAL STANDARD<F1> CAPITAL CAPITAL<F2>
------- ------------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
DOLLAR BASIS:
Total risk-based capital...... $43,086 $50,745 $(7,659) $58,086
Tier 1 risk-based capital..... 36,738 30,447 6,291 48,984
Tier 1 leverage capital....... 36,738 29,936 6,802 48,984
PERCENTAGE BASIS:
Total risk-based capital
ratio....................... 8.49% 10.00% 11.45%
Tier 1 risk-based capital
ratio....................... 7.24 6.00 9.65
Tier 1 leverage capital ratio. 6.14 5.00 8.18
<PAGE>
<CAPTION>
MARCH 31, 1999
---------------------------
AS ADJUSTED
---------------------------
"WELL-
CAPITALIZED" EXCESS
STANDARD<F1> CAPITAL
------------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
DOLLAR BASIS:
Total risk-based capital...... $50,745 $ 7,341
Tier 1 risk-based capital..... 30,447 18,537
Tier 1 leverage capital....... 29,936 19,048
PERCENTAGE BASIS:
Total risk-based capital
ratio....................... 10.00%
Tier 1 risk-based capital
ratio....................... 6.00
Tier 1 leverage capital ratio. 5.00
<FN>
- ---------
<F1> Reflects the minimum amount of capital necessary to meet the
"well-capitalized" regulatory standard. As of March 31, 1999, we exceeded
the minimum "well-capitalized" standard for both Tier 1 leverage and Tier
1 risk-based capital, but the level of total risk-based capital was below
the "well capitalized" standard. Upon completion of this offering, we will
meet the "well-capitalized" standard for total risk-based capital.
<F2> Federal Reserve Board guidelines for calculation of Tier 1 capital limit
the aggregate amount of trust preferred securities, including securities
similar to the trust preferred securities, which can be included in Tier 1
capital to 25% of total Tier 1 capital. As of March 31, 1999, $12.25
million of the aggregate amount of trust preferred securities would have
qualified as Tier 1 capital, and the remaining amount would have qualified
as Tier 2 capital.
</TABLE>
18
<PAGE>
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as
our subsidiary and, accordingly, the accounts of the Trust will be
included in our consolidated financial statements. The trust
preferred securities will be included in our consolidated balance
sheets under the caption "Company Obligated Mandatorily Redeemable
Trust Preferred Securities of Subsidiary Trust Holding Solely
Subordinated Debentures" and appropriate disclosures about the trust
preferred securities, the guarantee and the junior subordinated
debentures will be included in the notes to our consolidated
financial statements. For financial reporting purposes, we will
record distributions on the trust preferred securities in our
consolidated statements of income.
Our future reports filed under the Securities Exchange Act of
1934 will include a footnote to the consolidated financial
statements stating that:
* the Trust is wholly-owned;
* the sole assets of the Trust are the junior subordinated
debentures and specifying their principal amount, interest
rate and maturity date; and
* our obligations described in this prospectus, in the
aggregate, constitute a full, irrevocable and unconditional
guarantee on a subordinated basis by us of the obligations of
the Trust under the trust preferred securities.
19
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following is our selected consolidated financial
information. The balance sheet and income statement data as of or
for the five years ended December 31, 1998 are taken from our
audited consolidated financial statements as of the end of and for
each such year. The balance sheet and income statement data as of or
for the three months ended March 31, 1999 and 1998 are taken from
our unaudited condensed consolidated financial statements as of the
end of and for each such three-month period. The quarterly data include all
adjustments which are, in our opinion, necessary to present a fair
statement of these periods and are of a normal recurring nature.
Results for the three months ended March 31, 1999 are not
necessarily indicative of results for the entire year. You should
read this selected consolidated financial information in conjunction
with our consolidated financial statements and notes that appear in
this prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income............................ $ 11,925 $ 12,270 $ 49,218 $ 37,765 $ 25,056 $ 19,252 $ 9,994
Interest expense........................... 6,088 6,841 27,267 21,466 14,999 11,206 4,584
-------- -------- -------- -------- -------- -------- --------
Net interest income...................... 5,837 5,429 21,951 16,299 10,057 8,046 5,410
Provisions for loan losses................. 562 400 2,420 2,397 1,448 977 849
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision...... 5,275 5,029 19,531 13,902 8,609 7,069 4,561
-------- -------- -------- -------- -------- -------- --------
Other income............................... 1,254 1,109 9,324 3,298 1,393 654 513
Other expense.............................. 4,858 5,118 21,295 13,069 7,019 5,625 3,764
-------- -------- -------- -------- -------- -------- --------
Income before income taxes............... 1,671 1,020 7,560 4,131 2,938 2,098 1,310
Provision for income taxes................. 669 393 3,026 1,716 1,175 823 509
-------- -------- -------- -------- -------- -------- --------
Net income............................... $ 1,002 $ 627 $ 4,534 $ 2,415 $ 1,808 $ 1,275 $ 801
======== ======== ======== ======== ======== ======== ========
COMMON SHARE DATA:
Book value per share at period-end......... $ 7.48 $ 6.87 $ 7.36 $ 6.88 $ 4.80 $ 4.25 $ 3.60
Basic earnings per share................... 0.15 0.10 0.72 0.54 0.55 0.42 0.35
Diluted earnings per share................. 0.15 0.09 0.68 0.49 0.48 0.42 0.35
Cash dividends declared per share.......... 0.05 0.03 0.12 0.08 0.06 0.04 0.02
Dividend payout ratio...................... 32.73% 24.56% 20.22% 13.77% 10.34% 8.86% 7.24%
BALANCE SHEET DATA (AT PERIOD-END):
Total assets............................... $620,857 $617,600 $596,274 $608,237 $377,564 $280,386 $171,927
Total loans................................ 520,306 507,156 495,668 484,863 291,926 181,544 121,393
Indebtedness:
Short-term borrowings.................... 10,039 11,038 14,542 15,729 11,637 4,108 14,756
Federal Home Loan Bank advances.......... 64,125 64,625 66,125 47,475 31,500 21,100 7,750
Other borrowings......................... 13,150 13,650 13,150 13,650 7,663 8,619 4,704
Total deposits............................. 481,038 479,776 450,766 484,641 308,670 231,309 134,884
Shareholders' equity....................... 49,059 43,017 48,104 42,071 16,386 13,938 8,453
SELECTED FINANCIAL RATIOS AND OTHER DATA:
Performance Ratios:
Net interest margin...................... 4.17% 3.81% 3.82% 3.71% 3.39% 3.71% 4.27%
Net interest spread...................... 3.66 3.33 3.33 3.20 2.92 3.22 3.84
Other income to average assets........... 0.83 0.72 1.51 0.71 0.45 0.29 0.38
Other expense to average assets.......... 3.22 3.34 3.44 2.82 2.27 2.47 2.82
Return on average total assets........... 0.67 0.41 0.73 0.52 0.59 0.56 0.60
Return on average shareholders' equity... 8.41 5.98 10.14 9.55 12.17 10.86 9.91
Total loans to total deposits at
period-end.............................. 108.16 105.71 109.96 100.05 94.58 78.49 90.00
Average interest earning assets to
average interest bearing liabilities.... 111.90 110.01 110.34 110.33 109.27 109.55 111.90
Efficiency ratio......................... 68.51 78.28 68.07 66.69 61.30 64.66 63.55
Average assets per employee.............. $ 2,680 $ 2,438 $ 2,879 $ 2,835 $ 2,835 $ 2,480 $ 2,301
Asset Quality Ratios (at period-end):
Allowance for loan losses to total
loans................................... 1.30% 1.07% 1.30% 1.07% 1.06% 1.17% 1.20%
Non-performing loans to total loans...... 0.37 0.20 0.36 0.28 0.24 0.17 0.14
Allowance for loan losses to total
non-performing loans.................... 354.24 547.43 362.32 377.12 447.98 691.56 841.04
Net charge offs to average loans......... 0.05 0.03 0.25 0.19 0.21 0.19 0.19
Non-performing assets to total assets.... 0.31 0.23 0.30 0.28 0.18 0.11 0.12
20
<PAGE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Including deposit interest............... 1.27x 1.16x 1.28x 1.19x 1.20x 1.19x 1.28x
Excluding deposit interest............... 2.31x 1.81x 2.38x 1.96x 1.99x 1.95x 2.64x
Allegiant Capital Ratios (at period-end):
Total risk-based capital................. 8.49% 8.29% 8.68% 8.14% 8.55% 11.51% 8.51%
Tier 1 risk-based capital................ 7.24 6.52 7.42 6.39 6.10 7.98 7.24
Tier 1 leverage capital.................. 6.14 4.84 5.83 6.15 4.38 5.12 4.98
Allegiant Bank Capital Ratios (at
period-end):
Total risk-based capital................. 10.63 9.18 10.93 9.35 10.06 14.40 13.10
Tier 1 risk-based capital................ 9.38 8.11 9.68 8.27 8.87 13.13 11.77
Tier 1 leverage capital.................. 7.81 6.31 7.61 7.76 6.37 8.63 8.02
Other Data:
Number of banking facilities at
period-end.............................. 14 15 13 14 8 7 6
Goodwill amortization.................... $250 $233 $910 $358 $67 $104 $68
</TABLE>
All share and per share amounts included above have been
restated to reflect: (1) a six-for-five stock split effected in
January 1994; (2) a five-for-three stock split effected in January
1995; (3) a 10% stock dividend paid in January 1996; (4) a 10% stock
dividend paid in January 1997; (5) a five-for-four stock split
effected in January 1998; and (6) a six-for-five stock split
effected in January 1999.
For purposes of the above table: (1) short-term borrowings
consist of federal funds purchased, repurchase agreements and
amounts due in 12 months or less on our term debt; and (2) other
borrowings consist of amounts due in more than 12 months on our term
debt and our outstanding subordinated debentures and convertible
subordinated debentures.
Our efficiency ratio is the quotient of our other expense over
the sum of our net interest income and other income.
For purposes of calculating the ratio of earnings to combined
fixed charges, earnings consist of earnings before income taxes plus
interest and one-half of rental expense. Fixed charges, excluding
interest on deposits, consist of interest on indebtedness and
one-half of rental expense (which is deemed representative of the
interest factor). Fixed charges, including interest on deposits,
consists of the foregoing items plus interest on deposits.
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following should be read in connection with our consolidated
financial statements and related notes and the other financial
information included elsewhere in this prospectus.
OVERVIEW
The profitability of our operations depends on our net interest
income, provision for loan losses, non-interest income and
non-interest expense. Net interest income is the difference between
the income we receive on our loan and investment portfolios and our
cost of funds, which consists of interest paid on deposits and
borrowings. The provision for loan losses reflects the cost of
credit risk in our loan portfolio. Non-interest income consists
primarily of service charges on deposit accounts and fees for
ancillary banking services and, to a lesser extent, revenues
generated from our mortgage banking, securities brokerage, insurance
brokerage and trust operations. Non-interest expense includes
salaries and employee benefits as well as occupancy, data
processing, marketing, professional fees, insurance and other
expenses.
Net interest income is dependent on the amounts and yields of
interest earning assets compared to the amounts and rates on
interest bearing liabilities. Net interest income is sensitive to
changes in market rates of interest and our asset/liability
management procedures are intended to manage the risk presented by
changes in market interest rates. The provision for loan losses is
dependent on changes in the loan portfolio, management's assessment
of the collectibility of the loan portfolio and loss experience, as
well as economic and market factors.
Since the beginning of 1998, we have focused primarily on
improving the profitability of our banking operations. As a result,
we have reduced the amount of one- to four-family mortgages that we
hold in our loan portfolio and increased the amount of higher
yielding commercial loans. We also have hired several banking
professionals with experience in the St. Louis metropolitan area. We
have refined our market focus to concentrate exclusively on
opportunities in the higher-growth St. Louis metropolitan area and,
accordingly, we sold three retail banking offices outside the St.
Louis metropolitan area in December 1998. We also have implemented
company-wide cost-control efforts to enhance efficiencies at our
entire operations.
Our primary financial strategies are to continue to grow our
loan portfolio while maintaining high asset quality, expand our core
deposit base to provide a cost-effective and stable source of
funding for our loan portfolio and increase non-interest income while
maintaining strong expense controls. We believe we have maintained
high asset quality while managing growth both internally and by
acquisition. We also believe our history of strong credit quality
has resulted from sound credit practices.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998.
Net income for the three months ended March 31, 1999 was $1.00
million, a 59.8% increase over the $0.63 million earned for the
first quarter of 1998. Both basic earnings per share and diluted
earnings per share were $0.15 for the first quarter of 1999 compared
to basic and diluted earnings per share for the first quarter of
1998 of $0.10 and $0.09, respectively. The annualized return on
average assets for the first quarter of 1999 was 0.67% and
represents a 63.41% improvement over the 0.41% annualized return on
average assets reported for the first quarter of 1998. The return on
average equity on an annualized basis was 8.41% for the first
quarter of 1999 compared to 5.98% for the first quarter of 1998.
We experienced modest growth during the first quarter of 1999.
Period-end total assets increased $24.58 million, or 4.12%, from
$596.27 million at December 31, 1998. Asset growth during the period
was primarily in loans which before allowance for loan losses,
increased $24.64 million, or 5.0%. Deposit balances increased $30.27
million, or 6.72%, during the first quarter of 1999. Money market
accounts increased $29.52 million representing the majority of the
net deposit growth during the quarter. This growth was a result of
efforts to promote our new money market product. Certificates of
deposit increased by a net of $5.71 million
22
<PAGE>
during the first quarter of 1999, including a $20 million increase
in brokered certificates of deposit issued in February.
Net Interest Income. Net interest income for the three months
ended March 31, 1999 was $11.93 million, a 2.81% decrease compared
to the $12.27 million reported for the first quarter of 1998. This
$0.34 million decline was attributable to a slightly lower yield on
earning assets and a decrease of $10.56 million in average earning
assets. The change in average earning assets reflected a decrease in
investment securities of $16.18 million from the first quarter of
1998 to the first quarter of 1999. The reduction in investment
securities provided funds for maturing certificates of deposit which
were not renewed. The decrease in investment securities was
partially offset by a $2.21 million increase in average loans and a
$3.40 million increase in average overnight investments.
Net interest margin for the first quarter of 1999 increased 36
basis points compared to the first quarter of 1998. The earning
assets yield declined 8 basis points while our efforts to shift
maturing certificates of deposit into other deposit accounts at
lower rates resulted in a 48 basis point reduction in the overall
interest rate paid on interest bearing deposits. The net interest
spread increased 33 basis points comparing the first quarter 1999 to
the first quarter 1998.
Interest expense on deposits declined $0.76 million due to a
$20.90 million decline in average interest bearing deposits and due
to a decline in the rate paid on deposits from 5.23% in the first
quarter of 1998 to 4.75% for the comparable period in 1999. The
decrease in interest expense on deposits consisted primarily of a
$1.05 million decline in interest expense on certificates of
deposit, offset by a $0.34 million increase in interest expense on
money markets and NOW accounts. The average balance in certificates
of deposit decreased by $56.73 million during the first quarter of
1999 as compared to the first quarter of 1998 and the rate paid
declined 41 basis points between those periods. The decrease in
average deposits included a $39.99 million reduction from the
December 1998 sale of three branches of the bank located outside the
St. Louis metropolitan area.
The rate paid on other borrowings also contributed to the net
interest margin improvement. The rate paid on other borrowings
declined from 7.60% for the first quarter of 1998 to 5.97% for the
first quarter of 1999. During October 1998, we refinanced a portion
of our long-term debt and all outstanding subordinated debentures
with a $13.65 million, 7.00% fixed rate, three-year note. This
refinancing caused the rate paid on other borrowings to decline 163
basis points in the first quarter of 1999 compared to the first
quarter of the previous year. The decrease in the average rate on
other borrowings was offset by a 79 basis point increase in the rate
paid on short-term borrowings in the first quarter of 1999 as
compared to the first quarter of 1998.
23
<PAGE>
The following table sets forth the condensed average balance
sheets for the periods reported. Also shown is the average yield on
each category of interest earning assets and the average rate paid
on interest bearing liabilities for each of the periods reported.
<TABLE>
DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
AND INTEREST RATES
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------------------------------------------------------------------
1999 1998
------------------------------------------ ------------------------------------------
AVERAGE INT. EARNED/ AVERAGE AVERAGE INT. EARNED/ AVERAGE
BALANCE PAID YIELD/RATE BALANCE PAID YIELD/RATE
-------- ------------ ---------- -------- ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest earning assets:
Loans<F1>........................ $507,830 $11,074 8.84% $505,618 $11,142 8.94%
Taxable investment securities.... 51,217 755 5.90 67,330 1,072 6.37
Non-taxable investment
securities<F2>................. 1,416 17 4.87 1,478 14 3.84
Federal funds sold and other
investments.................... 6,807 79 4.71 3,407 42 5.00
-------- ------- -------- -------
Total interest earning
assets..................... 567,270 11,925 8.53 577,833 12,270 8.61
-------- ------- -------- -------
Non-interest earning assets:
Cash and due from banks.......... 15,476 9,876
Bank premises and equipment...... 10,967 10,615
Other assets..................... 23,667 28,650
Allowance for loan losses........ (6,325) (5,349)
-------- --------
Total assets................. $611,055 $621,625
======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Interest bearing liabilities:
Money market/NOW accounts........ $155,055 1,530 4.00% $116,030 1,186 4.15%
Savings deposits................. 14,877 79 2.15 16,322 109 2.71
Certificates of deposit.......... 192,664 2,575 5.42 233,878 3,356 5.82
Certificates of deposit over
$100,000....................... 33,474 399 4.83 48,988 672 5.56
IRA certificates................. 18,669 273 5.93 20,423 295 5.86
-------- ------- -------- -------
Total interest bearing
deposits................... 414,739 4,856 4.75 435,641 5,618 5.23
-------- ------- -------- -------
Federal funds purchased,
repurchase agreements and other
short-term borrowings.......... 51,936 639 4.99 54,429 564 4.20
Other borrowings................. 40,275 593 5.97 35,163 659 7.60
-------- ------- -------- -------
Total interest bearing
liabilities................ 506,950 6,088 4.87 525,233 6,841 5.28
-------- ------- -------- -------
Non-interest bearing liabilities
and equity:
Demand deposits.................. 51,796 45,846
Other liabilities................ 3,996 8,002
Shareholders' equity............. 48,313 42,544
-------- --------
Total liabilities and
shareholders' equity....... $611,055 $621,625
======== ========
Net interest income.......... $ 5,837 $ 5,429
======= =======
Net interest spread.......... 3.66% 3.33%
Net interest margin.......... 4.17% 3.81%
<FN>
- --------
<F1> Average balances include non-accrual loans.
<F2> Presented at actual yield rather than tax-equivalent yield.
</TABLE>
24
<PAGE>
The following table sets forth for the periods indicated the
changes in interest income and interest expense which were
attributable to change in average volume and changes in average
rates. Volume variances are computed using the change in volume
multiplied by the previous year's rate. Rate variances are computed
using the changes in rate multiplied by the previous year's volume.
The change in interest due to both rate and volume has been
allocated between the factors in proportion to the relationship of
the absolute dollar amounts of the change in each.
<TABLE>
RATE/VOLUME ANALYSIS
<CAPTION>
QUARTER ENDED MARCH 31,1999
COMPARED TO THE
QUARTER ENDED MARCH 31, 1998
-----------------------------------
VOLUME RATE NET CHANGE
------ ----- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
INTEREST EARNED ON:
Loans............................................... $ 49 $(117) $ (68)
Taxable investment securities....................... (242) (75) (317)
Non-taxable investment securities................... (1) 4 3
Federal funds sold and other investments............ 40 (3) 37
----- ----- -----
Total interest income........................... (154) (191) (345)
----- ----- -----
INTEREST PAID ON:
Money Market/NOW accounts........................... 386 (42) 344
Savings deposits.................................... (9) (21) (30)
Certificates of deposit............................. (562) (219) (781)
Certificates of deposit over $100,000............... (193) (80) (273)
IRA certificates.................................... (26) 4 (22)
Federal funds purchased, repurchase agreements and
other short-term borrowings....................... (27) 102 75
Other borrowings.................................... 88 (154) (66)
----- ----- -----
Total interest expense.......................... (343) (410) (753)
----- ----- -----
Net interest income............................. $ 189 $ 219 $ 408
===== ===== =====
</TABLE>
Other Income. Other income increased by $0.14 million to $1.25
million for the three months ended March 31, 1999 compared to $1.11
million in the first quarter in 1998.
Service charge income for the three-month period ended March 31,
1999 increased $0.11 million, or 43.1%, compared to the first
quarter of 1998. This increase was attributable to our focus on
revenue enhancement programs. Operating lease income increased 4.2%
to $0.30 million for the quarter ended March 31, 1999 from $0.28
million for the comparable period in 1998. The small increase in
income was related to the decision to decrease production of
operating leases during the latter half of 1998.
For the quarter ended March 31, 1999 mortgage banking revenue
was $0.36 million compared to $0.49 million for the quarter ended
March 31, 1998, a 26.6% decrease. The change was primarily the
result of a decrease in servicing fee income due to a reduction in
the servicing portfolio. Other non-interest income increased 183.3%
for the three-month period ended March 31, 1999 to $0.24 million,
compared to $0.08 million for the first quarter of 1998.
Other Expenses. For the three months ended March 31, 1999
compared to the first quarter of 1998, other expenses decreased
$0.26 million to $4.86 million from $5.12 million, a 5.1% decline.
25
<PAGE>
Salaries and employee benefits increased 5.7% to $2.45 million
for the three months ended March 31, 1999 compared to $2.31 million
for the three months ended March 31, 1998. Additional expenses were
incurred due to management and support staff additions throughout 1998
and into 1999, offset by the sale in December 1998 of three branches
of the bank outside the St. Louis metropolitan area. We had 228
full-time equivalent employees at March 31, 1999 compared to 255
full-time equivalent employees at March 31, 1998. Total annualized
cost per full-time equivalent employee was $42,895 for the three months
ended March 31, 1999 compared to $36,298 for the corresponding
period of 1998.
Expenses associated with premises and equipment decreased for
the three-month period ended March 31, 1999 as compared to the same
period in 1998, with occupancy expense decreasing $0.05 million and
furniture and equipment decreasing $0.01 million. Advertising costs
decreased 40.3% from first quarter 1998 to the comparable period of
1999. In early 1998, management made a decision to commit additional
resources to promote the larger organization due to the significant
growth that occurred from 1997 to 1998. Advertising costs through
March 31, 1999 were $0.09 million compared to $0.14 million for the
first quarter of 1998.
Operating lease depreciation decreased by $0.08 million to $0.22
million for the three months ended March 31, 1999 from $0.30 million
for the three months ended March 31, 1998. This decrease also was
reflective of our decision to decrease production of operating
leases in the latter half of 1998.
Total other expenses for the three months ended March 31, 1999
decreased $0.13 million, or 11.2%, totaling $1.02 million compared
to $1.15 million for the three months ended March 31, 1998. The
decline in other expenses was a direct result of our efforts to
control operating costs.
Our efficiency ratio was 68.5% for the quarter ended March 31,
1999 compared to 78.3% for the first quarter of 1998. This positive
change in the efficiency ratio was a direct result of fewer offices
due to the sale of the three branch offices. This improvement
reflects our commitment to improving our overall efficiency by
continuing to emphasize revenue growth while decreasing our current
level of operating expense.
26
<PAGE>
The following table sets forth a summary of our other income and
expense for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1999 1998
------ ------
(IN THOUSANDS)
<S> <C> <C>
OTHER INCOME:
Mortgage banking revenues........................... $ 359 $ 489
Leasing revenues.................................... 295 283
Service charges on deposits......................... 362 253
Gain on the sale of securities...................... -- 12
Other non-interest income........................... 238 72
------ ------
Total other income.............................. $1,254 $1,109
====== ======
OTHER EXPENSES:
Salaries and employee benefits...................... $2,445 $2,314
Furniture and equipment............................. 415 431
Occupancy........................................... 349 403
Depreciation of operating leases.................... 215 295
Goodwill amortization............................... 250 233
Advertising......................................... 86 144
Supplies............................................ 76 147
Other non-interest expense.......................... 1,022 1,151
------ ------
Total other expenses............................ $4,858 $5,118
====== ======
</TABLE>
Securities Portfolio. Our securities portfolio consists of
securities classified as held-to-maturity and available-for-sale. We
designate these securities upon purchase into one of these two
categories. At March 31, 1999, held-to-maturity securities amounted
to $10.85 million representing those securities we intended to hold
to maturity. Securities designated as available-for-sale totaled
$45.08 million representing securities which we may sell to meet
liquidity needs or in response to significant changes in interest
rates or prepayment patterns.
For purposes of this discussion, held-to-maturity and
available-for-sale securities are described as the securities portfolio.
At March 31, 1999, the securities portfolio totaled $55.93 million,
a decline of 3.89% from March 31, 1998. The decline in the securities
portfolio occurred in the fourth quarter of 1998, as maturities were
not rolled over in order to fund the previously mentioned branch sales.
We maintain a traditional short-term laddered portfolio investment
strategy to insure adequate liquidity while minimizing interest rate risk.
27
<PAGE>
The carrying values of the securities portfolio at the dates
indicated were as follows:
<TABLE>
INVESTMENT SECURITIES PORTFOLIO
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
1999 1998 1998
--------- ------------ ---------
(IN THOUSANDS)
<S> <C> <C> <C>
U.S. governmental and agency securities........... $39,424 $37,021 $33,833
Mortgage-backed securities........................ 10,792 11,930 14,322
Federal Home Loan Bank stock...................... 3,574 3,574 7,033
States and municipal securities................... 1,346 1,464 1,555
Other securities.................................. 791 791 1,448
------- ------- -------
Total investment securities..................... $55,927 $54,780 $58,191
======= ======= =======
</TABLE>
Maturities and yield information of the securities
portfolio as of March 31, 1999 were as follows:
<TABLE>
INVESTMENT PORTFOLIO--MATURITIES AND YIELDS<F1>
<CAPTION>
WEIGHTED OVER ONE WEIGHTED OVER FIVE WEIGHTED WEIGHTED
ONE YEAR AVERAGE THROUGH AVERAGE THROUGH AVERAGE OVER TEN AVERAGE
OR LESS YIELD FIVE YEARS YIELD TEN YEARS YIELD YEARS YIELD
-------- -------- ---------- -------- --------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. governmental and
agency securities........ $15,532 5.70% $23,892 5.77% $ -- --% $ -- --%
Mortgage-backed
securities............... -- -- 6,848 5.60 -- -- 3,944 6.85
Federal Home Loan Bank
stock.................... 3,574 6.25 -- -- -- -- -- --
States and municipal
securities............... 252 4.95 361 5.34 532 4.67 201 4.90
Other securities........... 396 6.42 395 6.75 -- -- -- --
------- ------- ---- -------
Total investment
securities........... $19,754 5.80 $31,496 5.74 $532 4.67 $ 4,145 6.76
======= ======= ==== =======
Total portfolio........ $55,927 5.83%
=======
<FN>
- ---------
<F1> Maturities are shown in this table by expected maturity. Expected
maturities differ from contractual maturities due to the right to call or
prepay obligations. Yields on tax-exempt obligations have been presented
on an actual basis rather than on a tax-equivalent basis.
</TABLE>
Loans. Loans have historically been the primary component of
earning assets. At March 31, 1999, loans totaled $520.31 million, an
increase of 4.97% from year-end 1998. Substantially all of these
loans were originated in our market area. At March 31, 1999,
we had no foreign loans and only a minimal amount of participations
purchased.
The largest increase in loans involved real estate construction
loans, which increased $10.13 million, or 27.67%, during the first
quarter of 1999. The increase was primarily due to loans made to home
builders. Multi-family and commercial real estate mortgage loans
showed the second largest increase of $8.65 million, or 0.44%. The
increase in these loans reflects our efforts to grow our commercial
loan portfolio, including loans originated by our expanded commercial
lending staff. As a result of this emphasis, real estate construction
loans comprised 8.98% of the loan portfolio at March 31, 1999 as compared
to 7.38% at December 31, 1998. Multi-family and commercial real estate
mortgage loans comprised 39.44% of the portfolio at March 31, 1999 versus
39.65% at year-end 1998. Additionally, commercial loans increased 2.60%,
totaling $129.52 million at March 31, 1999 compared to $126.24
million at year-end 1998.
28
<PAGE>
The following tables summarize the composition of our loan
portfolio at the dates indicated:
<TABLE>
LOAN PORTFOLIO--TYPES OF LOANS
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998
----------------------- ----------------------- -----------------------
PERCENT PERCENT PERCENT
AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL
-------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial, agricultural,
municipal and industrial
development........................... $129,523 24.89% $126,239 25.47% $ 93,888 18.51%
Real estate--construction............... 46,717 8.98 36,590 7.38 26,622 5.25
Real estate--mortgage
One- to four-family residential..... 117,894 22.66 116,291 23.46 224,758 44.32
Multi-family and commercial......... 205,192 39.44 196,545 39.65 145,808 28.75
Consumer and other, net of unearned
income.................................. 20,980 4.03 20,004 4.04 16,080 3.17
-------- ------ -------- ------ -------- ------
Total loans......................... $520,306 100.00% $495,669 100.00% $507,156 100.00%
======== ====== ======== ====== ======== ======
</TABLE>
<TABLE>
LOAN PORTFOLIO--MATURITIES AND SENSITIVITIES OF LOANS
<CAPTION>
MARCH 31, 1999
------------------------------------------------------------------------------------------
MATURING AFTER ONE YEAR MATURING AFTER
MATURING IN THROUGH FIVE YEARS FIVE YEARS
ONE YEAR ------------------------- -------------------------
OR LESS FIXED-RATE VARIABLE FIXED-RATE VARIABLE TOTAL
----------- ---------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Commercial, financial,
agricultural, municipal and
industrial development........... $101,019 $ 27,298 $ 378 $ 828 $ -- $129,523
Real estate--construction.......... 45,504 507 -- 706 -- 46,717
Real estate--mortgage
One- to four-family
residential.................... 67,023 23,269 381 3,219 24,002 117,894
Multi-family and commercial.... 35,949 101,856 62,700 4,687 -- 205,192
Consumer and other, net of unearned
income........................... 7,298 12,687 -- 995 -- 20,980
-------- -------- ------- ------- ------- --------
Total loans.................... $256,793 $165,617 $63,459 $10,435 $24,002 $520,306
======== ======== ======= ======= ======= ========
</TABLE>
Asset Quality. Non-performing assets consist of the following:
nonaccrual loans on which the ultimate collectibility of the full
amount of interest is uncertain; loans which have been renegotiated
to provide for a reduction or deferral of interest or principal
because of a deterioration in the financial condition of the
borrower; and loans past due 90 days or more as to principal or
interest and other real estate owned. Non-performing assets
increased to $1.91 million at March 31, 1999 as compared to $1.41
million at March 31, 1998. At March 31, 1999, non-performing assets
represented 0.31% of total assets compared to 0.23% of total assets
at March 31, 1998. Non-accrual loans were $1.51 million at March 31,
1999 as compared to $0.47 million at March 31, 1998. This increase
was partially offset by declines in loans delinquent 90 days or
more, reflecting migration to non-accrual status, and by liquidation
of other real estate owned.
We continually analyze our loan portfolio to identify potential
risk elements. The loan portfolio is reviewed by lending management
and the bank's internal loan review staff. As an integral part of
their examination process, the various regulatory agencies
periodically review our allowance for loan losses. We believe that
our allowance for loan losses at March 31, 1999 was consistent with
applicable regulatory requirements.
29
<PAGE>
The following table summarizes, at the dates presented,
non-performing assets by category:
<TABLE>
RISK ELEMENTS--NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
1999 1998 1998
--------- ------------ ---------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
COMMERCIAL, FINANCIAL, AGRICULTURAL, MUNICIPAL AND
INDUSTRIAL DEVELOPMENT:
Past due 90 days or more........................ $ -- $ -- $ --
Non-accrual..................................... 394 962 319
Restructured terms.............................. -- -- --
REAL ESTATE--CONSTRUCTION:
Past due 90 days or more........................ -- -- --
Non-accrual..................................... -- -- 24
Restructured terms.............................. -- -- --
REAL ESTATE--MORTGAGE:
One- to four-family residential:
Past due 90 days or more........................ 396 69 491
Non-accrual..................................... 849 378 63
Restructured terms.............................. -- -- --
Multi-family and commercial:
Past due 90 days or more........................ -- -- --
Non-accrual..................................... 241 307 50
Restructured terms.............................. -- -- --
CONSUMER AND OTHER, NET OF UNEARNED INCOME:
Past due 90 days or more........................ -- -- 30
Non-accrual..................................... 30 62 14
Restructured terms.............................. -- -- --
------ ------ ------
Total non-performing loans.......................... 1,910 1,778 991
------ ------ ------
Other real estate................................... -- -- 422
------ ------ ------
Total non-performing assets......................... $1,910 $1,778 $1,413
====== ====== ======
RATIOS:
Non-performing loans to total loans............. 0.37% 0.36% 0.20%
Non-performing assets to total assets........... 0.31 0.30 0.23
Non-performing loans to shareholders' equity.... 3.89 3.70 2.30
Allowance for loan losses to total loans........ 1.30 1.30 1.07
Allowance for loan losses to non-performing
loans......................................... 354.24 362.32 547.43
</TABLE>
Interest income that would have been recorded during the three
months ended March 31, 1999 had all non-accrual, past due and
restructured loans been current in accordance with their original
terms was immaterial.
Allowance for Loan Losses. The provision for loan losses was
$0.56 million during the first three months of 1999 compared to
$0.40 million for the first quarter of 1998. Net charge-offs were
$0.24 million for the three months ended March 31, 1999 compared to
$0.17 million for the first quarter of 1998. Net charge-offs for the
first three months of 1999 represented 0.05% of average loans,
compared to 0.03% of average loans for the first three months of
1998.
30
<PAGE>
The allowance for loan losses increased to $6.77 million at
March 31, 1999 compared to $5.43 million at March 31, 1998. As a
percentage of loans outstanding, the allowance represented 1.30% of
loans at March 31, 1999 and December 31, 1998 and 1.07% at March 31,
1998.
The higher expense provision and the higher allowance percentage
were the result of the change in the composition of the loan
portfolio at March 31, 1999 compared to March 31, 1998. Since early
1998, we have been focused on generating higher yielding loans from
the commercial and industrial underwriting areas rather than lower
yielding residential mortgage loans. This increase in risk as a
result of the change in loan mix was reflected in the higher provision
and higher allowance as a percentage of loans outstanding.
Non-performing assets increased to $1.91 million at March 31,
1999 compared to $1.78 million at December 31, 1998 and $1.41
million at March 31, 1998. This increase includes a greater number
of non-accrual residential mortgage loans. The non-performing assets
at March 31, 1999 includes one loan of $0.66 million on a single
family residential property which management presently believes will
be collected without incurring a loss. Non-performing assets as a
percentage of total assets increased to 0.31% at March 31, 1999 from
0.23% at March 31, 1998. From year-end 1998, the percentage
increased one basis point.
The allowance for loan losses is provided at a level considered
adequate to provide for potential loan losses and, among other
things, is based on management's evaluation of the anticipated
impact on the loan portfolio of current economic conditions, changes
in the character and size of the loan portfolio, evaluation of
potential problem loans identified based on existing circumstances
known to management, potential future loan losses on loans to
specific customers or industries and recent loan loss experience. We
continually monitor the quality of our loan portfolio to ensure the
timely charge-off of problem loans and to determine the adequacy of
the level of the allowance for loan losses. We presently believe
that our asset quality, as measured by the statistics in the
following table, continues to be very high and that our allowance is
adequate to absorb potential losses inherent in the portfolio at
March 31, 1999.
The following table summarizes the allocation of the allowance
for loan losses by major category and identifies the percentage of
each loan category to the total loan portfolio balance:
<TABLE>
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<CAPTION>
MARCH 31,
-------------------------------------------------------
1999 1998
------------------------ ------------------------
ALLOCATED PERCENT ALLOCATED PERCENT
ALLOWANCE OF LOANS ALLOWANCE OF LOANS
--------- -------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial, financial, agricultural, municipal
and industrial development.................... $1,459 24.89% $1,248 18.51%
Real estate--construction....................... 528 8.98 303 5.25
Real estate--mortgage
One- to four-family residential............ 1,221 22.66 727 44.32
Multi-family and commercial................ 2,901 39.44 1,432 28.75
Consumer and other.............................. 235 4.03 163 3.17
Unallocated..................................... 423 -- 1,552 --
------ ------ ------ ------
Total....................................... $6,767 100.00% $5,425 100.00%
====== ====== ====== ======
</TABLE>
31
<PAGE>
The following table summarizes, for the periods indicated,
activity in the allowance for loan losses, including amounts of
loans charged off, amounts of recoveries and additions to the
allowance charged to operating expenses.
<TABLE>
SUMMARY OF LOAN LOSS EXPERIENCE AND RELATED INFORMATION
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1999 1998
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ALLOWANCE FOR LOAN LOSSES (BEGINNING OF PERIOD)..... $ 6,442 $ 5,193
Loans charged off:
Commercial, financial, agricultural, municipal
and industrial development.................... (132) (105)
Real estate--construction....................... -- --
Real estate--mortgage
One- to four-family residential............. (69) (24)
Multi-family and commercial................. -- (25)
Consumer and other.............................. (39) (21)
-------- --------
Total loans charged off............................. (240) (175)
-------- --------
Recoveries of loans previously charged off:
Commercial, financial, agricultural, municipal
and industrial development.................... -- 1
Real estate--construction....................... -- --
Real estate--mortgage
One- to four-family residential............. 1 --
Multi-family and commercial................. -- --
Consumer and other.............................. 2 6
-------- --------
Total recoveries.................................... 3 7
-------- --------
Net loans charged off............................... (237) (168)
-------- --------
Provision for loan losses........................... 562 400
-------- --------
Allowance for loan losses (end of period)........... $ 6,767 $ 5,425
======== ========
LOANS OUTSTANDING:
Average......................................... $507,830 $505,618
End of period................................... 520,305 507,156
RATIOS:
Net charge-offs to average loans................ 0.05% 0.03%
Net charge-offs to provision for loan losses.... 42.35 42.00
Provision for loan losses to average loans...... 0.11 0.08
Allowance for loan losses to total loans........ 1.30 1.07
</TABLE>
Deposits. Total deposits increased $30.27 million, or 6.72%, in
the first quarter of 1999 as compared to a decrease in deposits of
$4.87 million, or 1.00%, in the first quarter of 1998. The 1999
increase was a result of an increase in demand deposits and money
market and NOW accounts offset by a decline in certificates of
deposit, which decline was the result of the sale of the three
branch offices of the bank previously mentioned. The majority of
deposits sold were in the certificate of deposit category, hence the
decline in certificates of deposit as a percent of total deposits to
50.65% at March 31, 1999 from 62.10% at March 31, 1998. In addition,
the reduction in large certificates of deposit was the result of
management's decision to replace these rate sensitive funds with
core deposits.
32
<PAGE>
The following tables summarizes deposits as of the dates
indicated:
<TABLE>
DEPOSIT LIABILITY COMPOSITION
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998
------------------------------ ------------------------------
PERCENT AVE. PERCENT AVE.
AMOUNT OF TOTAL RATE AMOUNT OF TOTAL RATE
-------- -------- ---- -------- -------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits................ $ 51,627 10.73% --% $ 55,417 12.29% --%
Money market and NOW accounts.. 170,772 35.50 4.00 142,902 31.70 4.12
Savings deposits............... 15,031 3.12 2.15 14,917 3.31 2.57
Certificates of deposit........ 191,740 39.86 5.42 187,886 41.68 5.73
Certificates of deposit over
$100,000..................... 33,033 6.87 4.83 31,173 6.92 5.55
IRA certificates............... 18,835 3.92 5.93 18,471 4.10 5.96
-------- ------ -------- ------
Total deposits............. $481,038 100.00% $450,766 100.00%
======== ====== ======== ======
<CAPTION>
MARCH 31, 1998
------------------------------
PERCENT AVE.
AMOUNT OF TOTAL RATE
-------- -------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Demand deposits................ $ 44,262 9.23% --%
Money market and NOW accounts.. 120,925 25.20 4.15
Savings deposits............... 16,666 3.47 2.71
Certificates of deposit........ 233,120 48.59 5.82
Certificates of deposit over
$100,000..................... 44,711 9.32 5.56
IRA certificates............... 20,092 4.19 5.86
-------- ------
Total deposits............. $479,776 100.00%
======== ======
</TABLE>
<TABLE>
AMOUNTS AND MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE
<CAPTION>
MARCH 31, 1999
--------------
<S> <C>
(IN THOUSANDS)
Three months or less................................ $ 9,336
Over three months through six months................ 10,138
Over six through twelve months...................... 9,153
Over twelve months.................................. 4,406
-------
Total........................................... $33,033
=======
</TABLE>
COMPARISON OF THE YEARS ENDED DECEMBER 31, 1998 AND 1997. We
reported record earnings for 1998. Consolidated net income was $4.53
million, an increase of 87.74% over the 1997 level of $2.42 million.
The 1998 results represented our seventh consecutive year of record
earnings. Net income has increased at a compound rate of 78.24% over
the past five years. Basic earnings per share were $0.72 compared to
$0.54 in 1997, an increase of 33.33%. A similar increase was
achieved in diluted earnings per share with 1998 results of $0.68
increasing 38.78% compared to the $0.49 recorded for 1997. Diluted
earnings per share have grown at a compound rate of 33.56% during
the last five years.
Return on average assets for 1998 was 0.73%, an improvement from
0.52% recorded for 1997. The improvement in return on assets was the
result of lower asset growth, improved net interest income, improved
mix of earning assets and a considerable increase in shareholders'
equity. Return on average shareholders' equity was 10.14% in 1998
compared to 9.55% in 1997. The improvement in 1998 was achieved
despite a 76.82% increase in average equity between 1998 and 1997.
Net Interest Income. Net interest income totaled $21.95 million,
an increase of $5.65 million in 1998 compared to an increase of
$6.24 million in 1997. The net interest spread increased by 13 basis
points and the net interest margin increased by 11 basis points from
the prior year. All of these increases were the result of a
relatively stable rate environment, the shifting of earning assets
into higher yielding loans and overall growth in average earning
assets and interest bearing liabilities. Partially offsetting these
positive factors were the declines in the prime lending rate which
affected our floating rate loans, the decline in the ratio of
earning assets to total assets and a decline in non-interest bearing
demand deposits to total deposits. Net interest margin and net
interest spread were fairly stable throughout the year, with only
minor quarterly fluctuations. The increase in net interest spread
was due to the yields on earning assets declining only 2 basis
points year-to-year compared to a decline of 15 basis points on
interest bearing liabilities. In 1997, the spread increased 28 basis
points as a result of similar changes on both sides of the balance
sheet, earning assets increasing 14 basis points and interest
bearing liabilities decreasing 14 basis points. In 1998, the yield
on loans declined by 16 basis points. However, this decline was
offset by an increase in the ratio of loans to total earning assets
improving to 85.96% in 1998 compared to 83.17% in 1997. Generally
flat or lower rates were paid on all categories of interest bearing
liabilities. Total cost of deposits declined 11 basis points due
33
<PAGE>
to a reduction of rates paid on money market/NOW accounts, savings
deposits and retail certificates of deposit. Further reduction in
the costs of short-term and long-term borrowings also helped lower
the overall costs of funds, despite the substantial increase in
long-term debt.
Average earning assets increased $134.61 million, or 30.62%,
during 1998 compared to an increase of $143.23 million, or 48.33%,
in 1997. Average loans increased 35.01%, or $128.00 million,
compared to growth of 57.35%, or $133.30 million, in 1997. The
growth in average loans includes the bulk sale of mortgage loans
that occurred during the second and third quarters of 1998. These
sales, which aggregated $77.04 million, decreased average loans
outstanding for the year by approximately $34.32 million. Our
securities portfolio (held-to-maturity and available-for sale)
increased 9.25% during 1998 compared to an increase of 7.41% in
1997. Average investment securities represented 12.46% of earning
assets during 1998 compared to 14.91% during 1997. This decline in
the relative amount of investment securities was directly correlated
to the increase in the percentage of loans to earning assets
mentioned above. In essence, strong loan growth necessitated the
reduction in the growth of the securities portfolio. Earning assets
as a percentage of total assets declined again in 1998 to 92.76%
from 94.94% in 1997. The increase in non-earning assets was the
result of opening additional branch locations as well as
acquisitions, which increased the number of branches and intangible
assets. This growth was somewhat mitigated by the sale of three
branch offices of the bank located outside the St. Louis
metropolitan area which occurred in December of 1998. The impact of
this change to average balances was minimal due to the timing of the
consummation of our branch sales.
Average interest bearing liabilities increased 30.61%, or
$121.97 million, for 1998 compared to an increase of $127.23
million, or 46.91%, in 1997. Average deposits increased 29.96% to
$475.74 million compared to $366.07 million in 1997. As was the case
in 1997, only moderate changes occurred in the mix of deposits.
During 1998, certificates of deposit over $100,000 declined as a
percent of total deposits while retail certificates of deposit
increased. Non-interest bearing deposits as a percentage of total
deposits declined only 10 basis points to 10.00% from 10.10%. The
substantial growth in average deposits and the relatively stable mix
allowed for the average cost of interest bearing deposits to decline
by 11 basis points.
Average short-term borrowings were flat during the year
averaging $52.86 million during 1998 compared to $52.70 million
during 1997. The level of short-term borrowings during 1998 was
consistent throughout the year with only minor fluctuations between
quarters.
Average long-term debt for 1998 increased 136.54%, or $22.75
million. The majority of this increase was due to long-term
borrowings from the Federal Home Loan Bank of $26.63 million at
December 31, 1998, a $17.00 million change from December 31, 1997.
We use the Federal Home Loan Bank as a cost-effective source of
funding loans. Additionally, during November 1998, we refinanced a
portion of our long-term debt and our entire issue of subordinated
debentures with a $13.65 million, 7.00% fixed rate, three-year note.
34
<PAGE>
The following table sets forth the condensed average balance
sheets for the periods reported. Also shown is the average yield on
each category of interest earning assets and the average rate paid
on interest-bearing liabilities for each of the periods reported.
<TABLE>
DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
AND INTEREST RATES
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------------
1998 1997
------------------------------------------ ------------------------------------------
AVERAGE INT. EARNED/ AVERAGE AVERAGE INT. EARNED/ AVERAGE
BALANCE PAID YIELD/RATE BALANCE PAID YIELD/RATE
-------- ------------ ---------- -------- ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest earning assets:
Loans<F1>...................... $493,619 $44,411 9.00% $365,615 $33,473 9.16%
Taxable investment
securities................... 70,079 4,223 6.03 64,384 3,910 6.07
Non-taxable investment
securities<F2>............... 1,494 73 4.89 1,130 56 4.96
Federal funds sold and other
investments.................. 9,036 511 5.66 8,492 326 3.84
-------- ------- -------- -------
Total interest earning
assets................... 574,228 49,218 8.57 439,621 37,765 8.59
Non-interest earning assets:
Cash and due from banks........ 12,230 9,341
Bank premises and equipment.... 10,994 6,869
Other assets................... 27,238 11,065
Allowance for loan losses...... (5,674) (3,867)
-------- --------
Total assets............... $619,016 $463,029
======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Interest bearing liabilities:
Money market/NOW accounts...... $126,829 5,221 4.12% $ 95,431 4,092 4.29%
Savings deposits............... 16,524 425 2.57 9,665 279 2.89
Certificates of deposit........ 224,661 12,878 5.73 162,870 9,436 5.79
Certificates of deposit over
$100,000..................... 39,581 2,198 5.55 48,358 2,686 5.55
IRA certificates............... 20,584 1,227 5.96 12,780 760 5.95
-------- ------- -------- -------
Total interest bearing
deposits................. 428,179 21,949 5.13 329,104 17,253 5.24
-------- ------- -------- -------
Federal funds purchased,
repurchase agreements and
other short-term
borrowings................... 52,855 2,624 4.96 52,702 2,895 5.49
Other borrowings............... 39,403 2,694 6.84 16,658 1,318 7.91
-------- ------- -------- -------
Total interest bearing
liabilities.............. 520,437 27,267 5.24 398,464 21,466 5.39
-------- ------- -------- -------
Non-interest bearing
liabilities and equity:
Demand deposits................ 47,560 36,966
Other liabilities.............. 6,298 2,307
Shareholders' equity........... 44,721 25,292
-------- --------
Total liabilities and
shareholders' equity..... $619,016 $463,029
======== ========
Net interest income............ $21,951 $16,299
======= =======
Net interest spread............ 3.33% 3.20%
Net interest margin............ 3.82% 3.71%
<FN>
- --------
<F1> Average balances include non-accrual loans.
<F2> Presented at actual yield rather than tax-equivalent yield.
</TABLE>
35
<PAGE>
The following table sets forth for the periods indicated, the
changes in interest income and interest expense which were
attributable to changes in average volume and changes in average
rates.
<TABLE>
RATE/VOLUME ANALYSIS
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
COMPARED TO THE
YEAR ENDED DECEMBER 31, 1997
------------------------------------
VOLUME RATE NET CHANGE
------- ----- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
INTEREST EARNED ON:
Loans................................................... $11,533 $(595) $10,938
Taxable investment securities........................... 340 (27) 313
Non-taxable investment securities....................... 17 -- 17
Federal funds sold and other investments................ 24 161 185
------- ----- -------
Total interest income............................... 11,914 (461) 11,453
------- ----- -------
INTEREST PAID ON:
Money market/NOW accounts............................... 1,298 (169) 1,129
Savings deposits........................................ 180 (34) 146
Certificates of deposit................................. 3,539 (97) 3,442
Certificates of deposit over $100,000................... (488) -- (488)
IRA certificates........................................ 465 2 467
Federal funds purchased, repurchase agreements and other
short-term borrowings................................. 8 (279) (271)
Other borrowings........................................ 1,577 (201) 1,376
------- ----- -------
Total interest expense.............................. 6,579 (778) 5,801
------- ----- -------
Net interest income................................. $ 5,335 $ 317 $ 5,652
======= ===== =======
</TABLE>
Other Income. Other income increased 182.72% totaling $9.32
million in 1998 compared to $3.30 million in 1997. Included in other
income in 1998 were $3.55 million of non-recurring gains,
specifically: $2.37 million from the sale of branches; $1.11 million
from the sale of mortgage loans; and $0.07 million from securities
transactions. Eliminating all one-time or discretionary gains, 1998
other income was $5.77 million compared to $3.27 million in 1997.
The increase in 1998 was due to substantial growth in mortgage
banking revenues, leasing revenues, deposit service charges and
brokerage revenues. Other income, excluding non-recurring gains, has
increased at a compound growth rate of 82.93% over the last five
years.
During the fourth quarter of 1998, we completed the sale of
three branch offices of the bank located outside the St. Louis
metropolitan area in order to focus on, and expand our market share
in, our market area. This sale generated a reduction in loans of
$13.52 million, a reduction in deposits of $39.99 million and a
pre-tax gain of $2.37 million.
Also during the year, we completed two significant sales of a
large portion of our one- to four-family adjustable rate mortgage
loans. These sales generated a pre-tax gain of $1.11 million. While
we previously had sold some of our mortgage loans, the 1998 bulk
sales reflect a shift in our strategy from originating and holding
mortgage loans to increasing our lending emphasis on more profitable
commercial loan relationships. During 1998, we also hired several
experienced commercial loan officers in order to implement our
strategy.
Mortgage banking revenues increased 76.85% in 1998 to $2.30
million. This compares to $1.30 million in 1997. The increase was
attributable to a continued favorable economic environment of low
unemployment and stable, low long-term interest rates. We benefited
from these macro economic trends as well as a larger customer base.
36
<PAGE>
Leasing revenues totaled $1.53 million, an increase of 252.66%
compared to 1997's level of $0.44 million. We entered the retail
leasing business during 1997 and the 1998 results reflect a full
year of business operation compared to a partial year in 1997.
During the latter part of 1998, a decision was made to curtail this
line of business because of declining profit margins.
Service charges on deposit accounts increased 51.92% to $1.39
million in 1998 compared to $0.91 million in 1997. The increase in
1998 was due to a larger customer base generating an increased
number of transaction deposits as well as the benefit of a full year
of the bank's revised fee structure.
Brokerage revenues increased 84.62% to $0.31 million compared to
$0.17 million in 1997. Part of this increase reflects a full year of
operation in 1998 compared to nine months of operation in 1997 and
higher transaction volumes.
Other Expenses. Total other expenses increased 62.94%, or $8.23
million, during 1998, totaling $21.30 million compared to $13.07
million in 1997. Operating expenses have increased at a 52.93% five
year annual compound growth rate. Our efficiency ratio for 1998 was
68.09%, up slightly from 66.69% in 1997. The increase in this ratio
was the result of acquisitions, deposit purchases, start-up costs
associated with new lines of business and costs resulting from
additional banking locations.
Salaries and employee benefits showed the largest dollar
increase year to year, increasing $3.47 million to $9.66 million
compared to $6.19 million in 1997. The percentage increase for 1998
was 56.06%. The increase in 1998 was due to additional staffing
resulting from acquisitions and new locations. Also included in this
caption was a payout related to a phantom stock plan for our
president. Amounts expensed under this plan, which has expired, were
$0.05 million in 1998 and $0.23 million in 1997. Average full-time
equivalent employees for 1998 were 237 compared to 146 in 1997, a
62.33% increase. At December 31, 1998 we had 215 full-time
equivalent employees compared to 209 at year-end 1997.
Furniture and equipment expenses increased $0.81 million to
$1.75 million in 1998. The increase in 1998 was the result of
acquisitions in 1997 and branch openings in 1998 and 1997.
Additionally, investments in computer resources in both years also
contributed to the large increase. Occupancy expenses totaled $1.52
million, an increase of $0.79 million, or 106.37%, during 1998. The
increase was attributable to acquisitions and branch openings, as
mentioned above. Depreciation of the assets held for operating
leases increased $0.95 million in 1998 compared to 1997. As
previously discussed, the retail leasing business was started in
late 1997 so that 1998 reflects a full year of operations.
Expense for the amortization of goodwill increased 154.19%
during 1998 or $0.55 million, totaling $0.91 million compared to
$0.39 million in 1997. This increase was the result of acquisitions
and deposit purchases undertaken during 1997 and reflected a full
year of amortization during 1998.
In 1998, operating losses totaled $0.72 million, as compared to
$0.94 million in 1997. Of the amount in 1997, $0.75 million was
considered systemic and non-recurring due to integration of two
branch acquisitions and difficulties associated with upgrading our
computer systems to an entirely new operating system. Excluding
non-recurring items in 1997, the increase in operating losses in
1998 was $0.53 million. The 1998 operating losses relate to
inconsistent operating procedures as a result of expanding the
number of branches and number of employees. Throughout 1998, we
reengineered several operational processes in an effort to improve
quality and control. Additionally, training was a focus for 1998 and
we believe that these types of losses will be substantially reduced
in 1999.
Other non-interest expense increased $1.82 million in 1998
compared to 1997. This growth in expenses was associated with
increases in the number of employees, deposit and loan accounts and
physical locations as compared to prior years.
37
<PAGE>
The following table sets forth a summary of our other income and
expense for the years indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
OTHER INCOME:
Gain on sale of branches............................ $ 2,370 $ --
Mortgage banking revenues........................... 2,299 1,300
Leasing revenues.................................... 1,527 433
Service charges on deposits......................... 1,387 913
Gain on sale of mortgage loans...................... 1,112 27
Brokerage division revenues......................... 312 169
Gain on the sale of securities...................... 68 2
Other non-interest income........................... 249 454
------- -------
Total other income.............................. $ 9,324 $ 3,298
======= =======
OTHER EXPENSES:
Salaries and employee benefits...................... $ 9,663 $ 6,192
Furniture and equipment............................. 1,752 943
Occupancy........................................... 1,523 738
Depreciation of operating leases.................... 1,340 394
Goodwill amortization............................... 910 358
Operating losses.................................... 722 938
Supplies............................................ 489 428
Other non-interest expense.......................... 4,896 3,078
------- -------
Total other expenses............................ $21,295 $13,069
======= =======
</TABLE>
Securities Portfolio. At December 31, 1998, held-to-maturity
securities amounted to $12.04 million and securities designated as
available-for-sale totaled $42.74 million. At December 31, 1998, the
securities portfolio totaled $54.78 million, a decline of 28.74%
from the preceding year. The decline in the securities portfolio
occurred in the fourth quarter of 1998, as maturities were not
rolled over in order to fund the previously mentioned branch sales.
While average balances for 1998 were higher than 1997, the relative
percentage of securities to earning assets declined to 12.46% in
1998 compared to 14.91% in 1997. This decline reflected management's
decision to allow maturing securities to be reinvested in higher
yielding commercial loans.
The carrying values of the securities portfolio at the dates
indicated were as follows:
<TABLE>
INVESTMENT SECURITIES PORTFOLIO
<CAPTION>
DECEMBER 31,
---------------------
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
U.S. governmental and agency securities........... $37,021 $48,354
Mortgage-backed securities........................ 11,930 18,548
Federal Home Loan Bank stock...................... 3,574 7,033
State and municipal securities.................... 1,464 1,563
Other securities.................................. 791 1,371
------- -------
Total investment securities..................... $54,780 $76,869
======= =======
</TABLE>
38
<PAGE>
Maturities and yield information of the securities
portfolio as of December 31, 1998 were as follows:
<TABLE>
INVESTMENT PORTFOLIO--MATURITIES AND YIELDS<F1>
<CAPTION>
OVER FIVE
WEIGHTED OVER ONE WEIGHTED THROUGH WEIGHTED WEIGHTED
ONE YEAR AVERAGE THROUGH AVERAGE TEN AVERAGE OVER TEN AVERAGE
OR LESS YIELD FIVE YEARS YIELD YEARS YIELD YEARS YIELD
-------- -------- ---------- -------- --------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. governmental and
agency securities........ $24,549 5.89% $12,472 5.94% $ -- --% $ -- --%
Mortgage-backed
securities............... 6,579 6.42 5,294 5.86 57 9.68
Federal Home Loan Bank
stock.................... 3,574 6.55 -- -- -- -- -- --
States and municipal
securities............... 324 4.87 281 5.08 859 4.87 -- --
Other securities........... -- -- 791 6.21 -- -- -- --
------- ------- ---- -------
Total investment
securities........... $35,026 6.05% $18,838 5.91% $916 5.17% $ -- --
======= ======= ==== =======
Total portfolio........ $54,780 5.99%
=======
<FN>
- ---------
<F1> Maturities are shown in this table by expected maturity. Expected
maturities differ from contractual maturities due to the right to call or
prepay obligations. Yields on tax-exempt obligations have been presented
on an actual basis rather than on a tax-equivalent yield basis.
</TABLE>
Loans. Loans have historically been the primary component of
earning assets. At December 31, 1998 loans totaled $495.67 million,
an increase of 2.23% from year-end 1997. This small increase
included the sale of $77.96 million of mortgage loans. Without this
sale, year-end 1998 loans would have increased 18.31% compared to
year-end 1997. Average loans increased 35.01% during 1998 compared
to a 57.38% increase in 1997. Loans have increased at a 48.01%
compound average growth rate over the last five years. Substantially
all of these loans were originated in our primary market areas. At
December 31, 1998, we had no foreign loans and only a minimal amount
of participations purchased.
The largest increase in loans involved commercial real estate
loans, which increased $61.09 million, or 45.10%, in 1998.
Traditional commercial loans showed the second largest increase of
$16.30 million, or 14.83%. Growth in both of these categories
reflected management's decision to focus on the more profitable
commercial relationships instead of emphasizing one- to four-family
mortgage loans. The growth in the commercial sectors was
accomplished by hiring several additional commercial lending
personnel and directing existing staff toward developing commercial
banking relationships. As a result of this emphasis, commercial real
estate loans comprised 39.65% of the loan portfolio at December 31,
1998 compared to 27.94% at December 31, 1997. Traditional commercial
loans comprised 25.47% of the portfolio at December 31, 1998 versus
22.67% in 1997. Additionally, construction loans, which can be
viewed as commercially oriented, increased 34.62%, totaling $36.59
million at year-end 1998 compared to $27.18 million at year-end
1997. Finally, consumer loans increased $4.09 million, or 24.30%,
during 1998, reaching $20.91 million at December 31, 1998 compared
to $16.82 million at December 31, 1997.
Offsetting the substantial loan growth mentioned above was the
decline in one- to four-family residential loans. This category of
loans declined $79.67 million during 1998. This decline was
accomplished by the bulk sale of loans mentioned before as well as
normal pay-offs and amortization. This category represented 23.46%
of total loans at year-end 1998 compared to 40.42% of total loans at
year-end 1997.
39
<PAGE>
The following table summarizes the composition of our loan
portfolio at the dates indicated:
<TABLE>
LOAN PORTFOLIO--TYPES OF LOANS
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------------
1998 1997 1996 1995
------------------ ------------------ ------------------ --------
PERCENT PERCENT PERCENT
OF OF OF
AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT
-------- ------- -------- ------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial,
agricultural, municipal
and industrial
development............... $126,239 25.47% $109,937 22.67% $ 75,129 25.74% $ 40,518
Real estate--construction... 36,590 7.38 27,181 5.61 8,763 3.00 8,777
Real estate--mortgage
One- to four-family
residential........... 116,291 23.46 195,964 40.42 121,386 41.58 71,260
Multi-family and
commercial............ 196,545 39.65 135,452 27.94 74,721 25.60 52,795
Consumer and other, net of
unearned income........... 20,004 4.04 16,328 3.36 11,927 4.08 8,194
-------- ------ -------- ------ -------- ------ --------
Total loans......... $495,669 100.00% $484,862 100.00% $291,926 100.00% $181,544
======== ====== ======== ====== ======== ====== ========
<CAPTION>
DECEMBER 31,
-----------------------------
1995 1994
------- ------------------
PERCENT PERCENT
OF OF
TOTAL AMOUNT TOTAL
------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Commercial, financial,
agricultural, municipal
and industrial
development............... 22.32% $ 28,212 23.24%
Real estate--construction... 4.83 5,504 4.53
Real estate--mortgage
One- to four-family
residential........... 39.25 47,109 38.81
Multi-family and
commercial............ 29.08 31,813 26.21
Consumer and other, net of
unearned income........... 4.52 8,755 7.21
------ -------- ------
Total loans......... 100.00% $121,393 100.00%
====== ======== ======
</TABLE>
<TABLE>
LOAN PORTFOLIO--MATURITIES AND SENSITIVITIES OF LOANS
<CAPTION>
DECEMBER 31, 1998
------------------------------------------------------------------------------------------
MATURING AFTER ONE YEAR MATURING AFTER
MATURING IN THROUGH FIVE YEARS FIVE YEARS
ONE YEAR ------------------------- -------------------------
OR LESS FIXED-RATE VARIABLE FIXED-RATE VARIABLE TOTAL
----------- ---------- -------- ---------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial,
agricultural, municipal and
industrial development...... $ 77,816 $ 27,224 $19,800 $1,399 $ -- $126,239
Real estate--construction..... 33,660 2,222 -- -- -- 36,590
Real estate--mortgage
One- to four-family
residential............. 55,704 29,478 23 5,278 25,808 116,291
Multi-family and
commercial.............. 50,123 94,750 52,380 -- -- 196,545
Consumer and other, net of
unearned income............. 8,751 11,085 -- 168 -- 20,004
-------- -------- ------- ------ ------- --------
Total loans............... $226,054 $164,759 $72,203 $6,845 $25,808 $495,669
======== ======== ======= ====== ======= ========
</TABLE>
Asset Quality. Non-performing assets, consisting of loans past
due 90 days or greater, non-accrual loans, restructured loans and
other real estate owned increased slightly to $1.78 million at
December 31, 1998 compared to $1.71 million at December 31, 1997. At
December 31, 1998 non-performing assets represented 0.30% of total
assets compared to 0.28% of total assets at December 31, 1997.
Non-accrual loans were $1.50 million at December 31, 1998 compared
to $0.56 million at December 31, 1997. This increase was offset by
declines in loans delinquent 90 days or more, reflecting migration
to non-accrual status, and by the elimination of other real estate
owned.
At December 31, 1998, the bank had one loan relationship, not
included in the past-due, restructured or non-accrual categories,
where known information about possible credit problems caused
management to be uncertain as to the ability of the borrower to
comply with the present loan repayment terms over the next six
months. This loan relationship totaled $2.51 million at December 31,
1998. Principal and interest payments were current at December 31,
1998.
40
<PAGE>
The following table summarizes, at the dates presented,
non-performing assets by category:
<TABLE>
RISK ELEMENTS--NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
COMMERCIAL, FINANCIAL, AGRICULTURAL, MUNICIPAL AND
INDUSTRIAL DEVELOPMENT:
Past due 90 days or more............................ $ -- $ 341 $ 5 $113 $ --
Non-accrual......................................... 962 360 207 109 40
Restructured terms.................................. -- -- -- -- --
REAL ESTATE--CONSTRUCTION:
Past due 90 days or more............................ -- -- 264 36 90
Non-accrual......................................... -- 108 84 20 35
Restructured terms.................................. -- -- -- 3 --
REAL ESTATE--MORTGAGE:
One- to four-family residential:
Past due 90 days or more............................ 69 456 -- -- --
Non-accrual......................................... 378 70 -- -- --
Restructured terms.................................. -- -- -- -- --
Multi-family and commercial:
Past due 90 days or more............................ -- -- -- -- --
Non-accrual......................................... 307 -- -- -- --
Restructured terms.................................. -- -- -- -- --
CONSUMER AND OTHER, NET OF UNEARNED INCOME:
Past due 90 days or more............................ -- 21 23 12 8
Non-accrual......................................... 62 21 109 15 --
Restructured terms.................................. -- -- -- -- --
------ ------ ---- ---- ----
Total non-performing loans.............................. 1,778 1,377 692 308 173
------ ------ ---- ---- ----
Other real estate....................................... -- 330 -- 10 25
------ ------ ---- ---- ----
Total non-performing assets............................. $1,778 $1,707 $692 $318 $198
====== ====== ==== ==== ====
RATIOS:
Non-performing loans to total loans................. 0.36% 0.28% 0.24% 0.17% 0.14%
Non-performing assets to total assets............... 0.30 0.28 0.18 0.11 0.12
Non-performing loans to shareholders' equity........ 3.70 3.27 4.22 2.21 2.05
Allowance for loan losses to total loans............ 1.30 1.07 1.06 1.17 1.20
Allowance for loan losses to non-performing loans... 362.32 377.12 447.98 691.56 841.04
</TABLE>
Allowance For Loan Losses. Our allowance for loan losses
increased 24.05% from $5.19 million on December 31, 1997 to $6.44
million on December 31, 1998. The provision charged to expense was
$2.42 million in 1998. This level, coupled with the bulk sale of
loans previously mentioned, allowed the level of the allowance to
increase to 1.30% of total loans at December 31, 1998 compared to
1.07% at December 31, 1997. As mentioned above in the loan
discussion, we shifted our lending focus in 1998 to higher yielding
commercial relationships. This shift, while providing higher
earnings potential, does entail greater risk than traditional
residential mortgage loans. Because of this shift, the overall level
of the allowance for loan losses was increased. Additionally, as can
be seen from the allocation of the allowance, additional weight was
given to the increased risks associated with the commercial real
estate portfolio that was reflected in the real estate--mortgage
category. Net charge-offs for 1998 were 24 basis points of average
loans outstanding. Although up from 1997's level of 19 basis points,
net charge-offs in 1998 were low and consistent with our
historically low charge-off ratio. At year-end 1998, our allowance
represented 362.32% of non-performing loans compared to 377.12% at
year-end 1997.
41
<PAGE>
The following table summarizes the allocation of the allowance
for loan losses by major category and identifies the percentage of
each loan category to the total loan portfolio balance:
<TABLE>
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<CAPTION>
DECEMBER 31,
------------------------------------------------------------------------------
1998 1997 1996 1995
------------------- ------------------- ------------------- ---------
PERCENT PERCENT PERCENT
ALLOCATED OF ALLOCATED OF ALLOCATED OF ALLOCATED
ALLOWANCE LOANS ALLOWANCE LOANS ALLOWANCE LOANS ALLOWANCE
--------- ------- --------- ------- --------- ------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial,
agricultural, municipal and
industrial development........ $1,327 25.47% $1,352 22.67% $ 833 25.73% $ 467
Real estate--construction...... 347 7.38 303 5.60 124 3.00 281
Real estate--mortgage
One- to four-family
residential................. 1,222 21.11 636 37.28 439 41.56 305
Multi-family and
commercial.................. 2,849 41.31 1,572 31.06 714 25.62 513
Consumer and other............. 196 4.73 179 3.39 142 4.09 90
Unallocated.................... 501 -- 1,151 -- 848 -- 474
------ ------ ------ ------ ------ ------ ------
Total...................... $6,442 100.00% $5,193 100.00% $3,100 100.00% $2,130
====== ====== ====== ====== ====== ====== ======
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
------- -------------------
PERCENT PERCENT
OF ALLOCATED OF
LOANS ALLOWANCE LOANS
------- --------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Commercial, financial,
agricultural, municipal and
industrial development........ 22.32% $ 315 25.00%
Real estate--construction...... 4.83 74 4.53
Real estate--mortgage
One- to four-family
residential................. 39.21 128 38.72
Multi-family and
commercial.................. 29.12 343 26.30
Consumer and other............. 4.52 93 5.45
Unallocated.................... -- 502 --
------ ------ ------
Total...................... 100.00% $1,455 100.00%
====== ====== ======
</TABLE>
The following table summarizes, for the periods indicated,
activity in the allowance for loan losses, including amounts of
loans charged off, amounts of recoveries and additions to the
allowance charged to operating expenses:
<TABLE>
SUMMARY OF LOAN LOSS EXPERIENCE AND RELATED INFORMATION
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR LOAN LOSSES (BEGINNING OF YEAR).......... $ 5,193 $ 3,100 $ 2,130 $ 1,455 $ 775
Loans charged off:
Commercial, financial, agricultural, municipal and
industrial development........................... (632) (536) (113) (183) (165)
Real estate--construction.......................... (7) (22) (252) (82) --
Real estate--mortgage
One- to four-family residential................ (307) (88) (37) -- (31)
Multi-family and commercial.................... (133) -- (75) -- --
Consumer and other................................. (147) (113) (68) (58) (10)
-------- -------- -------- -------- --------
Total loans charged off................................ (1,226) (759) (545) (323) (206)
-------- -------- -------- -------- --------
Recoveries of loans previously charged off:
Commercial, financial, agricultural, municipal and
industrial development........................... 4 12 54 11 35
Real estate--construction.......................... 6 -- -- -- --
Real estate--mortgage
One- to four-family residential................ 14 10 3 -- --
Multi-family and commercial.................... 20 -- -- -- --
Consumer and other................................. 11 30 10 10 2
-------- -------- -------- -------- --------
Total recoveries....................................... 55 52 67 21 37
-------- -------- -------- -------- --------
Net loans charged off.................................. (1,171) (707) (478) (302) (169)
-------- -------- -------- -------- --------
Acquired subsidiary balance............................ -- 403 -- -- --
Provision for loan losses.............................. 2,420 2,397 1,448 977 849
-------- -------- -------- -------- --------
Allowance for loan losses (end of year)................ $ 6,442 $ 5,193 $ 3,100 $ 2,130 $ 1,455
======== ======== ======== ======== ========
LOANS OUTSTANDING:
Average........................................ $493,619 $365,615 $232,314 $158,503 $ 88,654
End of year.................................... 495,669 484,862 291,926 181,544 121,393
RATIOS:
Net charge-offs to average loans............... 0.24% 0.19% 0.21% 0.19% 0.19%
Net charge-offs to provision for loan losses... 48.39 29.50 33.01 30.91 19.91
Provision for loan losses to average loans..... 0.49 0.66 0.62 0.62 0.96
Allowance for loan losses to total loans....... 1.30 1.07 1.06 1.17 1.20
</TABLE>
42
<PAGE>
Deposits. Total deposits declined $33.88 million, or 6.99%, in
1998 compared to 1997. As previously mentioned, this decline in
year-end numbers was the result of the sale of three branch offices
of the bank. This sale reduced total deposits at December 31, 1998
by $39.99 million. The majority of deposits sold were in the
certificate of deposit category, hence the decline in certificates
of deposit as a percent of total deposits to 41.55% at December 31,
1998 from 47.79% at December 31, 1997. Absent the sale, deposits
would have increased slightly during 1998.
Average deposits for 1998 were $475.74 million compared to
$366.07 million in 1997. The increase in average deposits was the
result of acquisitions and deposit purchases that occurred during
the third quarter of 1997. The effect of these 1997 acquisitions
increased averages for the full year of 1998. Changes in the mix of
average deposits were concentrated in both categories of
certificates of deposit. On average, retail certificates of deposit
increased as a percentage of total deposits to 47.22% in 1998 from
44.49% in 1997. Certificates of deposit over $100,000 declined to
8.32% of total deposits in 1998 from 13.21% of total deposits in
1997. The reduction in large certificates of deposit was the result
of management's efforts to replace these rate sensitive funds with
core deposits.
The following tables summarize deposits as of the dates
indicated:
<TABLE>
DEPOSIT LIABILITY COMPOSITION
<CAPTION>
DECEMBER 31,
------------------------------------------------------------------
1998 1997
------------------------------- -------------------------------
PERCENT AVE. PERCENT AVE.
AMOUNT OF TOTAL RATE AMOUNT OF TOTAL RATE
-------- -------- ---- -------- -------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits.................................. $ 55,417 12.29% --% $ 50,060 10.33% --%
Money market and NOW accounts.................... 142,902 31.70 4.12 115,856 23.91 4.29
Savings deposits................................. 14,917 3.31 2.57 16,157 3.33 2.89
Certificates of deposit.......................... 187,886 41.68 5.73 231,601 47.79 5.79
Certificates of deposit over $100,000............ 31,173 6.92 5.55 52,211 10.77 5.55
IRA certificates................................. 18,471 4.10 5.96 18,756 3.87 5.95
-------- ------ -------- ------
Total deposits............................... $450,766 100.00% 5.13 $484,641 100.00% 5.24
======== ====== ======== ======
</TABLE>
<TABLE>
AMOUNTS AND MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE
<CAPTION>
DECEMBER 31, 1998
-----------------
<S> <C>
(IN THOUSANDS)
Three months or less................................ $14,387
Over three months through six months................ 5,658
Over six through twelve months...................... 5,905
Over twelve months.................................. 5,223
-------
Total........................................... $31,173
=======
</TABLE>
43
<PAGE>
COMPARISON OF THE YEARS ENDED DECEMBER 31, 1997 AND 1996. We
reported then-record earnings for 1997 with consolidated net income
of $2.42 million, an increase of 33.70% over 1996 earnings of $1.81
million. Basic earnings per share were $0.65 compared to $0.66 in
1996. Diluted earnings per share were $0.49, a 2.08% increase over
the $0.48 earned in 1996. Average shares outstanding increased
substantially in 1997 as we continued to increase our equity base to
keep pace with asset growth.
Return on average assets for 1997 was 0.52%, compared to 0.59%
in 1996. Return on average shareholders' equity was 9.55% for the
year compared to 12.17% for 1996. The decline in the return on
average shareholders' equity was attributable to our issuance of
shares of common stock in connection with the acquisition of
Reliance Financial, Inc. in August 1997 and two rights offerings
during 1997.
Net Interest Income. Net interest income increased $6.24
million, or 62.07%, in 1997 compared to an increase of 24.99% in
1996. Net interest margin was 3.71% in 1997 compared to 3.39% in
1996. The increase in net interest income and net interest margin
was due to a relatively stable rate environment, significant
increases in loans and deposits, substantial shifting of earning
assets into higher yielding loans and proportionately greater
non-interest bearing deposits. These improvement factors were
partially offset by a decrease in the ratio of earning assets to
total assets.
Our net interest spread increased by 30 basis points from 2.92%
in 1996 to 3.22% in 1997. This followed a decrease of 30 basis
points in 1996. The increase in 1997 occurred as a result of an
increase on the yields on earning assets of 14 basis points and a 16
basis point decline in rates paid on interest bearing liabilities.
The increase of the yields on earning assets of 14 basis points
followed a decrease of 42 basis points in 1996. The increase in 1997
was due in large part to average loans comprising 83.17% of earning
assets. Despite a 10 basis point decline in loan yields, the
increased volume of loans helped raise overall yield on earning
assets. Yields on taxable securities also improved 35 basis points
as a result of reinvestment opportunities and the additional
investment opportunities and the additional investment of $5.0
million resulting from cash received in the third quarter from the
acquisition of the branches in Union and Warrenton, Missouri. The
lower rates paid on interest bearing liabilities was the result of
generally lower rates in all categories with the exception of
certificates of deposit over $100,000. The decline in rates on
certificates of deposits under $100,000 of 11 basis points had the
most impact.
44
<PAGE>
The following table sets forth the condensed average balance
sheets for the periods reported. Also shown is the average yield on
each category of interest earning assets and the average rate paid
on interest-bearing liabilities for each of the periods reported.
<TABLE>
DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
AND INTEREST RATES
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1997 1996
-------------------------------------- --------------------------------------
AVERAGE INT. EARNED/ AVERAGE AVERAGE INT. EARNED/ AVERAGE
BALANCE PAID YIELD/RATE BALANCE PAID YIELD/RATE
-------- ------------ ---------- -------- ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Loans<F1>.............................. $365,615 $33,473 9.16% $232,314 $21,428 9.22%
Taxable investment securities.......... 64,384 3,910 6.07 59,882 3,428 5.72
Non-taxable investment
securities<F2>....................... 1,130 56 4.96 1,115 49 4.39
Federal funds sold and other
investments.......................... 8,492 326 3.84 3,079 151 4.90
-------- ------- ---- -------- ------- ----
Total interest earning assets...... 439,621 37,765 8.59 296,390 25,056 8.45
Non-interest earning assets:
Cash and due from banks................ $ 9,341 $ 6,382
Bank premises and equipment............ 6,869 4,698
Other assets........................... 11,065 3,915
Allowance for loan losses.............. (3,867) (2,401)
-------- --------
Total assets....................... $463,029 $308,984
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest bearing liabilities:
Money market/NOW accounts.............. $ 95,431 4,092 4.29% $ 70,948 3,218 4.54%
Savings deposits....................... 9,665 279 2.89 6,985 227 3.25
Certificates of deposit................ 162,870 9,436 5.79 104,283 6,149 5.90
Certificates of deposit over
$100,000............................. 48,358 2,686 5.55 36,387 2,001 5.50
IRA certificates....................... 12,780 760 5.95 7,673 465 6.06
-------- ------- -------- -------
Total interest bearing deposits.... 329,104 17,253 5.24 226,276 12,060 5.33
-------- ------- -------- -------
Federal funds purchased, repurchase
agreements and other short-term
borrowings........................... 52,702 2,895 5.49 27,481 1,542 5.61
Other borrowings....................... 16,658 1,318 7.91 17,482 1,397 7.99
-------- ------- -------- -------
Total interest bearing
liabilities...................... $398,464 $21,466 5.39 $271,239 $14,999 5.53
-------- ------- -------- -------
Non-interest bearing liabilities and
equity:
Demand deposits........................ $ 36,966 $ 21,312
Other liabilities...................... 2,307 1,582
Shareholders' equity................... 25,292 14,851
-------- --------
Total liabilities and shareholders'
equity........................... $463,029 $308,984
======== ========
Net interest income................ $16,299 $10,057
======= =======
Net interest spread................ 3.20% 2.92%
Net interest margin................ 3.71% 3.39%
<FN>
- --------
<F1> Average balances include non-accrual loans.
<F2> Presented at actual yield rather than tax-equivalent yield.
</TABLE>
45
<PAGE>
The following table sets forth for the periods indicated, the
changes in interest income and interest expense which were
attributable to changes in average volume and changes in average
rates.
<TABLE>
RATE/VOLUME ANALYSIS
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
COMPARED TO THE
YEAR ENDED DECEMBER 31, 1996
------------------------------------
VOLUME RATE NET CHANGE
------- ----- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
INTEREST EARNED ON:
Loans....................................................... $12,186 $(141) $12,045
Taxable investment securities............................... 267 216 483
Non-taxable investment securities........................... 1 6 7
Federal funds sold and other investments.................... 213 (39) 174
------- ----- -------
Total interest income................................... 12,667 42 12,709
------- ----- -------
INTEREST PAID ON:
Money market/NOW accounts................................... 1,047 (173) 874
Savings deposits............................................ 79 (27) 52
Certificates of deposit..................................... 3,404 (117) 3,287
Certificates of deposit over $100,000....................... 666 19 685
IRA certificates............................................ 303 (8) 295
Federal funds purchased, repurchase agreements and other
short-term borrowings..................................... 1,386 (33) 1,353
Other borrowings............................................ (65) (14) (79)
------- ----- -------
Total interest expense.................................. 6,820 (353) 6,467
------- ----- -------
Net interest income..................................... $ 5,847 $ 395 $ 6,242
======= ===== =======
</TABLE>
Other Income. Other income increased 136.76% for 1997 compared
to 1996, and totaled $3.30 million for 1997. Other income, excluding
securities gains and mortgage banking revenues, increased $0.96
million, or 93.41%, in 1997 compared to the prior year. The increase
in other income in 1997 resulted primarily from an increase of $0.99
million in mortgage banking gross revenues generated by Allegiant
Mortgage Company and the newly formed Edge Mortgage Services. In
addition, service charges on deposit accounts grew by $0.30 million
due to the increased number of deposit accounts and an expanded base
of service chargeable products.
Other Expenses. Total operating expenses increased $6.05
million, or 86.19%, to $13.07 million during 1997, compared to an
increase of $1.39 million, or 24.78%, to $7.02 million in 1996. A
majority of the increase was due to the expansion of our business
lines, our two mortgage subsidiaries and an increase in the number
of our banking locations. These additions resulted in increased
salary and benefit expense, furniture and equipment costs and
occupancy expenses. Our efficiency ratio, determined by dividing the
total operating expenses by the total tax-equivalent revenue, was
67.69% in 1997 as compared to 61.30% in 1996.
46
<PAGE>
The following table sets forth a summary of our other income and
expense for the years indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1997 1996
-------- -------
(IN THOUSANDS)
<S> <C> <C>
OTHER INCOME:
Mortgage banking revenues........................... $ 1,300 $ 312
Leasing revenues.................................... 433 --
Service charges on deposits......................... 913 612
Gain on the sale of mortgage loans.................. 27 --
Brokerage division revenues......................... 169 6
Gain on the sale of securities...................... 2 49
Other non-interest income........................... 454 414
------- ------
Total other income.............................. $ 3,298 $1,393
======= ======
OTHER EXPENSES:
Salaries and employee benefits...................... $ 6,192 $3,455
Furniture and equipment............................. 943 689
Occupancy........................................... 738 448
Depreciation of operating leases.................... 394 --
Goodwill amortization............................... 358 67
Operating losses.................................... 938 144
Supplies............................................ 428 202
Other non-interest expense.......................... 3,078 2,014
------- ------
Total other expenses............................ $13,069 $7,019
======= ======
</TABLE>
Securities Portfolios. At December 31, 1997, held-to-maturity
securities amounted to $31.95 million and securities designated as
available-for-sale totaled $44.92 million.
The carrying value of securities portfolio at the dates indicated
were as follows:
<TABLE>
INVESTMENT SECURITIES PORTFOLIO
<CAPTION>
DECEMBER 31,
-----------------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
U.S. governmental and agency securities........... $48,354 $36,492
Mortgage-backed securities........................ 18,548 18,202
Federal Home Loan Bank stock...................... 7,033 4,462
State and municipal securities.................... 1,563 1,199
Other securities.................................. 1,371 205
------- -------
Total investment securities..................... $76,869 $60,560
======= =======
</TABLE>
Loans. Loans, the largest component of interest earning assets,
increased 66.09% for the year ended December 31, 1997 which followed
an increase of 60.80% in 1996. Average total loans outstanding for
1997 were $365.62 million, a 57.38% increase over 1996 average
outstandings. Average total loans outstanding for 1996 were $232.31
million, an increase of 46.57% over average total outstanding loans
in 1995. The loan growth in 1997 consisted of a 46.33% increase in
commercial loans, a 69.00% increase in real estate mortgage loans, a
210.18% increase in real estate construction loans and a 39.20%
increase in consumer loans. Essentially all of the loans were
generated within our primary market area. We had no foreign credits
and an insignificant amount of participations were purchased.
47
<PAGE>
Commercial loans increased $34.81 million, from $75.13 million
on December 31, 1996 to $109.94 million on December 31, 1997. The
increase in commercial loans was largely due to marketing efforts of
the bank's commercial loan team, strengthened by the additions
during 1997 of experienced personnel. The commercial loan portfolio
is diversified from an industry standpoint and includes businesses
engaged in manufacturing, agribusiness, wholesaling and retailing,
financial services and other service businesses. Emphasis is upon
middle market and community businesses with known management and
financial stability. Consistent with the bank's strategy and
emphasis upon relationship banking, most borrowing customers also
maintain deposit accounts and utilize other banking services. Real
estate is often a material component of collateral for the
commercial and industrial loans even though repayment on the loans
may not be directly related to the real estate. This real estate
provides us with additional collateral protection.
Asset Quality. Our allowance for loan losses increased 67.52%,
from $3.10 million on December 31, 1996, to $5.19 million on
December 31, 1997. The majority of this increase was due to the
provision of $2.40 million to the allowance for loan losses during
1997. The 67.52% increase in the allowance was directly related to
the 66.09% increase during 1997 in our loan balance. The allowance
for loan losses to total loans increased slightly to 1.07% at
December 1997 from 1.06% at December 31, 1996. The allowance for
loan losses represented 377.12% of non-performing loans at
December 31, 1997, compared to 447.98% at December 31, 1996.
Non-performing assets increased by $0.69 million to $1.38
million at December 31, 1997, from $0.69 million on December 31,
1996. The ratio of non-performing loans to total loans was 0.28% at
December 31, 1997 compared to 0.24% as of December 31, 1996. The
largest component of this increase in non-performing loans was an
increase of $0.04 million in past due commercial loans and $0.46
million in past due real estate loans.
Allowance for Loan Losses. The allowance for loan losses equaled
1.07% of loans outstanding at December 31, 1997, essentially the
same percentage level as 1996. For the year ended December 31, 1997,
the provision for loan losses was $2.40 million compared to $1.45
million for the year ended December 31, 1996, an increase of $0.95
million, or 65.54%. The increase in the annual provision for loan
losses was primarily a result of the 66.09% increase in total loans
outstanding at December 31, 1997 compared to December 31, 1996. The
provision to average loans outstanding as 0.71% in 1997 compared to
0.62% in 1996. Net loans charged off during 1997 was $0.71 million,
compared to $0.48 million for the year ended December 31, 1996
representing an increase of 47.91%. Net loans charged off as a
percentage of average loans outstanding was 0.19% and 0.21% in 1997
and 1996, respectively. Non-performing loans to total loans remained
low at 0.28% at December 31, 1997 compared to 0.24% at year-end
1996. Total recoveries for the twelve months ended December 31, 1997
were $0.05 million compared to $0.07 million in 1996.
Deposits. Average deposits increased $118.48 million, or 47.85%,
1997 following an increase of $63.28 million, or 34.33%, in 1996.
The increase in 1997 was due to internal growth of approximately
$67.5 million primarily from additional branch openings in 1996 and
1997 and growth of approximately $51.0 million due to acquisitions.
As shown in the table below, total deposits at year-end 1997
increased by $175.97 million, or 57.01%. This growth rate, which is
higher than the average growth rate, was due to the aforementioned
acquisitions taking place in the third quarter of 1997, which
therefore impacted average balances for the year to a lesser degree.
The mix of average deposits changed moderately during the year
with non-interest bearing deposits comprising 10.10% of total
deposits compared to 8.61% in 1996. This increase also was the
result of the previously mentioned deposit acquisition having
proportionately more non-interest bearing accounts. Certificates of
deposit under $100,000 comprised 44.49% of average deposits compared
to 42.12% in 1996. The increase in 1997 was a result of the thrift
acquisition having proportionately more of these deposits.
48
<PAGE>
The following tables summarize deposits as of the dates
indicated:
<TABLE>
DEPOSIT LIABILITY COMPOSITION
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------------------
1997 1996
---------------------------------- ----------------------------------
PERCENT AVE. PERCENT AVE.
AMOUNT OF TOTAL RATE AMOUNT OF TOTAL RATE
-------- -------- ---- -------- -------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits.......................... $ 50,060 10.33% --% $ 29,406 9.53% --%
Money market and NOW accounts............ 115,856 23.91 4.29 85,201 27.60 4.54
Savings deposits......................... 16,157 3.33 2.89 6,083 1.97 3.25
Certificates of deposit.................. 231,601 47.79 5.79 128,407 41.60 5.90
Certificates of deposit over $100,000.... 52,211 10.77 5.55 50,825 16.47 5.50
IRA certificates......................... 18,756 3.87 5.95 8,748 2.83 6.06
-------- ------ -------- ------
Total deposits....................... $484,641 100.00% 5.24 $308,670 100.00% 5.33
======== ====== ======== ======
</TABLE>
<TABLE>
AMOUNTS AND MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE
<CAPTION>
DECEMBER 31, 1997
-----------------
(IN THOUSANDS)
<S> <C>
Three months or less.............................. $26,694
Over three months through six months.............. 5,604
Over six through twelve months.................... 11,098
Over twelve months................................ 8,815
-------
Total........................................... $52,211
=======
</TABLE>
INTEREST RATE SENSITIVITY
Our asset/liability strategy is to minimize the sensitivity of
earnings to changes in interest rates while maintaining an
acceptable net interest margin. The bank's asset/liability committee
monitors the interest rate sensitivity of the balance sheet on a
bi-weekly basis. The committee reviews asset and liability repricing
in the context of current and possible future interest rate
scenarios affecting the economic climate in our market area.
Our pricing policy is that all earning assets and interest
bearing liabilities be either based on floating rates or have a
fixed rate not exceeding five years. Real estate mortgage loans held
by us, while having long final maturities, are comprised of one-,
two- or three-year adjustable rate loans. The adjustable basis of
these loans significantly reduces interest rate risk.
49
<PAGE>
The following table illustrates our estimated interest rate
sensitivity and periodic and cumulative gap positions calculated as
of March 31, 1999:
<TABLE>
<CAPTION>
TIME TO MATURITY OR REPRICING
--------------------------------------------------------------------
0 TO 3 4 TO 12 1 TO 5 OVER
MONTHS MONTHS YEARS 5 YEARS TOTAL
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
RATE SENSITIVE ASSETS (RSA):
Loans............................ $250,433 $ 86,037 $170,060 $ 13,776 $520,306
Investment securities............ 8,837 6,254 30,259 10,577 55,927
Federal funds.................... 4,475 -- -- -- 4,475
-------- -------- -------- -------- --------
Total RSA.................... $263,745 $ 92,291 $200,319 $ 24,353 $580,708
======== ======== ======== ======== ========
RATE SENSITIVE LIABILITIES (RSL):
Money market and NOW accounts.... $170,771 $ -- $ -- $ -- $170,771
Savings.......................... 15,032 -- -- -- 15,032
Time deposits.................... 43,559 87,269 79,746 -- 210,574
Time deposits over $100,000...... 9,336 19,291 4,406 -- 33,033
Repurchase agreements............ 9,292 247 -- -- 9,539
S/T other........................ -- 500 -- -- 500
S/T FHLB borrowings.............. 12,000 25,500 -- -- 37,500
L/T FHLB borrowings.............. -- -- 26,625 -- 26,625
L/T borrowings--other............ -- -- 13,150 -- 13,150
-------- -------- -------- -------- --------
Total RSL.................... $259,990 $132,807 $123,927 $ -- $516,724
======== ======== ======== ======== ========
PERIODIC INFORMATION:
GAP (RSA--RSL)................... $ 3,755 $(40,516) $ 76,392 $ 24,353
RSA/RSL<F1>...................... 101.4% 69.49% 161.84% N/A
RSA/total assets................. 42.5 14.9 32.3 3.9%
RSL/total assets................. 41.9 21.4 20.0 0.0
GAP/total assets................. 0.6 6.5 12.3 3.9
GAP/RSA.......................... 0.6 7.0 13.2 4.2
CUMULATIVE INFORMATION:
Cumulative RSA................... $263,745 $356,036 $556,355 $580,708
Cumulative RSL................... 259,990 392,797 516,724 516,724
GAP (RSA--RSL)................... 3,755 (36,761) 39,631 63,984
RSA/RSL.......................... 101.44% 90.64% 107.67% 112.38%
RSA/total assets................. 42.5 57.4 89.7 93.6
RSL/total assets................. 41.9 63.3 83.3 83.3
GAP/total assets................. 0.6 5.9 6.4 10.3
GAP/RSA.......................... 0.6 6.3 6.8 11.0
<FN>
- -------
<F1> Our current asset/liability policy is to maintain RSA/RSL percentage
between 80% and 135% for the 0 to 3 month maturity range and between 75%
and 125% for the cumulative one-year maturity range.
</TABLE>
50
<PAGE>
We measure the impact of interest rate changes on our income
statement through the use of gap analysis. The gap represents the
net position of assets and liabilities subject to repricing in
specified time periods. During any given time period, if the amount
of rate sensitive liabilities exceeds the amount of rate sensitive
assets, a company would generally be considered negatively gapped
and would benefit from falling rates over that period of time.
Conversely, a positively gapped company would generally benefit from
rising rates.
We have structured the assets and liabilities of our company to
mitigate the risk of either a rising or falling interest rate
environment. Depending upon our assessment of economic factors such
as the magnitude and direction of projected interest rates over the
short- and long-term, we generally operate within guidelines set by
our asset/liability policy and attempt to maximize our returns
within an acceptable degree of risk. Our intention is to maintain a
gap position at the one-year horizon of between 0.75% and 1.25%. Our
position at March 31, 1999 was 0.91%. We manage our gap position at
the one-year horizon as well as monitor the cumulative gap position
for succeeding time frames.
Interest rate changes do not affect all categories of assets and
liabilities equally or simultaneously. There are other factors that
are difficult to measure and predict that would influence the effect
of interest rate fluctuations on our income statement. For example,
a rapid drop in interest rates might cause our loans to repay at a
more rapid pace and certain mortgage-related investments to prepay
more quickly than projected. This could mitigate some of the
benefits of falling rates as are expected when negatively gapped.
Conversely, a rapid rise in rates could give us an opportunity to
increase our margins and stifle the rate of repayment on our
mortgage-related loans which would increase our returns.
The following table shows the "rate shock" results of a
simulation model that attempts to measure the effect of rising and
falling interest rates over a two-year horizon in a rapidly changing
rate environment.
<TABLE>
<CAPTION>
+200 BASIS -200 BASIS
POINTS POINTS
---------- ----------
<S> <C> <C>
Percentage change in net income due to an
immediate 200 basis point change in interest
rates over a two-year time horizon............ +37.25% -44.11%
</TABLE>
As this table demonstrates, as of March 31, 1999 we had a
cumulative positive gap position. This table shows that if there
were an instantaneous, parallel shift in the yield curve of +200
basis points, we would realize an increase in net income of 37.25%
over a two year horizon. Conversely, a like shift of -200 basis points
would result in a decrease in net income of 44.11% over a two-year
horizon. We used a sensitivity model that simulated these interest
rate changes on our earning assets and interest-bearing liabilities.
This process allows us to explore the complex relationships among the
financial instruments in various interest rate environments.
The preceding sensitivity analysis is based on numerous
assumptions including: the nature and timing of interest rate levels
including the shape of the yield curve; prepayments on loans and
securities; changes in deposit levels; pricing decisions on loans
and deposits; reinvestment/replacement of asset and liability cash
flows; and others. While assumptions are developed based upon
current economic and local market conditions, we cannot make any
assurances as to the predictive nature of these assumptions
including how client preferences or competitor influences might
change.
Interest rate exposure is measured by the potential impact on
our income statement of possible changes in interest rates. We use
information from our gap analysis and rate shock calculations as
input to help manage our exposure to changing interest rates. During
the past year, we have managed our balance sheet in a negatively
gapped position for the one-year time frame, reflecting our outlook
that the U.S. economy and general interest rate levels will be
stable. We recognized opportunities to extend maturities on assets
to take advantage of higher interest rates at longer maturities.
We use our rate shock information to tell us how much exposure
we have to rapidly changing rates. Based on historical information
and our assessment of future interest rate trends, we do not believe
there is a substantial risk of rapidly rising rates, which would
negatively impact our income statement. Conversely,
51
<PAGE>
we also believe there is minimal likelihood of rapidly falling
rates, which would positively impact our income statement.
We believe that more likely scenarios include gradual changes in
interest rate levels. We continue to monitor our gap and rate shock
reports to detect changes to our exposure to fluctuating rates. We
have the ability to shorten or lengthen maturities on newly acquired
assets, sell investment securities, or seek funding sources with
different maturities in order to change our asset and liability
structure for the purpose of mitigating the effect of interest rate
risk.
As the following table shows, at December 31, 1998 we had a slight
bias for falling interest rates in the most immediate time frame. This
structure is similar to our positioning at the beginning of 1998;
however, the bias to falling rates has been reduced to mitigate the
impact of any increases in short-term rates. The cumulative gap
positions in all time frames presented are well within our
asset/liability guidelines.
<TABLE>
<CAPTION>
0 TO 3 4 TO 12 1 TO 5 OVER
MONTHS MONTHS YEARS 5 YEAR TOTAL
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Earning Assets:
Loans $246,622 $ 77,989 $164,213 $ 6,845 $495,669
Investment securities <F1> 11,857 23,169 18,838 916 54,780
Federal funds sold 3,430 -- -- -- 3,430
-------- -------- -------- -------- --------
Total earning assets $261,909 $101,158 $183,051 $ 7,761 $553,879
======== ======== ======== ======== ========
Funding Sources:
Money market accounts 123,826 -- -- -- 123,826
NOW accounts 19,075 -- -- -- 19,075
Savings 14,918 -- -- -- 14,918
Time deposits 62,880 65,993 58,636 377 187,886
Time deposits over $100,000 15,037 11,865 3,929 342 31,173
IRAs 4,601 4,645 8,928 297 18,471
Repurchase agreements 13,745 297 -- -- 14,042
Short-term borrowings--other -- -- -- -- --
Short-term FHLB borrowings 27,000 12,500 -- -- 39,500
Long-term FHLB borrowings -- -- 15,125 11,500 26,625
Long-term borrowings--other -- 500 13,150 -- 13,650
-------- -------- -------- -------- --------
Total funding sources $281,082 $ 95,800 $ 99,768 $ 12,516 $489,166
======== ======== ======== ======== ========
Interest sensitivity gap--$ $(19,173) $ 5,358 $ 83,283 $ (4,755) $ 64,713
Interest sensitivity gap--% 93.18% 105.59% 183.48% 62.01% 113.23%
Cumulative gap--$ $(19,173) $(13,815) $ 69,468 $ 64,713
Cumulative gap--% 93.18% 96.33% 114.57% 113.23%
Cumulative gap as a percentage of total
earning assets (3.46)% (2.49)% 12.54% 11.68%
<FN>
<F1> Investment securities include mortgage-backed securities which
have effective maturities based upon current market conditions. This
stratification is based on management's estimates in relation to the
historical trends of these types of securities.
</TABLE>
52
<PAGE>
<PAGE>
The following table provides additional information about our
financial instruments as of December 31, 1998. For loans, securities
and liabilities with contractual maturities, the table presents
principal cash flow and related weighted-average interest rates by
contractual maturities. Core deposits that have no contractual
maturity are subject to immediate withdrawal or repricing.
<TABLE>
<CAPTION>
YEAR OF CONTRACTUAL MATURITY
------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 THEREAFTER TOTAL
-------- ------- ------- ------- ------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
RATE SENSITIVE ASSETS:
Fixed rate loans............... $ 70,498 $63,377 $56,938 $25,309 $24,468 $ 6,845 $247,435
Average interest rate........ 8.07% 8.48% 8.40% 8.40% 8.29% 8.35% 8.37%
Variable rate loans............ $155,556 $31,913 $15,494 $ 8,594 $16,202 $20,475 $248,234
Average interest rate........ 8.45% 8.01% 8.24% 8.50% 7.78% 8.40% 8.33%
Fixed rate securities.......... $ 7,739 $ 6,450 $ 4,403 $ 5,223 $10,240 $ 8,629 $ 42,684
Average interest rate........ 6.11% 6.34% 6.00% 6.09% 5.62% 5.98% 5.98%
Variable rate securities....... -- $ 4,000 -- -- -- $ 8,096 $ 12,096
Average interest rate........ -- 4.85% -- -- -- 6.82% 6.17%
Federal funds sold............. $ 3,430 -- -- -- -- -- $ 3,430
Average interest rate........ 4.55% -- -- -- -- -- 4.55%
RATE SENSITIVE LIABILITIES:
Non-interest-bearing
deposits..................... $ 55,417 -- -- -- -- -- $ 55,417
Savings and interest-bearing
checking..................... 157,819 -- -- -- -- -- 157,819
Average interest rate........ 3.89% -- -- -- -- -- 3.89%
Time deposits.................. $165,021 $41,452 $18,513 $ 6,126 $ 5,402 $ 1,016 $237,530
Average interest rate........ 5.48% 5.41% 5.79% 5.96% 5.67% 6.12% 5.51%
Fixed interest rate
borrowings................... $ 17,042 $20,000 $12,650 $ 625 $ 1,500 $42,000 $ 93,817
Average interest rate........ 4.19% 5.70% 7.00% 5.87% 5.62% 5.01% 5.29%
</TABLE>
CAPITAL RESOURCES AND LIQUIDITY
LIQUIDITY MANAGEMENT. Long-term liquidity is a function of the
core deposit base and an adequate capital base. We are committed to
growth of our deposit base. This growth is both internally generated
through product pricing and product development and externally
generated through brokered certificates of deposit. During the
quarter ended March 31, 1999 and the year ended December 31, 1998,
both of these elements contributed heavily to developing and
maintaining long-term liquidity. Our capital position has been
maintained through earnings and raising of capital. See "--Capital
Resources."
Short-term liquidity needs arise from continuous fluctuations in
the flow of funds on both sides of the balance sheet resulting from
growth and seasonal and cyclical customer demands. The securities
portfolio provides stable long-term earnings as well as being a
primary source of liquidity. The designation of securities as
available-for-sale and held-to-maturity does not impact the
portfolio as a source of liquidity due to the ability to enter into
repurchase agreements using those securities.
We anticipate continued loan demand in our market areas as
industry consolidation continues. We have utilized, and expect to
continue to utilize, Federal Home Loan Bank borrowings to fund a
portion of future loan growth. We had a $70.25 million secured
credit facility with the Federal Home Loan Bank as of December 31,
1998, of which $66.13 million was outstanding at December 31, 1998.
As of March 31, 1999, we had availability under our Federal Home
Loan Bank secured credit facility of $71.08 million of which $64.13
million was outstanding.
Average short-term borrowings decreased 1.74% during the first
quarter of 1999 following an increase of 0.29% in the year ended
December 31, 1998. The increases reflected the above-mentioned
strategy of utilizing Federal Home Loan Bank borrowings to fund loan
growth while continuing to systematically build our deposit base. We
anticipate similar use of the Federal Home Loan Bank facility in the
foreseeable future. In addition to the Federal Home Loan Bank credit
facility, as of March 31, 1999, we had available $29.10 million of
additional short-term borrowing capacity.
53
<PAGE>
<PAGE>
The following table summarizes short-term borrowings for the
periods indicated:
<TABLE>
AVERAGE SHORT-TERM BORROWINGS
<CAPTION>
QUARTER ENDED YEAR ENDED
MARCH 31, 1999 DECEMBER 31, 1998
--------------------- ---------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE AMOUNT RATE
------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Federal funds purchased........................ $ 4,690 5.08% $ 1,272 5.56%
Securities sold under agreement to repurchase
and other short-term borrowings.............. 47,246 4.98 51,583 4.95
------- -------
Total.......................................... $51,936 4.99 $52,855 4.96
======= =======
Total maximum short-term borrowings outstanding
at any month-end during the period........... $53,969 $63,449
</TABLE>
We experienced net growth in assets of 4.12% during the first
three months of 1999, while deposits increased 6.72% during the same
period. Total assets and liabilities were relatively unchanged in
totals from March 31, 1998 to March 31, 1999 and actually increased
subsequent to the sale of the three northeast Missouri branches in
December 1998. The branch sale resulted in a reduction of $13.52
million in loans and $39.99 million in deposits. We continue to
emphasize growth in stable core deposits while utilizing the Federal
Home Loan Bank as necessary to balance liquidity and cost
effectiveness. We closely monitor our level of liquidity to meet
expected future needs.
CAPITAL RESOURCES. Total shareholders' equity increased 2.00% to
$49.06 million at March 31, 1999 compared to $48.10 million at
year-end 1998.
Our capital requirements have been historically financed through
offerings of debt and equity securities, retention earnings and
borrowings from a commercial bank. The bank also utilized its
borrowing capacity with the Federal Home Loan Bank. The principal
amount of our term loan was $13.65 million as of March 31, 1999,
which loan matures in November 2001.
During the first quarter of 1999, we purchased approximately
$20.00 million of brokered deposit at rates between 4.55% and 4.65%
in order to fund loan growth and to provide for other liquidity
needs. Of such deposits, $5.00 million matured in May 1999 and the
remainder matures in August 1999. We may use brokered deposits in
the future as a source of liquidity.
We may from time to time repurchase shares of our common stock
in private transactions. In July 1999, we repurchased 232,010 shares
of our common stock for $2.32 million.
We also analyze our capital and the capital position of our bank
in terms of regulatory capital guidelines. This analysis of capital
is dependent upon a number of factors including asset quality,
earnings strength, liquidity, economic conditions and combinations
thereof. The Federal Reserve Board has issued standards for
measuring capital adequacy for bank holding companies. These
standards are designed to provide risk-responsive capital guidelines
and to incorporate a consistent framework for use by financial
institutions. Management believes that, as of March 31, 1999, we and
the bank met all capital adequacy requirements to which we were
subject.
54
<PAGE>
Allegiant's and the bank's capital ratios were as follows as of
the dates indicated:
<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998
------------------------------ ------------------------------
ALLEGIANT ALLEGIANT BANK ALLEGIANT ALLEGIANT BANK
--------- -------------- --------- --------------
<S> <C> <C> <C> <C>
Total capital (to risk-weighted assets)...... 8.49% 10.63% 8.68% 10.93%
Tier 1 capital (to risk-weighted assets)..... 7.24 9.38 7.42 9.68
Tier 1 capital (to average assets)........... 6.14 7.81 5.83 7.61
</TABLE>
Our commitment to maintaining adequate capital is evidenced by
the significant increase in our average equity to average asset
ratio which improved to 7.90% for the quarter ended March 31, 1999
compared to 6.84% for the first quarter of 1998. We will seek to
maintain a strong equity base while executing our controlled
expansion plans.
YEAR 2000
GENERAL DESCRIPTION OF THE YEAR 2000 ISSUE AND THE READINESS OF
ALLEGIANT. The Year 2000 issue is a result of computer programs
being written using two digits rather than four digits to define the
applicable year. Any of our computer programs or hardware that have
date-sensitive software or embedded chips 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 of
operations including, among other things, a temporary inability to
process transactions, or engage in similar normal business
activities. To mitigate the risk of disruption, a Year 2000 plan has
been developed and implemented. The plan is comprised of five
phases, with completion of all five necessary to protect us against
potential Year 2000 failures.
Our plan to resolve the Year 2000 issue involves the following
five phases: awareness, assessment, remediation, testing and
implementation. During the awareness phase, a comprehensive strategy
for addressing the Year 2000 issue was formulated. We have fully
completed our assessment of all systems that could be significantly
affected by the Year 2000. The completed assessment indicated that
most of the significant information technology systems could be
affected, including the loan, deposit, general ledger and billing
systems. All software and hardware systems have been provided by
third party vendors; therefore, the remediation of systems primarily
involves the installation of upgraded systems that have been
certified by the vendors as Year 2000 compliant. We are in the
process of testing all hardware and software systems to validate
that systems have been renovated. In addition, testing will validate
the compatibility of system interfaces. After all testing is
completed, all systems will be implemented, which will include
certification that all systems are Year 2000 compliant.
YEAR 2000 STATUS, INCLUDING TIMETABLE FOR COMPLETION. As of the
date of this prospectus, the awareness and assessment phases are
100% complete. The remediation phase is substantially complete, with
only two lesser significant software systems requiring upgrades. It
is anticipated that these systems will be upgraded no later than
September 30, 1999. Testing of our systems is accomplished after
upgrades are provided by and certified as Year 2000 compliant by a
third party vendor. As of the date of this prospectus, approximately
85% of all internal systems have been tested. The testing of mission
critical systems was substantially complete by December 31, 1998.
Except for the two systems identified above, it is anticipated that
testing of all systems will be substantially completed by July 31,
1999, with the implementation phase to be completed by August 31,
1999.
IMPORTANCE OF THIRD PARTIES AND THEIR EXPOSURE TO THE YEAR 2000.
We have some systems that interface directly with significant third
party vendors. These include the Electronic Fund Transfer (EFT)
systems related to wire transfers, automated teller machine and
debit card transactions, in addition to trust system software. These
third parties have made, or are in the process of making, their
systems Year 2000 compliant. We are working with these third party
vendors to ensure that the third party systems interface properly
with our systems. Testing for these systems will be accomplished
using actual and proxy testing. Proxy testing is testing that takes
place in a controlled environment using similar software/hardware
that we and the third party vendors utilize. These tests have been
completed.
55
<PAGE>
We also have gathered information about the Year 2000 compliance
status of customers with significant credit relationships. In
addition, significant suppliers and other third parties that do not
share information with our systems (external agents) have been
queried to assess their Year 2000 status. As of the date of this
prospectus, there is no evidence of any significant customers or
external agents that would materially impact our operations,
liquidity or capital resources. However, we have has no means of
ensuring that these entities will be Year 2000 compliant. The
inability of third parties and external agents to complete their
Year 2000 resolution process in a timely fashion could materially
impact us. The effect of non-compliant third parties and external
agents is not determinable.
YEAR 2000 COSTS. We have utilized and will continue to utilize
both internal and external resources to reprogram, replace, test and
implement the software and operating equipment for Year 2000
modifications. The total cost of the Year 2000 project is estimated
at $0.20 million and is being funded through operating cash flows.
As of the date of this prospectus, we have incurred approximately
$0.20 million ($0.11 million expensed and $0.09 million capitalized
for new systems and equipment), related to all phases of the
Year 2000 project. The total remaining project costs, which we
approximate will be $0.03 million, are attributable to the testing
and validation phases of the project and will be expensed as
incurred.
OVERALL YEAR 2000 RISKS. Management believes it has an effective
program in place to resolve the Year 2000 issue in a timely manner.
As noted above, all necessary phases of the Year 2000 program have
not yet been completed. In the event that such phases are not
completed in a timely fashion, we could experience system failures
that may have a significant impact on our financial condition. In
addition, disruptions in the economy generally resulting from Year
2000 issues also could materially adversely affect us. We could be
subject to litigation for computer system product failures. The
amount of potential liability and lost revenue cannot be reasonably
estimated at this time.
CONTINGENCY PLANNING. We have contingency plans for certain
mission critical applications and are working on plans for all other
systems. These contingency plans involve, among other actions,
manual workarounds and adjusting staffing strategies. In addition,
funding plans are being developed to assure adequate levels of
liquid assets are available in the event of significant customer
withdrawals of cash items as a result of concerns regarding Year
2000 issues.
56
<PAGE>
BUSINESS
GENERAL
We are a bank holding company headquartered in St. Louis,
Missouri. Our bank subsidiary, Allegiant Bank, offers full-service
banking and personal trust services to individuals, commercial
businesses and municipalities in the St. Louis metropolitan area.
Our services include commercial, real estate and installment loans,
checking, savings and time deposit accounts, personal trust and
other fiduciary services and various other financial services such
as securities brokerage, insurance and safe deposit boxes. As of
March 31, 1999, we reported, on a consolidated basis, total assets
of $620.86 million, loans of $513.54 million, deposits of $481.04
million and shareholders' equity of $49.06 million.
Since 1989 when we were organized, we have been committed to
building a strong, customer-friendly community bank. As a community
bank, we are able to respond quickly to our customers through local
decision-making and to tailor products and services to meet their
needs. We believe this customer-friendly approach provides us with a
competitive advantage over many of the larger financial institutions
in the St. Louis metropolitan area. In addition, we believe that we
have benefited from recent acquisitions of locally headquartered
financial institutions by larger regional or national out-of-town
financial institutions. Recent acquisitions of financial
institutions in our market area include: Bank America Corporation's
acquisition of Boatmen's Bancshares, Inc.; Union Planters'
Corporation's acquisition of Magna Group, Inc.; and the pending
acquisition by Firstar Corp. of Mercantile Bancorporation Inc.
We currently are the fourth largest St. Louis-based bank holding
company. We have expanded rapidly through internal growth and
acquisitions. We believe that market coverage is necessary, and our
goal is to have a banking facility within a 20-minute drive from all
principal sectors of the St. Louis metropolitan area.
We were organized in May 1989 and at that time acquired
Allegiant State Bank located in Northeastern Missouri. We acquired
Allegiant Bank in St. Louis, Missouri in 1990. In November 1994, we
acquired Allegiant Mortgage Company. Effective in January 1995,
Allegiant State Bank was merged into Allegiant Bank. We acquired
Reliance Savings and Loan Association of St. Louis County in August
1997 and later merged it with Allegiant Bank.
In September 1997, the bank acquired two branches in Union and
Warrenton, Missouri, from Roosevelt Bank. In that transaction, the
bank assumed approximately $96.08 million of deposit liabilities,
acquired real property and related automated teller machines,
furniture, fixtures, equipment and other operating assets with an
aggregate value of $0.54 million, and approximately $3.02 million of
consumer loans. The bank recorded goodwill of $8.83 million in
connection with this branch acquisition. In January 1999, the bank
acquired all the assets and liabilities of Allegiant Mortgage
Company which then was dissolved.
In addition to our acquisitions, we have opened several new
branches with a view toward covering all sectors of the St. Louis
metropolitan area. Branch openings in the past three years
include Mehlville in 1996, and St. Peters, Affton and Crestwood in
1997. We also opened a branch in Town & Country in 1998, and a
downtown St. Louis branch in the first quarter of 1999. Later in
1999 we will open our 15th branch in Ballwin.
Since the beginning of 1998, we have focused primarily on
improving the profitability of our banking operations. As a result,
we have reduced the amount of one- to four-family mortgages that we
hold in our loan portfolio and increased the amount of higher
yielding commercial loans. We also have hired several banking
professionals with experience in the St. Louis metropolitan area to
help us grow our commercial loans and deposits. We have refined our
market focus to concentrate exclusively on opportunities in the
higher-growth St. Louis metropolitan area and, accordingly, we sold
three retail banking offices outside the St. Louis metropolitan area
in December 1998. We also have implemented company-wide cost-control
efforts to enhance efficiencies of entire operations.
Our management team is comprised of experienced individuals who
average more than 15 years in the banking or financial services
industries. Our directors and executive officers own approximately
35% of our outstanding common stock.
57
<PAGE>
The St. Louis metropolitan area is the 17th largest metropolitan
area in the United States with a population of approximately 2.45
million. The St. Louis metropolitan area is home to 19 Fortune 1000
companies, such as Anheuser-Busch Companies, Inc., Monsanto Company,
Ralston Purina Company and Trans World Airlines, Inc. Also the St.
Louis metropolitan area ranks fifth in the United States as a
headquarters location for Fortune 500 companies. In 1998, the St.
Louis area ranked second in Entrepreneur Magazine's listing of the
top places in the United States for small business, marking four
straight years on that publication's top ten list, and Inc. magazine
placed St. Louis among its top ten areas for growing firms.
OPERATIONS
The bank offers complete banking and trust services to
individuals, businesses and municipalities in the St. Louis
metropolitan area. Services include commercial, real estate,
mortgage and installment loans, checking, savings and time deposit
accounts, trust and other fiduciary services, and various other
customer services such as brokerage, insurance and safe deposit
boxes.
COMPETITION
The bank encounters substantial competition in offering all of
its banking and related financial products and services from other
banking institutions and from an increasing number of non-banking
institutions in its market area. Many of the bank's non-bank
competitors are not subject to the extensive federal and state
regulations which govern us and our subsidiaries and, as a result,
have a competitive advantage over the bank in providing certain
services. Many of the financial institutions with which the bank
competes are larger and have substantially greater financial
resources than the bank.
SUPERVISION AND REGULATION
GENERAL. Financial institutions and their holding companies are
extensively regulated under federal and state law. As a result, our
growth and earnings performance can be affected not only by
management decisions and general economic conditions, but also by
the requirements of applicable state and federal statutes and
regulations and the policies of various governmental regulatory
authorities, including the Missouri Division of Finance, the Federal
Reserve Board, the Federal Deposit Insurance Corporation, the
Internal Revenue Service, state taxing authorities and the SEC. We
cannot predict with a high degree of certainty the effect of
applicable statutes, regulations and regulatory policies on us, but
believe that it could be significant.
Federal and state laws and regulations generally applicable to
financial institutions regulate, among other things, the scope of
business, investments, reserves against deposits, capital levels
relative to operations, the nature and amount of collateral for
loans, the establishment of branches, mergers, consolidations and
dividends. The system of supervision and regulation applicable to us
establishes a comprehensive framework for our operations and is
intended primarily for the protection of the FDIC's deposit
insurance funds and the depositors of the bank rather than our
shareholders.
This summary of the material elements of this regulatory
framework does not describe all applicable statutes, regulations and
regulatory policies, nor does it restate all of the requirements of
the statutes, regulations and regulatory policies that are
described. You should review the applicable statutes, regulations
and regulatory policies. Any change in applicable law, regulations
or regulatory policies may have a material effect on our business.
RECENT REGULATORY DEVELOPMENTS. Legislation is pending in
Congress that would allow bank holding companies to engage in a
wider range of nonbanking activities, including additional
securities and insurance activities. The expanded powers generally
would be available to a bank holding company only if the bank
holding company and its bank subsidiaries remain well-capitalized
and well-managed. At this time, we are unable to predict whether the
proposed legislation will be enacted and, therefore, are unable to
predict the impact such legislation may have on us.
58
<PAGE>
ALLEGIANT BANCORP, INC.
General. We, as the sole shareholder of the bank, are a bank
holding company. As a bank holding company, we are registered with,
and are subject to regulation by, the Federal Reserve Board under
the Bank Holding Company Act. In accordance with Federal Reserve
Board policy, we are expected to act as a source of financial
strength to the bank and to commit resources to support the bank in
circumstances where we might not otherwise do so. We are subject to
periodic examination by the Federal Reserve Board. We also are
required to file with the Federal Reserve Board periodic reports of
our operations and such additional information as the Federal
Reserve Board may require. We also are regulated by the Missouri
Division of Finance under Missouri banking laws.
Investments and Activities. Under the Bank Holding Company Act,
a bank holding company must obtain Federal Reserve Board approval
before: (a) acquiring direct or indirect ownership or control of any
voting shares of another bank or bank holding company if it would
own or control more than 5% of the shares of the other bank or bank
holding company after the acquisition (unless it already owns or
controls the majority of such shares); (b) acquiring all or
substantially all of the assets of another bank; or (c) merging or
consolidating with another bank holding company. Subject to certain
conditions (including certain deposit concentration limits), the
Federal Reserve Board may allow a bank holding company to acquire
banks located in any state of the United States regardless of
whether the acquisition is prohibited by the law of the state in
which the target bank is located. However, in approving interstate
acquisitions, the Federal Reserve Board is required to observe
applicable state law limitations on the aggregate amount of deposits
that may be held by the acquiring bank holding company and its
insured depository institution affiliates in the state in which the
target bank is located (provided that those limits do not
discriminate against out-of-state depository institutions or their
holding companies) and state laws which require that the target bank
have been in existence for a minimum period of time (up to five
years) before being acquired by an out-of-state bank holding
company.
The Bank Holding Company Act also generally prohibits bank
holding companies from acquiring direct or indirect ownership or
control of more than 5% of the voting shares of any company which is
not a bank and from engaging in any business other than that of
banking, managing and controlling banks or furnishing services to
banks and their subsidiaries. This general prohibition is subject to
a number of exceptions. The principal exception allows bank holding
companies to engage in, and to own shares of companies engaged in,
certain businesses found by the Federal Reserve Board to be "so
closely related to banking ... as to be a proper incident thereto."
Under current regulations of the Federal Reserve Board, we are
permitted to engage in a variety of banking-related businesses,
including the operation of a thrift, sales and consumer finance,
equipment leasing, the operation of a computer service bureau
(including software development), and mortgage banking and
brokerage. The Bank Holding Company Act generally does not place
territorial restrictions on the domestic activities of non-bank
subsidiaries of bank holding companies.
Capital Requirements. Bank holding companies are required to
maintain minimum levels of capital in accordance with Federal
Reserve Board capital adequacy guidelines. If capital falls below
minimum guideline levels, a bank holding company, among other
things, may be denied approval to acquire or establish additional
banks or non-bank businesses.
The Federal Reserve Board's capital guidelines contain a
risk-based requirement, expressed as a percentage of total
risk-weighted assets, and a leverage requirement, expressed as a
percentage of total assets. Bank holding companies must maintain a
minimum ratio of total capital to total risk-weighted assets of 8%,
at least one-half of which must be Tier 1 capital, and a minimum
ratio of Tier 1 capital to total assets of 3% for the most highly
rated companies, with a minimum requirement of 4% for all others.
For purposes of these capital standards, Tier 1 capital consists
primarily of permanent shareholders' equity less intangible assets
(other than certain mortgage servicing rights and purchased credit
card relationships). Up to 25% of Tier 1 capital can consist of the
proceeds of the sale of trust preferred securities. Total capital
consists primarily of Tier 1 capital plus certain other debt and
equity instruments that do not qualify as Tier 1 capital, including
any proceeds from the sale of trust preferred securities that would
exceed 25% of Tier 1 capital, and a portion of the bank holding
company's allowance for loan and lease losses.
59
<PAGE>
The risk-based and leverage standards described above are
minimum requirements. Higher capital levels will be required if
warranted by the particular circumstances or risk profiles of
individual banking organizations. For example, the Federal Reserve
Board's capital guidelines contemplate that additional capital may
be required to take adequate account of, among other things,
interest rate risk, or the risks posed by concentrations of credit,
nontraditional activities or securities trading activities. Further,
any banking organization experiencing or anticipating significant
growth would be expected to maintain capital ratios, including
tangible capital positions (i.e., Tier 1 capital less all intangible
assets), well above the minimum levels.
As of March 31, 1999, we had regulatory capital in excess of the
Federal Reserve Board's minimum requirements, with a total risk-based
capital ratio of 8.49% and a Tier 1 leverage capital ratio of 6.14%.
The Federal Reserve Board does not (and has not in the past) require
us to maintain our capital at levels exceeding minimum requirements.
Dividends. Under Missouri law, we may not pay dividends if our
net assets are less than our stated capital or if payment of
dividends would reduce our net assets below our stated capital.
Additionally, the Federal Reserve Board has issued a policy
statement about the payment of cash dividends by bank holding
companies. The policy statement provides that a bank holding company
should not pay cash dividends that exceed its net income or which
can only be funded in ways that weaken the bank holding company's
financial health, such as by borrowing. The Federal Reserve Board
also possesses enforcement powers over bank holding companies and
their non-bank subsidiaries to prevent or remedy actions that
represent unsafe or unsound practices or violations of applicable
statutes and regulations. These powers include proscribing the
payment of dividends by banks and bank holding companies.
Federal Securities Regulation. Our common stock is registered
with the SEC under the Securities Exchange Act of 1934.
Consequently, we are subject to the information, proxy solicitation,
insider trading and other restrictions and requirements of the SEC
under the Securities Exchange Act of 1934.
ALLEGIANT BANK
General. The bank is chartered in Missouri, and its deposit
accounts are insured by the FDIC's Bank Insurance Fund. As an
FDIC-insured, Missouri-chartered bank, the bank is subject to the
examination, supervision, reporting and enforcement requirements of
the Missouri Division of Finance, as the chartering authority for
Missouri banks, and the FDIC, as administrator of the Bank Insurance
Fund.
Deposit Insurance. As an FDIC-insured institution, the bank is
required to pay deposit insurance premium assessments to the FDIC.
The FDIC has adopted a risk-based assessment system under which all
insured depository institutions are placed into one of nine
categories and assessed insurance premiums based upon their
respective levels of capital and results of supervisory evaluations.
Institutions classified as well-capitalized (as defined by the FDIC)
and considered healthy pay the lowest premium while institutions
that are less than adequately capitalized (as defined by the FDIC)
and considered of substantial supervisory concern pay the highest
premium. The FDIC risk classifies all insured institutions for each
semi-annual assessment period.
During the semi-annual assessment period which began January 1,
1999, Bank Insurance Fund assessment rates ranged from 0% of
deposits to 0.27% of deposits. During the semi-annual assessment
period beginning July 1, 1999, Bank Insurance Fund assessment rates
will continue to range from 0% of deposits to 0.27% of deposits.
The FDIC may terminate the deposit insurance of any insured
depository institution if the FDIC determines, after a hearing, that
the institution (a) has engaged or is engaging in unsafe or unsound
practices, (b) is in an unsafe or unsound condition to continue
operations or (c) has violated any applicable law, regulation,
order, or any condition imposed in writing by, or written agreement
with, the FDIC. The FDIC also may suspend deposit insurance
temporarily during a hearing process about permanent termination of
insurance if the institution has no tangible capital. We are not
aware of any activity or condition that could result in termination
of the deposit insurance of the bank.
60
<PAGE>
Financing Corporation Assessments. Since 1987, a portion of the
deposit insurance assessments paid by members of the FDIC's Savings
Association Insurance Fund has been used to cover interest payments
due on the outstanding obligations of the Financing Corporation. The
Financing Corporation was created in 1987 to finance the
recapitalization of the Federal Savings and Loan Insurance
Corporation, the predecessor insurance fund to the Savings
Association Insurance Fund.
As a result of federal legislation enacted in 1996, beginning
January 1, 1997, both Savings Association Insurance Fund members and
Bank Insurance Fund members became subject to assessments to cover
the interest payments on outstanding Financing Corporation
obligations. These assessments are in addition to amounts assessed
by the FDIC for deposit insurance. Until January 1, 2000, the
Financing Corporation assessments made against Bank Insurance Fund
members may not exceed 20% of the amount of the Financing
Corporation assessments made against Savings Association Insurance
Fund members. Between January 1, 2000 and the final maturity of the
outstanding Financing Corporation obligations in 2019, Bank
Insurance Fund members and Savings Association Insurance Fund
members will share the cost of the interest on the Financing
Corporation bonds on a pro rata basis. During the year ended
December 31, 1998, the Financing Corporation assessment rate for
Savings Association Insurance Fund members ranged between
approximately 0.061% of deposits and approximately 0.063% of
deposits, while the Financing Corporation assessment rate for Bank
Insurance Fund members ranged between approximately 0.012% of
deposits and approximately 0.013% of deposits. During the quarter
ended March 31, 1999, the Financing Corporation assessment rate for
Bank Insurance Fund members was approximately 0.012% of deposits and
the Financing Corporation assessment rate for Savings Association
Insurance Fund members was approximately 0.061% of deposits.
Supervisory Assessments. All Missouri banks are required to pay
supervisory assessments to the Missouri Division of Finance to fund
the operations of the Missouri Division of Finance. The amount of
the assessment is calculated based on a formula established by the
Missouri Division of Finance which takes into account the
institution's total assets.
Capital Requirements. The FDIC has established minimum capital
standards for state-chartered insured non-member banks, such as the
bank, comprised of a leverage requirement and a risk-based capital
requirement. The leverage requirement mandates a minimum ratio of
Tier 1 capital to total assets of 3% for the most highly-rated banks
and at least 4% for all others. The risk-based capital requirement
provides for a minimum ratio of total capital to total risk-weighted
assets of 8%, at least one-half of which must be Tier 1 capital. For
purposes of these capital standards, Tier 1 capital and total
capital consist of substantially the same components as Tier 1
capital and total capital under the Federal Reserve Board's capital
guidelines for bank holding companies.
The foregoing capital requirements are minimum requirements.
Higher capital levels will be required if warranted by the
particular circumstances or risk profiles of individual
institutions. For example, the regulations of the FDIC provide that
additional capital may be required to take adequate account of,
among other things, interest rate risk or the risks posed by
concentrations of credit, nontraditional activities or securities
trading activities.
During the year ended December 31, 1998 and the quarter ended
March 31, 1999, the bank was not required by the FDIC to increase
its capital to an amount in excess of the minimum regulatory
requirement. As of March 31, 1999, the bank exceeded its minimum
regulatory capital requirements with a Tier 1 leverage capital ratio
of 7.81% and a total risk-based capital ratio of 10.63%.
Federal law provides the federal banking regulators with broad
power to take prompt corrective action to resolve the problems of
undercapitalized institutions. The extent of the regulators' powers
depends on whether an institution is "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized"
or "critically undercapitalized," in each case as defined by
regulation. Depending upon the capital category to which an
institution is assigned, the regulators' corrective powers include:
(a) requiring the institution to submit a capital restoration plan;
(b) limiting the institution's asset growth and restricting its
activities; (c) requiring the institution to issue additional
capital stock (including additional voting stock) or to be acquired;
(d) restricting transactions between the institution and its
affiliates; (e) restricting the interest rate the institution can
pay on deposits; (f) ordering a new election of directors of the
61
<PAGE>
institution; (g) requiring that senior executive officers or
directors be dismissed; (h) prohibiting the institution from
accepting deposits from correspondent banks; (i) requiring the
institution to divest certain subsidiaries; (j) prohibiting the
payment of principal or interest on subordinated debt; (k) and
ultimately, appointing a receiver for the institution. As of March
31, 1999, the bank was "well capitalized," as defined by FDIC
regulations.
Dividends. Under Missouri law, the bank may pay dividends out of
its undivided profits. The payment of dividends by any financial
institution or its holding company, however, is affected by the
requirement to maintain adequate capital pursuant to applicable
capital adequacy guidelines and regulations, and a financial
institution generally is prohibited from paying any dividends if,
following payment of a dividend, the institution would be
undercapitalized. As described above, the bank exceeded its minimum
capital requirements under applicable guidelines as of March 31,
1999. As of March 31, 1999, approximately $13.21 million was
available to be paid as dividends by the bank to us. However, the
FDIC or the Missouri Division of Finance may prohibit the payment of
any dividends from these available funds by the bank if either
determines such payment would constitute an unsafe or unsound
practice.
Insider Transactions. The bank is subject to certain
restrictions imposed by federal law on extensions of credit to us,
on investments in our stock or other of our securities and the
acceptance of our stock or other securities as collateral for loans.
Certain limitations and reporting requirements also are placed on
extensions of credit by the bank to its directors and officers, to
our directors and officers, to our principal shareholders, and to
"related interests" of such directors, officers and principal
shareholders. In addition, federal law and regulations may affect
the terms upon which any person becoming one of our directors or
officers or one of our principal shareholders may obtain credit from
banks with which the bank maintains a correspondent relationship.
Safety and Soundness Standards. The federal banking agencies
have adopted guidelines which establish operational and managerial
standards to promote the safety and soundness of federally insured
depository institutions. The guidelines set forth standards for
internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset
growth, compensation, fees and benefits, asset quality and earnings.
In addition, in October 1998, the federal banking regulators issued
safety and soundness standards for achieving Year 2000 compliance,
including standards for developing and managing Year 2000 project
plans, testing remediation efforts and planning for contingencies.
In general, the safety and soundness guidelines prescribe the
goals to be achieved in each area, and each institution is
responsible for establishing its own procedures to achieve those
goals. If an institution fails to comply with any of the standards
set forth in the guidelines, the institution's primary federal
regulator may require the institution to submit a plan for achieving
and maintaining compliance. If an institution fails to submit an
acceptable compliance plan, or fails in any material respect to
implement a compliance plan that has been accepted by its primary
federal regulator, the regulator is required to issue an order
directing the institution to cure the deficiency. Until the
deficiency cited in the regulator's order is cured, the regulator
may restrict the institution's rate of growth, require the
institution to increase its capital, restrict the rates the
institution pays on deposits or require the institution to take any
action the regulator deems appropriate under the circumstances.
Noncompliance with the standards established by the safety and
soundness guidelines may also constitute grounds for other
enforcement action by the federal banking regulators, including
cease and desist orders and civil money penalty assessments.
Branching Authority. Missouri banks, such as the bank, have the
authority under Missouri law to establish branches anywhere in the
State of Missouri, subject to receipt of all required regulatory
approvals.
Under the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994, both state and national banks are allowed to
establish interstate branch networks by acquiring other banks,
subject to certain conditions, including limitations on the
aggregate amount of deposits that may be held by the surviving bank
and all of its insured depository institution affiliates.
Establishing new interstate branches or acquiring individual
branches of a bank in another state (rather than acquiring an
out-of-state bank in its entirety) is allowed by the Riegle-Neal Act
only if specifically authorized by state law. The legislation
allowed individual states to "opt-out" of certain provisions of the
Riegle-Neal Act by enacting appropriate legislation prior to June 1,
1997. Missouri enacted legislation permitting interstate mergers
beginning on
62
<PAGE>
June 1, 1997, subject to certain conditions, including a prohibition
against interstate mergers involving a Missouri bank that has been
in existence and continuous operation for fewer than five years.
State Bank Activities. Under federal law and FDIC regulations,
FDIC-insured state banks are prohibited, subject to certain
exceptions, from making or retaining equity investments of a type,
or in an amount, that are not permissible for a national bank.
Federal law and FDIC regulations also prohibit FDIC-insured state
banks and their subsidiaries, subject to certain exceptions, from
engaging as principal in any activity that is not permitted for a
national bank or its subsidiary, respectively, unless the bank
meets, and continues to meet, its minimum regulatory capital
requirements, and the FDIC determines the activity would not pose a
significant risk to the deposit insurance fund of which the bank is
a member. These restrictions have not had, and are not currently
expected to have, a material impact on the operations of the bank.
Federal Reserve System. Federal Reserve Board regulations, as
presently in effect, require depository institutions to maintain
non-interest earning reserves against their transaction accounts
(primarily NOW and regular checking accounts), as follows: for
transaction accounts aggregating $46.5 million or less, the reserve
requirement is 3% of total transaction accounts; and for transaction
accounts aggregating in excess of $46.5 million, the reserve
requirement is $1.395 million plus 10% of the aggregate amount of
total transaction accounts in excess of $46.5 million. The first
$4.9 million of otherwise reservable balances are exempted from the
reserve requirements. These reserve requirements are subject to
annual adjustment by the Federal Reserve Board. The bank is in
compliance with these requirements.
EMPLOYEES
As of March 31, 1999, we had approximately 228 full-time
equivalent employees. None of our employees is subject to a
collective bargaining agreement. We consider our relationships with
our employees and those of the bank to be good.
PROPERTIES
Our principal executive, administrative and operational offices
are located at 2122 Kratky Road in St. Louis, Missouri. The bank
conducts its business and operations out of 14 locations in the
St. Louis metropolitan area. Our physical properties, which are
either owned or leased, are in satisfactory condition, adequately
insured and suitable and adequate for present operations.
63
<PAGE>
The following table sets forth the location and certain
additional information regarding our banking facilities as of the
date hereof. The expiration date shown includes the renewal option
periods available to the bank.
<TABLE>
<CAPTION>
YEAR OWNED OR LEASED/ APPROXIMATE
OPENED EXPIRATION DATE SQUARE FOOTAGE
------ ---------------- --------------
<S> <C> <C> <C>
ALL BANKING FACILITIES:
ST. LOUIS, GRAND
4323 North Grand Blvd. 1990 Owned 10,000
St. Louis, MO 63107
WEST PORT
157 Westport Plaza Drive 1992 Leased/2012 2,500
Maryland Heights, MO 63146
HAZELWOOD
7650 North Lindbergh 1992 Owned 5,000
Hazelwood, MO 63042
CLAYTON
7801 Forsyth Blvd. 1994 Leased/2004 3,200
Clayton, MO 63105
DES PERES
12100 Manchester Road 1995 Owned 2,300
Des Peres, MO 63131
SOUTH COUNTY
7421 South Lindbergh Blvd. 1996 Leased/2015 1,900
Mehlville, MO 63125
ST. PETERS
3551 Harvester Road 1997 Owned 2,500
St. Peters, MO 63303
WARRENTON
236 East Booneslick Road 1997 Owned 1,800
Warrenton, MO 63383
UNION
509 Highway 50 West 1997 Owned 2,900
Union, MO 63084
CRESTWOOD
9792 Watson Road 1997 Leased/2017 2,500
Crestwood, MO 63126
AFFTON
8930 Gravois 1997 Owned 4,400
Affton, MO 63123
TOWN & COUNTRY
157 Lamp & Lantern Village 1998 Owned 3,500
Town & Country, MO 63017
HEADQUARTERS
2122 Kratky Road 1998 Owned 22,000
St. Louis, MO 63114
ST. LOUIS, DOWNTOWN
119 North Broadway 1999 Leased/2028 3,000
St. Louis, MO 63102
BALLWIN<F1>
15061 Manchester Road 1999 Owned 6,000
Ballwin, MO 63011
<FN>
- --------
<F1> Planned opening in August 1999
</TABLE>
LEGAL PROCEEDINGS
Various claims and lawsuits, incidental to the ordinary course
of business, are pending against us. In the opinion of management,
after consultation with legal counsel, resolution of these matters
is not expected to have a material effect on our consolidated
financial condition or results of operations.
64
<PAGE>
MANAGEMENT
The following table sets forth certain information regarding the
directors and executive officers of Allegiant:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Marvin S. Wool........................ 70 Chairman of the Board
Shaun R. Hayes........................ 39 President, Chief Executive Officer and Director
Leland B. Curtis...................... 55 Director
Kevin R. Farrell...................... 48 Director and Secretary
Leon A. Felman........................ 64 Director
C. Virginia Kirkpatrick............... 65 Director
Jack K. Krause........................ 67 Director
John L. Weiss......................... 44 Director
Lee S. Wielansky...................... 48 Director
Thomas A. Daiber...................... 41 Senior Vice President and Chief Financial Officer
</TABLE>
Marvin S. Wool has served as a director of Allegiant since 1990
and as the Chairman of Allegiant and Chairman of the bank since
March 1992. From March 1992 through 1998, Mr. Wool served as Chief
Executive Officer of Allegiant. For more than the past five years,
Mr. Wool has served as the President and Chief Executive Officer of
Dash Multi-Corp, Inc., the holding company for subsidiary companies
located in Georgia, Mississippi, Missouri, New Jersey and California
that are in the chemical, cloth coating and carpet industries. Mr.
Wool serves as a director of R-B Rubber Products, Inc., a recycler
and manufacturer of rubber products.
Shaun R. Hayes has served as a director and the President of
Allegiant since 1989 and became Chief Executive Officer of Allegiant
in January 1999. Additionally, Mr. Hayes has served as President and
Chief Executive Officer of the bank since May 1992. From November
1986 through May 1989, Mr. Hayes was Senior Vice President and
Manager of the Metropolitan Banking Division of United Missouri Bank
of St. Louis, where he served as a member of that bank's executive
committee and acted as an advisor to its Board of Directors. Mr.
Hayes currently serves on the Board of Directors of the American
Institute of Banking as well as the United Way of St. Louis.
Leland B. Curtis has been a director since 1996. Mr. Curtis has
been a partner in the law firm of Curtis, Oetting, Heinz, Garrett &
Soule, a law firm located in St. Louis, Missouri, for more than the
past five years.
Kevin R. Farrell has served as a director of Allegiant since
1989 and as Secretary of Allegiant since 1994. Mr. Farrell has been
President of St. Louis Steel Products, a steel fabricating company,
for more than the past five years.
Leon A. Felman has been a director of Allegiant since 1992. For
more than the past five years, Mr. Felman has been associated with
Sage Systems, Inc., which until June 1999 was a franchisee of Arby's
restaurants in the St. Louis area, and currently serves as its
President and Chief Executive Officer.
C. Virginia Kirkpatrick has been a director of Allegiant since
1990. Ms. Kirkpatrick has been President of CVK Personal Management
& Training Specialists, a business consulting and human resource
management firm, for more than the past five years.
Jack K. Krause has been a director of Allegiant since 1998. Mr.
Krause has been the President and Chief Executive Officer of
Jenkin-Guerin, Inc., a lubricant manufacturing company, since 1971.
John L. Weiss has served as a director of Allegiant since March
1999 and as a director of the bank since 1996. Mr. Weiss has been
President of Brentwood Volvo, an automobile dealership in St. Louis,
Missouri, for more than the past five years.
65
<PAGE>
Lee S. Wielansky has been a director of Allegiant since 1990 and
became Vice Chairman of the bank in February 1999. Mr. Wielansky has
been the Managing Director-Investments and a member of the Board of
Directors of Regency Realty Corporation, a publicly-held real estate
investment trust since 1998. Prior to such time, he was the
President and Chief Executive Officer of Midland Development Group,
a real estate development company, for more than five years.
Thomas A. Daiber has served as a Senior Vice President and the
Chief Financial Officer of Allegiant since May 7, 1999. Mr. Daiber
has been employed by Allegiant since March 17, 1997 and served most
recently as the Director of Internal Auditing. Prior to joining
Allegiant, Mr. Daiber served as an officer of Pioneer Bank and Trust
Company or its holding company, Forbes First Financial Corporation,
for more than five years.
COMMITTEES OF THE BOARD OF DIRECTORS
EXECUTIVE COMMITTEE. Marvin S. Wool (Chairperson), Shaun R.
Hayes, C. Virginia Kirkpatrick, Kevin R. Farrell and Lee S.
Wielansky are the members of the executive committee. The executive
committee may exercise all powers of the Board of Directors that may
be lawfully delegated when the Board of Directors is not in session.
AUDIT COMMITTEE. C. Virginia Kirkpatrick (Chairperson), Jack K.
Krause and Leon A. Felman are the members of the audit committee of
the Board of Directors of Allegiant. The audit committee's duties
include meeting with the independent auditors, management, internal
auditors, compliance and credit review personnel to periodically
review the work of each and ensure that each is properly discharging
its responsibilities. On January 1, 1999, the audit committee
assumed the duties of the former directors' responsibility
committee. The directors' responsibility committee was responsible
for periodically reviewing transactions between directors and
Allegiant to ensure compliance with various regulatory and other
requirements.
DIRECTORS' AND EXECUTIVES' COMPENSATION COMMITTEE. Leland B.
Curtis (Chairperson), Kevin Farrell and John L. Weiss are the
members of the directors' and executives' compensation committee.
The directors' and executives' compensation committee reviews and
recommends the salaries and other compensation of all directors and
executive officers of Allegiant.
66
<PAGE>
BENEFICIAL OWNERSHIP
The following table sets forth information regarding the amount
of common stock of Allegiant beneficially owned, as of June 24,
1999, by each person who is a director or executive officer of
Allegiant or who is known by us to own beneficially more than 5% of
our common stock, and all directors and executive officers of
Allegiant as a group:
<TABLE>
<CAPTION>
NAME OF NUMBER OF SHARES
BENEFICIAL BENEFICIALLY PERCENT
OWNER OWNED<F1> OF CLASS
---------- ---------------- --------
<S> <C> <C>
Marvin S. Wool.................................... 769,369<F2> 11.5%
Shaun R. Hayes.................................... 451,733<F3> 6.8
Leon A. Felman.................................... 554,615<F4> 8.4
Kevin R. Farrell.................................. 295,096<F5> 4.5
Lee S. Wielansky.................................. 163,210<F6> 2.4
C. Virginia Kirkpatrick........................... 166,555<F7> 2.5
Leland B. Curtis.................................. 35,079<F8> <F9>
Jack K. Krause.................................... 142,777<F10> 2.2
John L. Weiss..................................... 7,422<F11> <F9>
Thomas A. Daiber.................................. 1,080<F12> <F9>
All directors and executive officers as a group
(10 persons).................................... 2,586,936<F13> 37.7%
<FN>
- -------
<F1> Except as otherwise indicated, each individual has sole voting and
investment power over the shares listed beside his or her name. The
percentage calculations for beneficial ownership are based upon 6,611,160
shares of common stock that were issued and outstanding as of June 24,
1999, plus, with respect to each individual and for all directors and
executive officers as a group, the number of shares subject to options
and warrants that may be acquired upon exercise or conversion within 60
days of June 24, 1999.
<F2> Total includes: 76,005 shares held by the Dash Industries Pension Plan;
63,636 shares held in trusts for the benefit of Mr. Wool's children; and
52,354 shares subject to stock options that are presently exercisable or
which are exercisable within 60 days of June 24, 1999. Mr. Wool's address
is 2500 Adie Road, Maryland Heights, Missouri 63043.
<F3> Total includes: 15,661 shares held of record by Mr. Hayes' spouse, as to
which shares Mr. Hayes has shared voting and investment power; 4,956
shares held by Mr. Hayes' spouse as custodian for Mr. Hayes' three
children; and 60,781 shares subject to stock options that are presently
exercisable or which are exercisable within 60 days of June 24, 1999. Mr.
Hayes' address is 2122 Kratky Road, St. Louis, Missouri 63114.
<F4> Total includes 9,900 shares subject to stock options that are presently
exercisable or which are exercisable within 60 days of June 24, 1999. Mr.
Felman's address is 2122 Kratky Road, St. Louis, Missouri 63114.
<F5> Total includes: 178,326 shares held of record by Pentastar Family
Holdings, Inc.; 51,733 shares held by Mr. Farrell as custodian for his
four children; 3,136 shares held by NFSC/FMTC as Trustee for the IRA of
Mr. Farrell's spouse; 505 shares held by Everen Clearing Corporation as
custodian for Mr. Farrell's family; and 9,900 shares subject to stock
options that are presently exercisable or which are exercisable within 60
days of June 24, 1999.
<F6> Total includes 51,300 shares subject to stock options that are presently
exercisable or which are exercisable within 60 days of June 24, 1999.
<F7> Total includes: 23,049 shares held jointly with Ms. Kirkpatrick's spouse;
14,520 shares held of record by Ms. Kirkpatrick's spouse; 19,422 shares
held by Paine Webber as Trustee for the IRA of Ms. Kirkpatrick's spouse;
8,120 shares held jointly with Ms. Kirkpatrick's children; and 39,930
shares subject to stock options that are presently exercisable or which
are exercisable within 60 days of June 24, 1999.
<F8> Total includes 18,480 shares subject to stock options that are presently
exercisable or which are exercisable within 60 days of June 24, 1999.
<F9> Less than one percent.
<F10> Total includes 5,700 shares subject to stock options that are presently
exercisable or which are exercisable within 60 days of June 24, 1999.
<F11> Total includes: 3,720 shares subject to stock options that are presently
exercisable or which are exercisable within 60 days of June 24, 1999; and
1,118 shares held of record by Mr. Weiss's spouse.
<F12> Includes 720 shares subject to stock options that are presently
exercisable or which are exercisable within 60 days of June 24, 1999.
<F13> Total includes 252,785 shares subject to stock options that are presently
exercisable or which are exercisable within 60 days of June 24, 1999.
</TABLE>
67
<PAGE>
<PAGE>
ALLEGIANT CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware
law pursuant to the filing of a Certificate of Trust with the
Delaware Secretary of State on June 30, 1999. The Trust will be
governed by the trust agreement among us, as depositor, Bankers
Trust (Delaware), as Delaware trustee, Bankers Trust Company, as
property trustee and two individuals selected by us to act as
administrators with respect to the Trust. While we hold the trust
common securities, we intend to select two individuals who are our
employees or officers or affiliated with us to serve as the
administrators. See "Description of Trust Preferred Securities--
Miscellaneous." The Trust exists for the exclusive purposes of:
* issuing and selling the trust preferred securities and the
trust common securities;
* using the proceeds from the sale of the trust preferred
securities and the trust common securities to acquire the
junior subordinated debentures; and
* engaging in only those other activities necessary, convenient
or incidental thereto (such as registering the transfer of the
trust preferred securities and the trust common securities).
Accordingly, the junior subordinated debentures will be the sole
assets of the Trust, and payments under the junior subordinated
debentures will be the sole source of revenue of the Trust.
We will own all of the trust common securities. The trust common
securities will rank equally, and payments on them will be made pro
rata, with the trust preferred securities, except that upon the
occurrence and during the continuation of an event of default under
the junior subordinated debentures our rights as the holder of the
trust common securities to payment in respect of distributions and
payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the trust preferred
securities. See "Description of Trust Preferred Securities--
Subordination of Trust Common Securities." We will acquire trust
common securities in an aggregate liquidation amount equal to at
least 3.75% of the total capital of the Trust. The Trust has a term
of 30 years, but may terminate earlier as provided in the trust
agreement.
The address of the Delaware trustee is Bankers Trust (Delaware),
1101 Centre Road, Suite 200, Trust Department, Wilmington, Delaware
19805, and the telephone number is (302) 636-3301.
The address of the property trustee, the guarantee trustee and
the debenture trustee is Bankers Trust Company, Four Albany Street,
4th Street, New York, New York 10006, and the telephone number is
(212) 250-2500.
68
<PAGE>
DESCRIPTION OF TRUST PREFERRED SECURITIES
The Trust will issue the trust preferred securities and the
trust common securities under the trust agreement for the Trust.
This summary of certain provisions of the trust preferred securities
and the trust agreement is not complete. You should read the form of
the trust agreement, which is filed as an exhibit to the
registration statement of which this prospectus is a part. Wherever
particular defined terms of the trust agreement are referred to in
this prospectus, such defined terms are incorporated herein by
reference. A copy of the form of the trust agreement also is
available upon request from the trustees.
In addition, the trust agreement will be qualified as an
indenture under the Trust Indenture Act of 1939. The terms of the
trust preferred securities include those made a part of the trust
agreement by the Trust Indenture Act. Therefore, this summary is
qualified by reference to the Trust Indenture Act and you should be
familiar with its provisions.
GENERAL
The trust preferred securities will be limited to $15 million
aggregate liquidation amount outstanding (which amount will be
increased by up to $2.25 million aggregate liquidation amount of
trust preferred securities if the underwriters exercise their
over-allotment option in full). See "Underwriting." The trust
preferred securities will rank equally, and payments will be made
pro rata, with the trust common securities except as described under
"--Subordination of Trust Common Securities." We will purchase and
hold all of the trust common securities. The Trust will use the
proceeds from selling the trust preferred securities and the trust
common securities to purchase the junior subordinated debentures
from us. The junior subordinated debentures will be registered in
the name of the Trust and held by the property trustee in trust for
your benefit and for our benefit as holder of the trust common
securities. The guarantee we will execute for the benefit of the
holders of the trust preferred securities will be a guarantee on a
subordinated basis with respect to the trust preferred securities
but will not guarantee payment of distributions or amounts payable
on redemption or liquidation of the trust preferred securities when
the Trust does not have funds on hand available to make such
payments. See "Description of Guarantee."
DISTRIBUTIONS
You will receive distributions on each trust preferred security
at the annual rate of --% of the stated liquidation amount of $10,
payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, to record holders at the close of business
on the 15th day of the month of the relevant distribution date. Each
date on which distributions will be paid is referred to as a distribution
date in this prospectus. Distributions on the trust preferred securities
will be cumulative. Distributions will accumulate from -------, 1999. The
first distribution date for the trust preferred securities will be September
30, 1999. Distributions payable for each full distribution period will be
computed by dividing the annual rate by four. The amount of distributions
payable for any period less than a full distribution period will be computed
on the basis of a 360-day year of twelve 30-day months and the actual days
elapsed in a partial month in such period. If any date on which
distributions are payable is not a business day or a holiday, then
payment will be made on the next succeeding day that is a business
day and not a holiday (without any additional distributions or other
payment because of the delay), except that, if such business day
falls in the next calendar year, the payment will be made on the
immediately preceding business day.
The term "distributions" includes quarterly distributions,
distributions that accumulate on distributions not paid on the
applicable distribution date and, if applicable, any additional sums
paid during a tax event, all as further described herein.
So long as no event of default under the indenture has occurred
and is continuing, we have the right to defer the payment of
interest on the junior subordinated debentures at any time or from
time to time for an "extension period" that does not (a) exceed 20
consecutive quarterly periods with respect to each extension period,
(b) extend beyond the maturity date of the junior subordinated
debentures or (c) end on a date that is not a distribution date. As
a consequence of any such deferral, quarterly distributions on the
trust preferred securities will be deferred during the extension
period. Distributions to which you are entitled will accumulate
additional distributions thereon at an annual rate of ---%.
69
<PAGE>
During any extension period, we may not (1) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make
a liquidation payment with respect to, any of our capital stock, (2)
make any payment of principal of or interest or premium, if any, on
or repay, repurchase or redeem any of our debt securities that rank
equally with or junior in interest to the junior subordinated
debentures (including the trust preferred securities), or (3)
redeem, purchase or acquire less than all of the junior subordinated
debentures or any of the trust preferred securities.
These prohibitions, however, do not apply to:
* repurchases, redemptions or other acquisitions of our capital
stock, in order to satisfy our obligations under any
employment contract, benefit plan or other similar
arrangement, a dividend reinvestment or stockholder stock
purchase plan;
* a reclassification, exchange or conversion of any class or
series of our capital stock (or any capital stock of the bank,
any of its subsidiaries or any of our future subsidiaries) for
any class or series of our capital stock;
* the purchase of fractional interests in shares of our capital
stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or
exchanged;
* any declaration of a dividend in connection with any
shareholders' rights plan, or the issuance of rights, stock or
other property under any shareholders' rights plan, or the
redemption or repurchase of rights pursuant thereto; or
* any dividend in the form of stock, warrants, options or other
rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks
equally with or junior to such stock.
Before the end of an extension period, we may extend the
extension period (subject to the limits imposed on the duration and
ending date of an extension period), further deferring the payment
of interest as long as no event of default under the indenture has
occurred and is continuing. Upon the termination of an extension
period and the payment of all amounts then due, we may elect to
begin a new extension period subject to the above conditions. No
interest will be due on the junior subordinated debentures during an
extension period, except at the end of the extension period. We must
give you and the trustees notice of our election of an extension
period at least one business day prior to the earlier of (1) the
date the distributions on the trust preferred securities would have
been payable but for the election to begin the extension period and
(2) the date the property trustee is required to give you notice of
the record date or the date the distributions are payable, but in
any event not less than one business day prior to the record date.
The property trustee will give you notice of our election to begin a
new extension period. Subject to the foregoing, there is no
limitation on the number of times that we may elect to begin an
extension period. During an extention period, distributions will
continue to accumulate, and you will be required to accrue and
recognize interest income for United States federal income tax
purposes. See "Description of Junior Subordinated Debentures--Option
To Extend Interest Payment Period" and "Certain United States
Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
We currently do not intend to exercise our right to defer
payments of interest by extending the interest payment period on the
junior subordinated debentures.
The revenue of the Trust available for distribution to you will
be limited to payments under the junior subordinated debentures.
Under the terms of the trust agreement, the trust cannot issue any
securities other than trust preferred securities, incur any
indebtedness or pledge any of its assets. If we do not make payments
on the junior subordinated debentures, the Trust may not have funds
available to pay distributions or other amounts payable on the trust
preferred securities. The payment of distributions and other amounts
payable on the trust preferred securities (if and to the extent the
Trust has funds sufficient to make such payments) is guaranteed by
us on a limited basis as set forth herein under "Description of
Guarantee."
70
<PAGE>
REDEMPTION
The junior subordinated debentures mature on ------------, 2029.
We may redeem the junior subordinated debentures (1) on or after
- ------------, 2004 in whole at any time or in part from time to
time, or (2) in whole, but not in part, at any time within 90 days
following the occurrence and during the continuation of a tax event,
investment company event or capital treatment event (each as defined
below), in each case subject to prior regulatory approval if it is
then required. See "--Liquidation Distribution Upon Dissolution." We
also may repurchase the junior subordinated debentures, in whole or
in part, from the Trust any time after ------------, 2004. A redemption
or repurchase of the junior subordinated debentures would cause a
mandatory redemption of a proportionate amount of the trust preferred
securities and trust common securities at the redemption price.
"Tax event" means the receipt by us and the Trust of an opinion
of counsel experienced in such matters to the effect that, as a
result of any amendment to, or change (including an announced
prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority,
or as a result of any official or administrative pronouncement or
judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or
decision is announced on or after the date of issuance of the trust
preferred securities, there is more than an insubstantial risk that:
* the Trust is, or will be within 90 days of the delivery of
such opinion, subject to United States federal income tax with
respect to income received or accrued on the junior
subordinated debentures;
* interest payable by us on the junior subordinated debentures
is not, or within 90 days of the delivery of such opinion will
not be, deductible by us, in whole or in part, for United
States federal income tax purposes; or
* the Trust is, or will be within 90 days of the delivery of
such opinion, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
See "Certain United States Federal Income Tax Consequences--Pending
Tax Litigation Affecting the Trust Preferred Securities" for
discussion of pending United States Tax Court litigation that, if
decided adversely to the taxpayer, could give rise to a tax event,
that may permit us to redeem the junior subordinated debentures
prior to ------------, 2004.
If a tax event described in the first or third circumstances
above has occurred and is continuing and the Trust holds all of the
junior subordinated debentures, we will pay on the junior
subordinated debentures any additional amounts as may be necessary
in order that the amount of distributions then due and payable by
the Trust on the outstanding trust preferred securities and trust
common securities of the Trust will not be reduced as a result of
any additional taxes, duties and other governmental charges to which
the Trust has become subject.
"Investment company event" means the receipt by us and the Trust
of an opinion of counsel experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation
or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or
regulatory authority, the Trust is or will be considered an
"investment company" that is required to be registered under the
Investment Company Act of 1940, which change becomes effective on or
after the date of the issuance of the trust preferred securities.
"Capital treatment event" means the receipt by us and the Trust
of an opinion of counsel experienced in such matters to the effect
that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any
rules or regulations thereunder) of the United States or any
political subdivision, or as a result of any official or
administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment
or change is effective or such pronouncement, action or decision, is
announced on or after the date of issuance of the trust preferred
securities, there is more than an insubstantial risk that we will
not be entitled to treat an amount equal to the liquidation amount
of the trust preferred securities as Tier 1 capital (or the then
equivalent thereof), except as otherwise restricted by the Federal
Reserve Board, for purposes of the risk-based capital
71
<PAGE>
adequacy guidelines of the Federal Reserve Board, as then in effect
and applicable to us. The Federal Reserve Board has determined that
the proceeds of certain qualifying securities like the trust
preferred securities will qualify as Tier I capital for us only up
to an amount not to exceed, when taken together with all of our
cumulative preferred stock, if any, 25% of our Tier 1 capital.
We or the Trust must request an opinion of counsel with regard
to the matter deemed to be an event within a reasonable period of
time after we or the Trust, as appropriate, become aware of the
possible occurrence of any such event.
REDEMPTION PROCEDURES
If we repay or redeem the junior subordinated debentures, we
must give the property trustee not less than 30 nor more than 60
days' notice in order that it can redeem a proportionate amount of
the preferred and trust common securities. The redemption price for
each trust preferred security shall equal $10 plus accumulated but
unpaid distributions through the redemption date and the related
amount of the premium, if any, paid by us upon the concurrent
redemption of such junior subordinated debentures.
Redemptions of the trust preferred securities will be made and
the redemption price will be payable on each redemption date only to
the extent that the Trust has funds on hand available for the
payment of such redemption price. See also "--Subordination of Trust
Common Securities."
If the Trust gives notice of redemption of the trust preferred
securities, then, by 12:00 noon, Eastern time, on the redemption
date, to the extent funds are available, in the case of trust
preferred securities held in book-entry form, the property trustee
will deposit irrevocably with The Depository Trust Company funds
sufficient to pay the applicable redemption price and will give DTC
irrevocable instructions and authority to pay the redemption price
to you. With respect to trust preferred securities not held in
book-entry form, the property trustee, to the extent funds are
available, will irrevocably deposit with the paying agent for the
trust preferred securities funds sufficient to pay the applicable
redemption price and will give the paying agent irrevocable
instructions and authority to pay the redemption price to you once
you surrender your certificates evidencing the trust preferred
securities. Notwithstanding the foregoing, distributions payable on
or prior to the redemption date for any trust preferred securities
called for redemption will be payable to you on the relevant record
dates for the related distribution dates.
If notice of redemption is given and funds are deposited as
required, then upon the date of such deposit all of your rights with
respect to your trust preferred securities so called for redemption
will cease, except your right to receive the redemption price and
any distributions payable in respect of the trust preferred
securities on or prior to the redemption date, but without interest,
and trust preferred securities that are redeemed will cease to be
outstanding. If any date fixed for redemption of trust preferred
securities is not a business day or is a holiday, then payment of
the redemption price payable on such date will be made on the next
succeeding day which is a business day and not a holiday (without
any interest or other payment in respect of any such delay), except
that, if such business day falls in the next calendar year, such
payment will be made on the immediately preceding business day. In
the event that payment of the redemption price for the trust
preferred securities called for redemption is improperly withheld or
refused and not paid either by the Trust or by us pursuant to the
guarantee as described under "--Description of Guarantee,"
distributions on such trust preferred securities will continue to
accumulate at the then applicable rate, from the redemption date
originally established by the Trust for such trust preferred
securities to the date such redemption price is actually paid, in
which case the actual payment date will be the date fixed for
redemption for purposes of calculating the redemption price.
Subject to applicable law (including, without limitation, United
States federal securities laws), we or our affiliates may from time
to time purchase outstanding trust preferred securities by tender,
in the open market or by private agreement, and may resell such
securities at any time that (a) interest on the junior subordinated
debentures is not being deferred during an extension period, and (b)
there is no event of default or an event that could cause an event
of default under the indenture or an event of default under the
guarantee.
72
<PAGE>
If less than all the trust preferred securities and trust common
securities are to be redeemed on a redemption date, then the
aggregate liquidation amount of such trust preferred securities and
trust common securities to be redeemed shall be allocated pro rata
to the trust preferred securities and the trust common securities
based upon the relative liquidation amounts of such classes. The
particular trust preferred securities to be redeemed shall be
selected in a manner that the property trustee deems fair, not more
than 60 days prior to the redemption date by the property trustee
from the outstanding trust preferred securities not previously
called for redemption, or in accordance with DTC's customary
procedures if the trust preferred securities are then held in the
form of a global trust preferred security in accordance with DTC's
customary practices. The property trustee shall promptly notify the
securities registrar for the trust preferred securities in writing
of the trust preferred securities selected for redemption and, in
the case of any trust preferred securities selected for partial
redemption, the liquidation amount of the trust preferred securities
to be redeemed. For all purposes of the trust agreement, unless the
context otherwise requires, all provisions relating to the
redemption of trust preferred securities shall relate, in the case
of any trust preferred securities redeemed or to be redeemed only in
part, to the portion of the aggregate liquidation amount of trust
preferred securities which has been or is to be redeemed.
Notice of any redemption will be mailed to you at your address
as it appears on the securities register for the Trust at least 30
days but not more than 60 days before the redemption date if your
trust preferred securities will be redeemed. Unless we default in
payment of the redemption price on the junior subordinated
debentures, on and after the redemption date interest will cease to
accrue on the junior subordinated debentures or portions thereof
called for redemption. Unless payment of the redemption price in
respect of the trust preferred securities is withheld or refused and
not paid either by the Trust or us pursuant to the guarantee,
distributions will cease to accumulate on the trust preferred
securities or portions thereof called for redemption.
SUBORDINATION OF TRUST COMMON SECURITIES
Payment of distributions on, the redemption price of, and the
liquidation distribution in respect of, as described under
"--Liquidation Distribution Upon Dissolution," the trust preferred
securities and trust common securities, as applicable, will be made
pro rata based on the liquidation amount of such trust preferred
securities and trust common securities. However, if on any
distribution date, redemption date or liquidation date an event of
default under the junior subordinated debenture has occurred and is
continuing, no payment of any distribution on, or redemption price
of, or liquidation distribution in respect of, any of the trust
common securities, and no other payment on account of the
redemption, liquidation or other acquisition of such trust common
securities, will be made unless payment in full in cash of all
accumulated and unpaid distributions on all the outstanding trust
preferred securities for all distribution periods terminating on or
prior thereto, or in the case of payment of the redemption price or
a liquidation distribution, the full amount of such redemption price
or liquidation distribution on all the outstanding trust preferred
securities then called for redemption or liquidation, as the case
may be, shall have been made or provided for, and all funds
immediately available to the property trustee shall first be applied
to the payment in full in cash of all distributions on, or
redemption price of, the trust preferred securities then due and
payable.
In the case of any event of default with respect to the trust
preferred securities (as described below under "--Events of Default;
Notice") resulting from an event of default with respect to junior
subordinated debentures (as described below under "Description of
Junior Subordinated Debentures--Debenture Events of Default"), we,
as the holder of the trust common securities, shall have no right to
act with respect to any event of default under the trust agreement
until the effects of all events of default with respect to such
trust preferred securities have been cured, waived or otherwise
eliminated. See "--Events of Default; Notice" and "Description of
Junior Subordinated Debentures--Debenture Events of Default." Until
all events of default under the trust agreement with respect to the
trust preferred securities have been so cured, waived or otherwise
eliminated, the property trustee will act solely on your behalf and
not on our behalf as the holder of the trust common securities, and
only you will have the right to direct the property trustee to act
on your behalf.
73
<PAGE>
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The amount payable on the trust preferred securities in the
event of any liquidation of the Trust is $10 per trust preferred
security plus accumulated and unpaid distributions (as long as the
Trust has assets available therefor), subject to certain exceptions,
which may be in the form of a distribution of such amount in junior
subordinated debentures.
We, as the holder of all the outstanding trust common
securities, have the right at any time to dissolve the Trust and,
after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, cause the junior subordinated debentures
to be distributed you and us, as the holder of the trust common
securities, in liquidation of the Trust.
The Federal Reserve Board's risk-based capital guidelines
currently provide that redemptions of permanent equity or other
capital instruments before stated maturity could have a significant
impact on a bank holding company's overall capital structure and
that any organization considering such a redemption should consult
with the Federal Reserve Board before redeeming any equity or
capital instrument prior to maturity if such redemption could have a
material effect on the level or composition of the organization's
capital base (this consultation may not be necessary if the equity
or capital instrument is redeemed with the proceeds of, or replaced
by, a like amount of a similar or higher quality capital instrument
and the Federal Reserve Board considers the organization's capital
position to be fully adequate after the redemption).
In the event we, while the holder of the trust common
securities, dissolve the Trust prior to the maturity date of the
trust preferred securities and the dissolution of the Trust is
deemed to constitute the redemption of capital instruments by the
Federal Reserve Board under its risk-based capital guidelines or
policies, our dissolution of the Trust may be subject to the prior
approval of the Federal Reserve Board. Moreover, any changes in
applicable law or changes in the Federal Reserve Board's risk-based
capital guidelines or policies could impose a requirement on us to
obtain the prior approval of the Federal Reserve Board to dissolve
the Trust.
Pursuant to the trust agreement, the Trust will automatically
dissolve upon expiration of its term or, if earlier, will dissolve
on the first to occur of:
* certain events of bankruptcy, dissolution or liquidation of us
or another holder of the trust common securities;
* the distribution of a proportionate amount of the junior
subordinated debentures to you and to us, as the holder of the
trust common securities, if we, as the holders of trust common
securities, have given written direction to the property
trustee to dissolve the Trust (which direction, subject to the
foregoing restrictions, is optional and wholly within our
discretion);
* the redemption of all the trust preferred securities and trust
common securities as described under "--Redemption;" and
* the entry of an order for the dissolution of the Trust by a
court of competent jurisdiction.
If dissolution of the Trust occurs as described in any of the first,
second and fourth circumstances described above, the Trust will be
liquidated by the property trustee as expeditiously as the property
trustee determines to be possible by distributing, after
satisfaction of liabilities to creditors of the Trust as provided by
applicable law, to you and to us, as holder of the trust common
securities, a proportionate amount of the junior subordinated
debentures, unless such distribution is not practical.
If distribution of the junior subordinated debentures is not
practical, you and the holders of trust preferred securities and
trust common securities will be entitled to receive out of the
assets of the Trust available for distribution to holders, after
satisfaction of liabilities to creditors of the Trust as provided by
applicable law, an amount equal to the aggregate of the liquidation
amount plus accumulated and unpaid distributions thereon to the date
of payment. If such liquidation distribution can be paid only in
part because the Trust has insufficient assets available to pay in
full the aggregate liquidation distribution, then the amounts
payable directly by the Trust on its trust preferred securities
shall be paid on a pro rata basis.
74
<PAGE>
We, as the holder of the trust common securities, will be
entitled to receive distributions upon any such liquidation pro rata
with you, except that if an event of default under the junior
subordinated debentures has occurred and is continuing, the trust
preferred securities shall have a priority over the trust common
securities. See "--Subordination of Trust Common Securities."
After the liquidation date is fixed for any distribution of
junior subordinated debentures:
* the trust preferred securities will no longer be deemed to be
outstanding;
* DTC or its nominee, as the registered holder of trust
preferred securities, will receive a registered global
certificate or certificate representing the junior
subordinated debentures to be delivered upon such distribution
with respect to trust preferred securities held by DTC or its
nominee; and
* any certificates representing the trust preferred securities
not held by DTC or its nominee will be deemed to represent the
junior subordinated debentures having a principal amount equal
to the stated liquidation amount of the trust preferred
securities and bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid distributions on
the trust preferred securities until such certificates are
presented to the security registrar for the trust preferred
securities and trust common securities for transfer or
reissuance.
If we do not redeem the junior subordinated debentures prior to
maturity, the Trust is not liquidated and the junior subordinated
debentures are not distributed to you, then the trust preferred
securities will remain outstanding until the repayment of the junior
subordinated debentures and the distribution of the liquidation
distribution to you.
Under current United States federal income tax law and
interpretations and assuming, as expected, that the Trust is treated
as a grantor trust, a distribution of the junior subordinated
debentures should not be a taxable event to you. Should there be a
change in law, a change in legal interpretation, a tax event or
other circumstances, however, the distribution could be a taxable
event to you. If we elect neither to redeem the junior subordinated
debentures prior to maturity nor to liquidate the Trust and
distribute the junior subordinated debentures to you, the trust
preferred securities will remain outstanding until the repayment of
the junior subordinated debentures. See "Certain United States
Federal Income Tax Consequences."
There can be no assurance as to the market prices for the trust
preferred securities or the junior subordinated debentures that may
be distributed in exchange for trust preferred securities if a
dissolution and liquidation of the Trust occurs. Accordingly, the
trust preferred securities that you may purchase, or the junior
subordinated debentures that you may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price that
you paid to purchase the trust preferred securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an event of default
under the trust agreement with respect to the trust preferred
securities (whatever the reason for such event of default and
whether it is voluntary or involuntary or effected by operation of
law or pursuant to a judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental
body):
* the occurrence of a event of default with respect to the
junior subordinated debentures (see "Description of Junior
Subordinated Debentures--Debenture Events of Default");
* default by the Trust in the payment of any distribution when
it becomes due and payable, and continuation of such default
for a period of 30 days;
* default by the Trust in the payment of any redemption price of
any trust preferred security or trust common security when it
becomes due and payable;
* default in the performance, or breach, in any material
respect, of any covenant or warranty of the trustees in the
trust agreement (other than a covenant or warranty a default
in the performance of which or the breach of which is dealt
with in either the second or third bulleted clause above), and
continuation of such default or breach for a period of 60 days
after there has been given, by registered or certified mail,
to the trustees and us by the holders of at least 25% in
aggregate
75
<PAGE>
liquidation amount of the outstanding trust preferred
securities, a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice
is a "Notice of Default" under the trust agreement; or
* the occurrence of certain events of bankruptcy or insolvency
with respect to the property trustee if a successor property
trustee has not been appointed within 60 days thereof.
Within five business days after the occurrence of any event of
default actually known to the property trustee, the property trustee
will transmit notice of the event of default to you, as the holder
of the trust preferred securities, and to us, as the holder of the
trust common securities, and the administrators, unless the event of
default has been cured or waived. We, as depositor, and the
administrators are required to file annually with the property
trustee a certificate as to whether or not we are in compliance with
all the conditions and covenants applicable to us under the trust
agreement.
If an event of default with respect to the junior subordinated
debentures has occurred and is continuing, the trust preferred
securities will have a preference over the trust common securities
with respect to payments of any amounts as described above. The
existence of an event of default does not entitle holders of the
trust preferred securities to accelerate the maturity of the trust
preferred securities unless the default is caused by an event of
default with respect to the junior subordinated debentures and both
the debenture trustee and holders of at least 25% in aggregate
liquidation amount of the junior subordinated debentures fail to
accelerate the maturity thereof. See "--Subordination of Trust
Common Securities," "--Liquidation Distribution Upon Dissolution"
and "Description of Junior Subordinated Debentures--Debenture Events
of Default."
REMOVAL OF TRUSTEES; APPOINTMENT OF SUCCESSORS
The holders of a majority in aggregate liquidation amount of the
outstanding trust preferred securities may remove any trustee (but
not any administrator) for cause at any time, or with or without
cause, if an event of default with respect to the junior
subordinated debentures has occurred and is continuing. If a trustee
is removed by the holders of the outstanding trust preferred
securities, the successor may be appointed by the holders of at
least 25% in aggregate liquidation amount of trust preferred
securities. If a trustee resigns, such trustee will appoint its
successor. If a trustee fails to appoint a successor, the holders of
at least 25% in aggregate liquidation amount of the outstanding
trust preferred securities may appoint a successor. If a successor
has not been appointed by the holders, any holder of trust preferred
securities or trust common securities or the other trustee may
petition a court in the State of Delaware to appoint a successor.
Any Delaware trustee must meet the applicable requirements of
Delaware law. Any property trustee must be a national or
state-chartered bank and have capital and surplus of at least
$50,000,000. 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 trust agreement. You do not have any
right to appoint, remove or replace the administrators of the Trust.
Only we, as holder of the trust common securities, have these
rights.
MERGER OR CONSOLIDATION OF TRUSTEES
Any entity into which the property trustee or the Delaware
trustee may be merged or converted or with which it may be
consolidated, or any entity resulting from any merger, conversion or
consolidation to which such trustee is a party, or any entity
succeeding to all or substantially all the corporate trust business
of such trustee, will be the successor of such trustee under the
trust agreement, provided such entity is otherwise qualified and
eligible.
MERGERS, REPLACEMENTS OR SIMILAR TRANSACTIONS OF THE TRUST
The Trust may not merge with, be replaced by, convey its assets
substantially as an entirety to, or engage in any similar
transaction with any entity except described below or as otherwise
set forth in the trust agreement. The Trust may, at our request as
the holder of the trust common securities, and with the consent of
the holders of a majority aggregate liquidation amount of the
outstanding trust preferred securities, the property trustee and the
Delaware trustee, merge with or into, consolidate, amalgamate, or be
76
<PAGE>
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to a trust organized as such under the
laws of any state, so long as:
* such successor entity (1) expressly assumes all the
obligations of the Trust with respect to the trust preferred
securities or (2) substitutes for the trust preferred
securities other securities having substantially the same
terms as the trust preferred securities so long as the
substitute securities have the same priority as the trust
preferred securities with respect to distributions and
payments upon liquidation, redemption and otherwise and which
are then listed or listed upon notification of issuance on any
national securities exchange or automated quotation system on
which the trust preferred securities are then listed;
* a trustee of such successor entity, possessing the same powers
and duties as the property trustee, is appointed to hold the
junior subordinated debentures;
* such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the trust
preferred securities (including any substitute securities) to
be downgraded by any nationally recognized statistical rating
organization, if then rated;
* such merger, replacement, conveyance or similar transaction
does not adversely affect the rights, preferences and
privileges of the holders of the trust preferred securities
(including any substitute securities) in any material respect;
* such successor entity has a purpose substantially identical to
that of the Trust;
* prior to such merger, replacement, conveyance or similar
transaction, the Trust has received an opinion from
independent counsel experienced in such matters to the effect
that (1) such merger, replacement, conveyance or similar
transaction does not adversely affect your rights, preference
and privileges as a holder of trust preferred securities (or
substitute securities) in any material respect, and (2)
following such merger, replacement, conveyance or similar
transaction, neither the Trust nor such successor entity will
be required to register as an investment company under the
Investment Company Act; and
* we or any permitted successor or assignee own all the trust
common securities of such successor entity and guarantee the
obligations of such successor entity under the successor
securities at least to the extent provided by the guarantee.
Notwithstanding the foregoing, the Trust may not, except with the
consent of holders of 100% in aggregate liquidation amount of the
trust preferred securities, merge with, be replaced by, or convey
its assets substantially as an entirety to, or engage in any similar
transaction with, any other entity if such merger, replacement,
conveyance or similar transaction would cause the Trust or the
successor entity to be classified as other than a grantor trust for
United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided above and under "--Removal of Trustees;
Appointment of Successors" and "Description of Guarantee--Amendments
and Assignment," as provided below and as otherwise required by law
and the trust agreement, you will have no voting rights.
We, as the holder of the trust common securities, the property
trustee and the administrators may amend the trust agreement from
time to time, without your consent, to:
* cure any ambiguity, correct or supplement any provisions in
the trust agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to
matters or questions arising under the trust agreement,
provided that any such amendment does not adversely affect in
any material respect your interests; or
* modify, eliminate or add to any provisions of the trust
agreement to such extent as may be necessary to ensure that
the Trust will be classified as a grantor trust for United
States federal income tax purposes at any time that any trust
preferred securities or trust common securities are
outstanding or
77
<PAGE>
to ensure that the Trust will not be required to register as
an investment company under the Investment Company Act.
Any such amendments of the trust agreement will become effective
when notice of such amendment is given to the holders of trust
preferred securities and trust common securities.
We, as the holder of the trust common securities, the property
trustee and the administrators may amend the trust agreement from
time to time with:
* the consent of holders representing a majority in aggregate
liquidation amount of the trust preferred securities; and
* receipt by the trustees of an opinion of counsel to the effect
that such amendment or the exercise of any power granted to
the trustees in accordance with such amendment will not affect
the Trust's status as a grantor trust for United States
federal income tax purposes or the Trust's exemption from
status as an investment company under the Investment Company
Act.
However, without the consent of each holder of trust preferred
securities or trust common securities affected thereby, the trust
agreement may not be amended to:
* change the amount or timing of any distribution on the trust
preferred securities or trust common securities or otherwise
adversely affect the amount of any distribution required to be
made in respect of the trust preferred securities or trust
common securities as of a specified date; or
* restrict your right or our right, as the holder of the trust
common securities, to institute suit for the enforcement of
any such payment on or after such date.
So long as any junior subordinated debentures are held by the
Trust, the property trustee will not:
* direct the time, method and place of conducting any proceeding
for any remedy available to the debenture trustee, or execute
any trust or power conferred on the property trustee with
respect to the junior subordinated debentures;
* waive any past default that is waivable pursuant to the terms
of the indenture;
* exercise any right to rescind or annul a declaration that the
principal of all the junior subordinated debentures shall be
due and payable; or
* consent to any amendment, modification or termination of the
indenture or the junior subordinated debentures, where such
consent shall be required, without, in each case, obtaining
the prior approval of the holders of a majority in aggregate
liquidation amount of the trust preferred securities, or, if a
consent under the indenture would require the consent of each
holder of junior subordinated debentures affected thereby, no
such consent will be given by the property trustee without the
prior consent of each holder of the trust preferred
securities.
The property trustee may not revoke any action previously
authorized or approved by a vote of the holders of the trust
preferred securities except by subsequent vote of the holders of the
trust preferred securities. In addition to obtaining your approval
as described above, before taking any of the actions listed above,
the property trustee will obtain an opinion of counsel experienced
in such matters to the effect that the Trust will not fail to be
classified as a grantor trust for United States federal income tax
purposes on account of such action.
Your vote or consent will not be required to redeem and cancel
trust preferred securities in accordance with the trust agreement.
Notwithstanding that you and other holders of trust preferred
securities are entitled to vote or consent under any of the
circumstances described above, any of the trust preferred securities
that are owned by us, the trustees or any of our respective
affiliates will, for purposes of such vote or consent, be treated as
if they were not outstanding.
78
<PAGE>
EXPENSES AND TAXES
Through the trust agreement, the indenture and the guarantee
agreement, we have agreed to pay all debts and other obligations
(other than distributions on the trust preferred securities) and all
costs and expenses of the Trust (including costs and expenses
relating to the organization of the Trust, the fees and expenses of
the trustees and the costs and expenses relating to the operation of
the Trust) and to pay any and all taxes and all costs and expenses
(other than United States withholding taxes) to which the Trust
might become subject. These obligations of ours are for the benefit
of, and shall be enforceable by, any creditor of the Trust to whom
any of these debts, obligations, costs, expenses and taxes are owed
whether or not such creditor has received notice thereof. Any such
creditor may enforce these obligations directly against us, and we
have irrevocably waived any right or remedy to require that any
creditor take any action against the Trust or any other person
before proceeding against us. We also have agreed in the indenture
to execute such additional agreements as may be necessary or
desirable to give full effect to the foregoing.
BOOK ENTRY, DELIVERY AND FORM
The trust preferred securities will be issued in the form of one
or more fully registered global securities, which will be deposited
with, or on behalf of, DTC and registered in the name of a DTC
nominee. Unless and until it is exchangeable in whole or in part for
the trust preferred securities in definitive form, a global security
may not be transferred except as a whole by DTC to a nominee of DTC
or by a nominee of DTC to DTC or to another nominee of DTC or by DTC
or any such nominee to a successor of DTC or to a nominee of such
successor.
Ownership of beneficial interests in a global security will be
limited to participants that have accounts with DTC or its nominee
or persons that may hold interests through such participants. We
expect that, upon the issuance of a global security, DTC will
credit, on its book-entry registration and transfer system, the
participants' accounts with their respective principal amounts of
trust preferred securities represented by such global security.
Ownership of beneficial interests in such global security will be
shown on, and the transfer of such ownership interests will be
effected only through, records maintained by DTC (with respect to
the interests of participants) and on the records of participants
(with respect to your interests). You will not receive written
confirmation from DTC of your purchase, but are expected to receive
written confirmations from participants through which you entered
into the transaction. Transfers of ownership interests will be
accomplished by entries on the books of participants acting on your
behalf.
So long as DTC, or its nominee, is the registered owner of a
global security, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the trust preferred
securities represented by such global security for all purposes
under the trust agreement. Except as provided below, you are the
owner of beneficial interests in a global security and will not be
entitled to receive physical delivery of the trust preferred
securities in definitive form. You will not be considered an owner
or holder under the trust agreement. Accordingly, you must rely on
the procedures of DTC and, if you are not a participant, on the
procedures of the participant through which you own your interest,
to exercise any rights as a holder of trust preferred securities
under the trust agreement. We understand that, under DTC's existing
practices, in the event that we request any action of you, or if you
desire to take any action which a holder of trust preferred
securities is entitled to take under the trust agreement, DTC would
authorize the participants holding your interests to take such
action, and such participants would authorize you to take such
action or would otherwise act upon your instructions. Redemption and
other notices also will be sent to DTC. If less than all of the
trust preferred securities are being redeemed, we understand that it
is DTC's existing practice to determine by lot the amount of the
interest of each participant to be redeemed. Therefore, as long as
the trust preferred securities are held in book-entry form,
references in this prospectus to your rights and benefits mean your
indirect interest held through DTC. You should consider the
procedures of DTC with respect to distributions, redemptions,
notice, voting and similar rights and benefits, as well as those
described in this prospectus.
Distributions on the trust preferred securities registered in
the name of DTC or its nominee will be made to DTC or its nominee,
as the case may be, as the registered owner of the global security
representing such trust preferred securities. Neither the trustees,
nor the administrators, any paying agent or any other
79
<PAGE>
agent of ours or the trustees will have any responsibility or
liability for any aspect of the records relating to or payments made
on account of beneficial ownership interests in the global security
for such trust preferred securities or for maintaining, supervising
or reviewing any records relating to such beneficial ownership
interests. Disbursements of distributions to participants shall be
the responsibility of DTC. DTC's practice is to credit participants'
accounts on a payable date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payment on the payable date. Payments by
participants to you will be governed by standing instructions and
customary practices, as is the case with securities held for the
accounts of customers in bearer form or registered in "street name,"
and will be the responsibility of such participant and not of DTC,
us, the trustees, the paying agent or any other agent of ours,
subject to any statutory or regulatory requirements as may be in
effect from time to time. The laws of some states require that
certain purchasers of securities take physical delivery of their
purchased securities in definitive form. Such limits and laws may
impair the ability to transfer beneficial interests in the global
security.
DTC may discontinue providing its services as securities
depository with respect to the trust preferred securities at any
time by giving reasonable notice to us or the trustees. If DTC
notifies us that it is unwilling to continue as such, or if it is
unable to continue or ceases to be a clearing agency registered
under the Exchange Act and a successor depository is not appointed
by us within 90 days after receiving such notice or becoming aware
that DTC is no longer so registered, we will issue the trust
preferred securities in definitive form upon registration of,
transfer of, or in exchange for, such global security. In addition,
we may at any time and in our sole discretion determine not to have
the trust preferred securities represented by one or more global
securities and, in such event, will issue trust preferred securities
in definitive form in exchange for all of the global securities
representing such trust preferred securities. Finally, holders of a
majority in liquidation amount of trust preferred securities may
determine to discontinue the system of book-entry transfers through
DTC following an event of default with respect to the trust
preferred securities.
DTC has advised the Trust and us as follows:
* DTC is a limited purpose trust company organized under the
laws of the State of New York, a "banking organization" within
the meaning of New York banking law, a member of the Federal
Reserve Board, a "clearing corporation" within the meaning of
the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act;
* DTC was created to hold securities for its participants and to
facilitate the clearance and settlement of securities
transactions between participants through electronic book
entry changes to accounts of its participants, thereby
eliminating the need for physical movement of certificates;
* participants include securities brokers and dealers (such as
the underwriters), banks, trust companies and clearing
corporations and may include certain other organizations;
* certain of such participants (or their representatives),
together with other entities, own DTC; and
* indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear
through, or maintain a custodial relationship with, a
participant, either directly or indirectly.
PAYMENT AND PAYING AGENCY
Payments in respect of the trust preferred securities will be
made to DTC, which will credit the relevant accounts at DTC on the
applicable distribution dates or, if the trust preferred securities
are not held by DTC, such payments will be made by check mailed to
the address of the holder entitled thereto such address appears on
the securities register for the trust preferred securities. The
paying agent will initially be the property trustee. The paying
agent will be permitted to resign as paying agent upon 30 days'
written notice to the property trustee and the administrators. If
the property trustee is no longer the paying agent, the property
trustee is to appoint a successor (which must be a bank or trust
company reasonably acceptable to the administrators) to act as
paying agent.
80
<PAGE>
REGISTRAR AND TRANSFER AGENT
The property trustee will act as registrar and transfer agent
for the trust preferred securities.
Registration of transfers of trust preferred securities will be
effected without charge by or on behalf of the Trust, but only upon
payment of any tax or other governmental charges that may be imposed
in connection with any transfer or exchange. The Trust will not be
required to register or cause to be registered the transfer of the
trust preferred securities after the trust preferred securities have
been called for redemption.
OBLIGATIONS AND DUTIES OF THE PROPERTY TRUSTEE
The property trustee, other than during the occurrence and
continuance of an event of default, undertakes to perform only such
duties as are specifically set forth in the trust agreement and the
Trust Indenture Act and, after such event of default, must exercise
the same degree of care and skill as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this
provision, the property trustee is under no obligation to exercise
any of the powers vested in it by the trust agreement at your
request, unless offered by you reasonable indemnity against the
costs, expenses and liabilities that might be incurred by the
exercise of these powers. The property trustee is not required to
expend or risk its own funds or otherwise incur any financial
liability in the performance of its duties if it has reasonable
grounds to believe that repayment or adequate indemnity is not
assured to it.
Prior to the occurrence of an event of default, the property
trustee may rely upon any certificates or opinions furnished to it
and conforming to the requirements of the trust agreement.
For information concerning the relationships between Bankers
Trust Company, the property trustee, and us, see "Description of
Junior Subordinated Debentures--Information Concerning the Debenture
Trustee."
MISCELLANEOUS
The administrators and the property trustee are authorized and
directed to conduct the affairs of and to operate the Trust in such
a way that (1) the Trust will not be deemed to be an "investment
company" required to be registered under the Investment Company Act
or be classified as other than a grantor trust taxable as a
corporation for United States federal income tax purposes and (2)
the junior subordinated debentures will be treated as our
indebtedness for United States federal income tax purposes. In this
connection, the property trustee and we and the administrators are
authorized to take any action not inconsistent with applicable law,
the certificate of trust of the Trust or the trust agreement that
the property trustee and we, as the holder of the trust common
securities, and the administrators, determine in their discretion to
be necessary or desirable for such purposes, as long as such action
does not materially adversely affect your interests.
You will not have preemptive or similar rights.
GOVERNING LAW
The trust agreement will be governed by and construed in
accordance with the laws of the State of Delaware.
81
<PAGE>
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The junior subordinated debentures are to be issued under the
indenture between Bankers Trust Company, the debenture trustee, and
us. This summary of certain terms and provisions of the junior
subordinated debentures and the indenture is not complete. You
should read the form of the indenture that is filed as an exhibit to
the registration statement of which this prospectus is a part.
Whenever particular defined terms of the indenture, as amended or
supplemented from time to time, are referred to in this prospectus,
such defined terms are incorporated herein by reference. A copy of
the form of indenture is available from the debenture trustee upon
request. In addition, the indenture will be qualified under the
Trust Indenture Act of 1939. The terms of the junior subordinated
debentures include those made a part of the indenture by the Trust
Indenture Act. This summary is qualified by reference to the Trust
Indenture Act and you should be familiar with its provisions.
GENERAL
Concurrently with the issuance of the trust preferred
securities, the Trust will invest the proceeds, together with the
consideration paid by us for the trust common securities, in the
junior subordinated debentures issued by us. The aggregate principal
amount of the junior subordinated debentures will be limited to the
aggregate liquidation amount of the trust preferred securities. The
junior subordinated debentures will be unsecured and will rank
junior and be subordinate in right of payment to all of our senior
indebtedness and other subordinated indebtedness. The junior
subordinated debentures will not be subject to a sinking fund. The
indenture does not limit our ability to incur or issue other secured
or unsecured debt, including senior indebtedness and other
subordinated indebtedness, whether under the junior subordinated
debentures or any existing or other indenture that we may enter into
in the future or otherwise. See "--Subordination." In addition,
because we are a holding company, our right to participate in any
distribution of assets by any of our subsidiaries upon a
subsidiary's liquidation or similar event is subject to the prior
claims of creditors of that subsidiary, except to the extent we are
recognized as a creditor of that subsidiary. Our obligations under
the junior subordinated debentures are effectively subordinated to
all existing and future liabilities of our subsidiaries. The junior
subordinated debentures will bear interest, accruing from ------------,
1999, at the annual rate of --% of the principal amount thereof, payable
quarterly in arrears on March 31, June 30, September 30 and December 31
of each year, commencing September 30, 1999, to the person in whose name
each junior subordinated debenture is registered at the close of business
on the 15th day of the month of such interest payment date. It is
anticipated that, unless the Trust is liquidated, each junior
subordinated debenture will be registered in the name of the Trust
and held by the property trustee in trust for you and the holders of
the trust common securities.
The amount of interest payable for any full interest period will
be computed by dividing the annual rate by four. The amount of
interest payable for any period less than a full interest period
will be computed on the basis of a 360-day year of twelve 30-day
months and the actual days elapsed in a partial month in such
period. If any date on which interest is payable to the junior
subordinated debentures is not a business day or is a holiday, then
payment of the interest payable on such date will be made on the
next business day that is not a holiday (without any interest or
other payment in respect of any such delay), or, if such business
day falls in the next calendar year, such payment will be made on
the immediately preceding business day in each case with the same
force and effect as if made on the date such payment was originally
payable.
Accrued interest that is not paid on the applicable interest
payment date will bear additional interest on the amount thereof (to
the extent permitted by law) at the annual rate of --%, compounded quarterly.
The term "interest" includes quarterly interest payments,
interest on quarterly interest payments not paid on the applicable
interest payment date and, if applicable, any additional sums we pay
on the junior subordinated debentures following a tax event (as
defined under "Description of Trust Preferred Securities--Redemption")
that may be required so that distributions payable by the Trust will not
be reduced by any additional taxes, duties or other governmental changes.
The junior subordinated debentures will mature on ------------,
2029, subject to our right to shorten the maturity date once at any time
to any date not earlier than ------------, 2004, if we have received prior
approval of the Federal Reserve Board if then required under applicable
capital guidelines or policies
82
<PAGE>
of the Federal Reserve Board. In the event we elect to shorten the
maturity of the junior subordinated debentures, we will give notice
to the registered holders of the junior subordinated debentures, the
debenture trustee and the Trust of such shortening no less than 90
days prior to the effectiveness thereof.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no event of default under the indenture has occurred
and is continuing, we have the right at any time during the term of
the junior subordinated debentures to defer the payment of interest
at any time for a period (a) not exceeding 20 consecutive quarterly
periods with respect to each extension period, (b) that does not
extend beyond the stated maturity of the junior subordinated
debentures and (c) that does not end on a date other than an
interest payment date. During any extension period we have the right
to make partial payments of interest on any interest payment date.
At the end of an extension period, we must pay all interest then
accrued and unpaid. During an extension period, interest will
continue to accrue and holders of junior subordinated debentures
(and holders of trust preferred securities while outstanding) will
be required to accrue and recognize interest income for United
States federal income tax purposes. See "Certain United States
Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
During any extension period, we may not:
* make any payment of principal of or interest or premium, if
any, on or repay, repurchase or redeem any of our debt
securities that rank equally with or junior in interest to the
junior subordinated debentures; or
* redeem, purchase or acquire less than all of the junior
subordinated debentures or any trust preferred securities; or
* declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect
to, any of our capital stock, except that we may:
(a) repurchase, redeem or make other acquisitions of shares of
our capital stock in connection with any employment
contract, benefit plan or other similar arrangement in
connection with a dividend reinvestment or shareholder
stock purchase plan;
(b)take any necessary action in connection with any
reclassification, exchange or conversion of any class or
series of our capital stock (or any capital stock of a
subsidiary of ours) for any class or series of our capital
stock;
(c)purchase fractional interests in shares of our capital
stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or
exchanged;
(d)declare a dividend in connection with any shareholders'
rights plan, or issue rights, stock or other property under
any shareholders' rights plan, or redeem or repurchase
rights pursuant thereto; or
(e)declare a dividend in the form of stock, warrants, options
or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other
rights is the same stock as that on which the dividend is
being paid or ranks equally with or junior to such stock.
Prior to the termination of any extension period, we may extend
the extension period (subject to the limits imposed on the duration
and ending date of an extension period) further deferring the
payment of interest as long as no event of default under the
indenture has occurred and is continuing. Upon the termination of
any extension period and the payment of all amounts then due, we may
elect to begin a new extension period subject to the above
conditions. No interest will be due and payable during an extension
period, except at its end. We must give the holders of the junior
subordinated debentures and the debenture trustee notice of our
election of such extension period at least one business day prior to
the earlier of (1) the next succeeding date the distribution on the
trust preferred securities would have been payable but for the
election to begin an extension period and (2) the date the property
trustee is required to give you notice of the record date or the
date such distribution is payable, but in any event not less than
one business day prior to such record date. The debenture trustee
will give you prompt notice of our election to begin an extension
83
<PAGE>
period. Subject to the foregoing, there is no limitation on the
number of times that we may elect to begin an extension period.
REDEMPTION
We may redeem the junior subordinated debentures prior to
maturity at our option (1) on or after ------------, 2004, in whole
at any time or in part from time to time, or (2) in whole, but not in
part, at any time within 90 days following the occurrence and during
the continuation of a tax event, investment company event or capital
treatment event (each as defined under "Description of Trust Preferred
Securities--Redemption"), in each case at a redemption price equal to
the outstanding principal amount of the junior subordinated debentures
plus accrued interest to the redemption date. The proceeds of any such
redemption will be used by the Trust to redeem the trust preferred securities.
The Federal Reserve Board's risk-based capital guidelines, which
are subject to change, currently provide that redemptions of
permanent equity or other capital instruments before stated maturity
could have a significant impact on a bank holding company's overall
capital structure and that any organization considering such a
redemption should consult with the Federal Reserve Board before
redeeming any equity or capital instrument prior to maturity if such
redemption could have a material effect on the level or composition
of the organization's capital base. Consultation may not be
necessary if the equity or capital instrument was redeemed with the
proceeds of, or replaced by, a like amount of a similar or higher
quality capital instrument and the Federal Reserve Board considers
the organization's capital position to be fully adequate after the
redemption.
If we redeem the junior subordinated debentures prior to their
stated maturity, such redemption would constitute the redemption of
capital instruments under the Federal Reserve Board's current
risk-based capital guidelines and may be subject to the prior
approval of the Federal Reserve Board. The redemption of the junior
subordinated debentures also could be subject to the additional
prior approval of the Federal Reserve Board under its current
risk-based capital guidelines.
ADDITIONAL SUMS
We have covenanted in the indenture that, if and for so long as
the Trust is the holder of all junior subordinated debentures and
the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a tax event, we will pay as
additional sums on the junior subordinated debentures such amounts
as may be required so that the distributions payable by the Trust
will not be reduced as a result of any such additional taxes, duties
or other governmental charges. See "Description of Trust Preferred
Securities--Redemption."
REGISTRATION, DENOMINATION AND TRANSFER
The junior subordinated debentures will initially be registered
in the name of the Trust. If the junior subordinated debentures are
distributed to you, it is anticipated that the depositary
arrangements for the junior subordinated debentures will be
substantially identical to those in effect for the trust preferred
securities. See "Description of Trust Preferred Securities--Book
Entry, Delivery and Form."
Although DTC has agreed to the procedures described in
"Description of Trust Preferred Securities--Book Entry, Delivery and
Form," it is under no obligation to perform or continue to perform
such procedures, and such procedures may be discontinued at any
time. If DTC is at any time unwilling or unable to continue as
depositary and we do not appoint a successor depositary within 90
days of receipt of notice from DTC to such effect, we will cause the
junior subordinated debentures to be issued in definitive form.
Payments on junior subordinated debentures represented by a
global security will be made to Cede & Co., the nominee for DTC, as
the registered holder of the junior subordinated debentures,
described under "Description of Trust Preferred Securities--Book
Entry, Delivery and Form." If junior subordinated debentures are
issued in certificated form, principal and interest will be payable,
the transfer of the junior subordinated debentures will be
registerable, and junior subordinated debentures will be
exchangeable for
84
<PAGE>
junior subordinated debentures of other authorized denominations of
a like aggregate principal amount, at the corporate trust office of
the debenture trustee in New York, New York, or at the offices of any
paying agent or transfer agent we appoint, provided that payment of
interest may be made at our option by check mailed to the address of
the persons entitled thereto. However, a holder of $1.00 million or
more in aggregate principal amount of junior subordinated debentures
may receive payments of interest (other than interest payable at the
stated maturity) by wire transfer of immediately available funds upon
written request to the debenture trustee not later than 15 calendar
days prior to the date on which the interest is payable.
Junior subordinated debentures are issuable only in registered
form without coupons in integral multiples of $10. Junior
subordinated debentures will be exchangeable for other junior
subordinated debentures of like tenor, of any authorized
denominations, and of a like aggregate principal amount.
Junior subordinated debentures may be presented for exchange as
provided above, and may be presented for registration of transfer
(with the form of transfer endorsed thereon, or a satisfactory
written instrument of transfer, duly executed), at the office of the
securities registrar appointed under the indenture or at the office
of any transfer agent we designate for such purpose without service
charge and upon payment of any taxes and other governmental charges
as described in the indenture. We will appoint the debenture trustee
as securities registrar under the indenture.
In the event of any redemption, we will not, nor will the
debenture trustee be required to:
* issue, register the transfer of or exchange junior
subordinated debentures during a period beginning at the
opening of business 15 days before the day of selection for
redemption of the junior subordinated debentures to be
redeemed and ending at the close of business on the day of
mailing of the relevant notice of redemption; or
* register the transfer of or exchange any junior subordinated
debentures so selected for redemption, except, in the case of
any junior subordinated debentures being redeemed in part, any
portion of the debenture not to be redeemed.
Any monies deposited with the debenture trustee or any paying
agent, or then held by us in trust, for the payment of the principal
of (and premium, if any) or interest on any junior subordinated
debenture and remaining unclaimed for two years after this principal
(and premium, if any) or interest has become due and payable shall,
at our request, be repaid to us and the holder of such junior
subordinated debenture must look, as a general unsecured creditor,
only to us for payment thereof.
RESTRICTIONS ON CERTAIN PAYMENTS; CERTAIN COVENANTS
We have covenanted that at any time (1) there has occurred any
event (a) of which we have actual knowledge that with the giving of
notice or the lapse of time, or both, would constitute an event of
default under the indenture and (b) that we have not taken
reasonable steps to cure, (2) there has occurred an event of default
under the indenture, (3) if the junior subordinated debentures are
held by the Trust, we are in default with respect to our payment of
any obligations under the guarantee, or (4) we have given notice of
our election of an extension period as provided in the indenture and
have not rescinded such notice, or such extension period, or any
extension thereof, is continuing, then we will not:
* make any payment of principal of or interest or premium, if
any, on or repay, repurchase or redeem any of our debt
securities that rank equally in all respects with, or junior
in interest to, the junior subordinated debentures; or
* redeem, purchase or acquire less than all of the junior
subordinated debentures or any trust preferred securities; or
* declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect
to, any of our capital stock, except that we may:
(a) repurchase, redeem or make other acquisitions of shares of
our capital stock in connection with any employment
contract, benefit plan or other similar arrangement with or
for the benefit of any
85
<PAGE>
one or more employees, officers, directors or consultants,
in connection with a dividend reinvestment or shareholder
stock purchase plan;
(b) take any necessary action in connection with any
reclassification, exchange or conversion of any class or
series of our capital stock (or any capital stock of any
subsidiary of ours) for any class or series of our capital
stock;
(c) purchase fractional interests in shares of our capital
stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or
exchanged;
(d) declare a dividend in connection with any shareholders'
rights plan, or issue rights, stock or other property under
any shareholders' rights plan, or redeem or repurchase
rights pursuant thereto; or
(e) declare a dividend in the form of stock, warrants, options
or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other
rights is the same stock as that on which the dividend is
being paid or ranks equally with or junior to such stock.
We have covenanted in the indenture:
* to continue to hold, directly or indirectly, 100% of the trust
common securities, provided that certain successors that are
permitted pursuant to the indenture may succeed to our
ownership of the trust common securities;
* as holder of the trust common securities, not to voluntarily
terminate, windup or liquidate the Trust, other than:
(a) in connection with a distribution of junior subordinated
debentures to the holders of the trust preferred securities
in liquidation of the Trust; or
(b) in connection with certain mergers, consolidations or
amalgamations permitted by the trust agreement; and
* to use reasonable efforts, consistent with the terms and
provisions of the trust agreement, to cause the Trust to
continue to be classified as a grantor trust for United States
federal income tax purposes.
MODIFICATION OF INDENTURE
From time to time, we as well as the debenture trustee may,
without the consent of any of the holders of the outstanding junior
subordinated debentures, amend, waive or supplement the provisions
of the indenture to:
* evidence the succession of another corporation or association
and the assumption by such person of our obligations under the
junior subordinated debentures;
* add further covenants, restrictions or conditions for the
protection of holders of the junior subordinated debentures or
to surrender any right or power conferred upon us under the
indenture;
* cure any ambiguity, to correct or supplement any provision in
the indenture that may be defective or inconsistent with any
other provision in the indenture, or to make any other
provisions with respect to matters or questions arising under
the indenture, provided that such action shall not adversely
affect the interest of the holders of the trust preferred
securities and the trust common securities in any material
respect or, in the case of the securities issued to the Trust
and for so long as any of the trust preferred securities
issued by the Trust shall remain outstanding, the holders of
such trust preferred securities;
* change the terms of the junior subordinated debentures to
facilitate the issuance of the junior subordinated debentures
in certificated or other definitive form;
* evidence or provide for the appointment of a successor
debenture trustee;
* qualify, or maintain the qualification of, the indenture under
the Trust Indenture Act;
86
<PAGE>
* convey, transfer, assign, mortgage, pledge any property to or
with the debenture trustee or to surrender any right or power
conferred upon us by the indenture;
* add any additional events of default under the indenture for
the benefit of the holders of the trust preferred securities
and the trust common securities; or
* change or eliminate any of the provisions of the indenture,
provided that any such change or elimination shall not apply
to any outstanding securities.
The indenture contains provisions permitting the debenture
trustee and us, with the consent of the holders of a majority in
principal amount of the junior subordinated debentures, to modify
the indenture in a manner affecting the rights of the holders of the
junior subordinated debentures. However, none of these modifications
may be made, without the consent of the holder of each outstanding
junior subordinated debenture so affected, that would:
* change the stated maturity of, or any installment of interest
on, the junior subordinated debentures, or reduce the
principal amount, the rate of interest or any premium payable
upon its redemption, or change the place of payment where, or
the currency in which, any such amount is payable, or impair
the right to institute suit for the enforcement of any payment
on the junior subordinated debentures; or
* reduce the percentage of principal amount of junior
subordinated debentures, the holders of which are required to
consent to any modification of, or waiver of rights under, the
indenture.
Furthermore, so long as any of the trust preferred securities
remain outstanding, no modification may be made that adversely
affects you in any material respect, and no termination of the
indenture may occur, and no waiver of any event of default or
compliance with any covenant under the indenture may be effective,
without the prior consent of the holders of a majority of the
aggregate liquidation amount of the outstanding trust preferred
securities unless and until the principal of (and premium, if any,
on) the junior subordinated debentures and all accrued and unpaid
interest have been paid in full and certain other conditions are
satisfied.
DEBENTURE EVENTS OF DEFAULT
The indenture provides that any one or more of the following
described events with respect to the junior subordinated debentures
that has occurred and is continuing constitute an "event of default"
with respect to the junior subordinated debentures:
* failure to pay any interest on the junior subordinated
debentures when due and continuance of this default for a
period of 30 days (subject to the deferral of any due date in
the case of an extension period);
* failure to pay any principal of or premium, if any, on the
junior subordinated debentures when due whether at the stated
maturity or otherwise;
* failure to observe or perform any of the other covenants
contained in the indenture for 90 days after written notice of
such failure to us from the debenture trustee or the holders
of at least 25% in aggregate outstanding principal amount of
the outstanding junior subordinated debentures; or
* the occurrence of the appointment of a receiver or other
similar official in any liquidation, insolvency or similar
proceeding with respect to us or all or substantially all of
our property; or a court or other governmental agency enters a
decree or order appointing a receiver or similar official and
such decree or order remains unstayed and undischarged for a
period of 60 days.
As described in "Description of Trust Preferred
Securities--Events of Default; Notice," the occurrence of an event
of default in respect of the junior subordinated debentures also
will constitute an event of default in respect of the trust
preferred securities and trust common securities.
Subject to certain limitations, the holders of a majority in
aggregate principal amount of outstanding junior subordinated
debentures have the right to direct the time, method and place of
conducting any
87
<PAGE>
proceeding for any remedy available to the debenture trustee. The
debenture trustee or the holders of not less than 25% in aggregate
principal amount of outstanding junior subordinated debentures may
declare the principal due and payable immediately upon an event of
default, and, should the debenture trustee or such holders of junior
subordinated debentures fail to make such declaration, the holders of
at least 25% in aggregate liquidation amount of the outstanding trust
preferred securities shall have such right. The holders of a majority
in aggregate principal amount of outstanding junior subordinated
debentures may annul such declaration and waive the default if all
defaults (other than the non-payment of the principal of junior
subordinated debentures which has become due solely by such acceleration)
have been cured and a sum sufficient to pay all matured installments
of interest and principal due otherwise than by acceleration and all
sums paid or advanced by the debenture trustee and the reasonable
compensation, expenses, disbursements and advances of the debenture
trustee, its agent and its counsel has been deposited with the debenture
trustee. Should the holders of junior subordinated debentures fail to
annul such declaration and waive such default, the holders of a majority
in aggregate liquidation amount of the outstanding trust preferred
securities shall have such right.
We are required to certify annually to the debenture trustee as
to whether or not we are in compliance with all the conditions and
covenants applicable to us under the indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If an event of default has occurred and is continuing and such
event is attributable to our failure to pay any amounts payable in
respect of the junior subordinated debentures on the date such
amounts are otherwise payable, you may institute a legal action
against us to enforce the payment to you of an amount equal to the
amount payable in respect of junior subordinated debentures having a
principal amount equal to the aggregate liquidation amount of the
trust preferred securities you hold. We may not amend the indenture
to remove the foregoing right to bring such legal action without
your prior written consent. We will have the right under the
indenture to set-off of any payment we make to you in connection
with such a legal action.
As a holder of trust preferred securities, you will not be able
to exercise directly any remedies available to the holders of the
junior subordinated debentures except under the circumstances
described in the preceding paragraph unless there has been an event
of default under the trust agreement. See "Description of Trust
Preferred Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The indenture provides that we may not consolidate with or merge
into any other entity or convey, transfer or lease our properties
and assets substantially as an entirety to any entity, and no entity
may consolidate with or merge into us or convey, transfer or lease
its properties and assets substantially as an entirety to us,
unless:
* in the event we consolidate with or merge into another entity
or convey or transfer our properties and assets substantially
as an entirety to any entity, the successor entity is
organized under the laws of the United States or any state or
the District of Columbia, and such successor entity expressly
assumes our obligations in respect of the junior subordinated
debentures; provided, however, that nothing in the indenture
shall be deemed to restrict or prohibit, and no supplemental
indenture shall be required in the case of the merger of a
bank (as defined below) with and into a bank or us, the
consolidation of banks into a bank or us, or the sale or other
disposition of all or substantially all of the assets of any
bank to another bank or us, if, in any such case in which we
are not the surviving, resulting or acquiring entity, we would
own, directly or indirectly, at least 80% of the voting
securities of the bank (and of any other bank any voting
securities of which are owned, directly or indirectly, by such
bank) surviving such merger, resulting from such consolidation
or acquiring such assets;
* immediately after giving effect thereto, no event of default
with respect to the junior subordinated debentures, and no
event which, after notice or lapse of time or both, would
constitute an event of default with respect to the junior
subordinated debentures, has occurred and is continuing; and
88
<PAGE>
* certain other conditions as prescribed in the indenture are
satisfied.
For purposes of the first bullet point above, the term "bank"
means each of:
* any banking subsidiary of ours the consolidated assets of
which constitute 20% or more of our consolidated assets and
our consolidated subsidiaries;
* any other banking subsidiary designated as a bank pursuant to
a board resolution and set forth in an officers' certificate
delivered to the trustee; and
* any subsidiary of ours that owns, directly or indirectly, any
voting securities, or options, warrants or rights to subscribe
for or purchase voting securities, of any bank under the first
and second bullet points above and in the case of all three
bullet points above their respective successors (whether by
consolidation, merger, conversion transfer of substantially
all their assets and business or otherwise) so long as any
such successor is a banking subsidiary (in the case of the
first and second bullet point or a subsidiary (in the case of
the third bullet point) of ours.
The provisions of the indenture do not afford holders of the
junior subordinated debentures protection in the event we are
involved in a highly leveraged or other transaction that may
adversely affect holders of the junior subordinated debentures.
SATISFACTION AND DISCHARGE
The indenture will cease to be of further effect and we will be
deemed to have satisfied and discharged the indenture when:
* all junior subordinated debentures have been delivered to the
debenture trustee for cancellation, or all junior subordinated
debentures not previously delivered to the debenture trustee
for cancellation (1) have become due and payable, or (2) will
become due and payable at the stated maturity within one year
or (3) are to be called for redemption within one year under
arrangements satisfactory to the debenture trustee;
* we deposit or cause to be deposited with the debenture trustee
funds, in trust, for the purpose and in an amount sufficient
to pay and discharge the entire indebtedness on the junior
subordinated debentures not previously delivered to the
debenture trustee for cancellation, for the principal (and
premium, if any) and interest to the date of the deposit or to
the stated maturity or redemption date; and
* we have paid all other sums payable by us under the indenture
and we have delivered applicable certificates and opinions of
counsel that indicate we have complied with all of our
obligations.
SUBORDINATION
The junior subordinated debentures will be subordinate and
junior in right of payment, to the extent set forth in the
indenture, to all of our senior indebtedness or other subordinated
indebtedness (as defined below). If we default in the payment of any
principal, premium, if any, or interest, if any, or any other amount
payable on any senior or other subordinated indebtedness when the
same becomes due and payable whether at maturity or at a date fixed
for redemption or by declaration of acceleration or otherwise, then
unless and until such default has been cured or waived or has ceased
to exist or all senior indebtedness has been paid, no direct or
indirect payment (in cash, property, securities, by set-off or
otherwise) may be made or agreed to be made on the junior
subordinated debentures, or in respect of any redemption repayment,
retirement, purchase or other acquisition of any of the junior
subordinated debentures.
As used herein, "senior indebtedness or other subordinated
indebtedness" means, whether recourse is to all or a portion of our
assets and whether or not contingent:
* every obligation of ours for money borrowed;
* every obligation of ours evidenced by bonds, debentures, notes
or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or
businesses;
89
<PAGE>
* every reimbursement obligation of ours with respect to letters
of credit, bankers' acceptances or similar facilities issued
for our account;
* every obligation of ours issued or assumed as the deferred
purchase price of property or services (but excluding trade
accounts payable or accrued liabilities arising in the
ordinary course of business);
* every capital lease obligation of ours;
* every obligation of ours for claims (as defined in Section
101(4) of the United States Bankruptcy Code of 1978, as
amended) in respect of derivative products such as interest
foreign exchange rate contracts, commodity contracts and
similar arrangements; and
* every obligation of the type referred to above of another
person and all dividends of another person the payment of
which, in either case, we have guaranteed or are responsible
or liable, directly or indirectly, as obligor or otherwise.
However, senior indebtedness and other subordinated indebtedness
shall not include any of the following:
* any obligations which, by their terms, are expressly stated to
rank equally in right of payment with, or to not be superior
in right of payment to, the junior subordinated debentures;
* any of our senior indebtedness and other subordinated
indebtedness which when incurred and without respect to any
election under Section 1111(b) of the United States Bankruptcy
Code of 1978, as amended, was without recourse to us;
* any indebtedness of ours to any of our subsidiaries;
* indebtedness to executive officers, directors or employees;
* any indebtedness which by its terms is subordinated to trade
accounts payable or accrued liabilities arising in the
ordinary course of business to the extent that payments made
to the holders of such indebtedness by the holders of the
junior subordinated debentures because of the debentures'
subordination provisions exceed amounts to which the obligees
of such indebtedness would be entitled under the subordination
provisions to which such debt is entitled; and
* any indebtedness in respect of debt securities issued to any
trust, or a trustee of such trust, partnership or other entity
affiliated with us that is a financing entity of ours in
connection with the issuance by such financing entity of
securities that are similar to the trust preferred securities.
As of March 31, 1999, the senior indebtedness and other
subordinated indebtedness were approximately $87.31 million. All
senior indebtedness (including any interest thereon accruing after
the commencement of any such proceedings) must first be paid in full
before any payment or distribution, whether in cash, securities or
other property, is made on account of the junior subordinated
debentures in the event of:
* any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, imposition or other similar
proceedings relating to us, our creditors or our property;
* any proceeding for our liquidation, dissolution or other
winding up, voluntary or involuntary, whether or not involving
insolvency or bankruptcy proceedings;
* any assignment by us for the benefit of creditors; or
* any other marshaling of our assets.
In such event, any payment or distribution on account of the junior
subordinated debentures, whether in cash, securities or other
property, that would otherwise (but for the subordination
provisions) be payable or deliverable in respect of the junior
subordinated debentures will be paid as described above directly to
the holders of senior indebtedness in accordance with the priorities
then existing among such holders until all senior indebtedness and
other subordinated indebtedness (including any interest accruing
after the commencement of any such proceedings) has been paid in
full.
In the event of any proceeding described above, after payment in
full of all sums owing with respect to our senior indebtedness and
other subordinated indebtedness, the holders of junior subordinated
90
<PAGE>
debentures, together with the holders of our obligations ranking on
a parity with the junior subordinated debentures, will be entitled
to be paid from our remaining assets the amounts at the time due and
owing on the junior subordinated debentures and such other
obligations. This payment will be made before any payment or other
distribution, whether in cash, property or otherwise, will be made
on account of any capital stock or obligations ranking junior to the
junior subordinated debentures and such other obligations. If
payment or distribution on account of the junior subordinated
debentures of any character or security, whether in cash, securities
or other property, is received by any holder of any junior
subordinated debentures in contravention of any of the terms of the
indenture and before all our senior indebtedness has been paid in
full, such payment or distribution or security will be received in
trust for the benefit of, and must be paid over or delivered and
transferred to, the holders of our senior indebtedness at the time
outstanding in accordance with the priorities then existing among
such holders for application to the payment of all senior
indebtedness remaining unpaid to the extent necessary to pay all
such senior indebtedness in full.
By reason of such subordination, in the event of our insolvency,
holders of senior indebtedness and other subordinated indebtedness
may receive more, ratably, and holders of the junior subordinated
debentures may receive less, ratably, than our other creditors. Such
subordination will not prevent the occurrence of any event of
default in respect of the junior subordinated debentures.
The indenture places no limitation on the amount of additional
senior indebtedness and other subordinated indebtedness that we may
incur. We expect from time to time to incur additional senior
indebtedness and other subordinated indebtedness.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The debenture trustee, other than during the occurrence and
continuance of a default in the performance of our obligations under
the junior subordinated debentures, is under no obligation to
exercise any of the powers vested in it by the indenture at the
request of any holder of junior subordinated debentures, unless
offered reasonable indemnity by such holder against the costs,
expenses and liabilities that might be incurred by the exercise of
these powers. The debenture trustee is not required to expend or
risk its own funds or otherwise incur personal financial liability
in the performance of its duties if the debenture trustee reasonably
believes that repayment or adequate indemnity is not reasonably
assured to it.
The debenture trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, security or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties. The debenture trustee may consult with
counsel of its choice and the advice of such counsel or any opinion
of such counsel shall be full and complete authorization and
protection in respect of any action taken in reliance thereon.
Bankers Trust Company, the debenture trustee, may serve from
time to time as trustee under other indentures or trust agreements
with us or our subsidiaries relating to other issues of our
securities. In addition, we as well as certain of our affiliates may
have other banking relationships with Bankers Trust Company and its
affiliates.
GOVERNING LAW
The indenture and the junior subordinated debentures will be
governed by and construed in accordance with the laws of the State
of Delaware.
91
<PAGE>
DESCRIPTION OF GUARANTEE
We will execute and deliver the guarantee concurrently with the
issuance of preferred securities by the Trust for your benefit.
Bankers Trust Company will act as guarantee trustee under the
guarantee and will hold the guarantee for your benefit. This summary
of certain provisions of the guarantee is not complete. You should
read the form of the guarantee, which is filed as an exhibit to the
registration statement of which this prospectus is a part. Whenever
particular defined terms of the guarantee are referred to in this
prospectus, such terms are incorporated herein by reference. A copy
of the form of guarantee is available upon request from the
guarantee trustee. The guarantee will be qualified as an indenture
under the Trust Indenture Act. This summary is qualified by
reference to the Trust Indenture Act and you should be familiar with
its provisions.
GENERAL
We will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth in the guarantee and described
herein, the payments described below to you, as and when due,
regardless of any defense, right of set-off or counterclaim that the
Trust may have or assert other than the defense of payment. The
following payments with respect to the trust preferred securities,
to the extent not paid by or on behalf of the Trust, will be subject
to the guarantee:
* any accumulated and unpaid distributions required to be paid
on the trust preferred securities, to the extent that the
Trust has funds available for their payment at such time;
* the redemption price with respect to any trust preferred
securities called for redemption, to the extent that the Trust
has funds available for its payment at such time; and
* upon a voluntary or involuntary dissolution, termination,
winding up or liquidation of the Trust (unless the junior
subordinated debentures are distributed to you and the other
holders of the trust preferred securities), the lesser of:
(a)the aggregate of the liquidation amount and all accumulated
and unpaid distributions to the date of payment, to the
extent that the Trust has funds available for their
payment; and
(b)the amount of assets of the Trust remaining available for
distribution to you on liquidation of the Trust.
Our obligation to make a guarantee payment may be satisfied by
directly paying you or by causing the Trust to pay you.
The guarantee will be an irrevocable, subordinated guarantee of
payment on a subordinated basis of the Trust's obligations under the
trust preferred securities. The guarantee will apply only to the
extent that the Trust has funds sufficient to make such payments. If
we do not make payments on the junior subordinated debentures held
by the Trust, the Trust will not be able to pay any amounts payable
in respect of the trust preferred securities and will not have funds
available for these payments. The guarantee will rank subordinate
and junior in right of payment to all of our senior indebtedness and
all of our other subordinated indebtedness. See "--Status of the
Guarantee."
STATUS OF THE GUARANTEE
The guarantee will constitute our unsecured obligation and will
rank subordinate and junior in right of payment to all of our senior
indebtedness and subordinated indebtedness in the same manner as the
junior subordinated debentures. The guarantee does not limit our
ability to incur or issue other secured or unsecured senior or
subordinated indebtedness. In addition, because we are a holding
company, our right to participate in any distribution of assets by
any of our subsidiaries upon a subsidiary's liquidation or similar
event is subject to the prior claims of the creditors of the
subsidiary except to the extent we are recognized as a creditor of
that subsidiary. Our obligations under the guarantee are effectively
subordinated to all existing and future liabilities of any of our
subsidiaries and their respective subsidiaries.
92
<PAGE>
The guarantee will constitute a guarantee of payment and not of
collection. A guarantee of payment entitles the guarantee trustee or
you to institute a legal proceeding directly against us as the
guarantor to enforce your rights under the guarantee without first
instituting a legal proceeding against the Trust or any other person
or entity. The guarantee will be held by the guarantee trustee for
your benefit. The guarantee will not be discharged except by paying
the amounts required under the guarantee in full to the extent not
paid by the Trust or distributing the junior subordinated debentures
to you.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially
adversely affect your rights (in which case no consent will be
required), the guarantee may not be amended without the prior
approval of the holders of a majority of the aggregate liquidation
amount of the outstanding trust preferred securities. The manner of
obtaining any such approval is set forth under "Description of Trust
Preferred Securities--Voting Rights; Amendment of Trust Agreement."
All guarantees and agreements contained in the guarantee will bind
our successors, assigns, receivers, trustees and representatives and
will inure to your benefit and the benefit of all of the holders of
the trust preferred securities then outstanding.
EVENTS OF DEFAULT
An event of default under the guarantee will occur if we fail to
perform any of our payment or other obligations under the guarantee,
or fail to perform any non-payment obligation if our failure remains
unremedied for 30 days. If an event of default occurs the guarantee
trustee must enforce your rights under the guarantee. The holders of
a majority in aggregate liquidation amount of the outstanding trust
preferred securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the
guarantee trustee under the guarantee or to direct the guarantee
trustee to exercise any trust or power conferred upon the guarantee
trustee under the guarantee.
In addition to acts taken by the guarantee trustee, you may
institute a legal proceeding directly against us to enforce your
rights under the guarantee without first instituting a legal
proceeding against the Trust, the guarantee trustee or any other
person or entity. Since you will not be the record holder of the
trust preferred securities while they are in book-entry form, you
will have to observe the procedures of DTC to take such action. See
"Description of Trust Preferred Securities--Book Entry, Delivery and
Form."
We are required, as guarantor, to certify annually to the
guarantee trustee whether or not we are in compliance with all the
conditions and covenants applicable to us under the guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, other than during a default by us in
performance of the guarantee, undertakes to perform only duties that
are set forth in the guarantee. After the occurrence of an event of
default with respect to the guarantee, the guarantee trustee must
enforce the guarantee and must exercise the same degree of care and
skill as a prudent person would exercise or use in the conduct of
his or her own affairs. The guarantee trustee is under no obligation
to expend or risk its own funds or otherwise incur any financial
liability in the performance of its duties if it has reasonable
grounds to believe that repayment or adequate indemnity is not
assured.
For information concerning our relationship with Bankers Trust
Company, as guarantee trustee, see "Description of Junior
Subordinated Debentures--Information Concerning the Debenture
Trustee."
TERMINATION OF THE GUARANTEE
The guarantee will terminate and be of no further force and
effect upon full payment of the redemption price of the trust
preferred securities, upon full payment of the amounts payable with
respect to the trust preferred securities upon liquidation of the
Trust, or upon distribution of junior subordinated debentures to you
and the other holders of the trust preferred securities in exchange
for all of the trust preferred securities. The guarantee will
continue to be effective or will be reinstated, as the case may be,
if at any time you must restore payment of any sums paid to you
under the trust preferred securities or the guarantee.
93
<PAGE>
GOVERNING LAW
The guarantee will be governed by and construed in accordance
with the laws of the State of Delaware.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
We have irrevocably guaranteed, on a subordinate basis, payments
of distributions and other amounts due on the trust preferred
securities (to the extent that Trust has funds available for such
payment) to the extent set forth under "Description of Guarantee."
Taken together, our obligations under the junior subordinated
debentures, the indenture, the trust agreement and the guarantee
provide, in the aggregate, a full, irrevocable and unconditional
guarantee of payments of distributions and other amounts due on the
trust preferred securities. No single document standing alone or
operating in conjunction with fewer than all the other documents
constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable
and unconditional guarantee of the Trust's obligations in respect of
the trust preferred securities.
If and to the extent that we do not make payments on the junior
subordinated debentures, the Trust will not have sufficient funds to
pay distributions or other amounts due on the trust preferred
securities. The guarantee does not cover payment of amounts payable
with respect to the trust preferred securities when the Trust does
not have sufficient funds to pay such amounts. In such event, your
remedy is to institute a legal proceeding directly against us for
enforcement of our payment obligations under the junior subordinated
debentures having a principal amount equal to the liquidation amount
of the trust preferred securities you hold.
Our obligations under the junior subordinated debentures and the
guarantee are subordinate and junior in right of payment to all
senior indebtedness and other subordinated indebtedness. An event of
default under any of our senior indebtedness or other subordinated
indebtedness would not constitute an event of default in respect of
the trust preferred securities. However, in the event of payment
defaults under, or acceleration of our senior indebtedness or other
subordinated indebtedness, the subordination provisions of the
indenture provide that no payments may be made in respect of the
junior subordinated debentures until such senior indebtedness or
other subordinated indebtedness has been paid in full or any payment
default on senior indebtedness or other subordinated indebtedness
has been cured or waived. See "Description of Junior Subordinated
Debentures--Subordination." Failure to make required payments on the
junior subordinated debentures would constitute an event of default
in respect of the trust preferred securities.
SUFFICIENCY OF PAYMENTS
As long as we make the payments on the junior subordinated
debentures when they are due, such payments will be sufficient to
cover distributions and other payments distributable on the trust
preferred securities, primarily because:
* the aggregate principal amount of the junior subordinated
debentures will be equal to the sum of the aggregate stated
liquidation amount of the trust preferred securities and trust
common securities;
* the interest rate and interest and other payment dates on the
junior subordinated debentures will match the distribution
rate, distribution dates and other payment dates for the trust
preferred securities;
* we will pay for any and all costs, expenses and liabilities of
the Trust except the Trust's obligations to you and to us, as
the holder of the trust common securities, amounts due under
the trust preferred securities and the trust common
securities, respectively; and
* the trust agreement further provides that the Trust will not
engage in any activity that is not consistent with the limited
purposes of the Trust.
94
<PAGE>
Notwithstanding anything to the contrary in the indenture, we
have the right to set-off any payment we are otherwise required to
make thereunder against and to the extent we have previously made,
or are concurrently making, a payment under the guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF TRUST PREFERRED SECURITIES
You may institute a legal proceeding directly against us to
enforce your rights under the guarantee without first instituting a
legal proceeding against the guarantee trustee, the Trust or any
other person or entity. See "Description of Guarantee."
RIGHTS TO DISTRIBUTIONS
The trust preferred securities represent preferred undivided
beneficial interests in the assets of the Trust, and the Trust
exists for the sole purposes of issuing the trust preferred
securities and trust common securities and investing the proceeds
from their issuance in the junior subordinated debentures and
engaging in other activities necessary, convenient or incidental
thereto. A principal difference between your rights as a holder of
trust preferred securities and a holder of a junior subordinated
debenture is that a holder of a junior subordinated debenture is
entitled to receive from us payments on the junior subordinated
debentures held, while you are entitled to receive distributions or
other amounts distributable with respect to the trust preferred
securities from the Trust (or from us under the guarantee) only if
and to the extent the Trust has funds available for the payment of
such distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of the Trust,
other than any dissolution involving the distribution of the junior
subordinated debentures to you and the other holders of the trust
preferred securities, and after satisfaction of liabilities to
creditors of the Trust as required by applicable law, you will be
entitled to receive, out of assets held by the Trust, the
liquidation distribution in cash. See "Description of Trust
Preferred Securities--Liquidation Distribution Upon Dissolution." If
we are voluntarily or involuntarily liquidated or declare
bankruptcy, the Trust, as registered holder of the junior
subordinated debentures, will be our subordinated creditor,
subordinated and junior in right of payment to all our senior
indebtedness or other subordinated indebtedness as set forth in the
indenture, but entitled to receive payment in full of all amounts
payable with respect to the junior subordinated debentures before
any of our shareholders receive payments or distributions. Since we
are the guarantor under the guarantee and have agreed under the
indenture to pay for all costs, expenses and liabilities of the
Trust (other than the Trust's obligations to you and the holders of
the trust common securities), your position as a holder of the trust
preferred securities and the position of a holder of such junior
subordinated debentures relative to other creditors and to our
shareholders in the event of our liquidation or bankruptcy are
expected to be substantially the same.
95
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Thompson Coburn LLP, St. Louis, Missouri, our
counsel, the following discussion fairly summarizes the material
United States federal income tax consequences of the purchase,
ownership, and disposition of the trust preferred securities.
The following discussion is general and may not apply to your
particular circumstances for any of the following (or other)
reasons:
* This summary is based on United States federal income tax laws
in effect as of the date of this prospectus, including
applicable regulations and administrative and judicial
interpretations. Changes to any of these laws, regulations or
interpretations after this date may affect the tax
consequences described below, possibly on a retroactive basis.
* This summary discusses only trust preferred securities you
acquire at original issuance at the original offering price
and hold as capital assets (within the meaning of federal tax
law). It does not discuss all of the tax consequences that may
be relevant to, beneficial owners who are subject to special
rules, such as banks, thrift institutions, real estate
investment trusts, regulated investment companies, insurance
companies, brokers and dealers in securities or currencies,
certain securities traders, tax-exempt organizations and
certain other financial institutions. This discussion also
does not discuss tax consequences that may be relevant to an
owner in light of the owner's particular circumstances, such
as an owner holding a trust preferred security as a position
in a straddle, hedging, conversion or other integrated
investment.
* This summary does not address:
(a)The income tax consequences to stockholders in, or partners
of beneficiaries of, a holder of trust preferred
securities;
(b)the United States alternative minimum tax consequences of
purchasing, owning and disposing of trust preferred
securities; or
(c)any state, local or foreign tax consequences of purchasing,
owning and disposing of trust preferred securities.
The authorities on which this summary is based are subject to
various interpretations, and the opinions of Thompson Coburn LLP are
not binding on the Internal Revenue Service, or the courts, either
of which could take a contrary position. Moreover, no rulings have
been or will be sought from the Service with respect to the
transaction described herein. Accordingly, we cannot assure you that
the Service will not challenge the opinion expressed herein or that
a court would not sustain such a challenge.
We advise you to consult your own tax advisors regarding the tax
consequences of purchasing, owning and disposing of the trust
preferred securities based on your particular circumstances and the
relevant taxing jurisdictions.
UNITED STATES HOLDERS
IN GENERAL. For purposes of the following discussion, a "United
States Holder" means:
* a citizen or individual resident of the United States;
* a corporation or partnership created or organized in or under
the laws of the United States or any political subdivision
thereof;
* an estate the income of which is includible in its gross
income for United States federal income tax purposes without
regard to its source; or
* a trust if a court within the United States is able to
exercise primary supervision over its administration and at
least one United States person has the authority to control
all substantial decisions of the trust.
96
<PAGE>
CHARACTERIZATION OF THE TRUST. Prior to the time that the trust
preferred securities are issued, Counsel will opine that (1) under
then current law and based on the representations, facts and
assumptions set forth in this prospectus, (2) assuming full
compliance with the terms of the trust agreement (and other relevant
documents), and (3) based on certain assumption and qualifications
referred to in the opinion, the Trust should be characterized for
United States federal income tax purposes as a grantor trust.
Accordingly, for United States federal income tax purposes, if you,
as a United States Holder, purchase a trust preferred security you
should be considered the owner of an undivided interest in the
junior subordinated debentures owned by the Trust, and you should be
required to include all income or gain recognized for United States
federal income tax purposes with respect to your share of the junior
subordinated debentures on your income tax return.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT. Under the terms of
the junior subordinated debentures, we have the ability to defer
payments of interest from time to time by extending the interest
payment period for a period not exceeding 20 consecutive quarterly
periods, but not beyond the maturity of the junior subordinated
debentures. Assuming that the junior subordinated debentures are
issued at face value and the likelihood of deferring interest
payments is "remote" within the meaning of applicable Treasury
regulations, the junior subordinated debentures will not be
considered issued with original issue discount ("OID").
We conclude that, as of the date of this prospectus, the
likelihood of our deferring payments of interest is "remote" within
the meaning of the applicable Treasury regulations. This conclusion
is based in part on the fact that exercising that option would
prevent us from declaring dividends on our common stock and would
prevent us from making any payments with respect to debt securities
that rank equally with or junior to the junior subordinated
debentures. Therefore, the junior subordinated debentures should not
be treated as issued with OID by reason of our deferral option
alone. Rather, you will be taxed on stated interest on the junior
subordinated debentures when such interest is paid or accrued in
accordance with your method of accounting for income tax purposes.
You should note, however, that no published rulings or any other
published authorities of the Service have addressed this issue.
Accordingly, we cannot assure you that the Service will not
challenge this conclusion or that a court would not sustain such a
challenge.
In the event we exercise our option to defer payments of
interest, the junior subordinated debentures would be treated as
redeemed and reissued for OID purposes. The sum of the remaining
interest payments (and any de minimus OID) on the junior
subordinated debentures would thereafter be treated as OID. The OID
would accrue, and be includible in your taxable income, on a daily
accrual basis (regardless of your method of accounting for income
tax purposes) over the remaining term of the junior subordinated
debentures (including any period of interest deferral), without
regard to the timing of payments under the junior subordinated
debentures. Subsequent distributions of interest on the junior
subordinated debentures generally would not be taxable. The amount
of OID that would accrue in any period would generally equal the
amount of interest that accrued on the junior subordinated
debentures in that period at the stated interest rate. Consequently,
during any period of interest deferral, you will include OID in
gross income in advance of the receipt of cash, and if you dispose
of a trust preferred security prior to the record date for payment
of distributions on the junior subordinated debentures following
that period, you will be subject to income tax on OID accrued
through the date of disposition (and not previously included in
income), but you will not receive cash from the Trust with respect
to the OID.
If our exercise of our option to defer payments of interest is
not treated as remote, the junior subordinated debentures would be
treated as initially issued with OID in an amount equal to the
aggregate stated interest (plus any de minimus OID) over the term of
the junior subordinated debentures. You would include that OID in
your taxable income, over the term of the junior subordinated
debentures, on a daily accrual basis.
CHARACTERIZATION OF INCOME. Because the income underlying the
trust preferred securities should not be characterized as dividends
for income tax purposes, a corporate holder of the trust preferred
securities will not be entitled to a dividends-received deduction
for any income recognized with respect to the trust preferred
securities.
MARKET DISCOUNT AND BOND PREMIUM. If you are not the initial
purchaser of the trust preferred securities or if you are the
initial purchaser but you do not purchase at the original offering
price, you may
97
<PAGE>
be considered to have acquired your undivided interest in the junior
subordinated debentures with market discount or bond premium (as
each phrase is defined for United States federal income tax
purposes). In this situation, you need to contact your own tax
advisor to determine your particular tax consequences.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON
LIQUIDATION OF THE TRUST. Under certain circumstances described
above (see "Description of Trust Preferred Securities--Liquidation
Distribution Upon Dissolution"), the Trust may distribute the junior
subordinated debentures to you in exchange for your trust preferred
securities and in liquidation of the Trust. Except as discussed
below, such a distribution would not be a taxable event for United
States federal income tax purposes, and you would have an aggregate
adjusted basis in the junior subordinated debentures you receive for
United States federal income tax purposes equal to your aggregate
adjusted basis in your trust preferred securities. For United States
federal income tax purposes, your holding period in the junior
subordinated debentures you receive in such a liquidation of the
Trust would include the period during which you held the trust
preferred securities. If, however, the relevant event is a tax event
as described in "Description of Trust Preferred Securities--
Redemption," which results in the Trust being treated as an
association taxable as a corporation, the distribution would likely
constitute a taxable event to you for United States federal income
tax purposes.
Under certain circumstances described herein (see "Description
of Trust Preferred Securities"), we may redeem junior subordinated
debentures for cash and distribute the proceeds of such redemption
to you in redemption of your trust preferred securities. Such a
redemption would be taxable for United States federal income tax
purposes, and you would recognize gain or loss as if you had sold
the trust preferred securities for cash. See "--Sales of Trust
Preferred Securities" below.
SALES OF TRUST PREFERRED SECURITIES. If you sell your trust
preferred securities, you will recognize gain or loss equal to the
difference between your adjusted basis in the trust preferred
securities and the amount realized on the sale of such trust
preferred securities. Your adjusted basis in the trust preferred
securities generally will be the initial purchase price, increased
by OID previously included (or currently includible) in your gross
income to the date of disposition, and decreased by payments
received on the trust preferred securities (other than any interest
received with respect to the period prior to the effective date we
first exercise our option to defer payments of interest). Any such
gain or loss generally will be capital gain or loss, and generally
will be a long-term capital gain or loss if you have held the trust
preferred securities for more than one year prior to the date of
disposition.
If you dispose of your trust preferred securities between record
dates for payments of distributions thereon, you will be required to
include accrued but unpaid interest (or OID) on the junior
subordinated debentures through the date of disposition in your
taxable income for United States federal income tax purposes
(notwithstanding that you may receive a separate payment from the
purchaser with respect to accrued interest). You may deduct that
amount from the sales proceeds received (including the separate
payment, if any, with respect to accrued interest) for the trust
preferred securities (or as to OID only, to add such amount to your
adjusted tax basis in the trust preferred securities). To the extent
the selling price is less than your adjusted tax basis (which will
include accrued but unpaid OID if any), you will recognize a capital
loss. Subject to certain limited exceptions, capital losses
generally cannot be applied to offset ordinary income for United
States federal income tax purposes.
PENDING TAX LITIGATION AFFECTING THE TRUST PREFERRED SECURITIES
Last year, a taxpayer filed a petition in the United States Tax
Court contesting the Service's disallowance of interest deductions
that the taxpayer claimed in respect of securities issued in 1993
and 1994 that are, in some respects, similar to the trust preferred
securities. (Enron Corp. v. Commissioner, Docket No. 6149-98, filed
April 1, 1998). The matter is still pending before the Tax Court. An
adverse decision by the Tax Court concerning the deductibility of
such interest may cause a tax event, giving us the right to redeem
the junior subordinated debentures. See "Description of Junior
Subordinated Debentures--Redemption" and "Description of Trust Preferred
Securities--Liquidation Distribution Upon Dissolution."
NON-UNITED STATES HOLDERS
The following discussion applies to you if you are not a United
States Holder as described above.
98
<PAGE>
Payments of interest, including OID, to you, as a non-United
States Holder, on a trust preferred security will generally not be
subject to withholding of United States federal income tax, provided
that:
* you did not (directly or indirectly, actually or
constructively) own 10% or more of the total combined voting
power of all classes of our stock entitled to vote;
* you are not a controlled foreign corporation that is related
to us through stock ownership;
* the interest does not constitute contingent interest as
described in Section 871(h)(4) of the Internal Revenue Code of
1986, as amended (the "Code");
* you are not a bank receiving interest described in Section
881(c)(3)(A) of the Code; and
* either (a) you certify to the Trust or its agent (or other
applicable payor), under penalties of perjury and in
accordance with applicable Treasury regulations, that you are
not a United States Holder and provide your name and address,
or (b) a securities clearing organization, bank or other
financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial
Institution"), and holds the trust preferred security in such
capacity, certifies to the Trust or its agent (or other
applicable payor), under penalties of perjury and in
accordance with applicable Treasury regulations, that it
requires and has received such a statement from you or another
Financial Institution between it and you in the chain of
ownership, and furnishes the Trust or its agent (or other
applicable payor) with a copy thereof.
Recently finalized Treasury regulations, that are generally
effective with respect to payments made after December 31, 2000,
would provide alternative methods for satisfying the certification
requirements described above.
It is possible that changes in the law affecting the income tax
consequences of the junior subordinated debentures could adversely
affect our ability to deduct interest payable on the junior
subordinated debentures. Such changes could also cause the junior
subordinated debentures to be classified as our equity (rather than
our debt) for United States federal income tax purposes. This might
cause the income derived from the junior subordinated debentures to
be characterized as dividends, generally subject to a 30% income tax
(on a withholding basis) when paid to you if you are not a United
States Holder, rather than as interest which, as discussed above,
generally is exempt from income tax in the hands of a person who is
not a United States Holder.
You, as a non-United States Holder, will generally not be
subject to withholding of income tax on any gain realized upon the
sale or other disposition of a trust preferred security.
If you hold the trust preferred securities in connection with
the active conduct of a United States trade or business, you will be
subject to income tax on all income and gains recognized with
respect to your proportionate share of the junior subordinated
debentures.
INFORMATION REPORTING
In general, information reporting requirements will apply to
payments of any interest or premium on, and proceeds from the sale
of, the trust preferred securities within the United States to, and
to the accrual of OID on trust preferred securities with respect to,
a non-corporate United States Holder. In addition, payments made on,
and payments of the proceeds from the sale of, the trust preferred
securities to or through the United States office of a broker are
subject to information reporting unless you certify as to your
non-United States Holder status or otherwise establish an exemption
from information reporting and backup withholding. See "--Backup
Withholding." Taxable income on the trust preferred securities for a
calendar year should be reported to United States Holders on the
appropriate forms by the following January 31st.
BACKUP WITHHOLDING
Payments of any interest or premium on, proceeds from the sale
of, and the accrual of OID on, the trust preferred securities may be
subject to a "backup" withholding tax of 31% unless you comply with
certain identification or exemption requirements. Any amounts so
withheld will be allowed as a credit against your income tax
liability, or refunded, if the required information is provided to
the Service.
99
<PAGE>
CERTAIN ERISA CONSIDERATIONS
We and certain of our affiliates may each be considered a "party
in interest" within the meaning of the Employee Retirement Income
Security Act of 1974 ("ERISA"), or a "disqualified person" within
the meaning of Section 4975 of the Code with respect to many
employee benefit plans that are subject to ERISA and individual
retirement accounts ("IRAs"). The purchase of the trust preferred
securities by an employee benefit plan or IRA that is subject to the
fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions Section 4975(e)(1) of the Internal Revenue
Code and with respect to which we, or any affiliate of ours is a
service provider (or otherwise is a party in interest or a
disqualified person), may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Internal Revenue
Code, unless the trust preferred securities are acquired pursuant to
and in accordance with an applicable exemption. Any pension or other
employee benefit plan, fiduciary or IRA holder, proposing to acquire
any trust preferred securities for such a plan or IRA should consult
with legal counsel.
UNDERWRITING
Subject to the terms and conditions of an underwriting
agreement, the underwriters named below, for whom EVEREN Securities,
Inc. is acting as representative, have severally agreed to purchase
from us, and we have agreed to sell to them, the respective number
of trust preferred securities set forth opposite each underwriter's
name below:
<TABLE>
<CAPTION>
NUMBER OF TRUST
UNDERWRITERS PREFERRED SECURITIES
------------ --------------------
<S> <C>
EVEREN Securities, Inc................................
---------
Total............................................. 1,500,000
=========
</TABLE>
The underwriting agreement provides that the obligations of the
several underwriters thereunder are subject to approval of certain
legal matters by their counsel and to various conditions. The nature
of the underwriters' obligation is such that they are committed to
purchase and pay for all the trust preferred securities (other than
those covered by the over-allotment option discussed below) if any
are purchased.
The underwriters will initially offer the trust preferred
securities to the public at the price stated on the cover page. The
underwriters may offer trust preferred securities to selected
dealers at the public-offering price less a concession of up to
$------- per trust preferred security. Those dealers may reallow a
discount not in excess of $------- per trust preferred security to
other brokers and dealers. After the initial offering of the trust
preferred securities, the underwriters may change the offering price,
concession, discount and other selling terms.
We have granted the underwriters an option to purchase up to
225,000 additional trust preferred securities. This option is
exercisable from time to time for 30 days after the date of this
prospectus, but may be exercised by the underwriters only to cover
any over-allotments.
The underwriters agreed to purchase the trust preferred
securities at the price stated on the cover page of this prospectus.
Because the Trust will use the proceeds from the sale of the trust
preferred securities to purchase the junior subordinated debentures
from us, we have agreed to pay the underwriters the following
compensation:
<TABLE>
<CAPTION>
UNDERWRITING
COMPENSATION
------------
<S> <C>
Per trust preferred security........................ $ 0.375
Total (assuming no exercise of over-allotment
option)........................................... 562,500
Total (assuming full exercise of over-allotment
option)........................................... 646,875
</TABLE>
We estimate that we will spend approximately $350,000 for printing,
depository and trustees' fees, legal and accounting fees, and other
expenses of the offering in addition to underwriting compensation.
100
<PAGE>
In connection with the offering, the underwriters and their
affiliates may engage in transactions, effected in accordance with
the SEC's Regulation M, that are intended to stabilize, maintain or
otherwise affect the market price of the trust preferred securities.
These transactions may include over-allotment through which the
underwriters create a selling syndicate short position by selling
more trust preferred securities than the underwriters are committed
to purchase from the Trust. The underwriters may purchase trust
preferred securities in the open market following completion of the
initial offering. The underwriters also may bid for, and purchase,
the trust preferred securities, including at a price above that
which might otherwise prevail in the open market for the purpose of
preventing or retarding a decline in the market price of the trust
preferred securities. Any of these transactions may maintain or
stabilize the price for the trust preferred securities at a level
above that which might otherwise prevail in the open market. None of
the underwriters, the Trust or us make any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the market price of the
trust preferred securities. The underwriters are not required to
engage in any of these transactions and may discontinue them at any
time without notice if it commences them. The underwriters may
effect these transactions on the American Stock Exchange or
elsewhere.
We and the Trust have agreed to indemnify the underwriters
against liabilities arising from the offering of the trust preferred
securities, including civil liabilities under the Securities Act of
1933, or to contribute to payments that the underwriters may be
required to make in connection with those liabilities.
The underwriters will comply with Rule 2810 under the NASD
Conduct Rules when it offers and sells the trust preferred
securities because the National Association of Securities Dealers,
Inc. may view the trust preferred securities as interests in a
direct participation. The underwriters and their affiliates may
provide investment banking services for us or our affiliates in the
future for which they would expect to receive customary fees and
commissions.
VALIDITY OF SECURITIES
The validity of the guarantee and the junior subordinated
debentures and certain tax matters will be passed upon for us by
Thompson Coburn LLP, St. Louis, Missouri, our counsel, and certain
legal matters will be passed upon for the underwriters by Barack
Ferrazzano Kirschbaum Perlman & Nagelberg, Chicago, Illinois.
Certain matters of Delaware law relating to the validity of the
trust preferred securities, the enforceability of the trust
agreement and the creation of the Trust will be passed upon by
Richards, Layton & Finger, as special Delaware counsel to us and the
Trust. Thompson Coburn LLP and Barack Ferrazzano Kirschbaum Perlman
& Nagelberg will rely as to certain matters of Delaware law on the
opinion of Richards, Layton & Finger.
EXPERTS
Ernst & Young, LLP, independent auditors, have audited our
consolidated financial statements included in our Annual Report on
Form 10-K for the year ended December 31, 1998 as set forth in their
report, which is included and incorporated by reference in this
prospectus and elsewhere in the registration statement. Our
financial statements are included and incorporated by reference in
reliance on Ernst & Young, LLP's report, given on their authority as
experts in accounting and auditing.
The consolidated financial statements of Allegiant as of
December 31, 1997 and for each of the two years in the period ended
December 31, 1997, included in this prospectus and in the
registration statement of which this prospectus is a part, have been
audited by BDO Seidman, LLP, independent auditors, as set forth in
their report dated March 13, 1998, and are included in reliance on
such report given upon the authority of such firm as experts in
accounting and auditing.
101
<PAGE>
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the informational requirements of the
Securities Exchange Act of 1934. Accordingly, we file annual,
quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may
read and copy any document we file with the Securities and Exchange
Commission at the public reference facilities maintained by the
Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Our filings with the Securities and Exchange
Commission also are available to the public from the Securities and
Exchange Commission's website at http://www.sec.gov. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further
information. Our common stock is listed on the Nasdaq National
Market.
This prospectus is part of a registration statement we filed
with the Securities and Exchange Commission and does not contain all
of the information set forth in the registration statement. You
should consult the registration statement for further information
with respect to our company and these securities.
The Securities and Exchange Commission allows us to "incorporate
by reference" the information we file with them, which means that we
can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered
to be part of this prospectus, and later information that we file
with the Securities and Exchange Commission will automatically
update and supersede this information and information in this
prospectus. We incorporate by reference the documents listed below
and any future filings made with the Securities and Exchange
Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until all of the securities are
sold.
* Annual Report on Form 10-K for the year ended December 31,
1998; and
* Quarterly Report on Form 10-Q for the quarter ended March 31,
1999.
You may request a copy of these filings, at no cost, by writing
or calling us at the following address: Secretary, Allegiant
Bancorp, Inc., 2122 Kratky Road, St. Louis, Missouri 63114,
telephone (314) 692-8200.
No separate financial statements of the Trust have been included
or incorporated by reference in this document. We do not, nor does
the Trust, consider that such financial statements would be material
to holders of the trust preferred securities because the Trust is a
newly formed special purpose entity, has no operating history or
independent operations and is not engaged in and does not propose to
engage in any activity other than holding as trust assets the junior
subordinated debentures and issuing the trust preferred securities
and trust common securities. See "Allegiant Capital Trust I,"
"Description of Trust Preferred Securities," "Description of Junior
Subordinated Debentures" and "Description of Guarantee." In
addition, we do not expect that the Trust will be filing reports
under the Securities Exchange Act of 1934 with the SEC.
102
<PAGE>
<TABLE>
INDEX TO FINANCIAL STATEMENTS
<S> <C>
Report of Independent Auditors--Ernst & Young LLP........... F-1
Consolidated Balance Sheets as of March 31, 1999 (unaudited)
and December 31, 1998 and 1997............................ F-2
Consolidated Statements of Income for the three months ended
March 31, 1999 and 1998 (unaudited) and each of the years
in the three-year period ended December 31, 1998.......... F-3
Consolidated Statements of Shareholders' Equity for the
three months ended March 31, 1999 (unaudited) and for each
of the years in the three-year period ended December 31,
1998...................................................... F-4
Consolidated Statements of Cash Flows for the three months
ended March 31, 1999 and 1998 (unaudited) and for each of
the years in the three-year period ended December 31, 1998 F-5
Notes to Consolidated Financial Statements.................. F-6
</TABLE>
103
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Allegiant Bancorp, Inc.
We have audited the accompanying consolidated balance sheet of Allegiant
Bancorp, Inc. as of December 31, 1998 and the related consolidated statements
of income, shareholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The consolidated balance sheets as of December 31, 1997, and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the two-year period ended December 31, 1997, were audited by
other auditors whose report dated March 13, 1998 expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Allegiant
Bancorp, Inc. at December 31, 1998 and the consolidated results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
Ernst & Young LLP
St. Louis, Missouri
January 21, 1999
F-1
<PAGE>
<PAGE>
<TABLE>
ALLEGIANT BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
DECEMBER 31,
MARCH 31, -----------------------
1999 1998 1997
----------- -------- --------
(UNAUDITED)
(DOLLARS IN THOUSANDS,
EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C>
ASSETS:
Cash and due from banks..................................... $ 12,855 $ 13,693 $ 14,872
Federal funds sold and other overnight investments.......... 4,475 3,430 1,600
Investment securities
Available-for-sale (at estimated market value).......... 45,075 42,740 44,918
Held-to-maturity (estimated market value of $10,927,
$12,132 and $32,146, respectively).................... 10,852 12,040 31,951
Loans, net of allowance for loan losses of $6,767, $6,442
and $5,193, respectively.................................. 513,539 489,227 479,669
Premises and equipment...................................... 10,866 11,010 10,801
Accrued interest and other assets........................... 10,747 11,438 10,837
Intangible assets........................................... 12,448 12,696 13,589
-------- -------- --------
Total assets................................................ $620,857 $596,274 $608,237
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
DEPOSITS:
Non-interest bearing.................................... $ 51,627 $ 55,417 $ 50,060
Interest bearing........................................ 396,378 364,176 382,370
Certificates of deposit of $100,000 or more............. 33,033 31,173 52,211
-------- -------- --------
Total deposits.............................................. 481,038 450,766 484,641
-------- -------- --------
Short-term borrowings....................................... 47,039 53,542 53,579
Long-term debt.............................................. 40,275 40,275 23,275
Accrued expenses and other liabilities...................... 3,446 3,587 4,671
-------- -------- --------
Total liabilities........................................... 571,798 548,170 566,166
SHAREHOLDERS' EQUITY:
Common Stock, $.01 par value--authorized 20,000,000
shares; issued 6,558,015, 6,536,164 and 6,111,743
shares, respectively.................................. 65 65 61
Capital surplus......................................... 42,026 41,898 39,484
Retained earnings....................................... 7,057 6,058 2,441
Accumulated other comprehensive income.................. (89) 83 85
-------- -------- --------
Total shareholders' equity.................................. 49,059 48,104 42,071
-------- -------- --------
Total liabilities and shareholders' equity.................. $620,857 $596,274 $608,237
======== ======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
F-2
<PAGE>
<PAGE>
<TABLE>
ALLEGIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
--------------------- -----------------------------------
1999 1998 1998 1997 1996
------- ------- ------- ------- -------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans..................... $11,073 $11,142 $44,412 $33,473 $21,428
Investment securities.......................... 773 1,086 4,295 3,966 3,477
Federal funds sold and overnight investments... 79 42 511 326 151
------- ------- ------- ------- -------
Total interest income.............................. 11,925 12,270 49,218 37,765 25,056
------- ------- ------- ------- -------
INTEREST EXPENSE:
Interest on deposits........................... 4,856 5,618 21,948 17,253 12,060
Interest on short-term borrowings.............. 639 564 2,625 2,895 1,542
Interest on long-term debt..................... 593 659 2,694 1,318 1,397
------- ------- ------- ------- -------
Total interest expense............................. 6,088 6,841 27,267 21,466 14,999
------- ------- ------- ------- -------
Net interest income................................ 5,837 5,429 21,951 16,299 10,057
Provision for loan losses.......................... 562 400 2,420 2,397 1,448
------- ------- ------- ------- -------
Net interest income after provision for loan
losses........................................... 5,275 5,029 19,531 13,902 8,609
------- ------- ------- ------- -------
OTHER INCOME:
Service charges on deposits.................... 148 89 1,387 913 612
Net gain on sale of securities................. -- 12 68 2 49
Other income................................... 1,106 1,008 7,869 2,383 732
------- ------- ------- ------- -------
Total other income................................. 1,254 1,109 9,324 3,298 1,393
------- ------- ------- ------- -------
OTHER EXPENSES:
Salaries and employee benefits................. 2,445 2,314 9,663 6,192 3,455
Occupancy and furniture and equipment.......... 764 834 3,275 1,681 1,137
Other expense.................................. 1,649 1,970 8,357 5,196 2,427
------- ------- ------- ------- -------
Total other expenses............................... 4,858 5,118 21,295 13,069 7,019
------- ------- ------- ------- -------
Income before income taxes......................... 1,671 1,020 7,560 4,131 2,983
Provision for income taxes......................... 669 393 3,026 1,716 1,175
------- ------- ------- ------- -------
Net income......................................... $ 1,002 $ 627 $ 4,534 $ 2,415 $ 1,808
======= ======= ======= ======= =======
Basic earnings per share....................... $ 0.15 $ 0.10 $ 0.72 $ 0.54 $ 0.55
Diluted earnings per share..................... $ 0.15 $ 0.09 $ 0.68 $ 0.49 $ 0.48
See accompanying notes to consolidated financial statements.
</TABLE>
F-3
<PAGE>
<PAGE>
<TABLE>
ALLEGIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMMON STOCK CAPITAL RETAINED COMPREHENSIVE SHAREHOLDERS' COMPREHENSIVE
SHARES PAR SURPLUS EARNINGS INCOME EQUITY INCOME
--------- ----- ------- -------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 as originally
reported.............................. 1,989,033 20 $13,542 $ 467 $ (91) $13,938
Reflect 5-for-4 stock split......... 497,259 5 (5) -- --
Reflect 6-for-5 stock split......... 497,259 5 (5) -- --
--------- --- ------- ------ ----- -------
Adjusted January 1, 1996................ 2,983,551 30 13,532 467 (91) 13,938
Net income.......................... -- -- -- 1,808 1,808 $1,808
Change in net unrealized gains
(losses) on available-for-sale
securities........................ -- -- -- -- 114 114 114
------
Comprehensive income................ $1,922
======
Cash dividends declared............. -- -- -- (187) (187)
Issuance of Common Stock for:
Stock dividend declared......... 309,518 3 1,728 (1,731) --
Conversion of subordinated
debentures.................... 86,592 1 503 -- 504
Exercise of stock
warrants/options.............. 17,771 -- 25 -- 25
Various stock issuance plans.... 8,264 -- 184 -- 184
--------- --- ------- ------ ----- -------
Balance December 31, 1996............... 3,405,696 34 15,972 357 23 16,386
Net income.......................... -- -- -- 2,415 2,415 $2,415
Change in net unrealized gains
(losses) on available-for-sale
securities........................ -- -- -- -- 62 62 62
------
Comprehensive income................ $2,477
======
Cash dividends declared............. -- -- -- (331) (331)
Issuance of Common Stock for:
Rights offerings................ 1,523,037 15 11,226 -- 11,241
Acquisition of Reliance
Financial, Inc................ 898,689 9 10,578 -- 10,587
Exercise of stock
warrants/options.............. 260,414 3 1,509 -- 1,512
Various stock issuance plans.... 23,907 -- 199 -- 199
--------- --- ------- ------ ----- -------
Balance December 31, 1997............... 6,111,743 61 39,484 2,441 85 42,071
Net income.......................... -- -- -- 4,534 4,534 $4,534
Change in net unrealized gains
(losses) on available-for-sale
securities........................ -- -- -- -- (2) (2) (2)
------
Comprehensive income................ $4,532
======
Cash dividends declared............. -- -- -- (917) (917)
Issuance of Common Stock for:
Exercise of stock
warrants/options.............. 384,785 4 2,112 -- 2,116
Various stock issuance plans.... 39,636 -- 302 -- 302
--------- --- ------- ------ ----- -------
Balance December 31, 1998............... 6,536,164 65 41,898 6,058 83 48,104
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income -- -- -- 1,002 1,002 $1,002
Unrealized losses on available-
for-sale securities, net of
reclassification adjustment
(see below)....................... -- -- -- -- (172) (172) (172)
------
Comprehensive income................ -- -- -- -- -- $ 830
======
Issuance of Common Stock for:
Warrants exercised.............. 1,770 -- 10 -- 10
New shares issued............... 3,445 -- 52 -- 52
Options exercised............... 16,636 -- 66 -- 66
--------- --- ------- ------ ----- -------
Balance March 31, 1999.................. 6,558,015 $65 $42,026 $7,057 $ (89) $49,059
========= === ======= ====== ===== =======
<PAGE>
<CAPTION>
YEAR ENDED DECEMBER 31,
THREE MONTHS ENDED -----------------------------------
MARCH 31, 1999 1998 1997 1996
------------------ ---- ---- ----
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Reclassification adjustments:
Unrealized gains (losses) on
available-for-sale securities........ $(172) $39 $63 $144
Less:
Reclassification adjustment for
gains realized included in net
income........................... -- 41 1 30
----- --- --- ----
Net unrealized gains (losses) on
available-for-sale securities........ $(172) $(2) $62 $114
===== === === ====
See accompanying notes to consolidated financial statements.
</TABLE>
F-4
<PAGE>
<PAGE>
<TABLE>
ALLEGIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
---------------------- ---------------------------------------
1999 1998 1998 1997 1996
-------- -------- --------- --------- ---------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.................................... $ 1,002 $ 627 $ 4,534 $ 2,415 $ 1,808
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............... 873 723 4,366 1,057 536
Provision for loan losses................... 562 400 2,420 2,397 1,448
Net realized gains on securities
available-for-sale......................... -- -- (68) (2) (49)
Deferred tax benefit........................ -- -- (496) (685) (282)
Net gain on sale of mortgage loans.......... -- -- (1,112) -- --
Net gain on disposition of branches......... -- -- (2,370) -- --
Changes in assets and liabilities:
Accrued interest receivable and other
assets................................... 577 (1,435) 811 (1,077) (938)
Accrued expenses and other liabilities.... (128) 945 (745) 623 768
-------- -------- --------- --------- ---------
Cash provided by operating activities..... 2,886 1,260 7,340 4,728 3,291
-------- -------- --------- --------- ---------
INVESTING ACTIVITIES:
Net cash received in acquisition of Reliance
Financial, Inc............................... -- -- -- 1,533 --
Net cash received in acquisition of
branches..................................... -- -- -- 83,596 --
Net cash paid in disposition of branches...... -- -- (22,662)
Proceeds from maturities of securities
held-to-maturity............................. 1,188 9,111 22,885 17,019 41,343
Purchase of investment securities
held-to-maturity............................. -- -- (2,974) (10,396) (25,279)
Proceeds from maturities of securities
available-for-sale........................... 9,659 9,888 87,840 25,020 36,797
Proceeds from sales of securities
available-for-sale........................... -- 1,230 8,989 2,949 3,882
Purchase of investments securities
available-for-sale........................... (12,281) (1,500) (94,586) (39,211) (34,457)
Loans made to customers, net of repayments.... (24,874) (22,693) (102,815) (175,387) (120,070)
Proceeds from sale of mortgage loans.......... -- -- 78,374 -- --
Purchases of assets held for operating leases,
net.......................................... -- -- (2,959) (2,992) --
Additions to premises and equipment........... (266) (676) (3,186) (4,710) (1,574)
-------- -------- --------- --------- ---------
Cash used in investing activities......... (26,574) (4,640) (31,094) (102,579) (99,358)
-------- -------- --------- --------- ---------
FINANCING ACTIVITIES:
Net increase in deposits...................... 30,273 (4,865) 5,201 57,518 77,362
Net increase in short-term borrowings......... (6,503) (2,541) 338 17,442 22,029
Proceeds from issuance of long-term debt...... -- 15,000 31,150 8,625 --
Repayment of long-term debt................... -- -- (13,650) (13) (4,552)
Proceeds from issuance of common stock........ 128 266 2,283 12,753 61
Payment of dividends.......................... (3) (122) (917) (331) (187)
-------- -------- --------- --------- ---------
Cash provided by financing activities..... 23,895 7,738 24,405 95,994 94,713
-------- -------- --------- --------- ---------
Net (decrease) increase in cash and cash
equivalents.................................. 207 4,358 651 (1,857) (1,354)
Cash and cash equivalents, beginning of
period....................................... 17,123 16,472 16,472 18,329 19,683
-------- -------- --------- --------- ---------
Cash and cash equivalents, end of period...... $ 17,330 $ 20,830 $ 17,123 $ 16,472 $ 18,329
======== ======== ========= ========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
F-5
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES:
Basis of Presentation. The accompanying consolidated financial statements
include the accounts of Allegiant Bancorp, Inc. (the "Company") and its
subsidiaries. The financial statements have been prepared in conformity with
generally accepted accounting principles and reporting practices applicable to
the banking industry. All significant intercompany transactions and balances
have been eliminated. The significant accounting policies are summarized below.
Business. The Company's bank subsidiary, (the "Bank") provides a full range
of banking services to individual and corporate customers in the St. Louis,
Missouri metropolitan area. The Bank is subject to intense competition from
other financial institutions. The Bank also is subject to the regulations of
certain federal and state agencies and undergoes periodic examination by those
regulatory authorities.
Accounting Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from estimates.
Reclassifications. Certain reclassifications have been made to the 1996 and
1997 financial statements to conform to the 1998 presentation. These
reclassifications had no effect on net income.
Investment Securities. Securities are classified as held-to-maturity or
available-for-sale. Only those securities which management has the intent and
ability to hold to maturity are classified as held-to-maturity and are reported
at amortized cost. Securities that are purchased with the intent to hold for an
indefinite period of time, including securities that management intends to use
as part of its asset/liability strategy or that may be sold to meet liquidity
needs, are classified as available-for-sale securities. Available-for-sale
securities are reported at fair value with unrealized gains and losses, net of
related deferred income taxes, reported in other comprehensive income. Interest
and dividends on securities, including amortization of premium and accretion of
discounts, are reported in interest income using the interest method. Realized
securities gains or losses are reported in the Consolidated Statements of
Income. Gains and losses on securities are determined on an identified
certificate basis.
Loans Held-for-Sale. In its lending activities, the Company originates
residential mortgage loans intended for sale in the secondary market. Loans
held-for-sale are carried at the lower of cost or fair value, which is
determined on an aggregate basis. Gains or losses on the sale of loans
held-for-sale are determined on a specific identification method.
Loans. Interest income on loans is generally accrued on a simple interest
basis. Loan fees and direct costs of loan originations are deferred and
amortized over the estimated life of the loans under methods approximating the
interest method.
When, in management's opinion, the collection of interest on a loan will
not be collected in the normal course of business, or when either principal or
interest is past due over 90 days, that loan is generally placed on a
non-accrual status. When a loan is placed on non-accrual status, accrued
interest for the current year is reversed and charged against current earnings,
and accrued interest from prior years is charged against the reserve for
possible loan losses. Interest payments received on non-accrual loans are
applied to principal if there is doubt as to the collectibility of such
principal; otherwise, these receipts are recorded as interest income. A loan
remains on non-accrual status until the loan is current as to payment of both
principal and interest, and/or the borrower demonstrates the ability to pay and
remain current.
All non-accrual and renegotiated commercial-related loans are considered
impaired. Impaired loans are measured based on the present value of expected
future cash flows discounted at the loan's effective interest
F-6
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
rate, or at the loan's observable market price, or the fair value of the
collateral, if the loan is collateral dependent.
Allowance for loan losses. The allowance for loan losses is increased by
the provision charged to expense and decreased by charge-offs, net of
recoveries. Management's periodic evaluation of the adequacy of the allowance
is based on the Bank's past loan loss experience, known and inherent risks in
the portfolio, adverse situations that may affect the borrowers' ability to
repay, the estimated value of any underlying collateral and current economic
conditions.
Premises and Equipment. Premises and equipment are stated at cost less
accumulated depreciation. The provision for depreciation is computed using the
straight-line method over the estimated useful lives of the individual assets
for book purposes and accelerated methods for tax purposes. Ordinary
maintenance and repairs are charged to expense as incurred.
Real Estate Owned. Real estate acquired in foreclosure or other settlement
of loans is initially recorded at the lower of fair market value of the assets
received (less estimated selling costs) or the recorded investment in the loan
at the date of transfer. Any adjustment to fair market value at the date of
transfer is charged against the allowance for loan losses. Subsequent
write-downs are charged to operating expense including charges relating to
operating, holding or disposing of the property. Real estate owned was
approximately $0 and $330,000 at December 31, 1998 and 1997, respectively.
Intangible Assets. Intangible assets consist primarily of goodwill and
mortgage servicing assets. Goodwill, the excess of cost over the net assets
acquired in business combinations accounted for as purchases, is amortized
using the straight-line method over the estimated period to be benefited,
but not exceeding 15 years. Management reviews goodwill for possible impairment
if there is a significant event that detrimentally affects operations.
Impairment is measured using estimates of the discounted future earnings
potential of the entity or assets acquired.
Mortgage servicing assets represent recorded value associated with the
contractual right to service loans in return for a fee. These assets may be
purchased and recorded at fair value or result from the sale of loans, where
servicing is retained and recorded at an allocated carrying amount based on the
relative fair value of the assets sold. This intangible is amortized using the
level-yield method over the estimated lives of the related loans. The carrying
value of mortgage servicing assets is subject to periodic adjustment based upon
changing market conditions. At December 31, 1998 the Company had no capitalized
mortgage servicing assets compared to $182,000 at December 31, 1997.
Income Taxes. Income taxes are accounted for under the liability method in
which deferred income taxes are recognized as a result of temporary differences
between the financial reporting basis and the tax basis of the assets and
liabilities of the Company.
Cash Equivalents. For purposes of the Consolidated Statements of Cash
Flows, the Company considers cash and due from banks, federal funds sold and
other overnight investments to be cash equivalents.
New Accounting Pronouncements. Effective January 1, 1998, the Company
adopted the Financial Accounting Standards Board ("FASB") Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income
(Statement 130). Statement 130 requires the reporting of comprehensive income
and its components in the 1998 financial statements. Comprehensive income is
defined as the change in equity from transactions and other events and
circumstances from non-owner sources, and excludes investments by and
distributions to owners. Comprehensive income also includes net income and
other items of comprehensive income meeting the above criteria. The Company's
most significant component of other comprehensive income is the unrealized
holding gains and losses on available-for-sale securities.
Effective January 1, 1998, the Company adopted the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related
F-7
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Information (Statement 131). Statement 131 superseded FASB Statement No. 14,
Financial Reporting for Segments of a Business Enterprise. Statement 131
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. Statement 131 also establishes standards
for related disclosures about products and services, geographic areas and major
customers. Based on an analysis of Statement 131, the Company has one operating
segment; therefore, no additional disclosures of segment information are
presented. The adoption of Statement 131 did not affect results of operations
or financial position.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities (Statement 133). The Company expects to adopt the new statement
effective January 1, 2000. Statement 133 will require the Company to recognize
all derivatives on the balance sheet at fair value. The Company does not
anticipate that the adoption of Statement 133 will have a significant effect
on its results of operations or financial position.
Unaudited Interim Financial Information. The interim financial information
as of March 31, 1999 and for the three-month periods ended March 31, 1999 and
1998 is unaudited. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. The interim results are not necessarily indicative of results
for any future period.
NOTE 2. ACQUISITIONS AND DIVESTITURES:
In August 1997, the Company acquired all the outstanding capital stock of
Reliance Financial, Inc. in exchange for 599,126 shares of the Company's Common
Stock. In September 1997, the Company purchased two bank branch offices from
Roosevelt Bank. As part of the agreement, the Company assumed deposits of
$96.076 million in exchange for loans of $3.017 million, premises and equipment
of $537 thousand and cash of $84.035 million. Total goodwill and core deposit
intangible assets recorded by the Company in connection with this acquisition
was $8.833 million. Both acquisitions were recorded using the purchase method
of accounting. Results of operations of companies and branches acquired in
purchase business combinations are included from the date of acquisition.
In December 1998, the Company sold three out-of-market branches to another
financial institution. The book value of assets disposed of totaled $17.492
million, the book value of liabilities transferred totaled $39.992 million
and the net cash paid for the divestiture was $22.662 million. A $2.370
million gain was recognized from the sale.
F-8
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. INVESTMENT SECURITIES:
Debt and equity securities have been classified in the Consolidated Balance
Sheets according to management's intent. The carrying amount of securities and
their approximate fair values at December 31 were as follows:
<TABLE>
<CAPTION>
SECURITIES AVAILABLE-FOR-SALE SECURITIES HELD-TO-MATURITY
DECEMBER 31, 1998 DECEMBER 31, 1998
------------------------------------------------ ------------------------------------------------
GROSS GROSS GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE COST GAINS LOSSES VALUE
--------- ---------- ---------- ------- --------- ---------- ---------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government and agency
securities.............. $29,269 $217 $ (51) $29,436 $ 7,585 $ 30 $(21) $ 7,595
State and municipal
securities.............. 598 9 -- 606 858 28 -- 886
Mortgage-backed
securities.............. 8,360 38 (65) 8,333 3,597 55 -- 3,651
Federal Home Loan Bank
stock................... 3,574 -- -- 3,574 -- -- -- --
Other securities.......... 791 -- -- 791 -- -- -- --
------- ---- ----- ------- ------- ---- ---- -------
Total..................... $42,592 $264 $(116) $42,740 $12,040 $113 $(21) $12,132
======= ==== ===== ======= ======= ==== ==== =======
<CAPTION>
SECURITIES AVAILABLE-FOR-SALE SECURITIES HELD-TO-MATURITY
DECEMBER 31, 1997 DECEMBER 31, 1997
------------------------------------------------ ------------------------------------------------
GROSS GROSS GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE COST GAINS LOSSES VALUE
--------- ---------- ---------- ------- --------- ---------- ---------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government and agency
securities.............. $26,545 $106 $ (9) $26,642 $21,712 $ 50 $(131) $21,631
State and municipal
securities.............. 597 -- -- 597 966 24 -- 990
Mortgage-backed
securities.............. 9,243 33 (1) 9,275 9,273 253 (1) 9,525
Federal Home Loan Bank
stock................... 7,033 -- -- 7,033 -- -- -- --
Other securities.......... 1,371 -- -- 1,371 -- -- -- --
------- ---- ---- ------- ------- ---- ----- -------
Total..................... $44,789 $139 $(10) $41,918 $31,951 $327 $(132) $32,146
======= ==== ==== ======= ======= ==== ===== =======
</TABLE>
Gross realized gains and losses on the sale of securities available-for-sale
were $71 thousand and $3 thousand, respectively, in 1998 and $15 thousand and
$13 thousand, respectively, in 1997.
Held-to-maturity and available-for-sale securities with a carrying value of
$33.579 million and $47.373 million at December 31, 1998 and 1997, respectively,
were pledged to secure public deposits and short-term borrowings.
F-9
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The contractual maturities of securities held-to-maturity and securities
(other than Federal Home Loan Bank stock and other securities)
available-for-sale at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-----------------------------------------------------
SECURITIES SECURITIES
AVAILABLE-FOR-SALE HELD-TO-MATURITY
----------------------- -----------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
--------- ------- --------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less.......................... $ 5,503 $ 5,538 $ 1,818 $ 1,829
Due from one year to five years.................. 21,561 21,646 6,294 6,302
Due from five years to ten years................. 3,396 3,446 305 323
Due after ten years.............................. 198 203 26 27
------- ------- ------- -------
Subtotal..................................... 30,658 30,883 8,443 8,481
Mortgage-backed securities....................... 8,360 8,333 3,597 3,651
------- ------- ------- -------
Total........................................ $39,018 $39,166 $12,040 $12,132
======= ======= ======= =======
</TABLE>
NOTE 4. LOANS:
The components of loans in the Consolidated Balance Sheets were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Commercial........................................ $126,239 $109,937
Real estate mortgage.............................. 312,836 331,416
Real estate construction.......................... 36,590 27,181
Consumer and other................................ 20,908 16,821
Net deferred loan fees, premiums and discounts.... (904) (493)
-------- --------
Total loans....................................... 495,669 484,862
Allowance for loan losses......................... (6,442) (5,193)
-------- --------
Net loans......................................... $489,227 $479,669
======== ========
</TABLE>
An analysis of the change in the allowance for loan losses follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1997
------ ------
(IN THOUSANDS)
<S> <C> <C>
Balance, beginning of year........................ $5,193 $3,100
Acquired subsidiary balance....................... -- 403
Loans charged off................................. (1,226) (759)
Recoveries........................................ 55 52
------ ------
Net loans charged off............................. (1,171) (707)
Provision for loan losses......................... 2,420 2,397
------ ------
Balance, end of year.............................. $6,442 $5,193
====== ======
</TABLE>
F-10
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The recorded investment in loans that were considered to be impaired under
Statement of Financial Accounting Standards No. 114, as amended by Statement of
Financial Accounting Standards No. 118, was $1.495 million in 1998 and $559
thousand in 1997 (these impaired loans were all classified as non-accrual
loans). The related allowance for these impaired loans was $269 thousand in 1998
and $86 thousand in 1997. Interest income that would have been recognized for
non-accrual loans was $72 thousand in 1998 and $57 thousand in 1997. Cash basis
income on non-accrual loans was not significant for 1998 or 1997.
The Company and the Bank have entered into transactions with their
directors, significant shareholders and affiliates (related parties). Such
transactions were made in the ordinary course of business on substantially the
same terms and conditions, including interest rates and collateral, as those
prevailing at the same time for comparable transactions with other customers,
and did not, in the opinion of management, involve more than normal credit risk
or present other unfavorable features. The aggregate amount of loans to such
related parties at December 31, 1998 and 1997 was $35.930 million and $16.432
million, respectively. During 1998, $26.049 million of new loans and $6.551
million of repayments were made on related party loans. Prior year numbers have
been reclassified for those directors and executive officers that no longer
hold such positions. As of December 31, 1998 $166 thousand of a related party
loan was past due 90 days or more. This loan has subsequently been brought
current. No related party loans were past due more than 90 days as of
December 31, 1997.
NOTE 5. PREMISES AND EQUIPMENT:
Components of premises and equipment as of December 31, 1998 and 1997 were
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land.............................................. $ 2,546 $ 2,618
Bank premises..................................... 5,657 5,019
Furniture, equipment and automobiles.............. 6,537 5,630
------- -------
Total cost........................................ 14,740 13,267
Less accumulated depreciation..................... (3,730) (2,466)
------- -------
Net book value.................................... $11,010 $10,801
======= =======
</TABLE>
The bank leases various banking facilities and one piece of equipment under
agreements, which expire at various dates through September 2012. These
agreements have options to renew. Future minimum lease payments required under
operating leases which have initial or remaining non-cancelable terms in excess
of one year as of December 31, 1998 were approximately as follows:
<TABLE>
<CAPTION>
YEARS ENDED MINIMUM
DECEMBER 31, RENTAL
------------ -------
(IN THOUSANDS)
<S> <C>
1999................................ $ 201
2000................................ 217
2001................................ 234
2002................................ 224
2003................................ 192
2004 and later...................... 1,399
------
Total........................... $2,467
======
</TABLE>
F-11
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Rental expense for all operating leases was $327 thousand in 1998 and $210
thousand in 1997.
NOTE 6. DEPOSITS:
Deposits consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Non-interest bearing.............................. $ 55,417 $ 50,060
Interest bearing demand........................... 19,075 18,448
Money market accounts............................. 123,827 97,408
Savings........................................... 14,917 16,157
Time and IRA certificates under $100,000.......... 206,357 250,357
-------- --------
Total core deposits............................. 419,593 432,430
Time certificates $100,000 and over............... 31,173 52,211
-------- --------
Total deposits.................................. $450,766 $484,641
======== ========
</TABLE>
The scheduled maturities of the Company's consumer time certificates under
$100,000 and time certificates $100,000 and over as of December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
SCHEDULED
MATURITY
PERIOD AMOUNT
------ ---------
(IN THOUSANDS)
<S> <C>
1999............................... $165,023
2000............................... 41,452
2001............................... 18,513
2002............................... 6,126
2003............................... 5,402
2004 and later..................... 1,014
--------
Total.......................... $237,530
========
</TABLE>
NOTE 7. INCOME TAXES:
The Company's results include income tax expense (benefit) as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1998 1997 1996
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current........................................... $3,522 $2,401 $1,457
Deferred.......................................... (496) (685) (282)
------ ------ ------
Total............................................. $3,026 $1,716 $1,175
====== ====== ======
</TABLE>
F-12
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The tax effects of temporary differences that gave rise to the deferred tax
assets and liabilities are presented below:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1997
------ ------
(IN THOUSANDS)
<S> <C> <C>
DEFERRED TAX ASSETS:
Reserve for possible loan losses................ $2,217 $1,536
Deferred loan fees.............................. -- 194
Deferred compensation........................... -- 74
Accrued expenses................................ -- 63
Mark-to-market securities adjustments........... -- 44
Other........................................... 116 72
------ ------
Total deferred tax assets........................... 2,333 1,983
------ ------
DEFERRED TAX LIABILITIES:
Depreciation.................................... (119) (461)
Investments in debt and equity securities--SFAS
No. 115....................................... (50) --
Discount accretion.............................. (83) --
Other........................................... (10) (29)
------ ------
Total deferred tax liabilities...................... (262) (490)
------ ------
Net deferred tax assets............................. $2,071 $1,493
====== ======
</TABLE>
A valuation allowance would be provided on deferred tax assets when it is
more likely than not that some portion of the assets will not be realized. The
Company has not established a valuation allowance as of December 31, 1998 or
1997, due to management's belief that all criteria for recognition have been
met, including the existence of a history of taxes paid sufficient to support
the realization of the deferred tax assets.
Income tax expense as reported differs from the amounts computed by applying
the statutory federal income tax rate to pre-tax income as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1998 1997 1996
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed expected tax expense..................... $2,646 $1,405 $1,014
Tax-exempt income................................. (157) (38) (19)
State and local income taxes, net of federal tax
benefits........................................ 314 258 143
Goodwill amortization............................. 318 24 23
Other, net........................................ (95) 67 14
------ ------ ------
Total tax expense................................. $3,026 $1,716 $1,175
====== ====== ======
</TABLE>
F-13
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. SHORT-TERM BORROWINGS:
Short-term borrowings were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Securities sold under agreements to repurchase.... $14,042 $ 8,252
Federal funds purchased........................... -- 6,500
Federal Home Loan Bank advances................... 39,500 37,850
Other short-term borrowings....................... -- 977
------- -------
Total short-term borrowings....................... $53,542 $53,579
======= =======
</TABLE>
As collateral for the Federal Home Loan Bank advances, the Bank has entered
into a blanket agreement that pledges first mortgage loans with principal
balances aggregating 130% of the outstanding advances.
NOTE 9. LONG-TERM DEBT:
Long-term debt consisted of the following at year-end:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Notes payable to a financial institution, interest payable
quarterly (7% on December 31, 1998), balance outstanding
payable on November 12, 2001, secured by Bank stock....... $13,650 $ --
Note payable to a financial institution, interest payable
quarterly at prime less one half of one percent (7.25% on
December 31, 1998), balance outstanding payable on
December 31, 1999, secured by Bank stock.................. -- 10,400
Notes payable to FHLB, interest payable monthly at rates
varying from 5.05% to 6.27%, principal balance due at
maturity ranging from April 3, 2000 to January 16, 2008
secured by stock in FHLB and certain loans................ 26,625 9,625
Subordinated debentures with certain shareholders, interest
payable quarterly at prime plus 3% (with a minimum floor
of 10%), called in 1998................................... -- 3,250
------- -------
Total long-term debt........................................ $40,275 $23,275
======= =======
</TABLE>
Under the terms of the current notes payable to a financial institution,
the Company and/or its subsidiaries are required to maintain certain financial
ratios and are limited with respect to cash dividends, capital expenditures
and the incurrence of additional indebtedness without prior approval. Principal
payments are required as follows: $500 thousand payable on October 1, 1999;
$500 thousand payable on October 1, 2000; $1.000 million payable on October
1, 2001; and the balance outstanding payable on November 12, 2001.
Common stock warrants of 121,049 exercisable at $6.61 per share, which were
issued in connection with the subordinated debentures, remained outstanding at
December 31, 1998. These warrants expire on May 31, 1999.
F-14
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A summary of annual principal reductions of long-term debt as of December
31, 1998 is as follows:
<TABLE>
<CAPTION>
ANNUAL
PRINCIPAL
YEAR REDUCTIONS
---- ----------
(IN THOUSANDS)
<S> <C>
1999................................ $ 500
2000................................ 5,000
2001................................ 12,650
2002................................ 625
2003................................ 1,500
2004 and later...................... 20,000
-------
Total........................... $40,275
=======
</TABLE>
NOTE 10. COMMON STOCK AND EARNINGS PER SHARE:
On July 1, 1998, the Company's Board of Directors declared a six-for-five
stock split (in the form of a stock dividend) of the Company's Common Stock to
shareholders of record on January 8, 1999, payable January 29, 1999. Common
stock was credited and capital surplus was charged for the aggregate par value
of shares that were issued. The stated par value of each share was not changed
from $.01.
On September 19, 1997, the Company's Board of Directors declared a
five-for-four stock split (in the form of a stock dividend) of the Company's
Common Stock to shareholders of record on January 7, 1998, payable on January
21, 1998. Common Stock was credited and capital surplus was charged for the
aggregate par value of the shares that were issued. The stated par value of
each share was not changed from $.01.
On September 19, 1996, the Company's Board of Directors declared a 10%
stock dividend to shareholders of record on January 2, 1997, payable on
January 15, 1997. The transaction was valued based on the closing market price
of the Company's Common Stock at the date of declaration.
All per share data in this report have been restated to reflect the
aforementioned stock splits and stock dividend.
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding during
the year. Diluted earnings per share gives effect to all dilutive potential
common shares that were outstanding during the year. The components of basic
and diluted earnings per share as prescribed by SFAS No. 128 are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996
---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net income............................................. $ 4,534 $ 2,415 $ 1,808
========== ========== ==========
Denominator:
Weighted average shares outstanding................ 6,250,910 4,481,724 3,298,013
Effect of dilutive securities:
Stock options and warrants..................... 383,946 403,579 410,808
---------- ---------- ----------
Dilutive potential common shares....................... 383,946 403,579 410,808
---------- ---------- ----------
Denominator for diluted earnings per share-adjusted
weighted average shares.............................. 6,634,856 4,885,303 3,708,821
========== ========== ==========
Basic earnings per share............................... $ 0.72 $ 0.54 $ 0.55
Diluted earnings per share............................. 0.68 0.49 0.48
</TABLE>
F-15
<PAGE>
PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. EMPLOYEE BENEFITS:
Pension Plan. The Company has a defined contribution pension plan in effect
for substantially all full-time employees. Salaries and employee benefits
expense includes $39 thousand in 1997 and $30 thousand in 1996 for such plans.
Contributions under the defined contribution plan are made at the discretion of
Company management.
Phantom Stock Plan. In December 1994, the Company's Board of Directors
approved a Phantom Stock Plan for the President, under which the Company agreed
to pay a cash award to the President of the Company based on the increase in
book value on shares of the Company's Common Stock, from December 31, 1994 until
the earlier of December 31, 1998 or the year immediately preceding the year the
President's employment terminates. The annual provision under this plan for the
years ended December 31, 1998, 1997, and 1996 was approximately $47 thousand,
$225 thousand and $55 thousand, respectively. Deferred compensation included in
accrued expenses and other liabilities totaled $365 thousand, $318 thousand and
$93 thousand at December 31, 1998, 1997 and 1996, respectively.
NOTE 12. STOCK OPTION PLANS AND DIRECTORS STOCK PURCHASE PLAN:
The Company has reserved 1,454,000 shares of its Common Stock for issuance
under various stock option plans offered to directors and certain key employees
of the Company and its subsidiaries. Options are granted, by action of the
Board of Directors, to acquire stock at 110% of fair market value at the date
of the grant, for a term of up to ten years.
At December 31, 1998, 525 thousand shares remained available for option
grants under these programs. The following tables summarize option activity
over the last three years and current options outstanding:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------
1998 1997 1996
-------------------------- -------------------------- -------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
SHARES OPTION PRICE SHARES OPTION PRICE SHARES OPTION PRICE
-------- ------------ -------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of
year...................... 768,230 $ 6.42 691,987 $ 5.11 509,938 $3.82
Granted..................... 146,386 14.84 284,273 9.20 190,245 8.54
Exercised................... (378,767) 4.51 (204,580) 5.79 (7,865) 3.82
Canceled.................... (18,009) 11.28 (3,450) 10.00 (331) 8.00
-------- ------ -------- ------ ------- -----
Outstanding, end of year.... 517,840 10.02 768,230 6.42 691,987 5.11
======== ======== =======
Weighted-average fair value
of options granted during
the year.................. $ 3.59 $ 2.74 $ 2.28
======== ======== =======
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- --------------------------------------------------------------------------- -------------------------------
WEIGHTED
NUMBER AVERAGE WEIGHTED NUMBER WEIGHTED
OUTSTANDING AT REMAINING AVERAGE EXERCISABLE AT AVERAGE
RANGE OF DECEMBER 31, CONTRACTUAL EXERCISE DECEMBER 31, EXERCISE
EXERCISE PRICE 1998 LIFE PRICE 1998 PRICE
- --------------------------------------------------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
$ 2.76 - $ 3.97 46,790 0.7 years $ 3.68 43,462 $ 3.65
4.13 - 7.92 101,488 2.0 years 6.78 97,858 6.88
8.78 - 10.45 213,174 3.0 years 9.68 141,684 9.43
11.58 - 18.57 156,388 4.2 years 14.49 64,432 15.33
------- -------
2.76 - 18.57 517,840 2.9 years 10.02 347,436 9.08
======= =======
</TABLE>
F-16
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company has a directors stock purchase plan whereby outside directors
of the Company and its subsidiaries may elect to use their directors' fees to
purchase Common Stock at market value. Twelve thousand shares were purchased at
an average price of $11.50 in 1998, thirteen thousand shares were purchased at
an average price of $10.74 in 1997 and 25 thousand shares were purchased at an
average price of $7.27 in 1996.
The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting for
its plans. Accordingly, no compensation expense has been recognized for its
stock-based compensation plans. Had compensation cost for the Company's
stock-based compensation plans been determined based upon the fair value of the
grant date for the awards under these plans consistent with the methodology
prescribed under Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation, the Company's net income and earnings
per share would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net income As reported............................ $4,534 $2,415 $1,808
Pro forma.............................. 4,208 1,988 1,534
Basic earnings per share As reported............................ 0.72 0.54 0.55
Pro forma.............................. 0.67 0.44 0.47
Diluted earnings per share As reported............................ 0.68 0.49 0.48
Pro forma.............................. 0.63 0.41 0.42
</TABLE>
The fair value of each option granted is estimated on the date of the grant
using the Black-Scholes option-pricing model using the following
weighted-average assumptions:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Dividend yield.................................. 1.80% 0.90% 0.93%
Volatility...................................... 30.80 16.38 34.23
Risk-free interest rate......................... 5.02 6.44 6.41
Expected life................................... 5 years 5 years 5 years
</TABLE>
NOTE 13. CONCENTRATIONS OF CREDIT:
Substantially all of the Bank's loans, commitments and commercial and
standby letters of credit have been granted to customers that are depositors
of the Bank and in the Bank's market area. Investments in state and municipal
securities also involve governmental entities within the Bank's market area.
The concentrations of credit by type of loan are set forth in Note 4. The
distribution of commitments to extend credit approximates the distribution
of loans outstanding. Commercial and standby letters of credit were granted
primarily to commercial borrowers.
NOTE 14. FINANCIAL INSTRUMENTS:
The Bank is a party to financial instruments with off-balance sheet risk
in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit, standby
letters of credit and financial guarantees. These instruments involve, to
varying degrees, elements of credit and interest-rate risk in excess of the
amount recognized in the Consolidated Balance
F-17
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Sheets. The contract or notional amounts of these instruments reflect the extent
of the Bank's involvement in particular classes of financial instruments.
The Bank's exposure to credit loss in the event of non-performance by the
other party to the financial instrument for commitments to extend credit,
standby letters of credit and financial guarantees written is represented by the
contractual or notional amount of those instruments. The Bank uses the same
credit policies in making commitments and conditional obligations as it does for
on-balance-sheet instruments.
A summary of the notional amounts of the Bank's financial instruments with
off-balance sheet risk at December 31, 1998, 1997 and 1996 follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1998 1997 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Commitments to extend credit...................... $82,530 $84,604 $73,522
Standby letters of credit......................... 6,496 3,868 1,310
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Bank evaluates each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained, if it is deemed necessary by the Bank upon extension of credit, is
based on management's credit evaluation of the counterparts. Collateral held
varies but may include accounts receivable, inventory, property, plant,
equipment and real estate.
Standby letters of credit and financial guarantees written are conditional
commitments issued by the Bank to guarantee the performance of a customer to a
third party. Those guarantees are primarily issued to support contractual
obligations of Bank customers. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities
to customers.
The carrying amount and estimated fair values of the Company's financial
instruments were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------- -----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
FINANCIAL ASSETS:
Cash and due from banks, federal funds sold
and other overnight investments.......... $ 17,123 $ 17,123 $ 16,472 $ 16,472
Securities available-for-sale.............. 42,740 42,740 44,918 44,918
Securities held-to-maturity................ 12,040 12,132 31,951 32,146
Loans, net of allowance.................... 492,787 490,596 479,669 479,502
FINANCIAL LIABILITIES:
Deposits................................... $450,766 $452,788 $484,641 $484,728
Short-term borrowings...................... 53,542 53,566 53,579 53,663
Long-term debt............................. 40,275 40,219 23,275 23,817
</TABLE>
F-18
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following methods and assumptions were used by the Company in
estimating fair values of financial instruments as disclosed herein:
Cash and Short-Term Instruments: The carrying amounts of cash and due from
banks and federal funds sold approximate their fair value.
Securities: Fair values for held-to-maturity and available-for-sale
securities are based on quoted market prices or dealer quotes, where available.
If quoted market prices are not available for a specific security, fair values
are based on quoted market prices of comparable instruments.
Loans: For variable-rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying values.
The fair values for fixed-rate loans are estimated using discounted cash flow
analyses and applying interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality. The fair values for
non-performing loans are estimated using assumptions regarding current
assessments of collectibility and historical loss experience.
Deposits: The fair values disclosed for deposits generally payable on
demand, such as non-interest bearing checking accounts, savings accounts, NOW
accounts and market rate deposit accounts, are by definition, equal to the
amount payable on demand at the reporting date. The carrying amounts for
variable-rate, fixed-term market rate deposit accounts and certificates of
deposit approximate their fair values at the reporting date. Fair values for
fixed-rate certificates of deposit are estimated using a discounted cash flow
calculation that applies interest rates currently being offered on certificates
of similar remaining maturities to a schedule of aggregated monthly maturities
on time deposits.
Short-Term Borrowings: The carrying amounts of federal funds purchased,
borrowings under repurchase agreements and other short-term borrowings
approximate their fair values at the reporting date.
Long-Term Debt: The fair value of the Company's long-term debt is based on
quoted market prices for similar issues or estimates using discounted cash flow
analyses, based on the Company's current incremental borrowing rates for
similar types of debt instruments.
Off-Balance Sheet Financial Instruments: The fair value of commitments to
extend credit and standby letters of credit are estimated using the fees
currently charged to enter into similar agreements, taking into account the
remaining terms of the agreements, the likelihood of the counterparties drawing
on such financial instruments and the present creditworthiness of such
counterparties. The Company believes such commitments have been made on terms
which are competitive in the markets in which it operates; however, no premium
or discount is offered thereon and accordingly, the Company has not assigned a
value to such instruments for the purposes of this disclosure.
Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's entire holdings of a particular
financial instrument. Because no market exists for a significant portion of the
Company's financial instruments, fair value estimates are based on judgments
regarding future expected loss experience, current economic conditions, risk
characteristics of various financial instruments and other factors. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off-balance sheet
financial instruments without attempting to estimate the value of anticipated
future business and the value of assets and liabilities that are not considered
financial instruments. In addition, the tax ramifications related to the
realization of the unrealized gains and losses can have a significant effect
on fair value estimates and have not been considered in many of the estimates.
F-19
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15. REGULATORY MATTERS:
The Company and the Bank are subject to various regulatory capital
requirements administered by federal and state banking agencies. Failure to
meet minimum capital requirements can initiate certain mandatory, and possibly
additional discretionary, actions by regulators that, if undertaken, could have
a direct material effect on the Company's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Company and the Bank must meet specific capital guidelines that involve
quantitative measures of the Company's and the Bank's assets, liabilities and
certain off-balance sheet items as calculated under regulatory accounting
practices. The Company's and the Bank's capital amounts and classifications
also are subject to qualitative judgments by the regulators about components,
risk weightings and other factors.
Quantitative measures established by regulators to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier 1 capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as
defined) to average assets (as defined). Management believes that, as of
December 31, 1998 the Company and the Bank met all capital adequacy
requirements to which they are subject.
As of June 30, 1998 the date of the most recent notification from the
regulatory agencies, the Bank was categorized as well capitalized under the
regulatory framework.
The actual and required capital amounts and ratios as of December 31, 1998
and 1997 for the Company and the Bank are listed in the following table:
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS
------------------- ------------------- -------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1998:
Total Capital (to Risk-Weighted Assets)
Allegiant Bancorp, Inc.............. $41,272 8.68% $38,059 8.00% $ N/A N/A%
Allegiant Bank...................... 51,931 10.93 37,999 8.00 47,499 10.00
Tier 1 Capital (to Risk-Weighted Assets)
Allegiant Bancorp, Inc.............. 35,319 7.42 19,030 4.00 N/A N/A
Allegiant Bank...................... 45,991 9.68 18,999 4.00 28,499 6.00
Tier 1 Capital (to Average Assets)
Allegiant Bancorp, Inc.............. 35,319 5.83 24,221 4.00 N/A N/A
Allegiant Bank...................... 45,991 7.61 24,185 4.00 30,232 5.00
AS OF DECEMBER 31, 1997:
Total Capital (to Risk-Weighted Assets)
Allegiant Bancorp, Inc.............. 36,250 8.14 35,646 8.00 N/A N/A
Allegiant Bank...................... 39,820 9.35 34,081 8.00 42,601 10.00
Tier 1 Capital (to Risk-Weighted Assets)
Allegiant Bancorp, Inc.............. 28,457 6.39 17,823 4.00 N/A N/A
Allegiant Bank...................... 35,237 8.27 17,040 4.00 25,560 6.00
Tier 1 Capital (to Average Assets)
Allegiant Bancorp, Inc.............. 28,457 6.15 18,521 4.00 N/A N/A
Allegiant Bank...................... 35,237 7.76 18,156 4.00 22,695 5.00
</TABLE>
F-20
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16. RESTRICTIONS ON CASH AND DUE FROM BANKS:
At December 31, 1998, $1.926 million in cash and due from bank balances were
maintained in accordance with the guidelines set forth by the Federal Reserve
Board to maintain certain average reserve balances.
NOTE 17. OTHER INCOME AND EXPENSES:
A summary of the components of other income and other expenses exceeding one
percent of revenues in each of the years presented is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1998 1997 1996
------ ------ ----
(IN THOUSANDS)
<S> <C> <C> <C>
Gain on sale of branches.......................... $2,370 $ -- $ --
Mortgage banking revenue.......................... 2,299 1,300 312
Leasing revenue................................... 1,527 433 --
Gain on sale of mortgage loans.................... 1,112 27 99
Furniture and equipment........................... 1,752 943 689
Occupancy......................................... 1,523 738 448
Depreciation of operating leases.................. 1,340 394 --
Goodwill amortization............................. 910 358 67
Operating losses.................................. 722 938 144
Supplies.......................................... 489 428 202
</TABLE>
NOTE 18. PARENT COMPANY CONDENSED FINANCIAL INFORMATION:
Following are the condensed financial statements of the Company (parent
company only) for the periods indicated:
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
ASSETS:
Cash................................................ $ 1,044 $ 1,555
Investment in subsidiaries.......................... 60,046 53,301
Other assets........................................ 1,707 3,034
------- -------
Total assets.................................... 62,797 57,890
LIABILITIES:
Long-term debt...................................... 13,650 13,650
Other liabilities................................... 1,042 2,169
------- -------
Total liabilities............................... 14,692 15,819
SHAREHOLDERS' EQUITY:............................... 48,105 42,071
------- -------
Total Liabilities and Shareholders' Equity...... $62,797 $57,890
======= =======
</TABLE>
F-21
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
INCOME:
Dividends from subsidiaries......................... $ 1,000 $1,475 $1,600
Total Income.................................... 1,000 1,475 1,600
EXPENSE:
Interest on long-term debt.......................... 1,183 812 828
Personnel expense................................... 1,674 350 42
Other operating expenses............................ 799 248 204
------- ------ ------
Total Expense................................... 3,656 1,410 1,074
Income before income tax benefit and equity in
undistributed income of subsidiaries.............. (2,656) 65 526
Income tax benefit.................................. 1,448 490 430
Income before equity in undistributed income of
subsidiaries...................................... (1,208) 555 956
Equity in undistributed income of subsidiaries...... 5,742 1,860 852
------- ------ ------
Net Income...................................... $ 4,534 $2,415 $1,808
======= ====== ======
<CAPTION>
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
-----------------------------------
1998 1997 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.......................................... $ 4,534 $ 2,415 $ 1,808
Adjustment to reconcile net income to net cash
provided by operating activities
Net income of subsidiaries...................... (6,742) (3,335) (2,452)
Dividend from subsidiaries...................... 1,000 1,475 1,600
Other, net...................................... 211 (558) 237
------- ------- -------
Net cash provided by operating activities....... (997) (3) 1,193
INVESTING ACTIVITIES:
Contributions of capital to subsidiaries............ (1,000) (13,979) --
Other, net.......................................... (15) -- --
------- ------- -------
Net cash used by investing activities........... (1,015) (13,979) --
FINANCING ACTIVITIES:
Cash dividends paid................................. (917) (331) (187)
Net issuance of common stock........................ 2,418 12,753 61
Issuance of long-term debt.......................... 13,650 3,000 --
Principal payments on long-term debt................ (13,650) -- (956)
------- ------- -------
Net cash provided (used) by financing
activities.................................... 1,501 15,422 (1,082)
Increase (decrease) in cash and cash equivalents.... (511) 1,440 111
Cash and cash equivalents at beginning of year...... 1,555 115 4
------- ------- -------
Cash and cash equivalents at end of year............ $ 1,044 $ 1,555 $ 115
======= ======= =======
</TABLE>
F-22
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 19. RESTRICTIONS ON SUBSIDIARY DIVIDENDS:
Subsidiary bank dividends are the principal source of funds for payment of
dividends by the Company to its shareholders. The payment of dividends by the
bank is subject to regulation by the Federal Deposit Insurance Corporation. The
state-chartered bank is also subject to regulation by the state of Missouri.
These payments are not restricted as to the amount of dividends that can be
paid, other than what prudent and sound banking principles permit and what must
be retained to meet minimum legal capital requirements. Accordingly,
approximately $11,997,000 could be paid in December 31, 1998 without prior
regulatory approval.
Extensions of credit by subsidiaries to the Company are permitted by
regulatory authorities but are limited in amount and subject to collateral
requirement. At December 31, 1998 approximately, $3,993,000 would have been
available under Federal Reserve Board guidelines.
NOTE 20. SUPPLEMENTAL DISCLOSURE FOR THE CONSOLIDATED STATEMENT OF CASH FLOWS:
Supplemental disclosures of noncash investing and financing activities, and
additional disclosures including details of cash and cash equivalents from
acquisitions accounted for as purchases and dispositions of branches, were as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1998 1997 1996
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Fair value of assets purchased (disposed)................... $ 17,492 $ 46,682 $ --
Liabilities assumed (transferred)........................... (40,154) 119,691 --
Issuance of common stock.................................... -- 10,587 --
-------- -------- -------
Net cash received (paid) for acquisitions and
dispositions.............................................. (22,662) 83,596 --
Cash and cash equivalent acquired........................... -- 1,533 --
-------- -------- -------
$(22,662) $ 85,129 $ --
======== ======== =======
CASH PAID DURING THE YEAR FOR:
Interest on deposits and borrowings..................... $ 28,096 $ 20,930 $14,750
Income taxes............................................ 3,345 2,768 1,393
NONCASH TRANSACTIONS:
Transfers to other real estate owned in settlement of
loans................................................. $ -- $ 330 $ --
Loans securitized....................................... -- 7,102 9,209
Common stock issued in acquisition of Reliance
Financial, Inc........................................ -- 10,587 --
Conversion of subordinate debentures to common stock.... -- -- 504
Conversion of directors' fees to common stock........... 135 136 148
Conversion of employee stock bonus to common stock...... -- 63 --
</TABLE>
F-23
<PAGE>
<PAGE>
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 21. SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
The following is a summary of quarterly operating results for the years
ended December 31, 1998 and 1997:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1998
Interest income.................................... $12,270 $12,288 $12,452 $12,208
Interest expense................................... 6,841 7,052 6,835 6,539
------- ------- ------- -------
Net interest income............................ 5,429 5,236 5,617 5,669
Provision for loan losses.......................... 400 315 465 1,240
Securities transactions............................ 12 46 4 6
Other income....................................... 1,097 2,130 1,946 4,083
Other expense...................................... 5,118 5,295 5,112 5,770
Income taxes....................................... 393 725 783 1,125
------- ------- ------- -------
Net income..................................... $ 627 $ 1,077 $ 1,207 $ 1,623
======= ======= ======= =======
Earnings per share:
Basic.......................................... $ 0.10 $ 0.17 $ 0.19 $ 0.26
Diluted........................................ 0.09 0.16 0.18 0.25
1997
Interest income.................................... $ 7,536 $ 8,337 $10,124 $11,768
Interest expense................................... 4,374 4,625 5,729 6,738
------- ------- ------- -------
Net interest income............................ 3,162 3,712 4,395 5,030
Provision for loan losses.......................... 493 628 556 720
Securities transactions............................ -- -- 25 (23)
Other income....................................... 636 556 938 1,166
Other expense...................................... 2,303 2,475 3,408 4,883
Income taxes....................................... 401 465 556 294
------- ------- ------- -------
Net income..................................... $ 601 $ 700 $ 838 $ 276
------- ------- ------- -------
Earnings per share:
Basic.......................................... $ 0.17 $ 0.17 $ 0.18 $ 0.02
Diluted........................................ 0.15 0.15 0.17 0.02
</TABLE>
F-24
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY US OR ANY OF THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
--------------------------------
TABLE OF CONTENTS
Page
----
Cautionary Statement Regarding
Forward-Looking Statements............ 3
Prospectus Summary......................... 4
Risk Factors............................... 11
Use of Proceeds............................ 17
Capitalization............................. 18
Accounting Treatment....................... 19
Selected Consolidated Financial Data....... 20
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 22
Business................................... 57
Management................................. 65
Beneficial Ownership....................... 67
Allegiant Capital Trust I.................. 68
Description of Trust Preferred
Securities............................ 69
Description of Junior Subordinated
Debentures............................ 82
Description of Guarantee................... 92
Relationship Among the Trust Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee.......... 94
Certain United States Federal Income Tax
Consequences.......................... 96
Certain ERISA Considerations............... 100
Underwriting............................... 100
Validity of Securities..................... 101
Experts.................................... 101
Where You Can Find Additional
Information........................... 102
Index to Financial Statements.............. 103
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
1,500,000 TRUST PREFERRED
SECURITIES
ALLEGIANT CAPITAL
TRUST I
% CUMULATIVE TRUST PREFERRED SECURITIES
- ---
(LIQUIDATION AMOUNT $10 PER TRUST
PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED AS DESCRIBED HEREIN BY
ALLEGIANT BANCORP, INC.
------------------
EVEREN SECURITIES, INC.
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with
the offering described in this registration statement:
SEC Registration Fee........................................ $ 4,796
NASD Filing Fee............................................. 2,225
American Stock Exchange Fee................................. 15,000
Legal Fees and Expenses..................................... 100,000
Accountants' Services....................................... 90,000
Trustee's Fees and Expenses................................. 15,000
Printing Expenses........................................... 90,000
Miscellaneous............................................... 32,979
--------
Total................................................... $350,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 351.355(1) and (2) of The General and Business Corporation Law of
the State of Missouri provide that a corporation may indemnify any 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 by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against 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 corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful, except that, in the case of an action or
suit by or in the right of the corporation, the corporation may not indemnify
such persons against judgments and fines and no person shall be indemnified
as to any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the corporation, unless and only to the extent that the court in
which the action or suit was brought determines upon application that such
person is fairly and reasonably entitled to indemnity for proper expenses.
Section 351.355(3) provides that, to the extent that a director, officer,
employee or agent of the corporation has been successful in the defense of
any such action, suit or proceeding or any claim, issue or matter therein,
he shall be indemnified against expenses, including attorneys' fees, actually
and reasonably incurred in connection with such action, suit or proceeding.
Section 351.355(7) provides that a corporation may provide additional
indemnification to any person indemnifiable under subsection (1) or (2),
provided such additional indemnification is authorized by the corporation's
articles of incorporation or an amendment thereto or by a shareholder-
approved bylaw or agreement, and provided further that no person shall
thereby be indemnified against conduct which was finally adjudged to have
been knowingly fraudulent, deliberately dishonest or willful misconduct or
which involved an accounting for profits pursuant to Section 16(b) of the
Securities Exchange Act of 1934.
Article XII of the By-Laws of the Company provides that the Company shall
extend to its directors and officers the indemnification specified in
subsections (1) and (2) and the additional indemnification authorized in
subsection (7).
Pursuant to directors' and officers' liability insurance policies, with
total annual limits of $2.0 million, the Company's directors and officers are
insured, subject to the limits, retention, exceptions and other terms and
conditions of such policy, against liability for any actual or alleged error,
misstatement, misleading statement, act or omission, or neglect or breach of
duty by the directors or officers of the Company, individually or collectively,
or any matter claimed against them solely by reason of their being directors or
officers of the Company.
II-1
<PAGE>
<PAGE>
Section 7 of the Underwriting Agreement also provides for indemnification
by the Underwriters of Allegiant's officers and directors for certain
liabilities under the Securities Act.
ITEM 16. EXHIBITS
See Exhibit Index hereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in the volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered)
and any deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Securities Exchange Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities Exchange Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-2
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing a registration statement on Form S-2 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of St. Louis, State
of Missouri, on the 17th day of June 1999.
ALLEGIANT BANCORP, INC.
By /s/ SHAUN R. HAYES
---------------------------------
Shaun R. Hayes, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Marvin S. Wool and Shaun R. Hayes, and each of
them, the undersigned's true and lawful attorney-in-fact and agents, with full
power of substitution and resubstitution, for the undersigned and in the
undersigned's name, place and stead, in any and all capacities, to sign any or
all amendments (including post-effective amendments) to this registration
statement, and to file the same with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in ratifying and confirming all the said attorneys-in-fact
and agents, or any of them, or their substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below on the 17th day of June 1999
by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MARVIN S. WOOL Chairman of the Board June 17, 1999
----------------------------
Marvin S. Wool
/s/ SHAUN R. HAYES President, Chief Executive Officer and Director June 17, 1999
----------------------------
Shaun R. Hayes
/s/ THOMAS A. DAIBER Senior Vice President and Chief Financial Officer June 17, 1999
----------------------------
Thomas A. Daiber
/s/ LELAND B. CURTIS Director June 17, 1999
----------------------------
Leland B. Curtis
/s/ KEVIN R. FARRELL Director June 17, 1999
----------------------------
Kevin R. Farrell
II-3
<PAGE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ LEON A. FELMAN Director June 17, 1999
----------------------------
Leon A. Felman
/s/ C. VIRGINIA KIRKPATRICK Director June 17, 1999
----------------------------
C. Virginia Kirkpatrick
/s/ JACK K. KRAUSE Director June 17, 1999
----------------------------
Jack K. Krause
/s/ JOHN L. WEISS Director June 17, 1999
----------------------------
John L. Weiss
/s/ LEE S. WIELANSKY Director June 17, 1999
----------------------------
Lee S. Wielansky
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing a registration statement on Form S-2 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of St. Louis, State of
Missouri, on the 1st day of July 1999.
ALLEGIANT CAPITAL TRUST I
By: /s/ SHAUN R. HAYES
--------------------------------
Shaun R. Hayes, Administrator
II-4
<PAGE>
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1 Form of Underwriting Agreement.
3.1 Articles of Incorporation, as amended, of the Company, filed
as Exhibit 3.1 to the Company's Registration Statement on
Form 10-SB (Reg. No. 0-26350), is hereby incorporated by
reference.
3.1(a) Amendment to Articles of Incorporation, as amended, of the
Company, filed as Exhibit 3 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1998, is hereby incorporated by reference.
3.2 By-laws of the Company, as currently in effect, filed as
Exhibit 3.2 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1998, are hereby incorporated by
reference.
4.1 Form of Stock Certificate for Common Stock, filed as
Exhibit 4.2 to the Company's Registration Statement on Form
10-SB (Reg. No. 0-26350), is hereby incorporated by
reference.
4.2 Form of Warrant Agreement, filed as Exhibit 4.3 to Company's
Registration Statement on Form 10-SB (Reg. No. 0-26350), is
hereby incorporated by reference.
4.3 Form of Junior Subordinated Indenture.
4.4 Form of Junior Subordinated Debenture (included in Exhibit
4.3).
4.5 Certificate of Trust of Allegiant Capital Trust I.
4.6 Form of Amended and Restated Trust Agreement.
4.7 Form of Trust Preferred Security (included in Exhibit 4.3).
4.8 Form of Guarantee Agreement.
5.1 Opinion of Thompson Coburn LLP.<F*>
5.2 Opinion of Richards, Layton & Finger.<F*>
8 Tax Opinion of Thompson Coburn LLP.<F*>
10.1 Loan Agreement, dated November 12, 1998, by and between
LaSalle National Bank and the Company, filed as Exhibit 10.1
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1998, is hereby incorporated by
reference.
10.2 Pledge Agreement, dated November 12, 1998, by and between
LaSalle National Bank and the Company, filed as Exhibit 10.2
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1998, is hereby incorporated by
reference.
10.3 Allegiant Bancorp, Inc. 1994 Stock Option Plan, filed as
Exhibit 10.7 to Company's Registration Statement on Form
10-SB (Reg. No. 0-26350), is hereby incorporated by
reference.
10.4 Allegiant Bancorp, Inc. 1996 Stock Option Plan, filed as
Exhibit 4.4 to Company's Form S-8 (Reg. No. 0-26350), is
hereby incorporated by reference.
II-5
<PAGE>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.5 Allegiant Bancorp, Inc. Directors Stock Option Plan, filed
as Exhibit 4.5 to Company's Form S-8 (Reg. No. 0-26350),
is hereby incorporated by reference.
10.6 Allegiant Bancorp, Inc. 1989 Stock Option Plan, filed as
Exhibit 4.6 to Company's Form S-8 (Reg. No. 0-26350), is
hereby incorporated by reference.
12 Statement of Earnings to Fixed Charges.
23.1 Consent of Ernst & Young LLP is filed herewith.
23.2 Consent of BDO Seidman, LLP is filed herewith.
24 Power of Attorney (included on signature page).
25.1 Form T-1 Statement of Eligibility for Bankers Trust Company
to act as trustee under the Indenture.
[FN]
- -------
<F*> To be filed by amendment.
II-6
<PAGE>
=================================================================
Allegiant Bancorp, Inc.
Allegiant Capital Trust I
_________________________
1,725,000 _____% Cumulative Trust Preferred Securities
(Liquidation Amount $10 per Trust Preferred Security)
__________ __, 1999
UNDERWRITING AGREEMENT
EVEREN Securities, Inc.
=================================================================
<PAGE>
<PAGE>
Allegiant Bancorp, Inc.
Allegiant Capital Trust I
________________________________
1,725,000 _____% Cumulative Trust Preferred Securities
(Liquidation Amount $10 per Trust Preferred Security)
UNDERWRITING AGREEMENT
__________ __, 1999
EVEREN Securities, Inc.
Individually and as Representatives of
the Several Underwriters
77 West Wacker Drive
Chicago, Illinois 60601-1694
Ladies and Gentlemen:
Allegiant Bancorp, Inc., a Missouri corporation (the "Company"),
and its fiduciary subsidiary, Allegiant Capital Trust I (the "Trust"
and, together with the Company, the "Offerors"), a statutory business
trust organized under the Delaware Business Trust Act (the "Delaware
Act"), confirm their agreement with the several underwriters listed in
Schedule I hereto (the "Underwriters"), for whom EVEREN Securities, Inc.
has been duly authorized to act as representative, with respect to the
proposed issuance and sale by the Trust of its _____% Cumulative Trust
Preferred Securities (liquidation amount $10 per security) representing
undivided beneficial interests in the assets of the Trust (the "Trust
Preferred Securities"). The Offerors propose that the Trust issue the
Trust Preferred Securities pursuant to an Amended and Restated Trust
Agreement among Bankers Trust Company, as property trustee (the
"Property Trustee"), Bankers Trust (Delaware), as Delaware trustee (the
"Delaware Trustee"), the administrators named therein (the
"Administrators") and the Company (the "Trust Agreement"). The Trust
Preferred Securities will be guaranteed by the Company with respect to
distributions and payments upon liquidation, redemption and otherwise
pursuant to a Guarantee Agreement (the "Guarantee Agreement") between
the Company and Bankers Trust Company, as trustee (the "Guarantee
Trustee"). The proceeds of the sale of the Trust Preferred Securities
will be combined with the proceeds from the sale by the Trust to the
Company of the Trust's common securities (the "Common Securities") and
will be used to purchase _____%
<PAGE>
<PAGE>
junior subordinated debentures (the "Subordinated Debentures") issued by
the Company pursuant to an Indenture ("Indenture") between the Company
and Bankers Trust Company, as trustee (the "Indenture Trustee"). The
Offerors hereby confirm their respective agreements with the
Underwriters as follows:
1. The Trust Preferred Securities. The 1,500,000 Trust
Preferred Securities proposed to be sold by the Trust are hereinafter
referred to as the "Firm Securities." The Trust also proposes to grant
to the Underwriters an option to purchase up to 225,000 additional Trust
Preferred Securities (the "Additional Securities") if requested by the
Underwriters as provided in Section 3 hereof. The Firm Securities and
the Additional Securities are herein collectively called the
"Securities."
2. Registration Statement and Prospectus. The Offerors have
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations (the "Rules and
Regulations") of the Commission thereunder (collectively, the "Act"),
and the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), a registration statement on Form S-2 (File Nos. __________ and
__________) including a prospectus, relating to the Securities, the
Subordinated Debentures and the Guarantee Agreement, that may have been
amended; each such amendment was so prepared and filed. The
registration statement, as amended at the time when it became or becomes
effective, including all financial schedules (if any) and exhibits
thereto, all information incorporated therein by reference and all of
the information (if any) deemed to be part of the registration statement
at the time of its effectiveness pursuant to Rule 430A under the Act
("Rule 430A"), is hereinafter referred to as the "Registration
Statement"; the prospectus in the form first provided to the
Underwriters by the Offerors in connection with the offering and sale of
the Securities (whether or not required to be filed pursuant to
Rule 424(b) under the Act ("Rule 424(b)")) is hereinafter referred to as
the "Prospectus," except that if any revised prospectus shall be
provided to the Underwriters by the Offerors for use in connection with
the offering of the Securities that differs from the Prospectus (whether
or not any such revised prospectus is required to be filed by the
Offerors pursuant to Rule 424(b)), the term "Prospectus" shall refer to
the revised prospectus from and after the time it is first provided to
the Underwriters for such use; and each preliminary prospectus included
in the Registration Statement prior to the time it became or becomes
effective is herein referred to as a "Preliminary Prospectus."
3. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject
to the terms and conditions hereof, (i) the Trust agrees to issue and
sell to the Underwriters, at a price of $10.00 per Security (the
"Purchase Price"), 1,500,000 Firm Securities; and (ii) each Underwriter
agrees, severally and not jointly, to purchase from the Trust, at the
Purchase Price, the aggregate number of Firm Securities set forth
opposite the name of such Underwriter in Schedule I hereto. As
compensation to the Underwriters for their commitments hereunder and in
view of the fact that the proceeds of the sale of the Securities
(together with the proceeds from the sale by the Trust to the Company of
the Common Securities)
<PAGE>
<PAGE>
will be used to purchase the Subordinated Debentures, the Company hereby
agrees to pay at the Closing Date to the Underwriters a commission per
Security equal to $_____ per Security, or $__________ in the aggregate
($__________ if the over-allotment with respect to the Additional
Securities is exercised in full).
On the basis of the representations and warranties contained in
this Agreement, and subject to the terms and conditions hereof, (i) the
Trust agrees to sell to the Underwriters, at the Purchase Price, up to
225,000 Additional Securities; and (ii) the Underwriters shall have the
right to purchase, severally and not jointly, from time to time, up to
an aggregate of 225,000 Additional Securities at the Purchase Price.
Additional Securities may be purchased as provided in Section 4 hereof
solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Securities. If any Additional Securities
are to be purchased, each Underwriter, severally and not jointly, agrees
to purchase the number of Additional Securities that bears the same
proportion to the total number of Additional Securities to be purchased
as the number of Firm Securities set forth opposite the name of such
Underwriter in Schedule I bears to the total number of Firm Securities.
4. Agreements of the Offerors as to Delivery and Payment. The
Offerors agrees with each Underwriter that:
(a) Delivery to the Underwriters of, and payment to the
Trust for, the Firm Securities shall be made at 10:00 A.M.,
Chicago time, on the third (or if the Firm Securities are priced,
as contemplated by Rule 15c6-1(c) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), after 4:30 p.m.
Eastern time, on the fourth) full business day (such time and date
being referred to as the "Closing Date") following the date of the
initial public offering of the Firm Securities as advised to you
by the Company, at such place as you shall designate.
(b) Delivery to the Underwriters of and payment for any
Additional Securities to be purchased by the Underwriters shall be
made at such place as you shall designate, at 10:00 A.M., Chicago
time, on such date or dates (individually, an "Option Closing
Date" and collectively, the "Option Closing Dates"), which may be
the same as the Closing Date but shall in no event be earlier than
the Closing Date, as shall be specified in a written notice from
you to the Offerors of the Underwriters' determination to purchase
a number, specified in said notice, of Additional Securities. Any
such notice may be given at any time within 30 days after the date
of this Agreement.
(c) The Securities will be delivered by the Trust to the
Underwriters on the Closing Date or the applicable Option Closing
Date against payment of the Purchase Price therefor by certified
or official bank check or wire transfer of next-day funds payable
to the order of the Trust to an account designated by the Trust.
Delivery of the Securities may be made by credit through full fast
transfer to the accounts at The Depository Trust Company
designated by you. Certificates
<PAGE>
<PAGE>
representing the Securities, in definitive form and in such
denominations and registered in such names as you may request in
writing not less than two business days prior to the Closing Date
or the applicable Option Closing Date notice to the Offerors shall
be prepared and will be made available for inspection not later
than 9:30 A.M., Chicago time, on the business day next preceding
the Closing Date or the applicable Option Closing Date, with any
transfer taxes payable upon initial issuance or the transfer
thereof duly paid by the Company for the respective accounts of
the Underwriters against payment of the Purchase Price therefor.
5. Further Agreements of the Offerors. The Offerors also agree
with each Underwriter that:
(a) they will, if the Registration Statement has not
heretofore become effective under the Act, file an amendment to
the Registration Statement or, if necessary pursuant to Rule 430A
under the Act, a post-effective amendment to the Registration
Statement, as soon as practicable after the execution and delivery
of this Agreement, and will use their best efforts to cause the
Registration Statement or such post-effective amendment to become
effective at the earliest possible time; and the Offerors will
comply fully and in a timely manner with the applicable provisions
of Rule 424(b) and Rule 430A under the Act;
(b) they will advise you promptly and, if requested by
you, confirm such advice in writing, (i) when the Registration
Statement has become effective, if and when the Prospectus is sent
for filing pursuant to Rule 424 under the Act and when any post-
effective amendment to the Registration Statement becomes
effective, (ii) of the receipt of any comments from the Commission
that relate to the Registration Statement or requests by the
Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement,
or of the suspension of qualification of the Securities for
offering or sale in any jurisdiction, or the initiation or, to the
best knowledge of the Offerors, threat of any proceedings for such
purpose by the Commission or any state securities commission or
other regulatory authority, and (iv) of the happening of any event
or information becoming known during the period referred to in
paragraph (e) below that makes any statement of a material fact
made in the Registration Statement untrue or that requires the
making of any additions to or changes in the Registration
Statement (as amended or supplemented from time to time) in order
to make the statements therein not misleading or that makes any
statement of a material fact made in the Prospectus (as amended or
supplemented from time to time) untrue or that requires the making
of any additions to or changes in the Prospectus (as amended or
supplemented from time to time) in order to make the statements
therein, not misleading; if at any time the Commission shall issue
or institute proceedings (or threaten to institute any such
proceedings) to issue any stop order suspending the effectiveness
of the Registration Statement, or any state securities commission
or
<PAGE>
<PAGE>
other regulatory authority shall issue or institute proceedings
(or threaten to institute proceedings) to issue an order
suspending the qualification or exemption of the Securities under
any state securities or blue sky laws, the Offerors shall use best
efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(c) they will furnish to you without charge one signed
copy of the Registration Statement as first filed with the
Commission and of each amendment to it, including all exhibits
filed therewith, and will furnish to you and each Underwriter
designated by you such number of conformed copies of the
Registration Statement as so filed and of each amendment to it,
without exhibits, as you may reasonably request;
(d) they will not file any amendment or supplement to the
Registration Statement, whether before or after the time when it
becomes effective, or make any amendment or supplement to the
Prospectus of which you shall not previously have been advised and
provided a copy a reasonable period of time prior to the filing
thereof or to which you or your counsel shall reasonably object,
and they will prepare and file with the Commission, promptly upon
your reasonable request, any amendment to the Registration
Statement or supplement to the Prospectus that may be necessary or
advisable in connection with the distribution of the Securities by
you in your or your counsel's opinion, and will use best efforts
to cause the same to become effective as promptly as possible;
(e) promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as a
prospectus is required by the Act to be delivered in connection
with the sales by an underwriter or a dealer (in the opinion of
your counsel), they will furnish to each Underwriter and dealer
without charge as many copies of the Prospectus (and any amendment
or supplement to the Prospectus) as such Underwriter or dealer may
reasonably request for the purposes contemplated by the Act, and
the Offerors consent to the use of the Prospectus and any
amendment or supplement thereto by any Underwriter or any dealer,
both in connection with the offering or sale of the Securities and
for such period of time thereafter as the Prospectus is required
by the Act to be delivered in connection therewith;
(f) if during the period specified in paragraph (e) any
event shall occur or information become known as a result of which
in the opinion of your counsel it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein
as of the date the Prospectus is delivered to a purchaser, in
light of the circumstances under which such statements were made,
not misleading, or it is necessary to amend or supplement the
Prospectus to comply with any law, forthwith to prepare and,
subject to paragraph 5(d) above, they will file with the
Commission at the sole expense of the Company an appropriate
amendment or supplement to the Prospectus so that the statements
of any
<PAGE>
<PAGE>
material facts in the Prospectus, as so amended and supplemented,
will not when it is so delivered, in light of the circumstances
under which such statements are made, be misleading, or so that
the Prospectus will comply with law and it will furnish to the
Underwriters and to such dealers as the Underwriters shall
specify, at the sole expense of the Company, such number of copies
thereof as such Underwriters or dealers may reasonably request;
(g) prior to any public offering of the Securities, it
will cooperate with you and counsel for the Underwriters in
connection with the registration or qualification of the
Securities for offer and sale by the several Underwriters and by
dealers under the state securities or blue sky laws of such
jurisdictions as you may request (provided that the Offerors shall
not be obligated to qualify as foreign corporations in any
jurisdiction in which they are not so qualified or to take any
action which would subject them to general consent to service of
process in any jurisdiction in which they are not now so subject),
and the Offerors will continue such qualification in effect so
long as required by law for the distribution of the Securities and
will file such consents to service of process or other documents
as may be necessary in order to effect such registration or
qualification (provided that the Offerors shall not be obligated
to take any action that would subject it to general consent to
service of process in any jurisdiction in which they are not now
so subject);
(h) they will not, prior to the exercise in full or
termination or expiration of the option to purchase the Option
Securities, incur any liability or obligation, direct or
contingent, or enter into any material transaction, other than in
the ordinary course of business, except as contemplated by the
Prospectus;
(i) they will mail and make generally available to their
security holders and furnish to the Underwriters as soon as
reasonably practicable a consolidated earnings statement covering
a period of at least 12 months beginning after the "effective
date" (as defined in Rule 158 under the Act) of the Registration
Statement (but in no event commencing later than 90 days after
such date) that will satisfy the provisions of Section 11(a) of
the Act and Rule 158 thereunder, and will advise you in writing
when such statement has been made so available;
(j) during the period of five years after the date of this
Agreement, they will furnish to you a copy (i) as soon as
practicable after the filing thereof, of each report filed by
either of the Offerors with the Commission, any securities
exchange or the National Association of Securities Dealers, Inc.
("NASD"); (ii) as soon as practicable after the release thereof,
of each material press release in respect of either of the
Offerors; (iii) as soon as available, of each report of the
Company mailed to shareholders; and (iv) as soon as available,
such other publicly available information concerning the Offerors
as you may reasonably request;
<PAGE>
<PAGE>
(k) whether or not the transactions contemplated hereby
are consummated or this Agreement becomes effective as to all of
its provisions or is terminated, to pay all costs, fees, expenses
and taxes incident to the performance by the Offerors of their
obligations hereunder, including (i) the preparation, printing,
filing and distribution under the Act of the Registration
Statement (including financial statements and exhibits), each
Preliminary Prospectus and all amendments and supplements to any
of them prior to or during the period specified in paragraph
(e) above of this Section 5, (ii) the word processing,
reproduction and distribution of this Agreement, the Blue Sky
Survey and any other agreements, memoranda, correspondence and
other documents prepared and delivered by the Underwriters or
their counsel in connection with the offering of the Securities
(including in each case any disbursements of counsel for the
Underwriters relating to such preparation and delivery), (iii) the
registration or qualification of the Securities for offer and sale
under the securities or blue sky laws of the several states,
including in each case the fees and disbursements of counsel for
the Underwriters, relating to such registration or qualification
and memoranda relating thereto, (iv) filings and clearance with
the NASD in connection with the offering and sale of the
Securities, (v) the listing of the Securities on the American
Stock Exchange ("AMEX"), (vi) furnishing such copies of the
Registration Statement, each Preliminary Prospectus, the
Prospectus and all amendments and supplements thereto as may be
requested for use in connection with the offering or sale of the
Securities by the Underwriters or by dealers to whom the
Securities may be sold, (vii) obtaining the opinions to be
provided pursuant to Sections 8(f), 8(g) and 8(h) of this
Agreement and (viii) the performance by the Offerors of all of
their other obligations under this Agreement; if the sale of the
Securities provided for herein is not consummated because the
Underwriters exercise their right to terminate this Agreement
pursuant to Section 9 hereof and any of the following have
occurred during the term of this Agreement: (a) there has been any
material adverse change in the condition (financial or otherwise),
earnings, affairs, business or prospects of the Company, or (b)
either Offeror shall refuse or be unable to comply with any
provision hereof (except as the result of a breach of this
Agreement by the Underwriters), the Company will promptly
reimburse the Underwriters upon demand for all reasonable out-of-
pocket expenses (including the fees and disbursements of counsel
for the Underwriters) that shall have been incurred by the
Underwriters in connection with the proposed purchase and sale of
Securities;
(l) they will use the net proceeds received by them from
the sale of the Securities and the Subordinated Debentures in the
manner specified in the Prospectus and will file such reports with
the Commission with respect to the application of the proceeds
therefrom as may be required in accordance with Rule 463 under the
Act and will furnish you copies of any such reports as soon as
practicable after the filing thereof;
<PAGE>
<PAGE>
(m) if, at the time of effectiveness of the Registration
Statement, any information shall have been omitted therefrom in
reliance upon Rule 430A, then immediately following the execution
and delivery of this Agreement, they will prepare, and file or
transmit for filing with the Commission in accordance with such
Rule 430A and Rule 424(b), copies of an amended prospectus, or, if
required by such Rule 430A, a post-effective amendment to the
Registration Statement (including an amended prospectus),
containing all information so omitted;
(n) they will cause the Securities to be listed, subject
to notice of issuance or sale, on AMEX and will comply with all
registration, filing and reporting requirements of AMEX;
(o) they will not take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or
result in the stabilization or manipulation of the price of any
security of either Offeror to facilitate the sale or resale of the
Securities;
(p) they will inform the Florida Department of Banking and
Finance at any time prior to the consummation of the distribution
of the Securities by the Underwriters if either of them commences
engaging in business with the government of Cuba or with any
person or affiliate located in Cuba, with such information to be
provided within 90 days after the commencement thereof or after a
change occurs with respect to previously reported information; and
(q) they will use its best efforts to do and perform all
things required to be done and performed under this Agreement by
them prior to or after the Closing Date or any Option Closing
Date, as the case may be, and to satisfy all conditions precedent
to the delivery of the Securities.
6. Representations and Warranties.
(a) The Offerors jointly and severally represent and
warrant to, and agree with, each Underwriter as of the date
hereof, the Closing Date and each Option Closing Date (except for
such representations that are specified as being made as of a
particular date) as follows:
(i) The Commission has not issued any order
preventing or suspending the use of any Preliminary
Prospectus relating to the proposed offering of the
Securities nor instituted or threatened any proceedings for
that purpose. The Registration Statement, on the date it
was or is declared effective by the Commission, each
Preliminary Prospectus, on the date of the filing thereof
with the Commission, and the Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the
Commission (or if not filed, on the date provided by the
Offerors to the Underwriters in connection with the offering
and sale of the securities) and
<PAGE>
<PAGE>
at the Closing Date and each Option Closing Date conformed
or will conform with the requirements of the Act, the Rules
and Regulations and the Trust Indenture Act and the rules
and regulations thereunder. The Registration Statement, on
the date it was or is declared effective by the Commission,
upon the filing or first delivery to the Underwriters of the
Prospectus (or any supplement to the Prospectus) and at the
Closing Date and each Option Closing Date did not or will
not contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
each Preliminary Prospectus; and on the date of the filing
thereof with the Commission, and the Prospectus and any
amendment or supplement thereto, on the date of filing
thereof with the Commission (or if not filed, on the date
provided by the Offerors to the Underwriters in connection
with the offering and sale of the Securities) and at the
Closing Date and each Option Closing Date did not and will
not include an untrue statement of material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided that the foregoing shall not apply to statements in
or omissions from the Registration Statement and the
Prospectus made or omitted in reliance upon, and in
conformity with, information relating to the Underwriters
furnished in writing to the Offerors by or on behalf of the
Underwriters with your consent expressly for use therein.
The Offerors hereby acknowledge for all purposes under this
Agreement that (A) the statements set forth under the
caption "Underwriting" in the Prospectus and (B) the
stabilization legend on page __ of the Prospectus constitute
the only written information furnished to the Offerors by or
on behalf of the Underwriters for use in the preparation of
the Registration Statement or the Prospectus or any
amendment or supplement thereto.
(ii) The Company has been duly organized and is a
validly existing corporation in good standing under the laws
of Missouri and is duly registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the
"BHC Act"), supervised by the Board of Governors of the
Federal Reserve System (the "FRB"). Allegiant Bank (the
"Bank"), Allegiant Real Estate Investment Trust (the
"REIT"), Allegiant Investment Company ("AIC"), Allegiant
Insurance Services Co. ("AISC") and Kratky Road, Inc.
(together with the Bank, the REIT, AIC and AISC,
collectively, the "Subsidiaries") and the Trust constitute
the only subsidiaries of the Company. Each Subsidiary has
been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of incorporation
or organization, as the case may be. Each of the Company
and its Subsidiaries has full power and authority, corporate
or otherwise, to own or lease its properties and assets and
to conduct its business as
<PAGE>
<PAGE>
described in the Registration Statement and the Prospectus
and is duly qualified to do business and in good standing in
each jurisdiction in which it owns or leases real property
or in which the conduct of its business or the ownership or
leasing of property requires such qualification, except
where the failure to be so qualified, either individually or
in the aggregate, would not have a material adverse effect
on the condition (financial or otherwise), business, assets,
prospects, net worth or results of operations of the Trust,
the Company and the Subsidiaries, taken as a whole (a
"Material Adverse Effect"). Other than the Trust and the
Subsidiaries, the Company owns no capital stock or other
equity, ownership or proprietary interest in any company,
partnership, association, trust or other entity. The
accounts of the Bank are insured by the Bank Insurance Fund
of the Federal Deposit Insurance Corporation (the "FDIC") up
to the maximum applicable amount in accordance with the
rules and regulations of the FDIC, and no proceedings for
the termination or revocation of such membership or
insurance are pending, or to the best knowledge of the
Offerors, threatened.
(iii) The Trust has been duly created and is
validly existing in good standing as a business trust under
the Delaware Act with full trust power and authority to own
property and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and
perform its obligations under this Agreement, the
Securities, the Common Securities and the Trust Agreement
and is authorized to do business in each jurisdiction in
which such qualification is required, except where the
failure to so qualify would not have a Material Adverse
Effect. The Trust has conducted and will conduct no
business other than the transactions contemplated by the
Trust Agreement and described in the Prospectus. The Trust
is not a party to or otherwise bound by any agreement other
than those described in the Prospectus. The Trust is and
will be classified for United States federal income tax
purposes as a grantor trust and not as an association
taxable as a corporation. The Trust is and will be treated
as a consolidated subsidiary of the Company pursuant to
generally accepted accounting principles.
(iv) Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus,
(A) none of the Offerors or the Subsidiaries has incurred
any material liabilities or obligations, direct or
contingent, or entered into any material transactions not in
the ordinary course of business, nor purchased any of its
outstanding capital stock or declared, paid or otherwise
made any dividend or distribution of any kind on its capital
stock or otherwise, and (B) there has not been any material
adverse change in either Offeror's or any Subsidiary's
condition (financial or otherwise),
<PAGE>
<PAGE>
business, affairs, prospects or results of operations or any
material change in their respective capital stock, short-
term debt or long-term debt.
(v) The Subordinated Debentures have been duly
authorized by the Company and at the Closing Date will have
been duly executed by the Company and, when authenticated in
the manner provided in the Indenture and delivered against
payment therefor as described in the Prospectus, will
constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their
terms, except as enforceability of the same may be limited
by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and
by general equity principles, will be in the form
contemplated by, and entitled to the benefits of, the
Indenture and will conform in all material respects to the
statements relating thereto in the Prospectus.
(vi) The Common Securities have been duly
authorized by the Trust and, when issued and delivered by
the Trust to the Company against payment therefor as
described in the Registration Statement and Prospectus, will
be validly issued and (subject to the terms of the Trust
Agreement) fully paid and nonassessable undivided beneficial
interests in the assets of the Trust and will conform to all
statements relating thereto contained in the Prospectus.
The issuance of the Common Securities is not subject to
preemptive or other similar rights. At the Closing Date all
of the issued and outstanding Common Securities of the trust
will be directly owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance,
claim or equity.
(vii) The Securities have been duly authorized by
the Trust Agreement and, when issued and delivered pursuant
to this Agreement against payment of the consideration set
forth herein, will be validly issued and fully paid and non-
assessable undivided beneficial interests in the Trust, will
be entitled to the benefits of the Trust Agreement and will
in all material respects conform to the statements relating
thereto contained in the Prospectus. The issuance of the
Securities is not subject to preemptive or other similar
rights. Holders of Securities will be entitled to the same
limitation of personal liability under Delaware law as
extended to stockholders of a private corporation for
profit.
(viii) Each of this Agreement, the Indenture, the
Trust Agreement and the Guarantee Agreement has been duly
authorized, executed and delivered by the Company and/or the
Trust, as the case may be, and constitutes a legal, valid
and binding obligation of the Company and/or the Trust, as
the case may be, enforceable in accordance with its terms,
except as enforceability of the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights
<PAGE>
<PAGE>
generally and by general equity principles. Each Offeror
has full power and authority to enter into this Agreement,
the Indenture, the Trust Agreement and the Guarantee
Agreement, as the case may be, and, in the case of the
Trust, to authorize, issue and sell the Securities as
contemplated by this Agreement, and each of the Indenture
and the Trust Agreement has been duly qualified under the
Trust Indenture Act and will conform in all material
respects to the statements relating thereto in the
Registration Statement and the Prospectus.
(ix) Neither the Company nor any Subsidiary is in
violation of its respective charter or by-laws. The Trust
is not in violation of the Trust Agreement or its
certificate of trust filed with the State of Delaware on
__________, 1999 (the "Certificate of Trust"). Neither
Offeror nor any Subsidiary is in violation of or in breach
of or in default in (nor has any event occurred that with
notice or lapse of time, or both, would be a breach of or a
default in) the performance of any obligation, agreement or
condition contained in any agreement, lease, contract,
permit, license, franchise agreement, mortgage, loan
agreement, debenture, note, deed of trust, bond, indenture
or other evidence of indebtedness or any other instrument or
obligation (collectively, "Obligations and Instruments") to
which any of them is a party or by which any of them or any
of their respective properties or assets is bound or
affected (except for such contravention or default as would
not have a Material Adverse Effect). Neither Offeror nor
any Subsidiary is in violation of any statute, judgment,
decree, order, rule or regulation (collectively, "Laws")
applicable to any of them or any of their respective
properties or assets that, alone, or together with other
violations of Laws would result in a Material Adverse
Effect. To the best knowledge of the Offerors, no other
party under any contract or other agreement to which either
Offeror or any Subsidiary is a party is in material default
thereunder except for such defaults as would not
individually or in the aggregate result in a Material
Adverse Effect.
(x) The execution, delivery and performance of
this Agreement, the Indenture, the Trust Agreement and the
Guarantee Agreement and the consummation of the transactions
contemplated hereby or thereby will not, alone or upon
notice or the passage of time or both, (A) require any
consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other
governmental body or third party (except such as may be
required under the Act and the securities or blue sky laws
of the various states or by the NASD), (B) result in the
creation or imposition of any lien, charge or encumbrance
upon any of the properties or assets of either Offeror
pursuant to the terms and provisions of any Obligation or
Instrument, (C) conflict with or constitute a breach or
default under any Obligation or Instrument to which either
Offeror is a party or by which either of them or any of
their respective properties or assets is bound
<PAGE>
<PAGE>
(except for such creation, conflict, breach or default as
would not have a Material Adverse Effect), or conflict with
or result in a breach or violation of any of the terms and
provisions of the Company's charter or by-laws, the Trust's
Trust Agreement or its Certificate of Trust, or (D) assuming
compliance with the Act and all applicable state securities
or Blue Sky laws, violate or conflict with any Laws
applicable to the Company or any of its properties or assets
(except for such violation or conflict as could not have a
Material Adverse Effect). No action, suit or proceeding
before any court or arbitrator or any governmental body,
agency or official (domestic or foreign) is pending against
or, to the best knowledge of the Offerors, threatened
against either Offeror, that, if adversely determined, could
reasonably be expected to in any manner invalidate this
Agreement, the Indenture, the Trust Agreement or the
Guarantee Agreement.
(xi) Except as set forth in the Prospectus, there
is no action, suit, proceeding, inquiry or investigation,
governmental or otherwise, before any court, arbitrator or
governmental agency or body (collectively, "Proceedings")
pending to which either Offeror or any Subsidiary is a party
or to which any of their respective properties or assets are
subject, that, if determined adversely to them, might result
in a Material Adverse Effect, or that seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge
the issuance or sale of any of the Securities to be sold
hereunder, and, to the best knowledge of the Offerors, no
such Proceedings are threatened or contemplated.
(xii) There is no contract, document, agreement or
transaction to which either Offeror or any Subsidiary is a
party, or that involved or involves any of them or any of
their respective properties or assets that is required to be
described in or filed as exhibits to the Registration
Statement or the Prospectus by the Act or the Rules and
Regulations that have not been so described or filed.
(xiii) No action has been taken with respect to
either Offeror, and, to the best knowledge of the Offerors,
no statute, rule, regulation or order has been enacted,
adopted or issued by any governmental agency that suspends
the effectiveness of the Registration Statement, prevents or
suspends the use of any Preliminary Prospectus or the
Prospectus or suspends the sale of the Securities in any
jurisdiction referred to in Section 5(g) hereof. No
injunction, restraining order or order of any nature by a
federal or state court of competent jurisdiction has been
issued with respect to either Offeror that might prevent the
issuance of the Securities, suspend the effectiveness of the
Registration Statement, prevent or suspend the use of any
Preliminary Prospectus or the Prospectus or suspend the sale
of the Securities in any jurisdiction referred to in
Section 5(g) hereof; and every request of the Commission, or
any securities
<PAGE>
<PAGE>
authority or agency of any jurisdiction, for additional
information (to be included in the Registration Statement or
the Prospectus or otherwise) has been complied with in all
material respects.
(xiv) All of the issued and outstanding shares of
capital stock of the Company are duly authorized and are
validly issued, fully paid and non-assessable, have been
issued in compliance with all federal and state securities
laws, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or
purchase securities, and the holders thereof are not subject
to personal liability by reason of being such holders. The
capital stock of the Company conforms to the description
thereof in the Registration Statement and Prospectus under
the caption "Capitalization." Except as otherwise stated in
the Registration Statement and Prospectus, there are no
preemptive rights or other rights to subscribe for or to
purchase, or any restriction upon the voting or transfer of,
any shares of the Company's capital stock pursuant to the
Company's charter, by-laws or any agreement or other
instrument to which the Company is a party to by which the
Company is bound. Neither the filing of the Registration
Statement nor the offering or sale of the Subordinated
Debentures or Securities as contemplated by this Agreement
gives, rise to any rights for or relating to the
registration of any shares of capital stock of the Company.
All of the issued and outstanding shares of capital stock of
each Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and the Company
owns of record and beneficially, free and clear of any
securities interests, claims, liens, proxies, equities or
other encumbrances, all of the issued and outstanding shares
of such stock. Except as described in the Registration
Statement and the Prospectus, there are no options,
warrants, agreements, contracts or other rights in existence
to purchase or acquire from the Company or any Subsidiary
any shares of the capital stock of the Company or such
Subsidiary.
(xv) The Indenture, the Trust Agreement and the
Guarantee Agreement are in substantially the respective
forms filed as exhibits to the Registration Statement.
(xvi) The Company's obligations under the Guarantee
Agreement are subordinated and junior in right of payment to
all [SENIOR INDEBTEDNESS] (as defined in the Indenture) of
the Company.
(xvii) The Subordinated Debentures are subordinate
and junior in right of payment to all [SENIOR INDEBTEDNESS]
of the Company.
(xviii) Each of the Administrators is an employee of
the Company and has been duly authorized by the Company to
execute and deliver the Trust Agreement.
<PAGE>
<PAGE>
(xix) Neither Offeror nor any Subsidiary has
violated any foreign, federal, state or local law or
regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws")
that, in each case or in the aggregate, might result in a
Material Adverse Effect. None of the property owned or
leased by either Offeror or any Subsidiary is contaminated
with any waste or hazardous substances, nor may either
Offeror or any Subsidiary be deemed an "owner or operator"
of a "facility" or "vessel" that owns, possesses,
transports, generates, discharges or disposes of a
"hazardous substance" as those terms are defined in Section
9601 of the Comprehensive Response Compensation and
Liability Act of 1980, U.S.C. Section 9601 et seq.
(xx) Each of the Company and the Subsidiaries is
in compliance in all material respects with all presently
applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). No "reportable
event" (as defined in ERISA) has occurred with respect to
any "pension plan" (as defined in ERISA) which could have a
material adverse effect on the general affairs, management,
financial position stockholders' equity or results of
operations of the Company and its Subsidiaries for which the
Company or any Subsidiary would have any liability. Neither
the Company nor any Subsidiary has incurred or expects to
incur liability under (A) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan," or
(B) Sections 412 or 4971 of the Internal Revenue Code or
1986, as amended , including the regulations and published
interpretations thereunder (the "Code"), in each case which
could have a Material Adverse Effect. Each "pension plan"
for which the Company or any Subsidiary would have any
liability that is intended to be qualified under Section
501(a) of the Code is so qualified in all material respects
and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification,
except for such losses as would not have a Material Adverse
Effect.
(xxi) The Offerors and the Subsidiaries hold such
permits, licenses, franchises and authorizations of
governmental or regulatory authorities or third parties
("Permits"), including, without limitation, under any
applicable Environmental Laws, as are necessary to own,
lease and operate their respective properties and assets and
to conduct their respective businesses, except where the
failure to have any such Permit would not have a Material
Adverse Effect. The Offerors and the Subsidiaries have
fulfilled and performed all of their respective material
obligations with respect to such Permits, and no event has
occurred that allows, or after notice or lapse of time or
both, would allow revocation or termination thereof or
result in any other material impairment of the rights of the
holder of any such Permit.
<PAGE>
<PAGE>
(xxii) Neither of the Offerors nor any Subsidiary is
an "investment company", a company "controlled" by an
"investment company" or an "investment adviser" within the
meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act").
(xxiii) The Offerors and the Subsidiaries have good
and marketable title, free and clear of all liens, claims,
encumbrances and restrictions (except liens for taxes not
yet due and payable) to all property and assets described in
the Registration Statement as being owned by them, except as
described or referred to in the Prospectus. All leases to
which either Offeror or any Subsidiary is a party are
subsisting, valid and binding and no default of such Offeror
or Subsidiary or, to the best knowledge of the Offerors, any
other person has occurred or is continuing thereunder that
might result in a Material Adverse Effect. Such Offeror or
Subsidiary enjoys peaceful and undisturbed possession under
all such leases to which they are a party as lessee with
such exceptions as do not materially interfere with the use
made thereof by such Offeror or Subsidiary.
(xxiv) The Offerors and the Subsidiaries maintain
reasonably adequate insurance for the conduct of their
respective businesses in accordance with prudent business
practices with reputable third-party insurers.
(xxv) Ernst & Young LLP and BDO Seidman, LLP, the
accounting firms that have certified or reviewed, or shall
certify or review, the financial statements and supporting
schedules filed or to be filed with the Commission as part
of the Registration Statement and the Prospectus, are
independent public accounting firms with respect to the
Trust, the Company and the Subsidiaries as required by the
Act.
(xxvi) The consolidated financial statements of the
Company, together with related notes and schedules of the
Company included in the Registration Statement and the
Prospectus, comply in all material respects with the
requirements of the Act and the Exchange Act, are accurate
and present fairly the financial position, results of
operations and cash flows of the Company at the indicated
dates and for the indicated periods. Such financial
statements of have been prepared in accordance with
generally accepted accounting principles ("GAAP")
consistently applied throughout the periods involved, and
all adjustments necessary for a fair presentation of results
for such periods have been made. The summary and selected
financial and operating data included in the Registration
Statement and the Prospectus present fairly the information
shown therein and have been compiled on a basis consistent
with the audited financial statements included therein.
<PAGE>
<PAGE>
(xxvii) No holder of any security of either Offeror
has any right to require inclusion of any such security in
the Registration Statement. There are no preemptive rights
with respect to the offering being made by the Prospectus.
(xxviii) No labor dispute with the employees of either
Offeror or any Subsidiary exists, or to the best knowledge
of the Offerors, is imminent, that could result in a
Material Adverse Effect.
(xxix) Each of the Offerors and each Subsidiary has
filed or caused to be filed, or has properly filed
extensions for, all foreign, federal, state and local
income, value added and franchise tax returns and has paid
all taxes and assessments shown thereon as due, except for
such taxes and assessments as are disclosed or adequately
reserved against and that are being contested in good faith
by appropriate proceedings, promptly instituted and
diligently conducted. All material tax liabilities are
adequately provided for on the books of such Offeror or
Subsidiary, and there is no material tax deficiency that has
been or might be asserted against any of them that is not so
provided for.
(xxx) The Offerors and the Subsidiaries own or
possess, or can acquire on reasonable terms, the patents,
patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and or
unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade
names (collectively, "Patents and Proprietary Rights")
currently employed by they in connection with the businesses
they now operate except where the failure to so own, possess
or acquire such Patents and Proprietary Rights would not
have a Material Adverse Effect. Neither of the Offerors nor
any Subsidiary has received any notice or is otherwise aware
of any infringement of or conflict with asserted rights of
others with respect to any Patent or Proprietary Rights
that, if the subject of any unfavorable decision, ruling or
finding, singly or in the aggregate, could result in a
Material Adverse Effect.
(xxxi) Each Offeror and each Subsidiary is
conducting and intends to conduct its business so as to
comply in all material respects with applicable federal,
state, local and foreign government Laws, except where the
failure to comply would not have a Material Adverse Effect.
Except as set forth in the Registration Statement and the
Prospectus, neither of the Offerors nor any Subsidiary is
charged with or, to the best knowledge of the Offerors,
under investigation with respect to, any material violation
of any such Laws.
<PAGE>
<PAGE>
(xxxii) Neither Offeror has taken or will take,
directly or indirectly, any action designed to or which has
constituted or that might reasonably be expected to cause or
result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security
of either Offeror to facilitate the sale or resale of the
Securities.
(xxxiii) None of the Offerors, any Subsidiary nor, to
the best knowledge of the Offerors, any employee or agent of
any of them has made any payment of funds of such Offeror or
Subsidiary or received has retained any funds in violation
of any Law, rule or regulation (including, without
limitation, the Foreign Corrupt Practices Act) or of a
character required to be disclosed in the Prospectus.
Neither of the Offerors nor any Subsidiary has, at any time
during the past five years, (A) made any unlawful
contributions to any candidate for any political office, or
failed fully to disclose any contribution in violation of
law, or (B) made any unlawful payment to state, federal or
foreign government officer or officers, or other person
charged with similar public or quasi-public duty.
(xxxiv) Each of the Company and the Subsidiaries
maintains a system of internal accounting controls
sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with
management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP
and to maintain asset accountability, and (iii) access to
assets is permitted only in accordance with management's
general or specific authorization.
(xxxv) The Offerors have not distributed and will
not distribute any prospectus or other offering material in
connection with the offering and sale of the Securities
other than any Preliminary Prospectus or the Prospectus or
other materials permitted by the Act to be distributed by
the Company.
(xxxvi) Other than as contemplated by this Agreement
or described in the Registration Statement, neither Offeror
has incurred any liability for any finder's or broker's fee
or agent's commission in connection with the execution and
delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(xxxvii) The Bank is in good standing with the
Division of Finance of the State of Missouri (the "Division
of Finance"); each of the other Subsidiaries is in good
standing with the Secretary of State of its state of
incorporation; and the activities of the Company and the
Subsidiaries are permitted under applicable federal and
state banking laws and regulations. The Company has all
necessary approvals, including the approvals of the
<PAGE>
<PAGE>
Office of the Comptroller of the Currency (the "OCC"), the
Division of Finance and the FRB, as applicable, to own the
capital stock of the Subsidiaries. Neither the Company nor
any of the Subsidiaries is a party or subject to any
agreement or memorandum with, or directive or order issued
by, the FRB, the Division of Finance, the OCC, the FDIC or
other regulatory authority having jurisdiction over it (the
"Regulators"), which imposes any restrictions or
requirements not generally applicable to entities of the
same type as the Company and the Subsidiaries. Neither the
Company nor any Subsidiary is subject to any directive from
any Regulator to make any material change in the method of
conducting their respective businesses, and no such
directive is pending or threatened by such Regulators.
(xxxviii) The Offerors expect that the Securities
will qualify as "tier 1" capital (as defined in 12 C.F.R.
Part 325 and subject to the limitations set forth therein).
(xxxix) The Bank has properly administered, in all
material respects, all accounts for which it acts as a
fiduciary, including but not limited to accounts for which
it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents and
applicable state and federal law and regulation and common
law. Neither the Bank nor any of its directors, officers or
employees has committed any material breach of trust with
respect to any such fiduciary account, and the accountings
for each such fiduciary account are true and correct in all
material respects and accurately reflect the assets of such
fiduciary account in all material respects.
(xl) The conditions for use of Form S-2, as set
forth in the General Instructions thereto, have been
satisfied.
(xli) The Offerors and the Subsidiaries are in
compliance with all provisions of Section 1 of Florida
Statutes, Section 517.075, An Act Relating to Disclosure of
Doing Business with Cuba.
(b) Any certificate signed by any officer of the Company
or a trustee of the Trust and delivered to you or to counsel for
the Underwriters shall be deemed a representation and warranty
jointly and severally made by the Offerors to each Underwriter as
to the matters covered thereby and shall be deemed incorporated
herein in its entirety and shall be effective as if such
representation and warranty were made herein.
<PAGE>
<PAGE>
7. Indemnification.
(a) The Offerors jointly and severally agree to indemnify
and hold harmless each of the Underwriters and each person, if
any, who controls each of the Underwriters within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act (the
"indemnified parties") from and against any and all losses,
claims, damages, liabilities and judgments caused by, arising out
of, related to or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (as amended or supplemented if the Offerors shall have
furnished any amendments or supplements thereto), including the
information deemed to be part of the Registration Statement at the
time of effectiveness pursuant to Rule 430A, if applicable, or the
Prospectus or any Preliminary Prospectus or caused by any omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; provided, however, that the Offerors shall not be
liable in any such case to the extent that such losses, claims,
damages, liabilities or judgments are caused by an untrue
statement or omission made or omitted in reliance upon, and in
conformity with, information relating to the Underwriters
furnished in writing to the Offerors by or on behalf of the
Underwriters with your consent expressly for use therein.
(b) In case any action shall be brought against any of the
indemnified parties, based upon any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment or
supplement thereto and with respect to which indemnity may be
sought against the Offerors, such indemnified parties shall
promptly notify the Offerors in writing (but the failure so to
notify shall not relieve the Offerors of any liability that they
may otherwise have to such indemnified parties under this
Section 7 (although the Offerors' liability to an indemnified
party may be reduced on a monetary basis to the extent, but only
to the extent, they have been prejudiced by such failure on the
part of such indemnified party)) and the Offerors shall promptly
assume the defense thereof, including the employment of counsel
satisfactory to such indemnified party and payment of all fees and
expenses. The indemnified parties shall each have the right to
employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall
be at the expense of such indemnified parties unless (i) the
employment of such counsel shall have been specifically authorized
by the Offerors, (ii) the Offerors shall have failed to assume
promptly the defense or to employ counsel reasonably satisfactory
to such indemnified party or (iii) the named parties to any such
action (including any impleaded parties) include both the
indemnified parties and the Offerors, and an indemnified party
shall have been advised by counsel that there may be one or more
legal defenses available to one or more of the indemnified parties
that are different from or additional to those available to the
Offerors (in which case the Offerors shall not have the right to
assume the defense of such action on behalf of such indemnified
party, it being understood, however, that the Offerors shall not,
in connection with any one such action or separate but
substantially similar or related actions in the same
<PAGE>
<PAGE>
jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel)
for the indemnified parties, which firm shall be designated in
writing by you, and that all such fees and expenses shall be
reimbursed promptly as they are incurred). The Offerors shall not
be liable for any settlement of any such action effected without
their written consent, which consent shall not be unreasonably
withheld, but if settled with the written consent of the Offerors,
the Offerors agree to indemnify and hold harmless the indemnified
parties from and against any and all loss or liability by reason
of such settlement. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph,
the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 10 business days
after delivery by registered or certified mail to the proper
address for notice to such indemnifying party of the aforesaid
request (whether or not such delivery is accepted) and (ii) such
indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of
any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional and complete release in
writing of such indemnified party from any and all liability on
claims that are the subject matter of such proceeding, which such
settlement shall be in form and substance satisfactory to the
indemnified party. The indemnification provided in this Section 7
will be in addition to any liability which the Offerors may
otherwise have.
(c) The Underwriters agree, severally and not jointly, to
indemnify and hold harmless the Offerors and their directors,
officers and trustees who sign the Registration Statement and any
person controlling the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, to the same extent as
the foregoing indemnity from the Offerors to the Underwriters but
only with reference to information stated in or omitted from the
Registration Statement, the Prospectus or any Preliminary
Prospectus in reliance upon, and in conformity with, information
relating to the Underwriters furnished in writing to the Offerors
by or on behalf of the Underwriters with your consent expressly
for use therein. In case any action shall be brought against the
Offerors or any other such person based on the Registration
Statement, the Prospectus or any Preliminary Prospectus and in
respect of which indemnity may be sought against the Underwriters,
the Underwriters shall have the rights and duties given to the
Offerors by Section 7(b) hereof (except that if the Offerors shall
have assumed the defense thereof, such Underwriter shall not be
required to do so, but may employ separate counsel therein and
participate in the defense thereof but the fees and
<PAGE>
<PAGE>
expenses of such counsel shall be at the expense of such
Underwriter), and the Offerors and such other persons shall have
the rights and duties given to the "indemnified parties" by
Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7
is for any reason unavailable to an indemnified party or
insufficient to hold such indemnified party harmless in respect of
any losses, claims, damages, liabilities or judgments referred to
therein, then each indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages, liabilities and judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the
Offerors on the one hand and the Underwriters on the other from
the offering of the Securities or (ii) if the allocation provided
in clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Offerors on the one hand and the Underwriters on the
other in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims,
damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the
Offerors on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds
from the offering and sale of the Securities (before deducting
expenses) received by the Offerors on the one hand, and the total
underwriting discounts and commissions received by the
Underwriters on the other, bears to the total price to the public
of the Securities, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Offerors
and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or the omission or the alleged omission to state a
material fact relates to information supplied by the Offerors or
the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission.
The Offerors and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7(d)
were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to
in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such
Underwriter has otherwise
<PAGE>
<PAGE>
paid or been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligation in this
Section 7(d) to contribute are several in proportion to the
respective amount of Securities purchased hereunder by each
Underwriter and not joint.
8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm
Securities on the Closing Date and the Option Securities on any Option
Closing Date are subject to the fulfillment of each of the following
conditions on or prior to the Closing Date and each Option Closing Date:
(a) All the representations and warranties of the Offerors
contained in this Agreement and in any certificate delivered
hereunder shall be true and correct on the Closing Date and each
Option Closing Date with the same force and effect as if made on
and as of the Closing Date or Option Closing Date, as applicable,
except for any such representations and warranties made as of a
specified date, which shall be true and correct as of such date.
The Offerors shall not have failed at or prior to the Closing Date
or Option Closing Date, as applicable, to perform or comply in all
respects with any of the agreements herein contained and required
to be performed or complied with by them at or prior to the
Closing Date or Option Closing Date, as applicable.
(b) If the Registration Statement is not effective at the
time of the execution and delivery of this Agreement, the
Registration Statement shall have become effective (or, if a post-
effective amendment is required to be filed pursuant to Rule 430A
under the Act, such post-effective amendment shall have become
effective) not later than 4:30 P.M., Chicago time, on the date
immediately following the date of this Agreement or such later
time as you may approve in writing or, if the Registration
Statement has been declared effective prior to the execution and
delivery hereof in reliance on Rule 430A, the Prospectus shall
have been filed as required hereby, if necessary; and at the
Closing Date and each applicable Option Closing Date, no stop
order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall
have been commenced or shall be pending before or, to the best
knowledge of the Underwriters and the Offerors, threatened by the
Commission. Every request for additional information on the part
of the Commission shall have been complied with to the
Underwriters' satisfaction. No stop order suspending the sale of
the Securities in any jurisdiction referred to in Section 5(g)
shall have been issued, and no proceeding for that purpose shall
have been commenced or shall be pending or threatened.
(c) The Securities shall have been qualified for sale
under the blue sky laws of such states as shall have been
specified by you.
<PAGE>
<PAGE>
(d) The legality and sufficiency of the authorization,
issuance and sale or transfer and sale of the Securities
hereunder, the execution and delivery of this Agreement and all
corporate proceedings and other legal matters incident thereto,
and the form of the Registration Statement and the Prospectus
(except financial statements) shall have been approved by counsel
for the Underwriters exercising reasonable judgment, and no
Underwriter shall have advised the Company that the Registration
Statement or the Prospectus, or any amendment or supplement
thereto, contains an untrue statement of material fact, or omits
to state a fact that in your opinion is material and is required
to be stated therein or is necessary to make the statements
therein not misleading.
(e) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred any material change, or
any material development involving a prospective change, in or
affecting particularly the business or properties of the Offerors
or the Subsidiaries, whether or not arising in the ordinary course
of business, that, in your judgment, makes it impractical or
inadvisable to proceed with the public offering or purchase of the
Securities as contemplated hereby.
(f) You shall have received an opinion (satisfactory to
you and your counsel) dated the Closing Date or the Option Closing
Date, as the case may be, of Thompson Coburn LLP, counsel for the
Offerors, to the effect that:
(i) The Company has been duly organized and is a
validly existing corporation in good standing under the laws
of Missouri. Each of the Subsidiaries been duly organized
and is facility existing as a bank or other entity in good
standing under the laws under which it was organized. Each
of the Company and the Subsidiaries has all necessary power
and authority, corporate or otherwise, to own, lease and
operate their respective properties and assets and to
conduct their respective businesses as described in the
Registration Statement and the Prospectus, and each is duly
qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which its ownership or
lease or real property or the conduct of its business makes
such qualification necessary and in which the failure to so
qualify could have a Material Adverse Effect.
(ii) Each Offeror has all necessary power and
authority, corporate, trust or otherwise, to enter into and
perform this Agreement, the Indenture, the Trust Agreement
and the Guarantee Agreement, as applicable, and to effect
the transactions contemplated hereby or thereby. The
performance of the Offerors' respective obligations
hereunder and under the Indenture, the Trust Agreement and
the Guarantee Agreement, as applicable, have been duly
authorized by all necessary action. This Agreement, the
Indenture, the Trust Agreement and the Guarantee
<PAGE>
<PAGE>
Agreement have been duly executed and delivered by and on
behalf of the Trust and/or the Company, as applicable, and,
assuming due authorization, execution and delivery of such
agreements by the other parties thereto, constitute legal,
valid and binding agreements of the Trust and/or the
Company, as applicable, enforceable in accordance with their
respective terms, except as enforceability of the same may
be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws of general
applicability relating to or affecting creditors' rights
generally and by general equity principles. No approval,
consent, order, authorization, designation, declaration or
filing by or with any regulatory, administrative or other
governmental body or, to the best of such counsel's
knowledge, after due inquiry, third party, is necessary in
connection with the execution and delivery of this
Agreement, the Indenture, the Trust Agreement or the
Guarantee Agreement and the consummation of the transactions
contemplated herein or therein or as contemplated by the
Prospectus (other than as may be required by the Trust
Indenture Act, the NASD or as required by state securities
or blue sky laws, as to which such counsel need express no
opinion) except such as have been obtained or made, with
counsel specifying the same.
(iii) The authorized, issued and outstanding
capital stock of the Company is as set forth in the
Prospectus under "Capitalization." All of the shares of
outstanding capital stock of the Company have been duly
authorized and validly issued, are fully paid and non-
assessable and were not issued in violation of any
preemptive rights or, to the best of such counsel's
knowledge, other rights to subscribe for or purchase
securities. Except as set forth in the Registration
Statement and the Prospectus, to the best of such counsel's
knowledge, no options, warrants or other rights to convert
any obligation into, or exchange any securities for, shares
of capital stock or ownership interests in the Company are
outstanding.
(iv) To the best of such counsel's knowledge,
after due inquiry, neither the filing of the Registration
Statement or any amendment thereto nor the offer and sale of
the Securities to the Underwriters as contemplated by this
Agreement gives rise to any rights, nor do any rights exist,
for or relating to the registration under the Act of any
securities of either Offeror.
(v) The Registration Statement has become
effective under the Act, the Prospectus has been filed as
required by this Agreement, if necessary, and to the best of
such counsel's knowledge: (a) after telephonic inquiry of
the Commission, no stop order suspending the effectiveness
of the Registration Statement has been issued, and (b) no
proceedings for that purpose are pending or have been
initiated or threatened by the Commission. The Registration
Statement (including the information deemed to be part of
the Registration Statement at the time of
<PAGE>
<PAGE>
effectiveness pursuant to Rule 430A, if applicable), the
Prospectus and each amendment or supplement thereto (except
for the financial statements and other statistical or
financial data included therein, as to which such counsel
need express no opinion) comply as to form in all material
respects with the requirements of the Act and the Rules and
Regulations.
(vi) The descriptions in the Registration
Statement and Prospectus of contracts, instruments and other
documents filed as exhibits to the Registration Statement,
and the description of legal and governmental proceedings,
are accurate in all material respects, and such counsel does
not know of any Proceedings required to be described in the
Prospectus that are not described, or of any contracts or
documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that were not
described and filed as required.
(vii) Neither the filing of the Registration
Statement or any amendment nor the execution and performance
of this Agreement, the Indenture, the Trust Agreement or the
Guarantee Agreement, nor the consummation of the
transactions contemplated herein or therein, will contravene
any of the provisions of, or result in a default under (nor,
to the best of such counsel's knowledge, has any event
occurred which with notice or lapse of time, or both, would
constitute a breach or default under), any Obligations and
Instruments to which the Trust or the Company is a party or
by which their property is bound (except for such
contravention or default which would not have a Material
Adverse Effect), or violate any of the provisions of the
charter or by-laws of the Company or the Certificate of
Trust of the Trust, or violate any Laws known to such
counsel.
(viii) Neither the Trust, the Company nor any
Subsidiary is an "investment company" or a company
controlled by an "investment company" within the meaning of
the Investment Company Act.
(ix) The statements in the Prospectus under the
caption "Description of Preferred Securities," "Description
of Junior Subordinated Debentures," "Description of
Guarantee" and "Relationship among the Preferred Securities,
the Junior Subordinated Debentures and the Guarantee,"
insofar as such statements constitute matters of law
applicable to the Offerors or summaries of documents, fairly
present the information required to be included therein in
all material respects.
(x) All of the issued and outstanding Common
Securities of the Trust are owned by the Company, free and
clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equitable right.
<PAGE>
<PAGE>
(xi) Each of the Indenture and the Trust Agreement
has been duly qualified under the Trust Indenture Act.
(xii) The Subordinated Debentures are subordinate
and junior in right of payment to all [SENIOR INDEBTEDNESS]
(as defined in the Indenture) of the Company.
(xiii) No Tax Event, Capital Treatment Event or
Investment Company Event (each as defined in the Indenture)
has occurred.
(xiv) The statements set forth in the Prospectus
under the caption "Certain Federal Income Tax Consequences"
constitute a fair and accurate summary of the matters
addressed therein, based upon current law and the
assumptions stated or referred to therein.
(xv) To the best of such counsel's knowledge and
information after due inquiry, the Trust is not required to
be authorized to do business in any other jurisdiction, and
the Trust is not a party to or otherwise bound by any
agreement other than those described in the Prospectus.
In addition, such counsel shall state that they have
participated in conferences with officers and other
representatives of the Offerors, representatives of the
independent public accountants of the Company and representatives
of the Underwriters and their counsel, at which the contents of
the Registration Statement and the Prospectus and related matters
were discussed and, although such counsel is not passing upon, and
does not assume any responsibility for, the accuracy, completeness
or fairness of the statements contained in the Registration
Statement and the Prospectus (except as set forth above) and has
not made any independent check or verification thereof, on the
basis of the foregoing (relying as to materiality upon the
statements of officers and other representatives of the Company),
no facts have come to such counsel's attention that lead such
counsel to believe that either the Registration Statement or any
amendment (including any post-effective amendment) thereto at the
time such Registration Statement or amendment became effective,
and as of the Closing Date and any applicable Option Closing Date,
contained or contains an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or that
the Prospectus or any amendment or supplement thereto as of their
respective dates and as of the Closing Date and any applicable
Option Closing Date contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, except that such counsel need express no opinion
with respect to the financial statements, schedules and other
financial data included in the Registration Statement or the
Prospectus.
<PAGE>
<PAGE>
(g) You shall have received an opinion (satisfactory to
you and your counsel) dated the Closing Date or the Option Closing
Date, as the case may be, of __________, counsel for the Property
Trustee under the Trust Agreement, the Indenture Trustee under the
Indenture and the Guarantee Trustee under the Guarantee Agreement,
to the effect that:
(i) Bankers Trust Company is duly incorporated
and is validly existing in good standing as a banking
corporation under the laws of the State of New York. Bankers
Trust (Delaware) is duly incorporated and is validly
existing in good standing as a banking corporation under the
laws of the State of Delaware.
(ii) Each of Bankers Trust Company and Bankers
Trust (Delaware) has the power and authority to execute,
deliver and perform their respective obligations under the
Indenture, the Trust Agreement and the Guarantee Agreement,
as the case may be.
(iii) Each of the Indenture, the Trust Agreement
and the Guarantee Agreement has been duly authorized,
executed and delivered by Bankers Trust Company and/or
Bankers Trust (Delaware), as the case may be, and
constitutes a legal, valid and binding obligation of Bankers
Trust Company and/or Bankers Trust (Delaware), as the case
may be, enforceable against them in accordance with their
respective terms.
(iv) The execution, delivery and performance by
Bankers Trust Company and/or Bankers Trust (Delaware) of the
Indenture, Trust Agreement and the Guarantee Agreement, as
the case may be, do not conflict with or constitute a breach
of the charter or by-laws of Bankers Trust Company or
Bankers Trust (Delaware), as the case may be.
(v) No consent, approval or authorization of, or
registration with or notice to, any governmental authority
or agency of the States of New York or Delaware or the
United States governing the banking or trust powers of
Bankers Trust Company or Bankers Trust (Delaware) is
required for the execution, delivery or performance by
Bankers Trust Company and/or Bankers Trust (Delaware) of the
Indenture, the Trust Agreement or the Guarantee Agreement,
as the case may be.
(h) You shall have received an opinion (satisfactory to
you and your counsel) dated the Closing Date or the Option Closing
Date, as the case may be, of _________, special Delaware counsel
for the Offerors, to the effect that:
(i) The Trust has been duly created and is
validly existing in good standing as a business trust under
the Delaware Act, and all filings
<PAGE>
<PAGE>
required as of the date hereof under the Delaware Act with
respect to the creation and valid existence of the Trust as
a business trust have been made.
(ii) Under the Trust Agreement and the Delaware
Act, the Trust has the trust power and authority to own
property and to conduct its business, all as described in
the Prospectus.
(iii) The Trust Agreement constitutes a valid and
binding obligation of the Company and each of the Property
Trustee and the Administrators, and is enforceable against
the Company and each of the Property Trustee and the
Administrators in accordance with its terms.
(iv) Under the Trust Agreement and the Delaware
Act, the Trust has the trust power and authority (i) to
execute and deliver, and to perform its obligations under,
this Agreement, and (ii) to issue, and to perform its
obligations under, the Securities and the Common Securities.
(v) Under the Trust Agreement and the Delaware
Act, the execution and delivery by the trust of this
Agreement, and the performance by it of its obligations
hereunder, have been duly authorized by all necessary trust
action on the part of the Trust.
(vi) The Securities and the Common Securities have
been duly authorized by the Trust Agreement and are duly and
validly issued and fully paid and non-assessable undivided
beneficial interests in the assets of the Trust. The
respective holders of the Securities and the Common
Securities, as beneficial owners of the Trust, will be
entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of
Delaware.
(vii) Under the Trust Agreement and the Delaware
Act, the issuance of the Securities and the Common
Securities is not subject to preemptive or similar rights.
(viii) The issuance and sale by the Trust of the
Securities and the Common Securities, the purchase by the
Trust of the Subordinated Debentures, the execution,
delivery and performance by the Trust of this Agreement, the
consummation by the Trust of the transactions contemplated
by this Agreement and compliance by the Trust with its
obligations under this Agreement do not violate (A) any of
the provisions of the Certificate of Trust or the Trust
Agreement, or (B) any applicable Delaware law or
administrative regulation.
<PAGE>
<PAGE>
(i) You shall have received an opinion of Barack
Ferrazzano Kirschbaum Perlman & Nagelberg, counsel for the
Underwriters, dated the Closing Date or the Option Closing Date,
as the case may be, in form and substance reasonably satisfactory
to you.
(j) You shall have received, in connection with the
execution of this Agreement and on the Closing Date and each
Option Closing Date, a "cold comfort" letter from Ernst & Young
LLP and BDO Seidman, LLP, dated as of each such date, in form and
substance satisfactory to you, with respect to the financial
statements and certain financial information contained in the
Registration Statement and the Prospectus.
(k) You shall have received from the Company a
certificate, signed by the Chief Executive Officer and Chief
Financial Officer of the Company, addressed to the Underwriters
and dated the Closing Date or Option Closing Date, as applicable,
to the effect that:
(i) such officers do not know of any Proceedings
instituted, threatened or contemplated against the Company
of a character required to be disclosed in the Prospectus
that are not so disclosed, and such officers do not know of
any material contract required to be filed as an exhibit to
the Registration Statement which is not so filed;
(ii) such officers have carefully examined the
Registration Statement and the Prospectus and all amendments
or supplements thereto and, in the opinion of such officers,
such Registration Statement or such amendment as of its
effective date and as of the Closing Date, and the
Prospectus or such supplement as of its date and as of the
Closing Date, did not contain an untrue statement of
material fact or omit to state a material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading and, in the opinion of
such officers, since the effective date of the Registration
Statement, no event has occurred or information become known
that should have been set forth in an amendment to the
Registration Statement or a supplement to the Prospectus
which has not been so set forth in such amendment or
supplement;
(iii) the representations and warranties of the
Company set forth in Section 6(a) of this Agreement are true
and correct as of the date of this Agreement and as of the
Closing Date or the Option Closing Date, as the case may be
(except for any such representations and warranties made as
of a specified date, which shall be true and correct as of
such date), and the Company has complied with all the
agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to such Closing Date;
and
<PAGE>
<PAGE>
(iv) the Commission has not issued an order
preventing or suspending the use of the Prospectus or any
preliminary prospectus filed as a part of the Registration
Statement or any amendment thereto; no stop order suspending
the effectiveness of the Registration Statement has been
issued, and, to the best knowledge of such officers, no
proceedings for that purpose have been instituted or are
pending or contemplated under the Act.
The delivery of the certificate provided for in this
subparagraph shall be and constitute a representation and warranty
of the Company as to the facts required in the immediately
foregoing clauses (iii) and (iv) of this subparagraph to be set
forth in said certificate.
(l) You shall have received from the Trust a certificate,
signed by the Administrators, addressed to the Underwriters and
dated the Closing Date or Option Closing Date, as applicable, to
the effect that:
(i) such persons have carefully examined the
Registration Statement and the Prospectus and all amendments
or supplements thereto and, in the opinion of such persons,
such Registration Statement or such amendment as of its
effective date and as of the Closing Date, and the
Prospectus or such supplement as of its date and as of the
Closing Date, did not contain an untrue statement of
material fact or omit to state a material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading and, in the opinion of
such persons, since the effective date of the Registration
Statement, no event has occurred or information become known
that should have been set forth in an amendment to the
Registration Statement or a supplement to the Prospectus
which has not been so set forth in such amendment or
supplement;
(ii) the representations and warranties of the
Trust set forth in Section 6(a) of this Agreement are true
and correct as of the date of this Agreement and as of the
Closing Date or the Option Closing Date, as the case may be
(except for any such representations and warranties made as
of a specified date, which shall be true and correct as of
such date), and the Trust has complied with all the
agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to such Closing Date;
and
(iii) the Commission has not issued an order
preventing or suspending the use of the Prospectus or any
preliminary prospectus filed as a part of the Registration
Statement or any amendment thereto; no stop order suspending
the effectiveness of the Registration Statement has been
issued, and, to the best knowledge of the respective
signers, no
<PAGE>
<PAGE>
proceedings for that purpose have been instituted or are
pending or contemplated under the Act.
The delivery of the certificate provided for in this
subparagraph shall be and constitute a representation and warranty
of the Trust as to the facts required in the immediately foregoing
clauses (ii) and (iii) of this subparagraph to be set forth in
said certificate.
(m) You and your counsel shall have received on or before
the Closing Date or the Option Closing Date, as the case may be,
such further documents, opinions, certificates and schedules or
instruments relating to the business, corporate, legal and
financial affairs of the Offerors as you and they shall have
reasonably requested from the Offerors.
9. Termination and Defaults. This Agreement may be terminated
at any time prior to the Closing Date and any exercise of the option to
purchase Additional Securities may be cancelled at any time prior to any
Option Closing Date by the Underwriters by written notice to the
Offerors if any of the following has occurred: (i) since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, any material adverse change or development involving a
prospective material adverse change in the condition, financial or
otherwise, of the Company, the Subsidiaries and the Trust, taken as a
whole, or the earnings, affairs, management, or business of the Company,
the Subsidiaries and the Trust, taken as a whole, whether or not arising
in the ordinary course of business, that would, in your sole judgment,
make it impracticable to market the Securities on the terms and in the
manner contemplated in the Prospectus, (ii) any outbreak or escalation
of hostilities or other national or international calamity or crisis or
change in economic conditions or in the financial markets of the United
States that, in your sole judgment, is material and adverse and would,
in your sole judgment, make it impracticable to market the Securities on
the terms and in the manner contemplated in the Prospectus, (iii) the
suspension or material limitation of trading in securities on AMEX,
(iv) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or
other governmental authority that in your opinion materially and
adversely affects, or will materially and adversely affect, the business
or operations of the Company, the Subsidiaries and the Trust, taken as a
whole, (v) the declaration of a banking moratorium by either federal or
Missouri state authorities, (vi) the taking of any action by any
federal, state or local government or agency in respect of its monetary
or fiscal affairs that in your opinion has a material adverse effect on
the financial markets in the United States or (vii) any change in
financial markets or in political, economic or financial conditions
which, in your sole opinion, either renders it impracticable or
inadvisable to proceed with the offering and sale of the Securities on
the terms set forth in the Prospectus or materially adversely affects
the market for the Securities.
If on the Closing Date or on any Option Closing Date, as the case
may be, any of the Underwriters shall fail or refuse to purchase the
Firm Securities or Additional
<PAGE>
<PAGE>
Securities, as the case may be, which it has agreed to purchase
hereunder on such date, and the aggregate number of Firm Securities or
Additional Securities, as the case may be, that such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase
does not exceed, in the aggregate, 10% of the total number of Securities
that all Underwriters are obligated to purchase on such date, each non-
defaulting Underwriter shall be obligated, in the proportion which the
number of Firm Securities set forth opposite its name in Schedule I
hereto bears to the total number of Firm Securities or Additional
Securities, as the case may be, that all the non-defaulting Underwriters
have agreed to purchase, or in such other proportion as you may specify,
to purchase the Firm Securities or Additional Securities, as the case
may be, that such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date. If, on the Closing Date or
on the Option Closing Date, as the case may be, any of the Underwriters
shall fail or refuse to purchase the Firm Securities or Additional
Securities, as the case may be, in an amount that exceeds, in the
aggregate, 10% of the total number of the Securities, and arrangements
satisfactory to you and the Offerors for the purchase of such Securities
are not made within 48 hours after such default, this Agreement shall
terminate without liability on the part of the non-defaulting
Underwriters and the Offerors, except as otherwise provided in this
Section 9. In any such case that does not result in termination of this
Agreement, either you or the Offerors may postpone the Closing Date or
the Option Closing Date, as the case may be, for not longer than
seven (7) days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph
shall not relieve a defaulting Underwriter from liability in respect of
any default of any such Underwriter under this Agreement.
The indemnity and contribution provisions and other agreements,
representations and warranties of the Offerors set forth in or made
pursuant to this Agreement shall remain operative and in full force and
effect, and will survive delivery of and payment for the Securities,
regardless of (i) any investigation, or statement as to the results
thereof, made by or on behalf of any of the Underwriters or by or on
behalf of the Offerors, (ii) acceptance of the Securities and payment
therefor hereunder or (iii) termination of this Agreement.
Notwithstanding any termination of this Agreement, the Company shall be
liable for and shall pay all expenses it has agreed to pay pursuant to
Section 5(k).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of, and shall be binding upon, the Offerors, the
Underwriters, any indemnified person referred to herein and their
respective successors and assigns, all as and to the extent provided in
this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The terms "successors and
assigns" shall not include a purchaser of any of the Securities from any
of the several Underwriters merely because of such purchase.
10. Effectiveness of Registration Statement. You and the
Offerors will use your and their best efforts to cause the Registration
Statement to become effective, if it has not yet become effective, and
to prevent the issuance of any stop order suspending the
<PAGE>
<PAGE>
effectiveness of the Registration Statement and, if such stop order be
issued, to obtain as soon as possible the lifting thereof.
11. Miscellaneous. All communications hereunder will be in
writing and, if sent to the Underwriters will be mailed, delivered or
telegraphed and confirmed to you c/o EVEREN Securities, Inc., 77 West
Wacker Drive, Chicago, Illinois 60601-1694, Attention: Syndicate
Department, with a copy to Barack Ferrazzano Kirschbaum Perlman &
Nagelberg, 333 West Wacker Drive, Suite 2700, Chicago, Illinois 60606,
Attention: Edwin S. del Hierro; and if sent to the Company or the Trust
will be mailed, delivered or telegraphed and confirmed to the Company or
the Trust at the Company's corporate headquarters with a copy to
Thompson Coburn LLP, One Mercantile Center, Suite 3400, St. Louis,
Missouri 63101, Attention: Thomas A. Litz.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW THEREOF.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
<PAGE>
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Trust and the several Underwriters,
including you.
Very truly yours,
ALLEGIANT BANCORP, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
ALLEGIANT CAPITAL TRUST I
By:______________________________________
Name:____________________________________
Title:___________________________________
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
EVEREN Securities, Inc.
Acting as representative of the
several Underwriters named in Schedule I.
By: EVEREN Securities, Inc.
By:_____________________________
Name:___________________________
Title:__________________________
<PAGE>
===========================================================
JUNIOR SUBORDINATED INDENTURE
Between
ALLEGIANT BANCORP, INC.
and
BANKERS TRUST COMPANY
(as Trustee)
dated as of
__________, 1999
===========================================================
<PAGE>
<PAGE>
ALLEGIANT CAPITAL TRUST I
Certain Sections of this Junior Subordinated Indenture relating
to Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Junior Subordinated
Act Section Indenture Section
----------- -----------------
Section 310 (a)(1) 6.9
(a)(2) 6.9
(a)(3) Not Applicable
(a)(4) Not Applicable
(a)(5) 6.9
(b) 6.8, 6.10
Section 311 (a) 6.13
(b) 6.13
(b)(2) 7.3(a)
Section 312 (a) 7.1, 7.2(a)
(b) 7.2(b)
(c) 7.2(c)
Section 313 (a) 7.3(a)
(a)(4) 7.3(a)
(b) 7.3(b)
(c) 7.3(a)
(d) 7.3(c)
Section 314 (a) 7.4
(b) 7.4
(c)(1) 1.2
(c)(2) 1.2
(c)(3) Not Applicable
(e) 1.2
Section 315 (a) 6.1(a)
(b) 6.2, 7.3
(c) 6.1(b)
(d) 6.1(c)
(e) 5.14
Section 316 (a) 5.12
(a)(1)(A) 5.12
(a)(1)(B) 5.13
(a)(2) Not Applicable
(b) 5.8
(c) 1.4(f)
Section 317 (a)(1) 5.3
(a)(2) 5.4
(b) 10.3
Section 318 (a) 1.7
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Indenture.
<PAGE>
<PAGE>
<TABLE>
TABLE OF CONTENTS
<C> <S> <C>
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 1
Section 1.1. Definitions 1
Section 1.2. Compliance Certificate and Opinions 10
Section 1.3. Forms of Documents Delivered to Trustee 10
Section 1.4. Acts of Holders 11
Section 1.5. Notices, Etc. to Trustee and Company 13
Section 1.6. Notice to Holders 13
Section 1.7. Conflict with Trust Indenture Act 13
Section 1.8. Effect of Headings and Table of Contents 13
Section 1.9. Successors and Assigns 13
Section 1.10. Separability Clause 14
Section 1.11. Benefits of Indenture 14
Section 1.12. Governing Law 14
Section 1.13. Non-Business Days 14
ARTICLE II SECURITY FORMS 15
Section 2.1. Forms Generally 15
Section 2.2. Form of Face of Security 15
Section 2.3. Form of Reverse of Security 18
Section 2.4. Additional Provisions Required in Global Security 21
Section 2.5. Form of Trustee's Certificate of Authentication 21
ARTICLE III THE SECURITIES 21
Section 3.1. Title and Terms 21
Section 3.2. Denominations 22
Section 3.3. Execution, Authentication, Delivery and Dating 22
Section 3.4. Temporary Securities 23
Section 3.5. Global Securities 24
Section 3.6. Registration, Transfer and Exchange Generally; Certain Transfers
and Exchanges; Securities Act Legends 25
Section 3.7. Mutilated, Lost and Stolen Securities 26
Section 3.8. Payment of Interest and Additional Interest; Interest Rights
Preserved 26
Section 3.9. Persons Deemed Owners 27
Section 3.10. Cancellation 28
Section 3.11. Computation of Interest 28
Section 3.12. Deferrals of Interest Payment Dates 28
Section 3.13. Right of Set-Off 29
Section 3.14. Agreed Tax Treatment 29
Section 3.15. CUSIP Numbers 30
Section 3.16. Shortening of Stated Maturity 30
ARTICLE IV SATISFACTION AND DISCHARGE 30
Section 4.1. Satisfaction and Discharge of Indenture 30
Section 4.2. Application of Trust Money 31
- i -
<PAGE>
<PAGE>
ARTICLE V REMEDIES 31
Section 5.1. Events of Default 31
Section 5.2. Acceleration of Maturity; Rescission and Annulment 32
Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee 33
Section 5.4. Trustee May File Proofs of Claim 33
Section 5.5. Trustee May Enforce Claim Without Possession of Securities 34
Section 5.6. Application of Money Collected 34
Section 5.7. Limitation on Suits 35
Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and
Interest; Direct Action by Holders of Preferred Securities 35
Section 5.9. Restoration of Rights and Remedies 36
Section 5.10. Rights and Remedies Cumulative 36
Section 5.11. Delay or Omission Not Waiver 36
Section 5.12. Control by Holders 36
Section 5.13. Waiver of Past Defaults 37
Section 5.14. Undertaking for Costs 37
Section 5.15. Waiver of Usury, Stay or Extension Laws 37
ARTICLE VI THE TRUSTEE 38
Section 6.1. Certain Duties and Responsibilities 38
Section 6.2. Notice of Defaults 38
Section 6.3. Certain Rights of Trustee 39
Section 6.4. Not Responsible for Recitals or Issuance of Securities 40
Section 6.5. May Hold Securities 40
Section 6.6. Money Held in Trust 40
Section 6.7. Compensation and Reimbursement 40
Section 6.8. Disqualification; Conflicting Interests 41
Section 6.9. Corporate Trustee Required; Eligibility 41
Section 6.10. Resignation and Removal; Appointment of Successor 42
Section 6.11. Acceptance of Appointment by Successor 43
Section 6.12. Merger, Conversion, Consolidation or Succession to Business 43
Section 6.13. Preferential Collection of Claims Against Company 43
Section 6.14. Appointment of Authenticating Agent 44
ARTICLE VII HOLDERS LISTS AND REPORTS BY TRUSTEE, PAYING AGENT AND COMPANY 45
Section 7.1. Company to Furnish Trustee Names and Addresses of Holders 45
Section 7.2. Preservation of Information, Communications to Holders 45
Section 7.3. Reports by Trustee and Paying Agents 45
Section 7.4. Reports by Company 46
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE 46
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms 46
Section 8.2. Successor Company Substituted 47
ARTICLE IX SUPPLEMENTAL INDENTURES 48
Section 9.1. Supplemental Indentures Without Consent of Holders 48
Section 9.2. Supplemental Indentures with Consent of Holders 49
- ii -
<PAGE>
<PAGE>
Section 9.3. Execution of Supplemental Indentures 49
Section 9.4. Effect of Supplemental Indentures 50
Section 9.5. Conformity with Trust Indenture Act 50
Section 9.6. Reference in Securities to Supplemental Indentures 50
ARTICLE X COVENANTS 50
Section 10.1. Payment of Principal, Premium and Interest 50
Section 10.2. Maintenance of Office or Agency 50
Section 10.3. Money for Security Payments to be Held in Trust 51
Section 10.4. Statement as to Compliance 52
Section 10.5. Waiver of Certain Covenants 52
Section 10.6. Additional Sums 52
Section 10.7. Additional Covenants 53
Section 10.8. Federal Tax Reports 54
ARTICLE XI REDEMPTION OF SECURITIES 54
Section 11.1. Applicability of this Article 54
Section 11.2. Election to Redeem; Notice to Trustee 54
Section 11.3. Selection of Securities to be Redeemed 54
Section 11.4. Notice of Redemption 55
Section 11.5. Deposit of Redemption Price 55
Section 11.6. Payment of Securities Called for Redemption 56
Section 11.7. Right of Redemption of Securities Initially Issued to the
Issuer Trust 56
ARTICLE XII SINKING FUNDS 56
ARTICLE XIII SUBORDINATION OF SECURITIES 57
Section 13.1. Securities Subordinate to Senior Indebtedness 57
Section 13.2. No Payment When Senior Indebtedness in Default; Payment Over of
Proceeds Upon Dissolution, Etc. 57
Section 13.3. Payment Permitted if No Default 58
Section 13.4. Subrogation to Rights of Holders of Senior Indebtedness 58
Section 13.5. Provisions Solely to Define Relative Rights 59
Section 13.6. Trustee to Effectuate Subordination 59
Section 13.7. No Waiver of Subordination Provisions 59
Section 13.8. Notice to Trustee 60
Section 13.9. Reliance on Judicial Order or Certificate of Liquidating Agent 60
Section 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness 61
Section 13.11. Rights of Trustee as Holder of Senior Indebtedness; Preservation
of Trustee's Rights 61
Section 13.12. Article Applicable to Paying Agents 61
Section 13.13. Certain Conversions or Exchanges Deemed Payment 61
</TABLE>
- iii -
<PAGE>
<PAGE>
JUNIOR SUBORDINATED INDENTURE
______________________
THIS JUNIOR SUBORDINATED INDENTURE, dated as of __________, 1999
between ALLEGIANT BANCORP, INC., a Missouri corporation (the "Company"),
having its principal office at 2122 Kratky Road, St. Louis, Missouri
63114 and BANKERS TRUST COMPANY, as Trustee, having its principal office
at Four Albany Street, 4th Floor, New York, New York 10006 (the
"Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance of its unsecured
junior subordinated deferrable interest debentures due ____________,
2029 (the "Securities") of substantially the tenor hereinafter provided,
including Securities issued to evidence loans made to the Company from
the proceeds from the issuance from time to time by Allegiant Capital
Trust I, a Delaware business trust (the "Issuer Trust"), of undivided
preferred beneficial interests in the assets of such Issuer Trust (the
"Preferred Securities") and common undivided interests in the assets of
such Issuer Trust (the "Common Securities" and, collectively with the
Preferred Securities, the "Trust Securities"), and to provide the terms
and conditions upon which the Securities are to be authenticated, issued
and delivered; and
WHEREAS, all things necessary to make this Indenture a valid
agreement of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders (as such term is defined in Section 1.1
hereof) thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, and intending to
be legally bound hereby, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.1. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) the words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation";
<PAGE>
<PAGE>
(d) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles as in effect at the time of computation;
(e) whenever the context may require, any gender shall be
deemed to include the other;
(f) unless the context otherwise requires, any reference to
an "Article" or a "Section" refers to an Article or a Section, as the
case may be, of this Indenture; and
(g) the words "hereby", "herein", "hereof" and "hereunder"
and other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision.
"25% Capital Limitation" means the limitation imposed by the
Federal Reserve that the proceeds of certain qualifying securities
similar to the Trust Securities will qualify as Tier 1 capital of the
Company up to an amount not to exceed, when taken together with all
cumulative preferred stock of the Company, if any, 25% of the Company's
Tier 1 capital, or any subsequent limitation adopted by the Federal
Reserve.
"Act" when used with respect to any Holder has the meaning
specified in Section 1.4.
"Additional Interest" means the interest, if any, that shall
accrue on any interest on the Securities the payment of which has not
been made on the applicable Interest Payment Date and which shall accrue
at the rate per annum specified or determined as specified in such
Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject from
time to time as a result of a Tax Event.
"Administrator" means, in respect of the Issuer Trust, each
Person appointed in accordance with the Trust Agreement, solely in such
Person's capacity as Administrator of the Issuer Trust and not in such
Person's individual capacity, or any successor Administrator appointed
as therein provided.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent Member" means any member of, or participant in, the
Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein,
the rules and procedures of the Depositary for such Global Security, in
each case to the extent applicable to such transaction and as in effect
from time to time.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 6.14 to act on behalf of the Trustee to
authenticate Securities.
"Board of Directors" means the board of directors of the
Company or the executive committee of the board of directors of the
Company (or any other committee of the board of directors of the Company
- 2 -
<PAGE>
<PAGE>
performing similar functions) or, for purposes of this Indenture, a
committee designated by the board of directors of the Company (or such
committee), comprised of two or more members of the board of directors
of the Company or officers of the Company, or both.
"Board Resolution" means a copy of a resolution certified by
the Secretary or any Assistant Secretary of the Company to have been
duly adopted by the Board of Directors, or such committee of the Board
of Directors or officers of the Company to which authority to act on
behalf of the Board of Directors has been delegated, and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day other than (a) a Saturday or
Sunday, (b) a day on which banking institutions in the State of Missouri
or the City of New York are authorized or required by law or executive
order to remain closed, or (c) a day on which the Corporate Trust Office
of the Trustee, or, with respect to the Securities initially issued to
the Issuer Trust, the "Corporate Trust Office" (as defined in the Trust
Agreement) of the Property Trustee or the Delaware Trustee under the
Trust Agreement, is closed for business.
"Capital Treatment Event" means the receipt by the Company and
the Issuer Trust of an Opinion of Counsel, rendered by counsel
experienced in such matters, to the effect that, as a result of the
occurrence of any amendment to, or change (including any announced
prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or any political subdivision thereof or
therein, or as a result of any official or administrative pronouncement
or action or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such
pronouncement, action or decision is announced on or after the date of
the issuance of the Preferred Securities of the Issuer Trust, there is
more than an insubstantial risk that the Company will not be entitled to
treat an amount equal to the Liquidation Amount of such Preferred
Securities as "Tier 1 Capital" (or the then equivalent thereof), except
as otherwise restricted under the 25% Capital Limitation, for purposes
of the risk-based capital adequacy guidelines of the Federal Reserve
Board, as then in effect and applicable to the Company. The Company or the
Issuer Trust must request an Opinion of Counsel with regard to such
matter within a reasonable period of time after the Company or the Issuer
Trust, as appropriate, becomes aware of the possible occurrence of any
such event.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at
any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties on such date.
"Common Securities" has the meaning specified in the first
recital of this Indenture.
"Common Stock" means the common stock, $0.01 par value per
share, of the Company.
"Company" means the Person named as the "Company" in the
preamble of this instrument until a successor entity shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor entity.
"Company Request" and "Company Order" mean, respectively, the
written request or order signed in the name of the Company by its
Chairman of the Board of Directors, its Chief Executive
- 3 -
<PAGE>
<PAGE>
Officer, President or any Vice President, and by its Chief Financial
Officer, its Treasurer, its Secretary or any Assistant Secretary, and
delivered to the Trustee.
"Corporate Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust business
shall be administered, which office at the date hereof is located at
Four Albany Street, 4th Floor, New York, New York 10006.
"Creditor" has the meaning specified in Section 6.7.
"Defaulted Interest" has the meaning specified in Section 3.8.
"Delaware Trustee" means, with respect to the Issuer Trust, the
Person identified as the "Delaware Trustee" in the Trust Agreement,
solely in its capacity as Delaware Trustee of the Issuer Trust under the
Trust Agreement and not in its individual capacity, or its successor in
interest in such capacity, or any successor Delaware trustee appointed
as therein provided.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in the form of one or more Global Securities,
the Person (or any successor thereto) designated as Depositary by the
Company pursuant to Section 3.1.
"Discount Security" means any security that provides for an
amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to
Section 5.2.
"Dollar" or "$" means the currency of the United States of
America that, as at the time of payment, is legal tender for the payment
of public and private debts.
The term "entity" includes a bank, corporation, association,
company, limited liability company, joint-stock company or business
trust.
"Event of Default," has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 and
any successor statute thereto, in each case as amended from time to
time.
"Expiration Date" has the meaning specified in Section 1.4.
"Extension Period" has the meaning specified in Section 3.12.
"Federal Reserve" means Board of Governors of the Federal
Reserve System.
"Global Security" means a Security in the form prescribed in
Section 2.4 evidencing all or part of the Securities, issued to the
Depositary or its nominee, and registered in the name of such Depositary
or its nominee.
"Guarantee" means, with respect to the Issuer Trust, the
Guarantee Agreement, dated ___________, 1999, executed by the Company
for the benefit of the holders of the Preferred Securities issued by the
Issuer Trust as modified, amended or supplemented from time to time.
"Holder" means a Person in whose name a Security is registered
in the Securities Register.
- 4 -
<PAGE>
<PAGE>
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Institutional Accredited Investor" means an institutional
accredited investor within the meaning of Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on such Securities.
"Investment Company Act" means the Investment Company Act of
1940 and any successor statute thereto, in each case as amended from
time to time.
"Investment Company Event" means the receipt by the Company and
the Issuer Trust of an Opinion of Counsel, rendered by counsel
experienced in such matters, to the effect that, as a result of the
occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, the Issuer
Trust is or will be considered an "investment company" that is required
to be registered under the Investment Company Act, which change becomes
effective on or after the date of the issuance of the Preferred
Securities of the Issuer Trust. The Company or the Issuer Trust must
request an Opinion of Counsel with regard to such matter within a reasonable
period of time after the Company or the Issuer Trust, as appropriate, becomes
aware of the possible occurrence of any such event.
"Issuer Trust" has the meaning specified in the first recital
of this Indenture.
"Liquidation Amount" has the meaning assigned in the Trust
Agreement.
"Maturity" when used with respect to any Security means the
date on which the principal of such Security becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind
specified in Section 5.1(c).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Chief Executive
Officer, President or a Vice President, and by the Chief Financial
Officer, Treasurer, an Associate Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of such Person, and delivered to the
Trustee. Any Officers' Certificate delivered with respect to compliance
with a condition or covenant provided for in this Indenture shall
include:
(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in rendering the
Officers' Certificate;
- 5 -
<PAGE>
<PAGE>
(c) a statement that such officer has made such
examination or investigation as, in such officer's opinion, is necessary
to enable such officer to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such
officer, such condition or covenant has been complied with;
provided, however, that the Officers' Certificate delivered pursuant to
the provisions of Section 10.4 hereof shall comply with the provisions
of Section 314 of the Trust Indenture Act.
"Opinion of Counsel" means a written opinion of independent
outside counsel to the Company.
"Original Issue Date" means the date of issuance specified as
such in each Security.
"Outstanding" means, when used in reference to any Securities,
as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities for whose payment money in the necessary
amount has been theretofore deposited with the Trustee or any Paying
Agent in trust for the Holders of such Securities; and
(c) Securities in substitution for or in lieu of other
Securities which have been authenticated and delivered or that have been
paid pursuant to Section 3.6, unless proof satisfactory to the Trustee
is presented that any such Securities are held by Holders in whose hands
such Securities are valid, binding and legal obligations of the Company;
provided, however, that in determining whether the Holders of the
requisite principal amount of Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor (other
than, for the avoidance of doubt, the Issuer Trust to which Securities
were initially issued) shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities that the Trustee
knows to be so owned shall be so disregarded. Securities so owned that
have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Securities and that the pledgee is
not the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor (other than, for the
avoidance of doubt, the Issuer Trust). Upon the written request of the
Trustee, the Company shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Securities, if any, known by the
Company to be owned or held by or for the account of the Company, or any
other obligor on the Securities or any Affiliate of the Company or such
obligor (other than, for the avoidance of doubt, the Issuer Trust), and,
subject to the provisions of Section 6.1, the Trustee shall be entitled
to accept such Officers' Certificate as conclusive evidence of the facts
therein set forth and of the fact that all Securities not listed therein
are Outstanding for the purpose of any such determination.
"Paying Agent" means the Trustee or any Person authorized by
the Company to pay the principal of (or premium, if any) or interest on,
or other amounts in respect of any Securities on behalf of the Company.
- 6 -
<PAGE>
<PAGE>
"Person" means any individual, partnership, trust,
unincorporated organization or Entity or government or any agency or
political subdivision thereof.
"Place of Payment" means, with respect to the Securities, the
place or places where the principal of (and premium, if any) and
interest on the Securities are payable pursuant to Section 3.1.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security. For the purposes of this
definition, any security authenticated and delivered under Section 3.7
in lieu of a mutilated, destroyed, lost or stolen Security shall be
deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
"Preferred Securities" has the meaning specified in the first
recital of this Indenture.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, with respect to the Issuer Trust, the
Person identified as the "Property Trustee" in the Trust Agreement,
solely in its capacity as Property Trustee of the Issuer Trust under the
Trust Agreement and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed
as therein provided.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to
this Indenture or the terms of such Security.
"Redemption Price", when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to
this Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date with respect to the Securities means, unless otherwise
provided pursuant to Section 3.1 with respect to the Securities, the
close of business on March 15, June 15, September 15 or December 15 next
preceding such Interest Payment Date (whether or not a Business Day).
"Responsible Officer", when used with respect to the Property
Trustee means any officer assigned to the Corporate Trust Office,
including any managing director, principal, vice president, assistant
vice president, assistant treasurer, assistant secretary or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Indenture, and also, with
respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Rights Plan" means any plan of the Company providing for the
issuance by the Company to all holders of its Common Stock, $0.01 par
value per share, of rights entitling the holders thereof to subscribe
for or purchase shares of any class or series of capital stock of the
Company which rights (a) are deemed to be transferred with such shares
of such Common Stock, (b) are not exercisable, and (c) are also issued
in respect of future issuances of such Common Stock, in each case until
the occurrence of a specified event or events.
"Securities" or "Security" means any debt securities or debt
security, as the case may be, authenticated and delivered under this
Indenture.
- 7 -
<PAGE>
<PAGE>
"Securities Act" means the Securities Act of 1933 and any
successor statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the
respective meanings specified in Section 3.6.
"Senior Indebtedness" means, whether recourse is to all or a
portion of the assets of the Company and whether or not contingent,
(a) every obligation of the Company for money borrowed;
(b) every obligation of the Company evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses;
(c) every reimbursement obligation of the Company with
respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of the Company;
(d) every obligation of the Company issued or assumed
as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary
course of business);
(e) every capital lease obligation of the Company;
(f) every obligation of the Company for claims (as
defined in Section 101(4) of the United States Bankruptcy Code of 1978,
as amended) in respect of derivative products such as interest and
foreign exchange rate contracts, commodity contracts and similar
arrangements;
(g) any indebtedness in respect of debt securities
issued to any trust, or a trustee of such trust, partnership or other
entity affiliated with the Company that is a financing entity of the
Company in connection with the issuance by such financing entity of
securities that are similar to the Preferred Securities; and
(h) every obligation of the type referred to in clauses
(a) through (g) of another person and all dividends of another person
the payment of which, in either case, the Company has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise.
Senior Indebtedness shall not include (a) any obligations
which, by their terms, are expressly stated to rank pari passu in right
of payment with, or to not be superior in right of payment to, the
Junior Subordinated Debentures, (b) any Senior Indebtedness of the
Company which when incurred and without respect to any election under
Section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Company, (c) any indebtedness of
the Company to any of its subsidiaries, (d) indebtedness to any
executive officer, director or employee of the Company, or (e) any
indebtedness in respect of debt securities issued to any trust, or a
trustee of such trust, partnership or other entity affiliated with the
Company that is a financing entity of the Company in connection with the
issuance of such financing entity of securities that are similar to the
Preferred Securities, including the obligations associated with the
Preferred Securities.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 3.8.
- 8 -
<PAGE>
<PAGE>
"Stated Maturity," when used with respect to any Security or
any installment of principal thereof or interest thereon, means the date
specified pursuant to the terms of such Security as the fixed date on
which the principal of such Security or such installment of principal or
interest is due and payable, as such date may, in the case of such
principal, be shortened or extended as provided pursuant to the terms of
such Security and this Indenture.
"Subsidiary" means an entity more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company
or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries. For purposes of this definition, "voting stock"
means stock that ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
"Successor Security" of any particular Security means every
Security issued after, and evidencing all or a portion of the same debt
as that evidenced by, such particular Security; and, for the purposes of
this definition, any Security authenticated and delivered under Section
3.7 in exchange for or in lieu of a mutilated, destroyed, lost or stolen
Security shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Security.
"Tax Event" means the receipt by the Company and the Issuer
Trust of an Opinion of Counsel, rendered by counsel experienced in such
matters, to the effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of
any official or administrative pronouncement or action or judicial
decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is
announced on or after the date of issuance of the Preferred Securities
of the Issuer Trust, there is more than an insubstantial risk that (a)
the Issuer Trust is, or will be within 90 days of the delivery of such
Opinion of Counsel, subject to United States federal income tax with
respect to income received or accrued on the Securities issued by the
Company to the Issuer Trust, (b) interest payable by the Company on the
Securities is not, or within 90 days of the delivery of such Opinion of
Counsel will not be, deductible by the Company, in whole or in part, for
United States federal income tax purposes, or (c) the Issuer Trust is,
or will be within 90 days of the delivery of such Opinion of Counsel,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges. The Company or the Issuer Trust must request an
Opinion of Counsel with regard to such matter within a reasonable period
of time after the Company or the Issuer Trust, as appropriate, becomes
aware of the possible occurrence of any such event.
"Trust Agreement" means the Amended and Restated Trust
Agreement, dated as of __________, 1999, as amended, modified or
supplemented from time to time, among the trustees of the Issuer Trust
named therein, the Company, as depositor, and the holders from time to
time of undivided beneficial ownership interests in the assets of the
Issuer Trust.
"Trustee" means the Person named as the "Trustee" in the
preamble of this Indenture, solely in its capacity as such and not in
its individual capacity, until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean or include each Person who is then a
Trustee hereunder and, if at any time there is more than one such
Person, "Trustee" as used with respect to any Securities shall mean the
Trustee with respect to such Securities.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended by the Trust Indenture Reform Act of 1990, or any successor
statute, in each case as amended from time to time, except as provided
in Section 9.5.
"Trust Securities" has the meaning specified in the first
recital of this Indenture.
- 9 -
<PAGE>
<PAGE>
"Vice President," when used with respect to the Company, means
any duly appointed vice president, whether or not designated by a number
or a word or words added before or after the title "vice president."
Section 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent (including covenants compliance with which
constitutes a condition precedent), if any, provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that, in the opinion of such counsel, all
such conditions precedent (including covenants compliance with which
constitutes a condition precedent), if any, have been complied with,
except that in the case of any such application or request as to which
the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the
certificates provided pursuant to Section 10.4) shall include:
(a) a statement by each individual signing such certificate
or opinion that such individual has read such covenant or condition and
the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions of
such individual contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such individual, he
or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such
individual, such condition or covenant has been complied with.
Section 1.3. Forms of Documents Delivered to Trustee.
(a) In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is
not necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or
covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
(b) Any certificate or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to matters upon
which his or her certificate or opinion is based are erroneous. Any
such certificate or Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that
the information with respect to such factual matters is in the
possession of the Company,
- 10 -
<PAGE>
<PAGE>
unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to
such matters are erroneous.
(c) Where any Person is required to make, give or execute two
or more applications, requests, consents, certificates, statements,
opinions, or other instruments under this Indenture, they may, but need
not, be consolidated and form one instrument.
Section 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given,
made or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in
person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when
such instrument or instruments is or are delivered to the Trustee, and,
where it is hereby expressly required, to the Company. Such instrument
or instruments (and the action embodied therein and evidenced thereby)
are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section 1.4.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness
of such execution or by the certificate of any notary public or other
officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to
him or her the execution thereof. Where such execution is by a Person
acting in other than his or her individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his or her
authority.
(c) The fact and date of the execution by any Person of any
such instrument or writing, or the authority of the Person executing the
same, may also be provided in any other manner that the Trustee deems
sufficient and in accordance with such reasonable rules as the Trustee
may determine.
(d) The ownership of Securities shall be proved by the
Securities Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Security shall bind
every future Holder of the same Security and the Holder of every
Security issued upon the transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Security.
(f) The Company may set any day as a record date for the
purpose of determining the Holders of Outstanding Securities entitled to
give, make or take any request, demand, authorization, direction,
notice, consent, waiver or other action provided or permitted by this
Indenture to be given, made or taken by Holders of Securities, provided
that the Company may not set a record date for, and the provisions of
this Section 1.4(f) shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in
Section 1.4(g). If any record date is set pursuant to this Section
1.4(f), the Holders of Outstanding Securities on such record date, and
no other Holders, shall be entitled to take the relevant action, whether
or not such Holders remain Holders after such record date, provided,
however that no such action shall be effective hereunder unless taken on
or prior to the applicable Expiration Date (as defined below) by Holders
of the requisite principal amount of Outstanding Securities on such
record date. Nothing in this Section 1.4(f) shall be construed to
prevent
- 11 -
<PAGE>
<PAGE>
the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this Section 1.4(f)
(whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in
this Section 1.4(f) shall be construed to render ineffective any action
taken by Holders of the requisite principal amount of Outstanding
Securities on the date such action is taken. Promptly after any record
date is set pursuant to this Section 1.4(f), the Company, at its own
expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Trustee in
writing and to each Holder of Securities in the manner set forth in
Section 1.6.
(g) The Trustee may set any day as a record date for the
purpose of determining the Holders of Outstanding Securities entitled to
join in the giving or making of (i) any Notice of Default, (ii) any
declaration of acceleration referred to in Section 5.2, (iii) any
request to institute proceedings referred to in Section 5.7(b), or (iv)
any direction referred to in Section 5.12, in each case with respect to
Securities. If any record date is set pursuant to this Section 1.4(g),
the Holders of Outstanding Securities on such record date, and no other
Holders, shall be entitled to join in such notice, declaration, request
or direction, whether or not such Holders remain Holders after such
record date, provided, however that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by
Holders of the requisite principal amount of Outstanding Securities on
such record date. Nothing in this Section 1.4(g) shall be construed to
prevent the Trustee from setting a new record date for any action for
which a record date has previously been set pursuant to this Section
1.4(g) (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect) and nothing
in this paragraph shall be construed to render ineffective any action
taken by Holders of the requisite principal amount of Outstanding
Securities on the date such action is taken. Promptly after any record
date is set pursuant to this paragraph, the Trustee, at the Company's
expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Company in
writing and to each Holder of Securities in the manner set forth in
Section 1.6.
(h) With respect to any record date set pursuant to this
Section 1.4, the party hereto that sets such record date may designate
any day as the "Expiration Date" and from time to time may change the
Expiration Date to any earlier or later day, provided that no such
change shall be effective unless notice of the proposed new Expiration
Date is given to the other party hereto in writing, and to each Holder
of Securities in the manner set forth in Section 1.6 on or prior to the
existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to this Section, the party
hereto that set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date
with respect thereto, subject to its right to change the Expiration Date
as provided in this Section 1.4(h). Notwithstanding the foregoing, no
Expiration Date shall be later than the 180th day after the applicable
record date.
(i) Without limiting the foregoing, a Holder entitled
hereunder to take any action hereunder with regard to any particular
Security may do so with regard to all or any part of the principal
amount of such Security or by one or more duly appointed agents each of
which may do so pursuant to such appointment with regard to all or any
part of such principal amount.
- 12 -
<PAGE>
<PAGE>
Section 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder, any holder of Preferred
Securities or the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with the
Trustee at its Corporate Trust Office, or
(b) the Company by the Trustee, any Holder or any holder of
Preferred Securities shall be sufficient for every purpose (except as
otherwise provided in Section 5.1) hereunder if in writing and mailed,
first class, postage prepaid, to the Company addressed to it at the
address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to
the Trustee by the Company.
Section 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first class postage
prepaid, to each Holder affected by such event, at the address of such
Holder as it appears in the Securities Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. If, by reason of the suspension of or
irregularities in regular mail services or for any other reason, it
shall be impossible or impracticable to mail notice of any event to
Holders when said notice is required to be given pursuant to any
provision of this Indenture or of the Securities, then any manner of
giving such notice as shall be satisfactory to the Trustee shall be
deemed to be a sufficient giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
Section 1.7. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required thereunder to be a
part of and govern this Indenture, the provision of the Trust Indenture
Act shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the latter provision shall be deemed to apply to
this Indenture as so modified or to be excluded, as the case may be.
Section 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction
hereof.
Section 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
- 13 -
<PAGE>
<PAGE>
Section 1.10. Separability Clause.
If any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and
their successors and assigns, the holders of Senior Indebtedness, the
Holders of the Securities and, to the extent expressly provided in
Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and 9.2, the holders of
Preferred Securities, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT
GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES).
Section 1.13. Non-Business Days.
If any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or the
Securities) payment of interest or principal (and premium, if any) or
other amounts in respect of such Security need not be made on such date,
but may be made on the next succeeding Business Day (and no interest
shall accrue in respect of the amounts whose payment is so delayed for
the period from and after such Interest Payment Date, Redemption Date or
Stated Maturity, as the case may be, until such next succeeding Business
Day) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day (in each case with the same force and effect as if made on
the Interest Payment Date or Redemption Date or at the Stated Maturity).
- 14 -
<PAGE>
<PAGE>
ARTICLE II
SECURITY FORMS
Section 2.1. Forms Generally.
(a) The Securities and the Trustee's certificate of
authentication shall be in substantially the forms set forth in this
Article II, or in such other form or forms as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental
hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with applicable tax laws or the rules of any
securities exchange or as may, consistently herewith, be determined by
the officers executing such securities, as evidenced by their execution
of the Securities. If the form of Securities is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant
Secretary of the Company and delivered to the Trustee at or prior to the
delivery of the Company Order contemplated by Section 3.3 with respect
to the authentication and delivery of such Securities.
(b) The definitive Securities shall be printed, lithographed
or engraved or produced by any combination of these methods, if required
by any securities exchange on which the Securities may be listed, on a
steel engraved border or steel engraved borders or may be produced in
any other manner permitted by the rules of any securities exchange on
which the Securities may be listed, all as determined by the officers
executing such Securities, as evidenced by their execution of such
Securities.
(c) Securities distributed to holders of Global Preferred
Securities (as defined in the Trust Agreement) upon the dissolution of
the Issuer Trust shall be distributed in the form of one or more Global
Securities registered in the name of a Depositary or its nominee, and
deposited with the Securities Registrar, as custodian for such
Depositary, or with such Depositary, for credit by the Depositary to the
respective accounts of the beneficial owners of the Securities
represented thereby (or such other accounts as they may direct).
Securities distributed to holders of Preferred Securities other than
Global Preferred Securities upon the dissolution of the Issuer Trust
shall not be issued in the form of a Global Security or any other form
intended to facilitate book-entry trading in beneficial interests in
such Securities.
Section 2.2. Form of Face of Security.
ALLEGIANT BANCORP, INC.
_____% Junior Subordinated Debentures due ____________, 2029
No. ________________ $__________
Allegiant Bancorp, Inc., a Missouri corporation (hereinafter
called the "Company", which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby promises
to pay to Allegiant Capital Trust I, or registered assigns, the
principal sum of __________ Dollars on ____________, 2029, or such other
principal amount represented hereby as may be set forth in the records
of the Securities Registrar hereinafter referred to in accordance with
the Indenture provided that the Company may shorten the Stated Maturity
of the principal of this Security to a date not
- 15 -
<PAGE>
<PAGE>
earlier than ____________, 2004. The Company further promises to pay
interest on said principal from __________, 1999, or from the most
recent Interest Payment Date to which interest has been paid or duly
provided for, quarterly (subject to deferral as set forth herein) in
arrears on March 31, June 30, September 30 and December 31 of each year,
commencing September 30, 1999 at the rate of _____% per annum, together
with Additional Sums, if any, as provided in Section 10.6 of the
Indenture, until the principal hereof is paid or duly provided for or
made available for payment; provided that any overdue principal, premium
or Additional Sums and any overdue installment of interest shall bear
Additional Interest at the rate of _____% per annum (to the extent that
the payment of such interest shall be legally enforceable), compounded
quarterly from the dates such amounts are due until they are paid or
made available for payment, and such interest shall be payable on
demand. The amount of interest payable for any period less than a full
interest period shall be computed on the basis of a 360-day year of
twelve 30-day months and the actual days elapsed in a partial month in
such period. The amount of interest payable for any full interest
period shall be computed by dividing the applicable rate per annum by
four. The initial payment of interest on any Security that is issued
between a Regular Record Date and the related Interest Payment Date
shall be computed on a pro rata basis, based on the number of days
between such Regular Record Date and such Interest Payment Date, and
shall be payable on the next succeeding Interest Payment Date following
such Interest Payment Date. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest
installment, which shall be the 15th day of the month in which such
Interest Payment Date falls. Any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the Holder
on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days
prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said
Indenture.
So long as no Event of Default has occurred and is continuing,
the Company shall have the right, at any time during the term of this
Security, from time to time to defer the payment of interest on this
Security for up to 20 consecutive quarterly interest payment periods
with respect to each deferral period (each an "Extension Period"),
during which Extension Periods the Company shall have the right to make
partial payments of interest on any Interest Payment Date, and at the
end of which the Company shall pay all interest then accrued and unpaid
including Additional Interest, as provided below; provided however, that
no Extension Period shall extend beyond the Stated Maturity of the
principal of this Security, as then in effect, and no such Extension
Period may end on a date other than an Interest Payment Date; and
provided further, however, that during any such Extension Period, the
Company shall not (a) declare or pay any dividends or distributions on,
or redeem, purchase, acquire or make a liquidation payment with respect
to, any of the Company's capital stock, (b) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Company that rank pari passu with or
junior in interest to this Security, including the Company's obligation
associated with the Preferred Securities, or (c) redeem, purchase or
acquire less than all of the Securities or any of the Preferred
Securities (other than (i) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection
with any employment contract, benefit plan or other similar arrangement
with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan, (ii) as a result of a reclassification,
an exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a Subsidiary of the Company) for
any class or series of the Company's capital stock, (iii) the purchase
of fractional interests in shares of the Company's capital stock
pursuant to the
- 16 -
<PAGE>
<PAGE>
conversion or exchange provisions of such capital stock or the security
being converted or exchanged, (iv) any declaration of a dividend in
connection with any Rights Plan, or the issuance of rights, stock or
other property under any Rights Plan, or the redemption or repurchase of
rights pursuant thereto, or (v) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari
passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Company may further defer the payment of
interest, provided that no Extension Period shall exceed 20 consecutive
quarterly interest payment periods, extend beyond the Stated Maturity of
the principal of this Security or end on a date other than an Interest
Payment Date. Upon the termination of any such Extension Period and
upon the payment of all accrued and unpaid interest and any Additional
Interest then due on any Interest Payment Date, the Company may elect to
begin a new Extension Period, subject to the above conditions. No
interest shall be due and payable during an Extension Period, except at
the end thereof, but each installment of interest that would otherwise
have been due and payable during such Extension Period shall bear
Additional Interest (to the extent that the payment of such interest
shall be legally enforceable) at the rate of _____% per annum,
compounded quarterly and calculated as set forth in the first paragraph
of this Security, from the date on which such amounts would otherwise
have been due and payable until paid or made available for payment. The
Company shall give the Holder of this Security and the Trustee notice of
its election to begin any Extension Period at least one Business Day
prior to the next succeeding Interest Payment Date on which interest on
this Security would be payable but for such deferral or so long as such
securities are held by Allegiant Capital Trust I, or at least one
Business Day prior to the earlier of (a) the next succeeding date on
which Distributions on the Preferred Securities of the Issuer Trust
would be payable but for such deferral, and (b) the date on which the
Property Trustee of the Issuer Trust is required to give notice to
holders of such Preferred Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business
Day prior to such record date.
Payment of the principal of (and premium, if any) and interest
on this Security will be made at the office or agency of the Company
maintained for that purpose in the United States, in such coin or
currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided however,
that at the option of the Company payment of interest may be made (a) by
check mailed to the address of the Person entitled thereto as such
address shall appear in the Securities Register, or (b) if to a Holder
of $1,000,000 or more in aggregate principal amount of this Security, by
wire transfer in immediately available funds upon written request to the
Trustee not later than 15 calendar days prior to the date on which the
interest is payable.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payments
to the prior payment in full of all Senior Indebtedness, and this
Security is issued subject to the provisions of the Indenture with
respect thereto. Each Holder of this Security, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Trustee on his or her behalf to take such actions as may be
necessary or appropriate to effectuate the subordination so provided,
and (c) appoints the Trustee his or her attorney-in-fact for any and all
such purposes. Each Holder hereof, by his or her acceptance hereof,
waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior
Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
- 17 -
<PAGE>
<PAGE>
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual or
facsimile signature, this Security shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
ALLEGIANT BANCORP, INC.
By:_____________________________________
Name:
Title:
Attest:
_________________________________
Secretary or Assistant Secretary
This is one of the Securities referred to in the within-
mentioned Indenture.
Dated: _________________________ BANKERS TRUST COMPANY, as Trustee
By:_____________________________________
Name:
Title:
Section 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued
under the Junior Subordinated Indenture, dated as of __________, 1999
(herein called the "Indenture"), between the Company and Bankers Trust
Company, as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee, the holders of Senior
Indebtedness and the Holders of the Securities, and of the terms upon
which the Securities are, and are to be, authenticated and delivered.
All terms used in this Security that are defined in the
Indenture or, if not defined in the Indenture, in the Amended and
Restated Trust Agreement dated as of __________, 1999 (as modified,
amended or supplemented from time to time the "Trust Agreement"),
relating to Allegiant Capital Trust I (the "Issuer Trust") among the
Company, as Depositor, the Trustees named therein and the holders from
time to time
- 18 -
<PAGE>
<PAGE>
of the Trust Securities issued pursuant thereto shall have the meanings
assigned to them in the Indenture or the Trust Agreement, as the case
may be.
The Company has the right to redeem this Security (a) on or
after ____________, 2004, in whole at any time or in part from time to
time, or (b) in whole (but not in part), at any time within 90 days
following the occurrence and during the continuation of a Tax Event,
Investment Company Event, or Capital Treatment Event, in each case at
the Redemption Price described below, and subject to prior regulatory
approval, if required. The Redemption Price shall equal 100% of the
principal amount hereof being redeemed, together with accrued interest
to but excluding the date fixed for redemption.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued
in the name of the Holder hereof upon the cancellation hereof.
[If applicable, insert - The Indenture contains provisions for
defeasance at any time [of the entire indebtedness of this Security]
[or] [certain restrictive covenants and Events of Default with respect
to this Security] [, in each case] upon compliance by the Company with
certain conditions set forth in the Indenture.]
The Indenture permits, with certain exceptions as therein
provided, the Company and the Trustee at any time to enter into a
supplemental indenture or indentures for the purpose of modifying in any
manner the rights and obligations of the Company and of the Holders of
the Securities, with the consent of the Holders of a majority in
principal amount of the Outstanding Securities to be affected by such
supplemental indenture. The Indenture also contains provisions
permitting Holders of specified percentages in principal amount of the
Securities at the time Outstanding, on behalf of the Holders of all
Securities, to waive compliance by the Company with certain provisions
of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon
this Security.
[If the Security is not a Discount Security, insert - As
provided in and subject to the provisions of the Indenture, if an Event
of Default with respect to the Securities at the time Outstanding occurs
and is continuing, then and in every such case the Trustee or the
Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities may declare the principal amount of all the
Securities to be due and payable immediately, by a notice in writing to
the Company (and to the Trustee if given by Holders), provided that, if
upon an Event of Default, the Trustee or such Holders fail to declare
the principal of all the Outstanding Securities to be immediately due
and payable, the holders of at least 25% in aggregate Liquidation Amount
of the Preferred Securities then outstanding shall have the right to
make such declaration by a notice in writing to the Company and the
Trustee; and upon any such declaration the principal amount of and the
accrued interest (including any Additional Interest) on all the
Securities shall become immediately due and payable, provided that the
payment of principal and interest (including any Additional Interest) on
such Securities shall remain subordinated to the extent provided in
Article XIII of the Indenture.]
[If the Security is a Discount Security, insert - As provided
in and subject to the provisions of the Indenture, if an Event of
Default with respect to the Securities at the time Outstanding occurs
and is continuing, then and in every such case the Trustee or the
Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities may declare an amount of principal of the
Securities to be due and payable immediately, by a notice in writing to
the Company (and to the Trustee if given by Holders), provided that, if
upon an Event of Default, the Trustee or such Holders fail to declare
such
- 19 -
<PAGE>
<PAGE>
principal amount of the Outstanding Securities to be immediately due and
payable, the Holders of at least 25% in aggregate Liquidation Amount of
the Preferred Securities then outstanding shall have the right to make
such declaration by a notice in writing to the Company and the Trustee.
The principal amount payable upon such acceleration shall be equal to
[insert formula for determining the amount]. Upon any such declaration,
such amount of the principal of and the accrued interest (including any
Additional Interest) on all the Securities shall become immediately due
and payable, provided that the payment of such principal and interest
(including any Additional Interest) on all the Securities shall remain
subordinated to the extent provided in Article XIII of the Indenture.
Upon payment (a) of the amount of principal so declared due and payable
and (b) of interest on any overdue principal, premium and interest (in
each case to the extent that the payment of such interest shall be
legally enforceable), all of the Company's obligations in respect of the
payment of the principal of and premium and interest, if any, on this
Security shall terminate.]
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of
(and premium, if any) and interest (including Additional Interest) on
this Security at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Securities Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained under Section
10.2 of the Indenture for such purpose, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company
and the Securities Registrar duly executed by, the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more
new Securities, of like tenor, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated
transferee or transferees.
As provided in the Indenture and subject to certain limitations
therein set forth, Securities are exchangeable for a like aggregate
principal amount of Securities and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered
as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall
be affected by notice to the contrary.
The Company and, by its acceptance of this Security or a
beneficial interest therein, the Holder of, and any Person that acquires
a beneficial interest in, this Security agrees that for United States
federal, state and local tax purposes it is intended that this Security
constitute indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE.
THIS SECURITY IS A DIRECT AND UNSECURED OBLIGATION OF THE
COMPANY, DOES NOT EVIDENCE DEPOSITS AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
- 20 -
<PAGE>
<PAGE>
Section 2.4. Additional Provisions Required in Global Security.
Unless otherwise specified as contemplated by Section 3.1, any
Global Security issued hereunder shall, in addition to the provisions
contained in Sections 2.2 and 2.3, bear a legend in substantially the
following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE
FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
Section 2.5. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in
substantially the following form:
This is one of the Securities referred to in the within-
mentioned Indenture.
Dated: ________________________ BANKERS TRUST COMPANY, as Trustee
By:__________________________________
Authorized Signatory
ARTICLE III
THE SECURITIES
Section 3.1. Title and Terms.
(a) The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is $___________.
(b) Subject to Section 3.16, the Securities' Stated Maturity
shall be ____________, 2029.
(c) The Securities, established pursuant to a Board
Resolution, shall bear interest at a per annum rate equal to _____% from
__________, 1999 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, as the case may be, payable
quarterly (subject to deferral as set forth in Section 3.12), in
arrears, on March 31, June 30, September 30 and December 31 of each
year, commencing September 30, 1999, until the principal thereof is paid
or made available for payment. Interest will compound quarterly and
will accrue at a per annum rate equal to _____% to the extent permitted
by applicable law, on any interest installment in arrears for more than
one quarterly period or during an extension of an interest payment
period as set forth below in Section 3.12.
- 21 -
<PAGE>
<PAGE>
(d) The principal of (and premium, if any) and interest on
the Securities shall be payable at the office or agency of the Paying
Agent in the United States maintained for such purpose and at any other
office or agency maintained by the Company for such purpose in such coin
or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however,
that at the option of the Company payment of interest may be made (i) by
check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register or (ii) if to a Holder of
$1,000,000 or more in aggregate principal amount of this Security, by
wire transfer in immediately available funds upon written request to the
Trustee not later than 15 calendar days prior to the date on which the
interest is payable, at such place and to such account as may be
designated by the Person entitled thereto as specified in the Security
Register.
(e) Securities may be issuable in whole or in part in the
form of one or more Global Securities and, in such case, the Depositary
for such Global Securities shall be The Depository Trust Company.
(f) The securities shall be subordinated in right of payment
to Senior Indebtedness as provided in Article XIII.
Section 3.2. Denominations.
The Securities shall be in registered form without coupons and
shall be issuable in denominations of $10 and any integral multiple
thereof.
Section 3.3. Execution, Authentication, Delivery and Dating.
(a) The Securities shall be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer, President or
one of its Vice Presidents, and attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
(b) Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company
shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and
delivery of such Securities or did not hold such offices at the date of
such Securities. At any time and from time to time after the execution
and delivery of this Indenture, the Company may deliver Securities
executed by the Company to the Trustee for authentication, together with
a Company Order for the authentication and delivery of such Securities,
and the Trustee in accordance with the Company Order shall authenticate
and deliver such Securities. If the form or terms of the Securities
have been established by or pursuant to one or more Board Resolutions as
permitted by Sections 2.1 and 3.1, in authenticating such Securities,
and accepting the additional responsibilities under this Indenture in
relation to such Securities, the Trustee shall be entitled to receive,
and (subject to Section 6.1) shall be fully protected in relying upon,
an Opinion of Counsel stating:
(i) if the form of such Securities has been established
by or pursuant to Board Resolution as permitted by Section 2.1, that
such form has been established in conformity with the provisions of this
Indenture;
(ii) if the terms of such Securities have been
established by or pursuant to Board Resolution as permitted by Section
3.1, that such terms have been established in conformity with the
provisions of this Indenture; and
- 22 -
<PAGE>
<PAGE>
(iii) that such Securities, when authenticated and
delivered by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(c) If such form or terms have been so established, the
Trustee shall not be required to authenticate such Securities if the
issue of such Securities pursuant to this Indenture will affect the
Trustee's own rights, duties or immunities under the Securities and this
Indenture or otherwise in a manner that is not reasonably acceptable to
the Trustee.
(d) Notwithstanding the provisions of Section 3.1 and Section
3.3(b), if all Securities are not to be originally issued at one time,
it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 or the Company Order and Opinion of
Counsel otherwise required pursuant to Section 3.3(b) at or prior to the
authentication of each Security if such documents are delivered at or
prior to the authentication upon original issuance of the first Security
to be issued.
(e) Each Security shall be dated the date of its
authentication.
(f) No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there
appears on such Security a certificate of authentication substantially
in the form provided for herein executed by the Trustee by the manual or
facsimile signature of one of its authorized officers, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such security has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by
the Company, and the Company shall deliver such Security to the Trustee
for cancellation as provided in Section 3.10, for all purposes of this
Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of
this Indenture.
Section 3.4. Temporary Securities.
(a) Pending the preparation of definitive Securities, the
Company may execute, and upon receipt of a Company Order the Trustee
shall authenticate and deliver, temporary Securities that are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
denomination, substantially of the tenor of the definitive Securities in
lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing
such Securities may determine, as evidenced by their execution of such
Securities.
(b) If temporary Securities are issued, the Company will
cause definitive Securities to be prepared without unreasonable delay.
After the preparation of definitive Securities, the temporary Securities
shall be exchangeable for definitive Securities upon surrender of the
temporary Securities at the office or agency of the Company designated
for that purpose without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall
execute and the Trustee shall authenticate and deliver in exchange
therefor one or more definitive securities, of any authorized
denominations having the same Original Issue Date and Stated Maturity
and having the same terms as such temporary Securities. Until so
exchanged, the temporary Securities shall in all respects be entitled to
the same benefits under this Indenture as definitive Securities.
- 23 -
<PAGE>
<PAGE>
Section 3.5. Global Securities.
(a) Each Global Security issued under this Indenture shall be
registered in the name of the Depositary designated by the Company for
such Global Security or a nominee thereof and delivered to such
Depositary or a nominee thereof or custodian therefor, and each such
Global Security shall constitute a single Security for all purposes of
this Indenture.
(b) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in part may
be registered, in the name of any Person other than the Depositary for
such Global Security or a nominee thereof unless (i) such Depositary
advises the Trustee in writing that such Depositary is no longer willing
or able to properly discharge its responsibilities as Depositary with
respect to such Global Security, and the Company is unable to locate a
qualified successor within 90 days of receipt of such notice from the
Depositary, (ii) the Company executes and delivers to the Trustee a
Company Order stating that the Company elects to terminate the book-
entry system through the Depositary, or (iii) there shall have occurred
and be continuing an Event of Default.
(c) If any Global Security is to be exchanged for other
Securities or cancelled in whole, it shall be surrendered by or on
behalf of the Depositary or its nominee to the Securities Registrar for
exchange or cancellation as provided in this Article III. If any Global
Security is to be exchanged for other Securities or canceled in part, or
if another Security is to be exchanged in whole or in part for a
beneficial interest in any Global Security, then either (i) such Global
Security shall be so surrendered for exchange or cancellation as
provided in this Article III or (ii) the principal amount thereof shall
be reduced, or increased by an amount equal to the portion thereof to be
so exchanged or canceled, or equal to the principal amount of such other
Security to be so exchanged for a beneficial interest therein, as the
case may be, by means of an appropriate adjustment made on the records
of the Securities Registrar, whereupon the Trustee, in accordance with
the Applicable Procedures, shall instruct the Depositary or its
authorized representative to make a corresponding adjustment to its
records. Upon any such surrender or adjustment of a Global Security by
the Depositary, accompanied by registration instructions, the Trustee
shall, subject to Section 3.6(b) and as otherwise provided in this
Article III, authenticate and deliver any Securities issuable in
exchange for such Global Security (or any portion thereof) in accordance
with the instructions of the Depositary. The Trustee shall not be
liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be fully protected in relying on, such
instructions.
(d) Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Security or any portion thereof, whether pursuant to this Article III,
Section 9.6 or 11.6 or otherwise, shall be authenticated and delivered
in the form of, and shall be, a Global Security, unless such Security is
registered in the name of a Person other than the Depositary for such
Global Security or a nominee thereof.
(e) The Depositary or its nominee, as the registered owner of
a Global Security, shall be the Holder of such Global Security for all
purposes under this Indenture and the Securities, and owners of
beneficial interests in a Global Security shall hold such interests
pursuant to the Applicable Procedures. Accordingly, any such owner's
beneficial interest in a Global Security shall be shown only on, and the
transfer of such interest shall be effected only through, records
maintained by the Depositary or its nominee or agent. Neither the
Trustee nor the Securities Registrar shall have any liability in respect
of any transfers effected by the Depositary.
(f) The rights of owners of beneficial interests in a Global
Security shall be exercised only through the Depositary and shall be
limited to those established by law and agreements between such owners
and the Depositary and/or its Agent Members.
- 24 -
<PAGE>
<PAGE>
Section 3.6. Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges; Securities Act Legends.
(a) The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the
registration of Securities and transfers of Securities. Such register
is herein sometimes referred to as the "Securities Register." The
Trustee is hereby appointed "Securities Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at
the offices or agencies of the Company designated for that purpose, the
Company shall execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new
Securities of any authorized denominations of like tenor and aggregate
principal amount.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denominations, of like tenor and
aggregate principal amount and bearing such restrictive legends as may
be required by this Indenture, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Securities that the Holder making
the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Securities surrendered upon such transfer or exchange.
Every Security presented or surrendered for transfer or
exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar, duly executed
by the Holder thereof or such Holder's attorney duly authorized in
writing.
No service charge shall be made to a Holder for any transfer or
exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Securities.
Neither the Company nor the Trustee shall be required, pursuant
to the provisions of this Section, (i) to issue, exchange or register
the transfer of any Security during a period beginning at the opening of
business 15 days before the day of selection for redemption of
Securities pursuant to Article XI and ending at the close of business on
the day of mailing of the notice of redemption, or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole
or in part, except, in the case of any such Security to be redeemed in
part, any portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Notwithstanding any
other provision of this Indenture, transfers and exchanges of Securities
and beneficial interests in a Global Security shall be made only in
accordance with this Section 3.6(b).
(i) Non-Global Security to Non-Global Security. A
Security that is not a Global Security may be transferred, in whole or
in part, to a Person who takes delivery in the form of another Security
that is not a Global Security as provided in Section 3.6(a).
- 25 -
<PAGE>
<PAGE>
(ii) Exchanges Between Global Security and Non-Global
Security. A beneficial interest in a Global Security may be exchanged
for a Security that is not a Global Security as provided in Section 3.5.
Section 3.7. Mutilated, Lost and Stolen Securities.
(a) If any mutilated Security, including any temporary
Security, is surrendered to the Trustee together with such security or
indemnity as may be required by the Company or the Trustee to save each
of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security, of like
tenor and aggregate principal amount, bearing the same legends, and
bearing a number not contemporaneously outstanding.
(b) If there shall be delivered to the Company and to the
Trustee (i) evidence to their satisfaction of the destruction, loss or
theft of any Security, and (ii) such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser or a protected purchaser, the Company
shall execute and upon its request the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security, of like tenor and aggregate principal amount and bearing the
same legends as such destroyed, lost or stolen Security, and bearing a
number not contemporaneously outstanding.
(c) If any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security.
(d) Upon the issuance of any new Security under this Section
3.7, the Company may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith.
(e) Every new Security issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or
not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities
duly issued hereunder.
(f) The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or
stolen Securities.
Section 3.8. Payment of Interest and Additional Interest; Interest
Rights Preserved.
(a) Interest and Additional Interest on any Security that is
payable, and is punctually paid or duly provided for, on any Interest
Payment Date, shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest in respect of
Securities, except that, unless otherwise provided in the Securities,
interest payable on the Stated Maturity of the principal of a Security
shall be paid to the Person to whom principal is paid. The initial
payment of interest on any Security that is issued between a Regular
Record Date and the related Interest Payment Date shall be payable as
provided in such Security or in the Board Resolution pursuant to Section
3.1 with respect to such Securities.
- 26 -
<PAGE>
<PAGE>
(b) Any interest on any Security that is due and payable, but
is not timely paid or duly provided for, on any Interest Payment Date
for Securities (herein called "Defaulted Interest"), shall forthwith
cease to be payable to the registered Holder on the relevant Regular
Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as
provided in clause (i) or (ii) below:
(i) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities in
respect of which interest is in default (or their respective Predecessor
Securities) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each Security
and the date of the proposed payment, and which shall be fixed at the
same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided.
Thereupon, the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest, which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first class, postage
prepaid, to each Holder of a Security at the address of such Holder as
it appears in the Securities Register not less than 10 days prior to
such Special Record Date. The Trustee may, in its discretion, in the
name and at the expense of the Company, cause a similar notice to be
published at least once in a newspaper, customarily published in the
English language on each Business Day and of general circulation in the
Borough of Manhattan, The City of New York, but such publication shall
not be a condition precedent to the establishment of such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered
on such Special Record Date and shall no longer be payable pursuant to
the following clause (ii).
(ii) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities in
respect of which interest is in default may be listed and, upon such
notice as may be required by such exchange (or by the Trustee if the
Securities are not listed), if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this clause (ii), such
payment shall be deemed practicable by the Trustee.
(c) Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue interest, that were carried by such
other Security.
Section 3.9. Persons Deemed Owners.
(a) The Company, the Trustee and any agent of the Company or
the Trustee shall treat the Person in whose name any Security is
registered as the owner of such Security for the purpose of receiving
payment of principal of and (subject to Section 3.8) any interest on
such Security and for all
- 27 -
<PAGE>
<PAGE>
other purposes whatsoever, whether or not such Security be overdue, and
none of the Company, the Trustee or any agent of the Company or the
Trustee shall be affected by notice to the contrary.
(b) No holder of any beneficial interest in any Global
Security held on its behalf by a Depositary shall have any rights under
this Indenture with respect to such Global Security, and such Depositary
may be treated by the Company, the Trustee and any agent of the Company
or the Trustee as the owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by a Depositary or impair, as between a Depositary and such
holders of beneficial interests, the operation of customary practices
governing the exercise of the rights of the Depositary (or its nominee)
as Holder of any Security.
Section 3.10. Cancellation.
All Securities surrendered for payment, redemption, transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee, and any such Securities, and Securities
surrendered directly to the Trustee for any such purpose, shall be
promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and
delivered hereunder that the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly canceled
by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section 3.10,
except as expressly permitted by this Indenture. All canceled
Securities shall be destroyed by the Trustee and the Trustee shall
deliver to the Company a certificate of such destruction.
Section 3.11. Computation of Interest.
Interest on the Securities for any period shall be computed on
the basis of a 360-day year of twelve 30-day months and the actual
number of days elapsed in any partial month in such period, and interest
on the Securities for a full period shall be computed by dividing the
rate per annum by four.
Section 3.12. Deferrals of Interest Payment Dates.
(a) So long as no Event of Default has occurred and is
continuing, the Company shall have the right, at any time during the
term of the Securities, from time to time to defer the payment of
interest on such Securities for such period or periods (each an
"Extension Period") not to exceed the number of consecutive interest
periods that equal 20 consecutive quarterly periods with respect to each
Extension Period, during which Extension Periods the Company shall have
the right to make partial payments of interest on any Interest Payment
Date. No Extension Period shall end on a date other than an Interest
Payment Date. At the end of any such Extension Period, the Company
shall pay all interest then accrued and unpaid on the Securities
(together with Additional Interest thereon, if any, at the rate
specified for the Securities to the extent permitted by applicable law);
provided, however, that no Extension Period shall extend beyond the
Stated Maturity of the principal of the Securities; and provided
further, however, that, during any such Extension Period, the Company
shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to,
any of the Company's capital stock, (ii) make any payment of principal
of or interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in
interest to the Securities, including the Company's obligations
associated with the Preferred Securities or (iii) redeem, purchase or
acquire less than all of the Securities or any of the Preferred
Securities (other than (A) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection
with any employment contract, benefit plan or other similar arrangement
with or for the
- 28 -
<PAGE>
<PAGE>
benefit of any one or more employees, officers, directors or
consultants, in connection with a dividend reinvestment or stockholder
stock purchase plan, (B) as a result of a reclassification, an exchange
or conversion of any class or series of the Company's capital stock (or
any capital stock of a Subsidiary of the Company) for any class or
series of the Company's capital stock, (C) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security
being converted or exchanged, (D) any declaration of a dividend in
connection with any Rights Plan, or the issuance of rights, stock or
other property under any Rights Plan, or the redemption or repurchase of
rights pursuant thereto, or (E) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari
passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Company may further defer the payment of
interest, provided that no Event of Default has occurred and is
continuing and provided further, that no Extension Period shall exceed
twenty (20) consecutive quarterly periods, extend beyond the Stated
Maturity of the principal of such Securities or end on a date other than
an Interest Payment Date. Upon the termination of any such Extension
Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due on any Interest Payment Date, the Company
may elect to begin a new Extension Period, subject to the above
conditions. No interest or Additional Interest shall be due and payable
during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable
during such Extension Period shall bear Additional Interest. The
Company shall give the Holders of the Securities and the Trustee notice
of its election to begin any such Extension Period at least one Business
Day prior to the next succeeding Interest Payment Date on which interest
on Securities would be payable but for such deferral or, with respect to
any Securities issued to the Issuer Trust, so long as any such
Securities are held by the Issuer Trust, at least one Business Day prior
to the earlier of (x) the next succeeding date on which Distributions
(as defined in the Trust Agreement) on the Preferred Securities of the
Issuer Trust would be payable but for such deferral, and (y) the date on
which the Property Trustee of the Issuer Trust is required to give
notice to holders of such Preferred Securities of the record date or the
date such Distributions are payable, but in any event not less than one
Business Day prior to such record date.
(b) The Trustee shall promptly give notice of the Company's
election to begin any such Extension Period to the Holders of the
Outstanding Securities.
Section 3.13. Right of Set-Off.
With respect to the Securities initially issued to the Issuer
Trust, notwithstanding anything to the contrary herein, the Company
shall have the right to set off any payment it is otherwise required to
make in respect of any such Security to the extent the Company has
theretofore made, or is concurrently on the date of such payment making,
a payment under the Guarantee or to a holder of Preferred Securities
pursuant to an action undertaken under Section 5.8 of this Indenture.
Section 3.14. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company
and, by its acceptance of a Security or a beneficial interest therein,
the Holder of, and any Person that acquires a beneficial interest in,
such Security agree that for United States federal, state and local tax
purposes it is intended that such Security constitutes indebtedness.
- 29 -
<PAGE>
<PAGE>
Section 3.15. CUSIP Numbers.
The Company, in issuing the Securities, may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP"
numbers in notice of redemption and other similar or related materials
as a convenience to Holders; provided that any such notice or other
materials may state that no representation is made as to the correctness
of such numbers either as printed on the Securities or as contained in
any notice of redemption or other materials and that reliance may be
placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect
in or omission of such numbers.
Section 3.16. Shortening of Stated Maturity.
The Company shall have the right to shorten the Stated Maturity
of the principal of the Securities at any time to any date not earlier
than ____________, 2004, provided that the Company shall give notice to
the Holders, the Trustee and, in the case of Securities issued to an
Issuer Trust, the Issuer Trust of such shortening no less than 90 days
prior to the effectiveness thereof and provided that the Company shall
have received prior regulatory approval, if required.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of
further effect (except as to any surviving rights of registration of
transfer or exchange of Securities herein expressly provided for and as
otherwise provided in this Section 4.1) and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when:
(a) either
(i) all Securities theretofore authenticated and
delivered (other than (A) Securities that have been destroyed, lost or
stolen and that have been replaced or paid as provided in Section 3.7
and (B) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
(ii) all such Securities not theretofore delivered to
the Trustee for cancellation
(A) have become due and payable,
(B) will become due and payable at their Stated
Maturity within one year of the date of deposit, or
(C) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of
the Company, and the Company, in the case of subclause (ii)(A), (B) or
(C) above, has deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose an amount in the currency or
currencies in which the Securities are payable sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for the principal (and
premium, if any) and interest (including any Additional Interest) to the
date of such deposit (in the
- 30 -
<PAGE>
<PAGE>
case of Securities that have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section
6.7, the obligations of the Company to any Authenticating Agent under
Section 6.14 and, if money shall have been deposited with the Trustee
pursuant to subclause (ii) of clause (a) of this Section, the
obligations of the Trustee under Section 4.2 and the last paragraph of
Section 10.3 shall survive.
Section 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
10.3, all money deposited with the Trustee pursuant to Section 4.1 shall
be held in trust and applied by the Trustee, in accordance with the
provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as
its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium, if any) and interest
and Additional Interest for the payment of which such money or
obligations have been deposited with or received by the Trustee.
ARTICLE V
REMEDIES
Section 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the
Securities, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) default in the payment of any interest upon any Security,
including any Additional Interest in respect thereof, when it becomes
due and payable and continuance of such default for a period of 30 days
(subject to the deferral of any due date in the case of an Extension
Period);
(b) default in the payment of the principal of (or premium,
if any, on) any Security when due, whether at its Stated Maturity, upon
redemption or otherwise;
(c) failure on the part of the Company duly to observe or
perform any other of the covenants or agreements on the part of the
Company in the Securities or in this Indenture for a period of 90 days
after the date on which written notice of such failure (a "Notice of
Default"), requiring the Company to remedy the same, shall have been
given to the Company by the Trustee by registered or certified mail or
to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities; or
- 31 -
<PAGE>
<PAGE>
(d) the occurrence of the appointment of a receiver or other
similar official in any liquidation, insolvency or similar proceeding
with respect to the Company or all or substantially all of its property;
or a court or other governmental agency shall enter a decree or order
appointing a receiver or similar official and such decree or order shall
remain unstayed and undischarged for a period of 60 days.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default (other than an Event of Default
specified in Section 5.1(d)) with respect to Securities at the time
Outstanding occurs and is continuing, then, and in every such case, the
Trustee or the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities may declare the principal amount
(or, if the Securities are Discount Securities, such portion of the
principal amount as may be specified in the terms) of all the Securities
to be due and payable immediately, by a notice in writing to the Company
(and to the Trustee if given by Holders), provided, however that, if,
upon an Event of Default, the Trustee or the Holders of not less than
25% in principal amount of the Outstanding Securities fail to declare
the principal of all the Outstanding Securities to be immediately due
and payable, the holders of at least 25% in aggregate Liquidation Amount
of the Preferred Securities issued by the Issuer Trust then outstanding
shall have the right to make such declaration by a notice in writing to
the Company and the Trustee; and upon any such declaration such
principal amount (or specified portion thereof) of and the accrued
interest (including any Additional Interest) on all the Securities shall
become immediately due and payable. If an Event of Default specified in
Section 5.1(d) with respect to Securities at the time Outstanding
occurs, the principal amount of all the Securities (or, if the
Securities are Discount Securities, such portion of the principal amount
of such Securities as may be specified by the terms) shall
automatically, and without any declaration or other action on the part
of the Trustee or any Holder, become immediately due and payable.
Payment of principal and interest (including any Additional Interest) on
such Securities shall remain subordinated to the extent provided in
Article XIII notwithstanding that such amount shall become immediately
due and payable as herein provided.
(b) At any time after such a declaration of acceleration with
respect to the Securities has been made and before a judgment or decree
for payment of the money due has been obtained by the Trustee as
hereinafter in this Article V provided, the Holders of a majority in
aggregate principal amount of the Outstanding Securities, by written
notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee
a sum sufficient to pay:
(A) all overdue installments of interest on all
Securities;
(B) any accrued Additional Interest on all
Securities;
(C) the principal of (and premium, if any, on)
any Securities that have become due otherwise than by such declaration
of acceleration and interest and Additional Interest thereon at the rate
borne by the Securities; and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and
(ii) all Events of Default with respect to Securities,
other than the non-payment of the principal of Securities that has
become due solely by such acceleration, have been cured or waived as
provided in Section 5.13.
- 32 -
<PAGE>
<PAGE>
(c) If the Holders of Securities fail to annul such
declaration and waive such default, the holders of a majority in
aggregate Liquidation Amount of Preferred Securities issued by the
Issuer Trust then outstanding shall also have the right to rescind and
annul such declaration and its consequences by written notice to the
Company and the Trustee, subject to the satisfaction of the conditions
set forth in clauses (a) and (b) above of this Section 5.2.
(d) No such rescission shall affect any subsequent default or
impair any right consequent thereon.
Section 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
(a) The Company covenants that if:
(i) default is made in the payment of any installment
of interest (including any Additional Interest) on any Security when
such interest becomes due and payable and such default continues for a
period of 30 days, or
(ii) default is made in the payment of the principal of
(and premium, if any, on) any Security at the Stated Maturity thereof,
then the Company will, upon demand of the Trustee, pay to the Trustee,
for the benefit of the Holders of the Securities, the whole amount then
due and payable on the Securities for principal (and premium, if any)
and interest (including any Additional Interest), and, in addition
thereto, all amounts owing the Trustee under Section 6.7.
(b) If the Company fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an express
trust, may institute a judicial proceeding for the collection of the
sums so due and unpaid, and may prosecute such proceeding to judgment or
final decree, and may enforce the same against the Company or any other
obligor upon such Securities and collect the monies adjudged or decreed
to be payable in the manner provided by law out of the property of the
Company or any other obligor upon the Securities, wherever situated.
(c) If an Event of Default with respect to Securities occurs
and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities by
such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or
in aid of the exercise of any power granted herein, or to enforce any
other proper remedy.
Section 5.4. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial or administrative proceeding relative to the Company or
any other obligor upon the Securities or the property of the Company or
of such other obligor or their creditors,
(a) the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Company for the payment of overdue principal
(and premium, if any) or
- 33 -
<PAGE>
<PAGE>
interest (including any Additional Interest)) shall be entitled and
empowered, by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest (including any Additional
Interest) owing and unpaid in respect to the Securities and to file such
other papers or documents as may be necessary or advisable and to take
any and all actions as are authorized under the Trust Indenture Act in
order to have the claims of the Holders and any predecessor to the
Trustee under Section 6.7 allowed in any such judicial or administrative
proceedings; and
(ii) in particular, the Trustee shall be authorized to
collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same in accordance with Section
5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator,
sequestrator, conservator (or other similar official) in any such
judicial or administrative proceeding is hereby authorized by each
Holder to make such payments to the Trustee for distribution in
accordance with Section 5.6, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay
to the Trustee any amount due to it and any predecessor Trustee under
Section 6.7.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of
any Holder in any such proceeding; provided, however, that the Trustee
may, on behalf of the Holders, vote for the election of a trustee in
bankruptcy or similar official and be a member of a creditors' or other
similar committee.
Section 5.5. Trustee May Enforce Claim Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, subject to Article XIII and after
provision for the payment of all the amounts owing the Trustee and any
predecessor Trustee under Section 6.7, its agents and counsel, be for
the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
Section 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee
with respect to the Securities pursuant to this Article V shall be
applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money or property on
account of principal (and premium, if any) or interest (including any
Additional Interest), upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts
then due and unpaid upon Securities for principal (and premium, if any)
and interest (including any Additional Interest) in respect of which or
for the benefit of which such money has been collected, ratably, without
preference or
- 34 -
<PAGE>
<PAGE>
priority of any kind, according to the amounts due and payable on such
Securities for principal (and premium, if any) and interest (including
any Additional Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
Section 5.7. Limitation on Suits.
Subject to Section 5.8, no Holder of any Securities shall have
any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture or for the appointment of a receiver,
assignee, trustee, liquidator, sequestrator (or other similar official)
or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities,
as herein before provided;
(b) the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the Outstanding Securities; it
being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing
itself of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holders of Securities, or to obtain or
to seek to obtain priority or preference over any other of such Holders
or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all such
Holders.
Section 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders of Preferred Securities.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if
any) and (subject to Sections 3.8 and 3.12) interest (including any
Additional Interest) on such Security on the Stated Maturity (or in the
case of redemption, on the Redemption Date) and to institute suit for
the enforcement of any such payment, and such right shall not be
impaired without the consent of such Holder. Any registered holder of
the Preferred Securities issued by the Issuer Trust shall have the
right, upon the occurrence of an Event of Default described in Section
5.1(a) or 5.1(b), to institute a suit directly against the Company for
enforcement of payment to such holder of principal of (and premium, if
any) and (subject to Sections 3.8 and 3.12) interest (including any
Additional Interest) on the Securities having a principal amount equal
to the aggregate Liquidation Amount of such Preferred Securities held by
such holder.
- 35 -
<PAGE>
<PAGE>
Section 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred
Securities issued by the Issuer Trust has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has
been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee, such Holder or such holder of Preferred
Securities, then, and in every such case, the Company, the Trustee, such
Holders and such holder of Preferred Securities shall, subject to any
determination in such proceeding, be restored severally and respectively
to their former positions hereunder, and thereafter all rights and
remedies of the Trustee, such Holder and such holder of Preferred
Securities shall continue as though no such proceeding had been
instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section
3.7, no right or remedy herein conferred upon or reserved to the Trustee
or the Holders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of
any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
(a) No delay or omission of the Trustee, any Holder of any
Security with respect to the Securities or any holder of any Preferred
Security to exercise any right or remedy accruing upon any Event of
Default with respect to the Securities shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an
acquiescence therein.
(b) Every right and remedy given by this Article V or by law
to the Trustee or to the Holders and the right and remedy given to the
holders of Preferred Securities by Sections 5.2 and 5.8 may be exercised
from time to time, and as often as may be deemed expedient, by the
Trustee, the Holders or the holders of Preferred Securities, as the case
may be.
Section 5.12. Control by Holders.
The Holders of a majority in aggregate principal amount of the
Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee, with
respect to the Securities, provided that:
(a) such direction shall not be in conflict with any rule of
law or with this Indenture,
(b) the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction, and
(c) subject to the provisions of Section 6.1, the Trustee
shall have the right to decline to follow such direction if a
Responsible Officer or Officers of the Trustee shall, in good faith,
determine that the proceeding so directed would be unjustly prejudicial
to the Holders not joining in any such direction or would involve the
Trustee in personal liability.
- 36 -
<PAGE>
<PAGE>
Section 5.13. Waiver of Past Defaults.
(a) The Holders of a majority in aggregate principal amount
of the Outstanding Securities affected thereby and, the holders of a
majority in aggregate Liquidation Amount of the Preferred Securities
issued by the Issuer Trust may waive any past default hereunder and its
consequences except a default:
(i) in the payment of the principal of (or premium, if
any) or interest (including any Additional Interest) on any Security
(unless such default has been cured and the Company has paid to or
deposited with the Trustee a sum sufficient to pay all matured
installments of interest (including Additional Interest) and all
principal of (and premium, if any on) all Securities due otherwise than
by acceleration), or
(ii) in respect of a covenant or provision hereof that
under Article IX cannot be modified or amended without the consent of
each Holder of any Outstanding Security affected thereby.
(b) Any such waiver shall be deemed to be on behalf of the
Holders of all the Securities, or in the case of waiver by holders of
Preferred Securities issued by the Issuer Trust, by all holders of
Preferred Securities issued by the Issuer Trust.
(c) Upon any such waiver, such default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture, but no such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that
any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may, in its discretion,
assess reasonable costs, including reasonable attorneys' fees, against
any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant, but
the provisions of this Section shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Holder, or group of Holders,
holding in the aggregate more than 10% in aggregate principal amount of
the Outstanding Securities, or to any suit instituted by any Holder for
the enforcement of the payment of the principal of (or premium, if any)
or interest (including any Additional Interest) on any Security on or
after the Stated Maturity.
Section 5.15. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any usury, stay or
extension law wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
- 37 -
<PAGE>
<PAGE>
ARTICLE VI
THE TRUSTEE
Section 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(i) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture, but in the case of any such certificates or opinions
that by any provisions hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct except that:
(i) this subsection shall not be construed to limit the
effect of subsection (a) of this Section 6.1;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of Holders pursuant to Section 5.12 relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture with respect to the Securities.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if there shall be reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(e) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to
the provisions of this Section.
Section 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer
of the Trustee of the occurrence of any default hereunder with respect
to the Securities, the Trustee shall transmit by mail to all Holders
- 38 -
<PAGE>
<PAGE>
of Securities, as their names and addresses appear in the Securities
Register, notice of such default, unless such default shall have been
cured or waived; provided, however, that, except in the case of a
default in the payment of the principal of (or premium, if any) or
interest (including any Additional Interest) on any Security, the
Trustee shall be protected in withholding such notice if and so long as
the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith
determines that the withholding of such notice is in the interests of
the Holders of Securities; and provided further, that, in the case of
any default of the character specified in Section 5.1(c), no such notice
to Holders of Securities shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section 6.2, the term
"default" means any event that is, or after notice or lapse of time or
both would become, an Event of Default with respect to the Securities.
Section 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, Security or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and
the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction; provided,
however, that nothing herein shall relieve the Trustee of its
obligations upon the occurrence of an Event of Default that has not been
cured or waived to exercise with respect to the Securities such of the
rights and powers vested in the Trustee by this Indenture, and to use
the same degree of care and skill in exercising such rights and powers
as a reasonably prudent person would 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, direction,
consent, order, bond, indenture, Security or other paper or document,
but the Trustee in its discretion may make such inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or by
agent or attorney; and
- 39 -
<PAGE>
<PAGE>
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
Section 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the
statements of the Company, and neither the Trustee nor any
Authenticating Agent assumes any responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency
of this Indenture or of the Securities. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by
the Company of the Securities or the proceeds thereof.
Section 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Securities Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of
Securities and, subject to Sections 6.8 and 6.13, may otherwise deal
with the Company with the same rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent, Securities Registrar or
such other agent.
Section 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money received
by it hereunder except as otherwise agreed with the Company.
Section 6.7. Compensation and Reimbursement.
(a) The Company agrees to pay to the Trustee from time to
time reasonable compensation for all services rendered by it hereunder
in such amounts as the Company and the Trustee shall agree from time to
time (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust).
(b) The Company agrees to reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred
or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense
disbursement or advance as may be attributable to its negligence, bad
faith or willful misconduct.
(c) Since the Issuer Trust is being formed solely to
facilitate an investment in the Preferred Securities, the Company, as
Holder of the Common Securities, hereby covenants to pay all debts and
obligations (other than with respect to the Preferred Securities and the
Common Securities) and all reasonable costs and expenses of the Issuer
Trust (including without limitation all costs and expenses relating to
the organization of the Issuer Trust, the fees and expenses of the
trustees and all reasonable costs and expenses relating to the operation
of the Issuer Trust) and to pay any and all taxes, duties, assessments
or governmental charges of whatever nature (other than withholding
taxes) imposed on the Issuer Trust by the United States, or any taxing
authority, so that the net amounts received and retained by the Issuer
Trust and the Property Trustee after paying such expenses will be equal
to the amounts the
- 40 -
<PAGE>
<PAGE>
Issuer Trust and the Property Trustee would have received had no such
costs or expenses been incurred by or imposed on the Issuer Trust. The
foregoing obligations of the Company are for the benefit of, and shall
be enforceable by, any person to whom any such debts, obligations,
costs, expenses and taxes are owed (each, a "Creditor") whether or not
such Creditor has received notice thereof. Any such Creditor may
enforce such obligations directly against the Company, and the Company
irrevocably waives any right or remedy to require that any such Creditor
take any action against the Issuer Trust or any other person before
proceeding against the Company. The Company shall execute such
additional agreements as may be necessary or desirable to give full
effect to the foregoing.
(d) The Company shall indemnify the Trustee, its directors,
officers, employees and agents for, and hold them harmless against, any
loss, liability or expense (including the reasonable compensation and
the expenses and disbursements of its agents and counsel) incurred
without negligence, bad faith or willful misconduct, arising out of or
in connection with the acceptance or administration of this trust or the
performance of its duties hereunder, including the reasonable costs and
expenses of defending against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder.
This indemnification shall survive the termination of this Indenture or
the resignation or removal of the Trustee.
(e) When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 5.1(d) occurs, the
expenses and the compensation for the services are intended to
constitute expenses of administration under the Bankruptcy Reform Act of
1978 or any successor statute.
Section 6.8. Disqualification; Conflicting Interests.
The Trustee for the Securities issued hereunder shall be
subject to, and shall comply fully with, the provisions of Section
310(b) of the Trust Indenture Act. Nothing herein shall prevent the
Trustee from filing with the Commission the application referred to in
the second to last paragraph of said Section 310(b).
Section 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee with respect to the
Securities issued hereunder which shall be:
(a) a Person organized and doing business under the laws of
the United States of America or of any state or territory thereof or of
the District of Columbia, authorized under such laws to exercise
corporate trust powers and subject to supervision or examination by
federal, state, territorial or District of Columbia authority, or
(b) an entity organized and doing business under the laws of
a foreign government that is permitted to act as Trustee pursuant to a
rule, regulation or order of the Commission, authorized under such laws
to exercise corporate trust powers, and subject to supervision or
examination by authority of such foreign government or a political
subdivision thereof substantially equivalent to supervision or
examination applicable to United States institutional trustees;
in either case having a combined capital and surplus of at least
$50,000,000, subject to supervision or examination by federal or state
authority. If such entity publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then, for the purposes of this
Section 6.9, the combined capital and surplus of such entity shall be
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any
- 41 -
<PAGE>
<PAGE>
time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article VI. Neither
the Company nor any Person directly or indirectly controlling,
controlled by or under common control with the Company shall serve as
Trustee for the Securities issued hereunder.
Section 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee
under Section 6.11.
(b) The Trustee may resign at any time with respect to the
Securities by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been
delivered to the Trustee within 30 days after the giving of such notice
of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time with respect to
the Securities by Act of the Holders of a majority in aggregate
principal amount of the Outstanding Securities, delivered to the Trustee
and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 6.8
after written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six months, or
(ii) the Trustee shall cease to be eligible under
Section 6.9 and shall fail to resign after written request therefor by
the Company or by any such Holder, or
(iii) the Trustee shall become incapable of acting or
shall be adjudged 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, (x) the Company, acting pursuant to the
authority of a Board Resolution, may remove the Trustee with respect to
the Securities issued hereunder, or (y) subject to Section 5.14, any
Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of such Holder and all others similarly situated,
petition any court of competent jurisdiction for the removal of the
Trustee with respect to the Securities issued hereunder and the
appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause with respect to the Securities, the Company, by a
Board Resolution, shall promptly appoint a successor Trustee with
respect to the Securities. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor
Trustee with respect to the Securities shall be appointed by Act of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of
such appointment, become the successor Trustee with respect to the
Securities and supersede the successor Trustee appointed by the Company.
If no successor Trustee with respect to the Securities shall have been
so appointed by the Company or the Holders and accepted appointment in
the manner hereinafter provided, any Holder who
- 42 -
<PAGE>
<PAGE>
has been a bona fide Holder of a Security for at least six months may,
subject to Section 5.14, on behalf of such Holder and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities.
(f) The Company shall give notice of each resignation and
each removal of the Trustee with respect to the Securities and each
appointment of a successor Trustee with respect to the Securities by
mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Securities as their names and addresses
appear in the Securities Register. Each notice shall include the name
of the successor Trustee with respect to the Securities and the address
of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to
the retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee shall
become effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring
to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder.
(b) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all rights, powers
and trusts referred to in Section 6.11(a).
(c) No successor Trustee shall accept its appointment unless,
at the time of such acceptance, such successor Trustee shall be
qualified and eligible under this Article VI.
Section 6.12. Merger, Conversion, Consolidation or Succession to
Business.
Any entity into which the Trustee may be merged or converted or
with which it may be consolidated, or any entity resulting from any
merger, conversion or consolidation to which the Trustee shall be a
party, or any entity succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such entity shall be otherwise qualified and
eligible under this Article VI, without the execution or filing of any
paper or any further act on the part of any of the parties hereto. In
case any Securities shall have been authenticated, but not delivered, by
the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated, and in case
any Securities shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any
predecessor Trustee or in the name of such successor Trustee, and in all
cases the certificate of authentication shall have the full force which
it is provided anywhere in the Securities or in this Indenture that the
certificate of the Trustee shall have.
Section 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such other obligor).
- 43 -
<PAGE>
<PAGE>
Section 6.14. Appointment of Authenticating Agent.
(a) The Trustee may appoint an Authenticating Agent or Agents
with respect to the Securities, which shall be authorized to act on
behalf of the Trustee to authenticate Securities issued upon original
issue and upon exchange, registration of transfer or partial redemption
thereof or pursuant to Section 3.6, and Securities so authenticated
shall be entitled to the benefits of this Indenture and shall be valid
and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed
to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to
the Company and shall at all times be an entity organized and doing
business under the laws of the United States of America, or of any state
or territory thereof or of the District of Columbia, authorized under
such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or
examination by federal or state authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervising or examining authority, then for
the purposes of this Section the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 6.14, such
Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section 6.14.
(b) Any entity into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any entity succeeding to all
or substantially all of the corporate trust business of an
Authenticating Agent shall be the successor Authenticating Agent
hereunder, provided such entity shall be otherwise eligible under this
Section, without the execution or filing of any paper or any further act
on the part of the Trustee or the Authenticating Agent.
(c) An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee
may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and to the
Company. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time such Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section,
the Trustee may appoint a successor Authenticating Agent, which shall be
acceptable to the Company and shall give notice of such appointment in
the manner provided in Section 1.6 to all Holders of Securities. Any
successor Authenticating Agent upon acceptance hereunder shall become
vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating
Agent. No successor Authenticating Agent shall be appointed unless
eligible under the provision of this Section.
(d) The Company agrees to pay to each Authenticating Agent
from time to time reasonable compensation for its services under this
Section, and the Trustee shall be entitled to be reimbursed for such
payment, subject to the provisions of Section 6.7.
- 44 -
<PAGE>
<PAGE>
(e) If an appointment is made pursuant to this Section 6.14,
the Securities may have endorsed thereon, in addition to the Trustee's
certificate of authentication, an alternative certificate of
authentication in the following form:
This is one of the Securities referred to in the within
mentioned Indenture.
Dated: ________________________ BANKERS TRUST COMPANY, as Trustee
By:_______________________________
As Authenticating Agent
ARTICLE VII
HOLDERS LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY
Section 7.1. Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to the
Trustee:
(a) quarterly, not more than 15 days after March 15, June 15,
September 15, and December 15 in each year, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the
Holders as of such dates, excluding from any such list names and
addresses received by the Trustee in its capacity as Securities
Registrar, and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished, excluding from any
such list names and addresses received by the Trustee in its capacity as
Securities Registrar.
Section 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in
the most recent list furnished to the Trustee as provided in Section 7.1
and the names and addresses of Holders received by the Trustee in its
capacity as Securities Registrar. The Trustee may destroy any list
furnished to it as provided in Section 7.1 upon receipt of a new list so
furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the
Securities, and the corresponding rights and privileges of the Trustee,
shall be as provided in the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company
nor the Trustee nor any agent of either of them shall be held
accountable by reason of the disclosure of information as to the names
and addresses of the Holders made pursuant to the Trust Indenture Act.
Section 7.3. Reports by Trustee and Paying Agent.
(a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act, at the times and in the
manner provided pursuant thereto.
- 45 -
<PAGE>
<PAGE>
(b) Reports so required to be transmitted at stated intervals
of not more than 12 months shall be transmitted within 60 days of
January 31 in each calendar year, commencing with January 31, 2000.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each securities
exchange upon which any Securities are listed and also with the
Commission. The Company will notify the Trustee when any Securities are
listed on any securities exchange.
(d) The Paying Agent shall comply with all withholding,
backup withholding, tax and information reporting requirements under the
Internal Revenue Code of 1986, as amended, and the Treasury Regulations
issued thereunder with respect to payments on, or with respect to, the
Securities.
Section 7.4. Reports by Company.
The Company shall file or cause to be filed with the Trustee
and with the Commission, and transmit to Holders, such information,
documents and other reports, and such summaries thereof, as may be
required pursuant to the Trust Indenture Act at the times and in the
manner provided in the Trust Indenture Act. In the case of information,
documents or reports required to be filed with the Commission pursuant
to Section 13(a) or Section 15(d) of the Exchange Act, the Company shall
file or cause the filing of such information documents or reports with
the Trustee within 15 days after the same is required to be filed with
the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Company or convey, transfer or lease
its properties and assets substantially as an entirety to the Company,
unless:
(a) if the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the entity formed by such
consolidation or into which the Company is merged or the Person that
acquires by conveyance or transfer, or that leases, the properties and
assets of the Company substantially as an entirety shall be an entity
organized and existing under the laws of the United States of America or
any state thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual
payment of the principal of (and premium, if any), and interest
(including any Additional Interest) on all the Securities and the
performance of every covenant of this Indenture on the part of the
Company to be performed or observed; provided, however, that nothing in
this Indenture shall be deemed to restrict or prohibit, and no
supplemental indenture shall be required in the case of the merger of a
bank (as defined below) with and into a bank or the Company, the
consolidation of banks into a bank or the Company, or the sale or
disposition of all or substantially all of the assets of any bank to
another bank or of the Company, if, in any such case in which the
Company was not the surviving, resulting or acquiring entity, the
Company would own, directly or indirectly, at least 80% of the voting
securities of the bank (and of any other bank
- 46 -
<PAGE>
<PAGE>
any voting securities of which are owned directly or indirectly by such
bank) surviving such merger, resulting from such consolidation or
acquiring such assets;
(b) immediately after giving effect to such transaction, no
Event of Default, and no event that, after notice or lapse of time, or
both, would constitute an Event of Default, shall have occurred and be
continuing; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and any such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with and, in the case of a transaction subject to this Section
8.1 but not requiring a supplemental indenture under paragraph (a) of
this Section 8.1, an Officer's Certificate or Opinion of Counsel to the
effect that the surviving, resulting or successor entity is legally
bound by the Indenture and the Securities; and the Trustee, subject to
Section 6.1, may rely upon such Officers' Certificates and Opinions of
Counsel as conclusive evidence that such transaction complies with this
Section 8.1.
For purposes of subparagraph (a) above, the term "bank" means
each of:
(x) any banking subsidiary of the Company the consolidated
assets of which constitute 20% or more of the Company's
consolidated assets and consolidated subsidiaries;
(y) any other banking subsidiary designated as a bank
pursuant to a board resolution and set forth in an
officers' certificate delivered to the trustee; and
(z) any subsidiary of the Company that owns, directly or
indirectly, any voting securities, or options, warrants
or rights to subscribe for or purchase voting securities,
of any bank under (x) and (y) above and in the case of
(x), (y) and this subparagraph (z), their respective
successors (whether by consolidation, merger, conversion
transfer of substantially all their assets and business
or otherwise) so long as any such successor is a banking
subsidiary (in the case of (x) and (y)) or a subsidiary
(in the case of (z)) of the Company.
Section 8.2. Successor Company Substituted.
(a) Upon any consolidation or merger by the Company with or
into any other Person, or any conveyance, transfer or lease by the
Company of its properties and assets substantially as an entirety to any
Person in accordance with Section 8.1, the successor entity formed by
such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person
had been named as the Company herein; and in the event of any such
conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities.
(b) Such successor Person may cause to be executed, and may
issue either in its own name or in the name of the Company, any or all
of the Securities issuable hereunder that theretofore shall not have
been signed by the Company and delivered to the Trustee; and, upon the
order of such successor Person instead of the Company and subject to all
the terms, conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver any Securities that
previously shall have been signed and delivered by the officers of the
Company to the Trustee for authentication pursuant to such
- 47 -
<PAGE>
<PAGE>
provisions and any Securities that such successor Person thereafter
shall cause to be executed and delivered to the Trustee on its behalf
for the purpose pursuant to such provisions. All the Securities so
issued shall in all respects have the same legal rank and benefit under
this Indenture as the Securities theretofore or thereafter issued in
accordance with the terms of this Indenture.
(c) In case of any such consolidation, merger, sale,
conveyance or lease, such changes in phraseology and form may be made in
the Securities thereafter to be issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may amend or waive any provision of this Indenture or
enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants of
the Company herein and in the Securities contained;
(b) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee;
(c) to facilitate the issuance of Securities in certificated
or other definitive form;
(d) to add to the covenants of the Company for the benefit of
the Holders of the Securities or to surrender any right or power herein
conferred upon the Company;
(e) to add any additional Events of Default for the benefit
of the Holders of the Securities;
(f) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall not apply
to any Outstanding Securities;
(g) to cure any ambiguity, to correct or supplement any
provision herein that may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture, provided that such
action pursuant to this clause (g) shall not adversely affect the
interest of the Holders of Securities in any material respect or, in the
case of the Securities issued to the Issuer Trust and for so long as any
of the Preferred Securities issued by the Issuer Trust shall remain
outstanding, the holders of such Preferred Securities;
(h) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities and to
add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of
Section 6.11(b); or
(i) to comply with the requirements of the Commission in
order to effect or maintain the qualification of this Indenture under
the Trust Indenture Act.
- 48 -
<PAGE>
<PAGE>
Section 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Securities affected by such
supplemental indenture, by Act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by a Board Resolution, and
the Trustee may enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities under
this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Security
affected thereby:
(a) change the Stated Maturity of the principal of, or any
installment of interest (including any Additional Interest) on, any
Security, or reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof, or reduce
the amount of principal of a Discount Security that would be due and
payable upon a declaration of acceleration of the Stated Maturity
thereof pursuant to Section 5.2, or change the place of payment where,
or the coin or currency in which, any Security or interest thereon is
payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the
case of redemption, on or after the Redemption Date),
(b) reduce the percentage in aggregate principal amount of
the Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture, or
(c) modify any of the provisions of this Section, Section
5.13 or Section 10.5, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Security
affected thereby; provided, further, that, in the case of the Securities
issued to the Issuer Trust, so long as any of the Preferred Securities
issued by the Issuer Trust remains outstanding, (i) no such amendment
shall be made that adversely affects the holders of such Preferred
Securities in any material respect, and no termination of this Indenture
shall occur, and no waiver of any Event of Default or compliance with
any covenant under this Indenture shall be effective, without the prior
consent of the holders of a majority of the aggregate Liquidation Amount
of such Preferred Securities then outstanding unless and until the
principal of (and premium, if any, on) the Securities and all accrued
and (subject to Section 3.8) unpaid interest (including any Additional
Interest) thereon have been paid in full, and (ii) no amendment shall be
made to Section 5.8 of this Indenture that would impair the rights of
the holders of Preferred Securities issued by the Issuer Trust provided
therein without the prior consent of the holders of each such Preferred
Security then outstanding unless and until the principal of (and
premium, if any, on) the Securities and all accrued and (subject to
Section 3.8) unpaid interest (including any Additional Interest) thereon
have been paid in full.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the
substance thereof.
Section 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article IX or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be
entitled to receive, and (subject to Section 6.1) shall be fully
protected in relying upon, an Officers'
- 49 -
<PAGE>
<PAGE>
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and
that all conditions precedent herein provided for relating to such
action have been complied with. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects
the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Section 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article IX, this Indenture shall be modified in accordance therewith,
and such supplemental indenture shall form a part of this Indenture for
all purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
Section 9.5 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
IX shall conform to the requirements of the Trust Indenture Act as then
in effect.
Section 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article IX may, and shall if
required by the Company, bear a notation in form approved by the Company
as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities so modified as to conform, in
the opinion of the Company, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by
the Trustee in exchange for Outstanding Securities.
ARTICLE X
COVENANTS
Section 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the
Securities that it will duly and punctually pay the principal of (and
premium, if any) and interest (including any Additional Interest) on the
Securities in accordance with the terms of such Securities and this
Indenture.
Section 10.2. Maintenance of Office or Agency.
(a) The Company will maintain in each Place of Payment an
office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served.
The Company initially appoints the Trustee, acting through its Corporate
Trust Office, as its agent for said purposes. The Company will give
prompt written notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company shall fail to
maintain such office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
- 50 -
<PAGE>
<PAGE>
(b) The Company may also from time to time designate one or
more other offices or agencies where the Securities may be presented or
surrendered for any or all of such purposes, and may from time to time
rescind such designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its obligation
to maintain an office or agency in each Place of Payment for Securities
for such purposes. The Company will give prompt written notice to the
Trustee of any such designation and any change in the location of any
such office or agency.
Section 10.3. Money for Security Payments to be Held in Trust.
(a) If the Company shall at any time act as its own Paying
Agent with respect to the Securities, it will, on or before each due
date of the principal of (and premium, if any) or interest (including
Additional Interest) on any of the Securities, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient
to pay the principal (and premium, if any) or interest (including
Additional Interest) so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided, and will
promptly notify the Trustee of its failure so to act.
(b) Whenever the Company shall have one or more Paying
Agents, it will, prior to 10:00 a.m., New York City time, on each due
date of the principal of (or premium, if any) or interest, including
Additional Interest on any Securities, deposit with a Paying Agent a sum
sufficient to pay the principal (and premium, if any) or interest,
including Additional Interest so becoming due, such sum to be held in
trust for the benefit of the Persons entitled to such principal (and
premium, if any) or interest, including Additional Interest, and (unless
such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its failure so to act.
(c) The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest (including Additional
Interest) on the Securities in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(ii) give the Trustee notice of any default by the
Company (or any other obligor upon such Securities) in the making of any
payment of principal (and premium, if any) or interest (including
Additional Interest) in respect of any Security;
(iii) at any time during the continuance of any default
with respect to the Securities, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by such Paying
Agent; and
(iv) comply with the provisions of the Trust Indenture
Act applicable to it as a Paying Agent.
(d) The Company may, at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for any
other purpose, pay, or by Company Order direct any Paying Agent to pay,
to the Trustee all sums held in trust by the Company or such Paying
Agent, such sums to be held by the Trustee upon the same terms as those
upon which such sums were held by the Company or such Paying Agent; and,
upon such payment by any Paying Agent to the Trustee, such Paying Agent
shall be released from all further liability with respect to such money.
- 51 -
<PAGE>
<PAGE>
(e) Any money deposited with the Trustee or any Paying Agent,
or then held by the Company in trust for the payment of the principal of
(and premium, if any) or interest (including Additional Interest) on any
Security and remaining unclaimed for two years after such principal (and
premium, if any) or interest (including Additional Interest) has become
due and payable shall (unless otherwise required by mandatory provision
of applicable escheat or abandoned or unclaimed property law) be paid on
Company Request to the Company, or (if then held by the Company) shall
(unless otherwise required by mandatory provision of applicable escheat
or abandoned or unclaimed property law) be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying
Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, the
City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
Section 10.4. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof,
an Officers' Certificate covering the preceding calendar year, stating
whether or not to the best knowledge of the signers thereof the Company
is in default in the performance, observance or fulfillment of or
compliance with any of the terms, provisions, covenants and conditions
of this Indenture, and if the Company shall be in default, specifying
all such defaults and the nature and status thereof of which they may
have knowledge. For the purpose of this Section 10.4, compliance shall
be determined without regard to any grace period or requirement of
notice provided pursuant to the terms of this Indenture.
Section 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Preferred Securities
specified in Section 9.2, if any, the Company may omit in any particular
instance to comply with any covenant or condition provided pursuant to
Section 3.1, 9.1(c) or 9.1(d) with respect to the Securities, if before
or after the time for such compliance the Holders of a majority in
aggregate principal amount of the Outstanding Securities shall, by Act
of such Holders, either waive such compliance in such instance or
generally waive compliance with such covenant or condition, but no such
waiver shall extend to or affect such covenant or condition except to
the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company in respect of any such
covenant or condition shall remain in full force and effect.
Section 10.6. Additional Sums.
So long as no Event of Default has occurred and is continuing
and except as otherwise specified as contemplated by Section 2.1 or
Section 3.1, if: (a) the Issuer Trust is the Holder of all of the
Outstanding Securities, and (b) a Tax Event described in clause (a) or
(c) of the definition of "Tax Event" in Section 1.1 hereof has occurred
and is continuing in respect of the Issuer Trust, the Company shall pay
the Issuer Trust (and its permitted successors or assigns under the
Trust Agreement) for so long as the Issuer Trust (or its permitted
successor or assignee) is the registered holder of the Outstanding
Securities, such additional sums as may be necessary in order that the
amount of Distributions (including any Additional Amount (as defined in
the Trust Agreement)) then due and payable by the Issuer Trust on the
Preferred Securities and Common Securities that at any time remain
outstanding in accordance with the
- 52 -
<PAGE>
<PAGE>
terms thereof shall not be reduced as a result of such Additional Taxes
(the "Additional Sums"). Whenever in this Indenture or the Securities
there is a reference in any context to the payment of principal of or
interest on the Securities, such mention shall be deemed to include
mention of the payments of the Additional Sums provided for in this
paragraph to the extent that, in such context, Additional Sums are, were
or would be payable in respect thereof pursuant to the provisions of
this paragraph and express mention of the payment of Additional Sums (if
applicable) in any provisions hereof shall not be construed as excluding
Additional Sums in those provisions hereof where such express mention is
not made; provided, however, that the deferral of the payment of
interest pursuant to Section 3.12 or the Securities shall not defer the
payment of any Additional Sums that may be due and payable.
Section 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities
that it shall not: (a) declare or pay any dividends or distributions on,
or redeem, purchase, acquire or make a liquidation payment with respect
to, any shares of the Company's capital stock, (b) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Company that rank pari passu with or
junior in interest to the Securities, including the Company's
obligations associated with the Preferred Securities, or (c) redeem,
purchase or acquire less than all of the Securities or any of the
Preferred Securities (other than (i) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection
with any employment contract, benefit plan or other similar arrangement
with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan, (ii) as a result of a reclassification,
exchange or conversion of any class or series of the Company's capital
stock (or any capital stock of a Subsidiary of the Company) for any
class or series of the Company's capital stock or of any class, (iii)
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, (iv) any declaration
of a dividend in connection with any Rights Plan, or the issuance of
rights, stock or other property under any Rights Plan, or the redemption
or repurchase of rights pursuant thereto, or (v) any dividend in the
form of stock, warrants, options or other rights where the dividend
stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being
paid or ranks pari passu with or junior to such stock), if at such time
(A) there shall have occurred an Event of Default hereunder or any event
(x) of which the Company has actual knowledge that with the giving of
notice or the lapse of time, or both, would constitute an Event of
Default with respect to the Securities, and (y) which the Company shall
not have taken reasonable steps to cure, (B) if the Securities are held
by the Issuer Trust, the Company shall be in default with respect to its
payment of any obligations under the Guarantee relating to the Preferred
Securities issued by the Issuer Trust, or (C) the Company shall have
given notice of its election to begin an Extension Period with respect
to the Securities as provided herein and shall not have rescinded such
notice, or such Extension Period, or any extension thereof, shall be
continuing.
The Company also covenants with each Holder of Securities
issued to the Issuer Trust (a) to hold, directly or indirectly, 100% of
the Common Securities of the Issuer Trust, provided that any permitted
successor of the Company as provided under Section 8.2 may succeed to
the Company's ownership of such Common Securities, (b) as holder of such
Common Securities, not to voluntarily terminate, windup or liquidate the
Issuer Trust, other than (i) in connection with a distribution of the
Securities to the holders of the Preferred Securities in liquidation of
the Issuer Trust, or (ii) in connection with certain mergers,
consolidations or amalgamations permitted by the Trust Agreement, and
(c) to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Issuer Trust to continue
to be classified as a grantor trust for United States federal income tax
purposes.
- 53 -
<PAGE>
<PAGE>
Section 10.8. Federal Tax Reports.
On or before December 15 of each year during which any
Securities are outstanding, the Company shall furnish to each Paying
Agent such information as may be reasonably requested by each Paying
Agent in order that each Paying Agent may prepare the information which
it is required to report for such year on Internal Revenue Service Forms
1096 and 1099 pursuant to Section 6049 of the Internal Revenue Code of
1986, as amended. Such information shall include the amount, if any, of
original issue discount includible in income for each authorized minimum
denomination of principal amount at Stated Maturity of outstanding
Securities during such year.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1. Applicability of this Article.
Redemption of Securities as permitted or required by any form
of Security issued pursuant to this Indenture shall be made in
accordance with such form of Security and this Article; provided,
however, that, if any provision of any such form of Security shall
conflict with any provision of this Article XI, the provision of such
form of Security shall govern.
Section 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any
redemption at the election of the Company, the Company shall, not less
than 30 nor more than 60 days prior to the Redemption Date (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee
and, in the case of Securities held by the Issuer Trust, the Property
Trustee under the Trust Agreement of such date and of the principal
amount of Securities to be redeemed and provide the additional
information required to be included in the notice or notices
contemplated by Section 11.4; provided, that, for so long as such
Securities are held by the Issuer Trust, such notice shall be given not
less than 45 nor more than 75 days prior to such Redemption Date (unless
a shorter notice shall be satisfactory to the Property Trustee under the
Trust Agreement). In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the
terms of such Securities, the Company shall furnish the Trustee with an
Officers' Certificate and an Opinion of Counsel evidencing compliance
with such restriction.
Section 11.3. Selection of Securities to be Redeemed.
(a) If less than all the Securities are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60
days prior to the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of a portion of the principal amount of any
Security, provided that the unredeemed portion of the principal amount
of any Security shall be in an authorized denomination (which shall not
be less than the minimum authorized denomination) for such Security.
(b) The Trustee shall promptly notify the Company in writing
of the Securities selected for partial redemption and the principal
amount thereof to be redeemed. For all purposes of this Indenture,
unless the context otherwise requires, all provisions relating to the
redemption of Securities shall relate,
- 54 -
<PAGE>
<PAGE>
in the case of any Security redeemed or to be redeemed only in part, to
the portion of the principal amount of such Security that has been or is
to be redeemed.
Section 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not later than the thirtieth day, and not
earlier than the sixtieth day, prior to the Redemption Date, to each
Holder of Securities to be redeemed, at the address of such Holder as it
appears in the Securities Register.
With respect to Securities to be redeemed, each notice of
redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price or, if the Redemption Price cannot
be calculated prior to the time the notice is required to be sent, the
estimate of the Redemption Price provided pursuant to the Indenture
together with a statement that it is an estimate and that the actual
Redemption Price will be calculated on the third Business Day prior to
the Redemption Date (if such an estimate of the Redemption Price is
given, a subsequent notice shall be given as set forth above setting
forth the Redemption Price promptly following the calculation thereof);
(c) if less than all Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption,
the respective principal amounts) of the particular Securities to be
redeemed;
(d) that, on the Redemption Date, the Redemption Price will
become due and payable upon each such Security or portion thereof, and
that interest thereon, if any, shall cease to accrue on and after said
date;
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price;
(f) such other provisions as may be required in respect of
the terms of the Securities; and
(g) that the redemption is for a sinking fund, if such is the
case.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the
Company and shall be irrevocable. The notice, if mailed in the manner
provided above, shall be conclusively presumed to have been duly given,
whether or not the Holder receives such notice. In any case, a failure
to give such notice by mail or any defect in the notice to the Holder of
any Security designated for redemption as a whole or in part shall not
affect the validity of the proceedings for the redemption of any other
Security.
Section 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the Redemption Date
specified in the notice of redemption given as provided in Section 11.4,
the Company will deposit with the Trustee or with one or more Paying
Agents (or if the Company is acting as its own Paying Agent, the Company
will segregate and hold in trust as provided in Section 10.3) an amount
of money sufficient to pay the Redemption Price of, and any accrued
interest (including Additional Interest) on, all the Securities (or
portions thereof) that are to be redeemed on that date.
- 55 -
<PAGE>
<PAGE>
Section 11.6. Payment of Securities Called for Redemption.
(a) If any notice of redemption has been given as provided in
Section 11.4, the Securities or portion of Securities with respect to
which such notice has been given shall become due and payable on the
date and at the place or places stated in such notice at the applicable
Redemption Price, together with accrued interest (including any
Additional Interest) to the Redemption Date. On presentation and
surrender of such Securities at a Place of Payment in said notice
specified, the said Securities or the specified portions thereof shall
be paid and redeemed by the Company at the applicable Redemption Price,
together with accrued interest (including any Additional Interest) to
the Redemption Date; provided, however, that, installments of interest
(including Additional Interest) whose Stated Maturity is on or prior to
the Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close
of business on the relevant record dates according to their terms and
the provisions of Section 3.8.
(b) Upon presentation of any Security redeemed in part only,
the Company shall execute and the Trustee shall authenticate and deliver
to the Holder thereof, at the expense of the Company, a new Security or
Securities, of authorized denominations, in aggregate principal amount
equal to the unredeemed portion of the Security so presented and having
the same Original Issue Date, Stated Maturity and terms.
(c) If any Security called for redemption shall not be so
paid under surrender thereof for redemption, the principal of and
premium, if any, on such Security shall, until paid, bear interest from
the Redemption Date at the rate prescribed therefor in the Security.
Section 11.7. Right of Redemption of Securities Initially Issued to the
Issuer Trust.
(a) The Company, at its option, may redeem such Securities,
subject to prior regulatory approval, if required (i) on or after
_________, 2004, in whole at any time or in part from time to time, or
(ii) upon the occurrence and during the continuation of a Tax Event, an
Investment Company Event or a Capital Treatment Event, at any time
within 90 days following the occurrence and during the continuation of
such Tax Event, Investment Company Event or Capital Treatment Event, in
whole (but not in part), in each case at a Redemption Price specified in
such Security, together with accrued interest (including Additional
Interest) to the Redemption Date.
(b) If less than all the Securities are to be redeemed, the
aggregate principal amount of such Securities remaining Outstanding
after giving effect to such redemption shall be sufficient to satisfy
any provisions of the Trust Agreement.
ARTICLE XII
SINKING FUNDS
Except as may be provided in any supplemental or amended
indenture, no sinking fund shall be established or maintained for the
retirement of Securities.
- 56 -
<PAGE>
<PAGE>
ARTICLE XIII
SUBORDINATION OF SECURITIES
Section 13.1. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a
Security, by its acceptance thereof, likewise covenants and agrees,
that, to the extent and in the manner hereinafter set forth in this
Article, the payment of the principal of (and premium, if any) and
interest (including any Additional Interest) on each and all of the
Securities are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness.
Section 13.2. No Payment When Senior Indebtedness in Default; Payment
Over of Proceeds Upon Dissolution, Etc.
(a) If the Company shall default in the payment of any
principal of (or premium, if any) or interest on any Senior Indebtedness
when the same becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration of acceleration or otherwise,
then, upon written notice of such default to the Company by the holders
of Senior Indebtedness or any trustee therefor, unless and until such
default shall have been cured or waived or shall have ceased to exist,
no direct or indirect payment (in cash, property, securities, by set-off
or otherwise) shall be made or agreed to be made on account of the
principal of (or premium, if any) or interest (including Additional
Interest) on any of the Securities, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the
Securities.
(b) In the event of (i) any insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment, composition or
other similar proceeding relating to the Company, its creditors or its
property, (ii) any proceeding for the liquidation, dissolution or other
winding up of the Company, voluntary or involuntary, whether or not
involving insolvency or bankruptcy proceedings, (iii) any assignment by
the Company for the benefit of creditors or (iv) any other marshalling
of the assets of the Company (each such event, if any, herein sometimes
referred to as a "Proceeding"), all Senior Indebtedness (including any
interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be
made to any Holder on account thereof. Any payment or distribution,
whether in cash, securities or other property (other than securities of
the Company or any other entity provided for by a plan of reorganization
or readjustment, the payment of which is subordinate, at least to the
extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment),
which would otherwise (but for these subordination provisions) be
payable or deliverable in respect of the Securities shall be paid or
delivered directly to the holders of Senior Indebtedness in accordance
with the priorities then existing among such holders until all Senior
Indebtedness (including any interest thereon accruing after the
commencement of any Proceeding) shall have been paid in full.
(c) In the event of any Proceeding, after payment in full of
all sums owing with respect to Senior Indebtedness, the Holders of the
Securities, together with the holders of any obligations of the Company
ranking on a parity with the Securities, shall be entitled to be paid
from the remaining assets of the Company the amounts at the time due and
owing on account of unpaid principal of (and premium, if any) and
interest on the Securities and such other obligations before any payment
or other distribution, whether in cash, property or otherwise, shall be
made on account of any capital stock or any obligations
- 57 -
<PAGE>
<PAGE>
of the Company ranking junior to the Securities, and such other
obligations. If, notwithstanding the foregoing, any payment or
distribution of any character or any security, whether in cash,
securities or other property (other than securities of the Company or
any other entity provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in
respect thereof under any plan of reorganization or readjustment), shall
be received by the Trustee or any Holder in contravention of any of the
terms hereof and before all Senior Indebtedness shall have been paid in
full, such payment or distribution or security shall be received in
trust for the benefit of, and shall be paid over or delivered and
transferred to, the holders of the Senior Indebtedness at the time
outstanding in accordance with the priorities then existing among such
holders for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full. In the event of the failure of the Trustee or any
Holder to endorse or assign any such payment, distribution or security,
each holder of Senior Indebtedness is hereby irrevocably authorized to
endorse or assign the same.
(d) The Trustee and the Holders shall take such action
(including, without limitation, the delivery of this Indenture to an
agent for the holders of Senior Indebtedness or consent to the filing of
a financing statement with respect hereto) as may, in the opinion of
counsel designated by the holders of a majority in principal amount of
the Senior Indebtedness at the time outstanding, be necessary or
appropriate to assure the effectiveness of the subordination effected by
these provisions.
(e) The provisions of this Section 13.2 shall not impair any
rights, interests, remedies or powers of any secured creditor of the
Company in respect of any security interest the creation of which is not
prohibited by the provisions of this Indenture.
(f) The securing of any obligations of the Company, otherwise
ranking on a parity with the Securities or ranking junior to the
Securities shall not be deemed to prevent such obligations from
constituting, respectively, obligations ranking on a parity with the
Securities or ranking junior to the Securities.
Section 13.3. Payment Permitted if No Default.
Nothing contained in this Article XIII or elsewhere in this
Indenture or in any of the Securities shall prevent (a) the Company, at
any time, except during the pendency of the conditions described in the
first paragraph of Section 13.2 or of any Proceeding referred to in
Section 13.2, from making payments at any time of principal of (and
premium, if any) or interest (including Additional Interest) on the
Securities, or (b) the application by the Trustee of any monies
deposited with it hereunder to the payment of or on account of the
principal of (and premium, if any) or interest (including any Additional
Interest) on the Securities or the retention of such payment by the
Holders, if, at the time of such application by the Trustee, it did not
have knowledge that such payment would have been prohibited by the
provisions of this Article.
Section 13.4. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become
due on all Senior Indebtedness, or the provision for such payment in
cash or cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Indebtedness, the Holders of the Securities shall be
subrogated to the extent of the payments or distributions made to the
holders of such Senior Indebtedness pursuant to the provisions of this
Article (equally and ratably with the holders of all indebtedness of the
Company that by its express
- 58 -
<PAGE>
<PAGE>
terms is subordinated to Senior Indebtedness of the Company to
substantially the same extent as the Securities are subordinated to the
Senior Indebtedness and is entitled to like rights of subrogation by
reason of any payments or distributions made to holders of such Senior
Indebtedness) to the rights of the holders of such Senior Indebtedness
to receive payments and distributions of cash, property and securities
applicable to the Senior Indebtedness until the principal of (and
premium if any) and interest (including Additional Interest) on the
Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of
any cash, property or securities to which the Holders of the Securities
or the Trustee would be entitled except for the provisions of this
Article, and no payments pursuant to the provisions of this Article to
the holders of Senior Indebtedness by Holders of the Securities or the
Trustee, shall, as among the Company, its creditors other than holders
of Senior Indebtedness, and the Holders of the Securities, be deemed to
be a payment or distribution by the Company to or on account of the
Senior Indebtedness.
Section 13.5. Provisions Solely to Define Relative Rights.
The provisions of this Article XIII are and are intended solely
for the purpose of defining the relative rights of the Holders of the
Securities on the one hand and the holders of Senior Indebtedness on the
other hand. Nothing contained in this Article XIII or elsewhere in this
Indenture or in the Securities is intended to or shall (a) impair, as
between the Company and the Holders of the Securities, the obligations
of the Company, which are absolute and unconditional, to pay to the
Holders of the Securities the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities as and
when the same shall become due and payable in accordance with their
terms; (b) affect the relative rights against the Company of the Holders
of the Securities and creditors of the Company other than their rights
in relation to the holders of Senior Indebtedness; or (c) prevent the
Trustee or the Holder of any Security (or to the extent expressly
provided herein, the holder of any Preferred Security) from exercising
all remedies otherwise permitted by applicable law upon default under
this Indenture, including filing voting claims in any Proceeding,
subject to the rights, if any, under this Article XIII of the holders of
Senior Indebtedness to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
Section 13.6. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof
authorizes and directs the Trustee on his or her behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate
the subordination provided in this Article XIII and appoints the Trustee
his or her attorney-in-fact for any and all such purposes.
Section 13.7. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act
on the part of the Company or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Company with
the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof that any such holder may have or be otherwise charged
with.
(b) Without in any way limiting the generality of Section
13.7(a), the holders of Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Trustee or the
Holders of the Securities, without incurring responsibility to such
Holders of the Securities and without impairing or releasing the
subordination provided in this Article XIII or the obligations hereunder
of such Holders of the Securities to the holders of Senior Indebtedness,
do any one or more of
- 59 -
<PAGE>
<PAGE>
the following: (i) change the manner, place or terms of payment or
extent the time of payment of, or renew or alter, Senior Indebtedness,
or otherwise amend or supplement in any manner Senior Indebtedness or
any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
Section 13.8. Notice to Trustee.
(a) The Company shall give prompt written notice to a
Responsible Officer of the Trustee of any fact known to the Company that
would prohibit the making of any payment to or by the Trustee in respect
of the Securities. Notwithstanding the provisions of this Article XIII
or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit
the making of any payment to or by the Trustee in respect of the
Securities, unless and until the Trustee shall have received written
notice thereof from the Company or a holder of Senior Indebtedness or
from any trustee, agent or representative therefor; provided, however,
that if the Trustee shall not have received the notice provided for in
this Section at least two Business Days prior to the date upon which by
the terms hereof any monies may become payable for any purpose
(including, the payment of the principal of (and premium, if any, on) or
interest (including any Additional Interest) on any Security), then,
anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such monies and to apply
the same to the purpose for which they were received and shall not be
affected by any notice to the contrary that may be received by it within
two Business Days prior to such date.
(b) Subject to the provisions of Section 6.1, the Trustee
shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself or herself to be a holder of Senior
Indebtedness (or a trustee or attorney-in-fact therefor) to establish
that such notice has been given by a holder of Senior Indebtedness (or a
trustee or attorney-in-fact therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held
by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such
evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to
receive such payment.
Section 13.9. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee, subject to the provisions of
Section 6.1, and the Holders of the Securities shall be entitled to rely
upon any order or decree entered by any court of competent jurisdiction
in which such Proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, conservator, liquidating trustee, custodian,
assignee for the benefit of creditors, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Holders of
Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article XIII.
- 60 -
<PAGE>
<PAGE>
Section 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee, in its capacity as trustee under this Indenture,
shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of Securities or
to the Company or to any other Person cash, property or securities to
which any holders of Senior Indebtedness shall be entitled by virtue of
this Article or otherwise.
Section 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article with respect to any Senior
Indebtedness that may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture
shall deprive the Trustee of any of its rights as such holder.
Section 13.12. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article XIII shall in such case
(unless the context otherwise requires) be construed as extending to and
including such Paying Agent within its meaning as fully for all intents
and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee.
Section 13.13. Certain Conversions or Exchanges Deemed Payment.
For purposes of this Article only, (a) the issuance and
delivery of junior securities upon conversion or exchange of Securities
shall not be deemed to constitute a payment or distribution on account
of the principal of (or premium, if any, on) or interest (including any
Additional Interest) on such Securities or on account of the purchase or
other acquisition of such Securities, and (b) the payment, issuance or
delivery of cash, property or securities (other than junior securities)
upon conversion or exchange of a Security shall be deemed to constitute
payment on account of the principal of such security. For the purposes
of this Section, the term "junior securities" means (i) shares of any
stock of any class of the Company, and (ii) securities of the Company
that are subordinated in right of payment to all Senior Indebtedness
that may be outstanding at the time of issuance or delivery of such
securities to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article.
* * * *
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all
such counterparts shall together constitute but one and the same
instrument.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
- 61 -
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
ALLEGIANT BANCORP, INC.
By:____________________________________
Name:
Title:
BANKERS TRUST COMPANY, as Trustee
By:____________________________________
Name:
Title:
- 62 -
<PAGE>
CERTIFICATE OF TRUST
OF
ALLEGIANT CAPITAL TRUST I
THIS Certificate of Trust of Allegiant Capital Trust I (the
"Trust"), dated as of June 29, 1999, is being duly executed and filed by
the undersigned, as trustee, to form a business trust under the Delaware
Business Trust Act (12 Del. C. Section 3801, et seq.)(the "Act").
------- ------
1. Name. The name of the business trust formed hereby is
----
Allegiant Capital Trust I.
2. Delaware Trustee. The name and business address of the
----------------
trustee of the Trust with a principal place of business in the State of
Delaware is Bankers Trust Company, E.A. Delle Donne Corporate Centre,
Montgomery Building, 1101 Center Road, Suite 200, Wilmington, Delaware
19805-1266, Attn: Corporate Trust Administration and Agency Group;
Corporate Marketing Services.
3. Effective Date. This Certificate of Trust shall be
--------------
effective upon filing.
IN WITNESS WHEREOF, the undersigned, being the trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written in accordance with section 3811(a) of the Act.
BANKERS TRUST (Delaware),
not in its individual capacity but solely as
trustee of the Trust
By:___________________________________________
Name:
Title:
<PAGE>
=========================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
Among
ALLEGIANT BANCORP, INC.
(as Depositor)
BANKERS TRUST COMPANY
(as Property Trustee)
and
BANKERS TRUST (DELAWARE)
as Delaware Trustee
dated as of __________, 1999
ALLEGIANT CAPITAL TRUST I
=========================================================================
<PAGE>
<PAGE>
ALLEGIANT CAPITAL TRUST I
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Trust Agreement
Act Section Section
----------- -------
Section 310 (a)(1) 8.7
(a)(2) 8.7
(a)(3) 8.9
(a)(4) 2.7(a)(ii)
(b) 8.8, 10.10(b)
Section 311 (a) 8.13, 10.10(b)
(b) 8.13, 10.10(b)
Section 312 (a) 10.10(b)
(b) 10.10(b), (f)
(c) 5.7
Section 313 (a) 8.15(a)
(a)(4) 10.10(c)
(b) 8.15(c), 10.10(c)
(c) 10.8, 10.10(c)
(d) 10.10(c)
Section 314 (a) 8.16, 10.10(d)
(b) Not Applicable
(c)(1) 8.17, 10.10(d), (e)
(c)(2) 8.17, 10.10(d), (e)
(c)(3) 8.17, 10.10(d), (e)
(e) 8.17, 10.10(e)
Section 315 (a) 8.1(d)
(b) 8.2
(c) 8.1(c)
(d) 8.1(d)
(e) Not Applicable
Section 316 (a) Not Applicable
(a)(1)(A) Not Applicable
(a)(1)(B) Not Applicable
(a)(2) Not Applicable
(b) 5.13
(c) 6.7
Section 317 (a)(1) Not Applicable
(a)(2) 8.14
(b) 5.10
Section 318 (a) 10.10(a)
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Trust Agreement.
<PAGE>
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS 1
Section 1.1 Definitions 1
ARTICLE II CONTINUATION OF THE ISSUER TRUST 11
Section 2.1 Name 11
Section 2.2. Office of the Delaware Trustee; Principal Place of Business 11
Section 2.3. Initial Contribution of Trust Property; Organizational Expenses 12
Section 2.4. Issuance of the Preferred Securities 12
Section 2.5. Issuance of the Common Securities; Subscription and Purchase of Junior
Subordinated Debentures 12
Section 2.6. Declaration of Trust 13
Section 2.7. Authorization to Enter into Certain Transactions 13
Section 2.8. Assets of Trust 16
Section 2.9. Title to Trust Property 16
ARTICLE III PAYMENT ACCOUNT 16
Section 3.1. Payment Account 16
ARTICLE IV DISTRIBUTIONS, REDEMPTION 17
Section 4.1. Distributions 17
Section 4.2. Redemption 18
Section 4.3. Subordination of Common Securities 20
Section 4.4. Payment Procedures 21
Section 4.5. Tax Returns and Reports 21
Section 4.6. Payment of Taxes, Duties, Etc. of the Issuer Trust 21
Section 4.7. Payments under Indenture or Pursuant to Direct Actions 22
Section 4.8. Liability of the Holder of Common Securities 22
ARTICLE V TRUST SECURITIES CERTIFICATES 22
Section 5.1. Initial Ownership 22
Section 5.2. The Trust Securities Certificates 22
Section 5.3. Execution and Delivery of Trust Securities Certificates 22
Section 5.4. Global Preferred Security 23
Section 5.5. Registration of Transfer and Exchange Generally; Certain Transfers and
Exchanges; Preferred Securities Certificates 24
Section 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates 25
Section 5.7. Persons Deemed Holders 25
Section 5.8. Access to List of Holders' Names and Addresses 26
Section 5.9. Maintenance of Office or Agency 26
<PAGE>
<PAGE>
Section 5.10. Appointment of Paying Agent 26
Section 5.11. Ownership of Common Securities by Depositor 26
Section 5.12. Notices to Clearing Agency 27
Section 5.13. Rights of Holders 27
ARTICLE VI ACTS OF HOLDERS; MEETINGS; VOTING 29
Section 6.1. Limitations on Holder's Voting Rights 29
Section 6.2. Notice of Meetings 29
Section 6.3. Meetings of Holders 30
Section 6.4. Voting Rights 30
Section 6.5. Proxies, etc 30
Section 6.6. Holder Action by Written Consent 30
Section 6.7. Record Date for Voting and Other Purposes 30
Section 6.8. Acts of Holders 31
Section 6.9. Inspection of Records 32
ARTICLE VII REPRESENTATIONS AND WARRANTIES 32
Section 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee 32
Section 7.2. Representations and Warranties of the Depositor 33
ARTICLE VIII THE ISSUER TRUSTEES; THE ADMINISTRATORS 33
Section 8.1. Certain Duties and Responsibilities 33
Section 8.2. Certain Notices 35
Section 8.3. Certain Rights of Property Trustee 36
Section 8.4. Not Responsible for Recitals or Issuance of Securities 37
Section 8.5. May Hold Securities 37
Section 8.6. Compensation; Indemnity; Fees 37
Section 8.7. Corporate Property Trustee Required; Eligibility of Trustees and
Administrators 38
Section 8.8. Conflicting Interests 39
Section 8.9. Co-Trustees and Separate Trustee 39
Section 8.10. Resignation and Removal; Appointment of Successor 40
Section 8.11. Acceptance of Appointment by Successor 41
Section 8.12. Merger, Conversion, Consolidation or Succession to Business 41
Section 8.13. Preferential Collection of Claims Against Depositor or Issuer Trust 42
Section 8.14. Trustee May File Proofs of Claim 42
Section 8.15. Reports by Property Trustee 42
Section 8.16. Reports to the Property Trustee 43
Section 8.17. Evidence of Compliance with Conditions Precedent 43
Section 8.18. Number of Issuer Trustees 43
Section 8.19. Delegation of Power 43
Section 8.20. Appointment of Administrators 44
<PAGE>
<PAGE>
ARTICLE IX DISSOLUTION, LIQUIDATION AND MERGER 44
Section 9.1. Dissolution Upon Expiration Date 44
Section 9.2. Early Dissolution 44
Section 9.3. Termination 45
Section 9.4. Liquidation 45
Section 9.5. Mergers, Consolidations, Amalgamations or Replacements of the Issuer
Trust 46
ARTICLE X MISCELLANEOUS PROVISIONS 47
Section 10.1. Limitation of Rights of Holders 47
Section 10.2. Amendment 47
Section 10.3. Separability 48
Section 10.4. Governing Law 49
Section 10.5. Payments Due on Non-Business Day 49
Section 10.6. Successors and Assigns 49
Section 10.7. Headings 49
Section 10.8. Reports, Notices and Demands 49
Section 10.9. Agreement Not to Petition 50
Section 10.10. Trust Indenture Act; Conflict with Trust Indenture Act 50
Section 10.11. Acceptance of Terms of Trust Agreement, Guarantee and Indenture 51
Section 10.12. Counterparts 51
<CAPTION>
EXHIBITS
<S>
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depositary Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Preferred Securities Certificate
</TABLE>
<PAGE>
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT
------------------------------------
THIS AMENDED AND RESTATED TRUST AGREEMENT, dated as of ________,
1999 (this "Trust Agreement"), is among (a) ALLEGIANT BANCORP, INC., a
Missouri corporation (including any successors or assigns, the
"Depositor"), (b) BANKERS TRUST COMPANY, a New York banking corporation,
as property trustee (in such capacity, the "Property Trustee" and, in
its separate corporate capacity and not in its capacity as Property
Trustee, the "Bank"), (c) BANKERS TRUST (DELAWARE), a Delaware banking
corporation, as Delaware trustee (the "Delaware Trustee") (the Property
Trustee and the Delaware Trustee are referred to collectively herein as
the "Issuer Trustees"); (d) SHAUN R. HAYES, an individual, and THOMAS
DAIBER, an individual, each of whose address is c/o the Depositor (each
an "Administrator" and, collectively, the "Administrators" and together
with the Issuer Trustees, the "Trustees"); and (e) the several Holders,
as hereinafter defined.
RECITALS
WHEREAS, the Depositor and certain of the Trustees have heretofore
duly declared and established a business trust pursuant to the Delaware
Business Trust Act by the entering into a certain Declaration of Trust,
dated as of ________, 1999 (the "Original Trust Agreement"), and by the
execution and filing by the Delaware Trustee with the Secretary of State
of the State of Delaware of the Certificate of Trust, filed on June
____, 1999 (the "Certificate of Trust"), a copy of which is attached
hereto as Exhibit A; and
WHEREAS, the Depositor and the Delaware Trustee desire to amend
and restate the Original Trust Agreement in its entirety as set forth
herein to provide for, among other things, (a) the issuance of the
Common Securities by the Issuer Trust to the Depositor, (b) the issuance
and sale of the Preferred Securities by the Issuer Trust pursuant to the
Underwriting Agreement, (c) the acquisition by the Issuer Trust from the
Depositor of all of the right, title and interest in the Junior
Subordinated Debentures and (d) the appointment of the Property Trustee
and the Administrators.
NOW THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each party,
for the benefit of the other parties and for the benefit of the Holders,
hereby amends and restates the Original Trust Agreement in its entirety
and agrees, intending to be legally bound, as follows:
ARTICLE I
----------
DEFINITIONS
-----------
Section 1.1. Definitions. For all purposes of this Trust
-----------
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article I have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
<PAGE>
<PAGE>
(c) the words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation";
(d) all accounting terms used but not defined herein have the
meanings assigned to them in accordance with United States generally
accepted accounting principles as in effect at the time of computation;
(e) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case
may be, of this Trust Agreement;
(f) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Trust Agreement as a whole and not to
any particular Article, Section or other subdivision; and
(g) all references to the date the Preferred Securities were
originally issued shall refer to the date the ____% Preferred Securities
were originally issued.
"25% Capital Limitation" means the limitation imposed by the
Federal Reserve that the proceeds of certain qualifying securities
similar to the Trust Securities will qualify as Tier 1 capital of the
issuer up to an amount not to exceed, when taken together with all
cumulative preferred stock of the Depositor, if any, 25% of the
Depositor's Tier 1 capital, or and subsequent or successor limitation
adopted by the Federal Reserve.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a
given Liquidation Amount and/or for a given period, the amount of
Additional Interest paid by the Depositor on a Like Amount of Junior
Subordinated Debentures for such period.
"Additional Interest" has the meaning specified in Section 1.1 of
the Indenture.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrators" means each Person appointed in accordance with
Section 8.20 solely in such Person's capacity as Administrator of the
Issuer Trust heretofore formed and continued hereunder and not in such
Person's individual capacity, or any successor Administrator appointed
as herein provided; with the initial Administrators being Shaun R. Hayes
and Thomas A. Daiber.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Preferred Security or beneficial interest
therein, the rules and procedures of the Depositary for such Preferred
Security, in each case to the extent applicable to such transaction and
as in effect from time to time.
2
<PAGE>
<PAGE>
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having
jurisdiction in the premises judging such Person a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjudication or composition of or in
respect of such Person under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of such Person or of any substantial part of its property or
ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under any applicable federal or State bankruptcy, insolvency,
reorganization or other similar law, or the consent by it to the filing
of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or similar official) of such Person or
of any substantial part of its property or the making by it of an
assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due
and its willingness to be adjudicated a bankrupt, or the taking of
corporate action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor
or the Executive Committee of the board of directors of the Depositor
(or any other committee of the board of directors of the Depositor
performing similar functions) or, for purposes of this Trust Agreement,
a committee designated by the board of directors of the Depositor (or
any such committee), comprised of two or more members of the board of
directors of the Depositor or officers of the Depositor, or both.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly
adopted by the Depositor's Board of Directors, or such committee of the
Board of Directors or officers of the Depositor to which authority to
act on behalf of the Board of Directors has been delegated, and to be in
full force and effect on the date of such certification, and delivered
to the Issuer Trustees.
"Business Day" means a day other than (a) a Saturday or Sunday,
(b) a day on which banking institutions in the State of Missouri or in
the City of New York are authorized or required by law or executive
order to remain closed or (c) a day on which the Property Trustee's
Corporate Trust Office or the Delaware Trustee's Corporate Trust Office
or the Corporate Trust Office of the Debenture Trustee is closed for
business.
"Capital Treatment Event" means the receipt by the Depositor and
the Issuer Trust of the Opinion of Counsel, rendered by counsel
experienced in such matters, that, as a result of the occurrence of any
amendment to, or change (including any announced prospective change) in,
the laws (or any rules or regulations thereunder) of the United States
or any political subdivision thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement, action or decision is
announced on or after the date of the issuance of the Preferred
Securities of the
3
<PAGE>
<PAGE>
Issuer Trust, there is more than an insubstantial risk that the
Depositor will not be entitled to treat an amount equal to the
Liquidation Amount of such Preferred Securities as "Tier 1 Capital" (or
the then equivalent thereof), except as otherwise restricted under the
25% Capital Limitation, for purposes of the risk-based capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to
the Depositor; provided, that the Depositor or the Trust shall have
requested and received such an Opinion of Counsel with regard to such
matters within a reasonable period of time after the Depositor or the
Trust shall have become aware of the possible occurrence of any such
event.
"Cede" means Cede & Co.
"Certificate Depositary Agreement" means the agreement among the
Issuer Trust, the Depositor and the Depositary, as the initial Clearing
Agency, dated as of the Closing Date, substantially in the form attached
hereto as Exhibit B, as the same may be amended and supplemented from
time to time.
"Certificate of Trust" has the meaning specified in the preamble
to this Trust Agreement.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. The Depositary
shall be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" means the Time of Delivery for the Firm Securities,
which date is also the date of execution and delivery of this Trust
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended or any
successor statute, in each case as amended from time to time.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any
time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached
hereto as Exhibit C.
"Common Security" means an undivided beneficial interest in the
assets of the Issuer Trust, having a Liquidation Amount of $10 and
having the rights provided therefor in this Trust Agreement, including
the right to receive Distributions and a Liquidation Distribution as
provided herein.
"Corporate Trust Office" means (a) with respect to the Property
Trustee or the Debenture Trustee, the principal office of the Property
Trustee located in the City of New York, New York, which at the time of
the execution of this Trust Agreement is located at Four Albany Street,
New York, New York 10006; Attention: Corporate Trust and Agency Group -
Corporate Market Services, and (b) with respect to the Delaware Trustee,
the principal office of the Delaware Trustee located at E.A. Delle Donne
Corporate Center, Montgomery Building, 1101 Center Road, Suite 200,
Wilmington, Delaware, 19805-1266.
4
<PAGE>
<PAGE>
"Debenture Event of Default" means an "Event of Default" as
defined in the Indenture.
"Debenture Redemption Date" means, with respect to any Junior
Subordinated Debentures to be redeemed under the Indenture, the date
fixed for redemption of such Junior Subordinated Debentures under the
Indenture.
"Debenture Trustee" means Bankers Trust Company, a New York
banking corporation and any successor, as trustee under the Indenture.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. 3801, et seq., as it may be amended from
-------
time to time.
"Delaware Trustee" means the corporation identified as the
"Delaware Trustee" in the preamble to this Trust Agreement solely in its
capacity as Delaware Trustee of the Issuer Trust continued hereunder and
not in its individual capacity, or its successor in interest in such
capacity, or any successor trustee appointed as herein provided.
"Depositary" means The Depository Trust Company or any successor
thereto.
"Depositor" has the meaning specified in the preamble to this
Trust Agreement.
"Direct Action" has the meaning specified in Section 5.13(c).
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
"Early Termination Event" has the meaning specified in
Section 9.2.
"Event of Default" means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) the occurrence of a Debenture Event of Default;
(b) default by the Issuer Trust in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days;
(c) default by the Issuer Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable;
(d) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Trustees in, this Trust
Agreement (other than a covenant or warranty a default in the
performance of which or the breach of which is dealt with in clause (b)
or (c) above) and continuation of such default or breach for a period of
60 days after there has been given, by registered or certified mail, to
the Issuer Trustees and the Depositor by the Holders of at least 25% in
aggregate Liquidation Amount
5
<PAGE>
<PAGE>
of the Outstanding Preferred Securities, a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder; or
(e) the occurrence of any Bankruptcy Event with respect to the
Property Trustee or all or substantially all of its property if a
successor Property Trustee has not been appointed within a period of 60
days thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute thereto, in each case as amended from
time to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Extension Period" has the meaning specified in Section 4.1.
"Federal Reserve" means the Board of Governors of the Federal
Reserve System.
"Firm Securities" means an aggregate Liquidation Amount of
$__________ of the Issuer Trust's ____% preferred securities.
"Global Preferred Securities Certificate" means a Preferred
Securities Certificate evidencing ownership of Global Preferred
Securities.
"Global Preferred Security" means a Preferred Security, the
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 5.4.
"Guarantee Agreement" means the Guarantee Agreement executed and
delivered by the Depositor and Bankers Trust Company, as guarantee
trustee, contemporaneously with the execution and delivery of this Trust
Agreement, for the benefit of the Holders of the Preferred Securities,
as amended from time to time.
"Holder" means a Person in whose name a Trust Security or Trust
Securities is registered in the Securities Register; any such Person
shall be a beneficial owner within the meaning of the Delaware Business
Trust Act.
"Indemnified Person" has the meaning specified in Section 8.6(c).
"Indenture" means the Junior Subordinated Indenture, dated as of
__________, 1999, between the Depositor and the Debenture Trustee (as
amended or supplemented from time to time) relating to the issuance of
the Junior Subordinated Debentures.
"Investment Company Act" means the Investment Company Act of 1940,
as amended or any successor statute, in each case as amended from time
to time.
"Investment Company Event" means the receipt by the Depositor and
the Issuer Trust of an Opinion of Counsel, rendered by counsel
experienced in such matters, to the effect that, as a result of the
occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, the Issuer
Trust is considered an "investment company" that is required to be
registered under the Investment Company Act, which change becomes
effective on or after the date of the issuance of the Preferred
Securities;
6
<PAGE>
<PAGE>
provided, however, that the Depositor or the Trust shall have requested
and received an Opinion of Counsel with regard to such matters within a
reasonable period of time after the Depositor or the Trust shall have
become aware of the possible occurrence of any such event.
"Issuer Trust" means Allegiant Capital Trust I.
"Issuer Trustees" means, collectively, the Property Trustee and
the Delaware Trustee.
"Junior Subordinated Debentures" means the aggregate principal
amount of the Depositor's ____% junior subordinated deferrable interest
debentures, due ___________, 2029 which date may be shortened once at
any time by the Depositor to any date not earlier than __________, 2004
issued pursuant to the Indenture.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed
of trust, adverse ownership interest, hypothecation, assignment,
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated
to the Common Securities and to the Preferred Securities based upon the
relative Liquidation Amounts of such classes and (b) with respect to a
distribution of Junior Subordinated Debentures to Holders of Trust
Securities in connection with a dissolution or liquidation of the Issuer
Trust, Junior Subordinated Debentures having a principal amount equal to
the Liquidation Amount of the Trust Securities of the Holder to whom
such Junior Subordinated Debentures are distributed; provided, in the
case of clause (b) that each Junior Subordinated Debenture so
distributed shall earn accrued and unpaid interest in an amount equal to
the amount of accrued and unpaid interest then due on such Junior
Subordinated Debentures.
"Liquidation Amount" means the stated amount of $10 per Trust
Security.
"Liquidation Date" means the date on which Junior Subordinated
Debentures or the Liquidation Distributions are to be distributed to
Holders of Trust Securities in connection with a dissolution and
liquidation of the Issuer Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in
Section 9.4(d).
"Majority in Liquidation Amount of the Preferred Securities" or
"Majority in Liquidation Amount of the Common Securities" means, except
as provided by the Trust Indenture Act, Preferred Securities or Common
Securities, as the case may be, representing more than 50% of the
aggregate Liquidation Amount of all then Outstanding Preferred
Securities or Common Securities, as the case may be.
"Officers' Certificate" means, a certificate signed by the
Chairman of the Board, Chief Executive Officer, President or a Vice
President and by the Chief Financial Officer, the Treasurer, an
Associate Treasurer, an Assistant Treasurer, the Secretary, or an
Assistant Secretary, of the Depositor, and delivered to the appropriate
Issuer Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust
Agreement shall include:
7
<PAGE>
<PAGE>
(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by such officer in rendering the Officers'
Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of independent
outside counsel to the Depositor.
"Option Closing Date" shall have the meaning provided in the
Underwriting Agreement.
"Option Securities" means an aggregate Liquidation Amount of
$2,250,000 of the Issuer Trust's ____% Preferred Securities, issuable at
any time and from time to time to the Underwriter, at its option,
exercisable within 30 days after the date of the Prospectus, solely to
cover over-allotments, if any.
"Option Preferred Securities Certificate" means the certificate
evidencing ownership of Preferred Securities issued if the Underwriter
exercises its option described in Section 2.4, which certificate shall
be substantially in the form attached hereto as Exhibit D.
"Original Trust Agreement" has the meaning specified in the
preamble to this Trust Agreement.
"Outstanding," with respect to Trust Securities, means, as of the
date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property
Trustee or delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent for the Holders of such Preferred
Securities, provided that if such Trust Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this Trust
Agreement; and
(c) Trust Securities which have been paid or in exchange for or
in lieu of which other Trust Securities have been executed and delivered
pursuant to Sections 5.4, 5.5, and 5.6;
provided, however, that in determining whether the Holders of the
requisite Liquidation Amount of the Outstanding Preferred Securities
have given any request, demand, authorization, direction, notice,
consent, or waiver hereunder, Preferred Securities owned by the
Depositor, any Issuer Trustee, any Administrator, or any Affiliate
of the Depositor or any Issuer Trustee shall be disregarded and deemed
not to be Outstanding, except that (i) in determining whether any Issuer
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Preferred
Securities that such Issuer Trustee or such Administrator, as the case
may be, knows to be so owned shall be so disregarded and (ii) the
foregoing shall not apply at any time when all of the outstanding
Preferred Securities are
8
<PAGE>
<PAGE>
owned by the Depositor, one or more of the Issuer Trustees, one or more
of the Administrators and/or any such Affiliate. Preferred Securities
so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Administrators the pledgee's right so to act with respect to such
Preferred Securities and that the pledgee is not the Depositor or any
Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of Global
Preferred Securities as reflected in the records of the Clearing Agency
or, if a Clearing Agency Participant is not the Owner, then as reflected
in the records of a Person maintaining an account with such Clearing
Agency, directly or indirectly, in accordance with the rules of such
Clearing Agency.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.10 and shall initially be the Property Trustee.
"Payment Account" means a segregated non-interest-bearing
corporate trust account maintained by the Property Trustee in its trust
department for the benefit of the Holders in which all amounts paid in
respect of the Junior Subordinated Debentures will be held and from
which the Property Trustee, through the Paying Agent, shall make
payments to the Holders in accordance with Sections 4.1 and 4.2.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint
stock company, company, limited liability company, trust, unincorporated
organization or government or any agency or political subdivision
thereof, or any other entity of whatever nature.
"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached
hereto as Exhibit D.
"Preferred Security" means a Firm Security or an Option Security,
each constituting a preferred undivided beneficial interest in the
assets of the Issuer Trust, having a Liquidation Amount of $10 and
having the rights provided therefor in this Trust Agreement, including
the right to receive Distributions and a Liquidation Distribution as
provided herein.
"Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement solely in its capacity
as Property Trustee of the Issuer Trust continued hereunder and not in
its individual capacity, or its successor in interest in such capacity,
or any successor property trustee appointed as herein provided.
"Prospectus" means the final prospectus covering the Preferred
Securities, Junior Subordinated Debentures and the Guarantee Agreement.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this
Trust Agreement; provided that each Junior Subordinated Debenture
Redemption Date and the stated maturity of the Junior Subordinated
Debentures shall be a Redemption Date for a Like Amount of Trust
Securities, including but not limited to any date of redemption pursuant
to the occurrence of any Special Event.
"Redemption Price" means with respect to a redemption of any Trust
Security, the Liquidation Amount of such Trust Security, together with
accumulated but unpaid Distributions to but excluding the
9
<PAGE>
<PAGE>
date fixed for redemption, plus the related amount of the premium, if
any, paid by the Depositor upon the concurrent redemption of a Like
Amount of Junior Subordinated Debentures.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Responsible Officer" when used with respect to the Property
Trustee means any officer assigned to the Corporate Trust Office,
including any managing director, principal, vice president, assistant
vice president, assistant treasurer, assistant secretary or any other
officer of the Property Trustee customarily performing functions similar
to those performed by any of the above designated officers and having
direct responsibility for the administration of the Indenture, and also,
with respect to a particular matter, any other officer to whom such
matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended, and
any successor statute thereto, in each case as amended from time to
time.
"Securities Register" and "Securities Registrar" have the
respective meanings specified in Section 5.5.
"Special Event" means any Tax Event, Capital Treatment Event, or
Investment Company Event.
"Successor Securities Certificate" of any particular Preferred
Securities Certificate means every Preferred Securities Certificate
issued after, and evidencing all or a portion of the same beneficial
interest in the Issuer Trust as that evidenced by, such particular
Preferred Securities Certificate; and, for the purposes of this
definition, any Preferred Securities Certificate executed and delivered
under Section 5.6 in exchange for or in lieu of a mutilated, destroyed,
lost or stolen Preferred Securities Certificate shall be deemed to
evidence the same beneficial interest in the Issuer Trust as the
mutilated, destroyed, lost or stolen Preferred Securities Certificate.
"Successor Security" has the meaning specified in Section 9.5.
"Tax Event" means the receipt by the Depositor and the Issuer
Trust of an Opinion of Counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting
or applying such laws or regulations, which amendment or change is
effective or which pronouncement, action or decision is announced on or
after the date of issuance of the Preferred Securities, there is more
than an insubstantial risk that (a) the Issuer Trust is, or will be
within 90 days of the delivery of such Opinion of Counsel, subject to
United States federal income tax with respect to income received or
accrued on the Junior Subordinated Debentures, (b) interest payable by
the Depositor on the Junior Subordinated Debentures is not, or within 90
days of the delivery of such Opinion of Counsel will not be, deductible
by the Depositor, in whole or in part, for United States federal income
tax purposes, or (c) the Issuer Trust is, or will be within 90 days of
the delivery of such Opinion of Counsel, subject to more than a de
minims; amount of other taxes, duties or other governmental charges;
provided, however, that the Depositor or the Trust shall have received
an Opinion of Counsel with regard to such matters within a reasonable
period of time after the Depositor or the Trust shall have become aware
of the possible occurrence of any such event.
10
<PAGE>
<PAGE>
"Time of Delivery" means 9:00 a.m. Eastern Time, either (a) with
respect to the Firm Securities or the Common Securities, on the third
Business Day (unless postponed in accordance with the provisions of
[Section __] of the Underwriting Agreement) following the date of
execution of the Underwriting Agreement, or such other time not later
than ten Business Days after such date as shall be agreed upon by the
Underwriters, the Issuer Trust and the Depositor, or (b) with respect to
the Option Securities, the applicable Option Closing Date.
"Trust Agreement" means this Amended and Restated Trust Agreement,
as the same may be modified, amended or supplemented in accordance with
the applicable provisions hereof, including (a) all Exhibits hereto, and
(b) for all purposes of this Amended and Restated Trust Agreement and
any such modification, amendment or supplement, the provisions of the
Trust Indenture Act that are deemed to be a part of and govern this
Amended and Restated Trust Agreement and any modification, amendment or
supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended by the Trust Indenture Reform Act of 1990, or any successor
statute, in each case as amended from time to time.
"Trust Property" means (a) the Junior Subordinated Debentures,
(b) any cash on deposit in, or owing to, the Payment Account, and
(c) all proceeds and rights in respect of the foregoing and any other
property and assets for the time being held or deemed to be held by the
Property Trustee pursuant to the trusts of this Trust Agreement.
"Trust Securities Certificate" means any one of the Common
Securities Certificates or the Preferred Securities Certificates.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Underwriters" has the meaning specified in the Underwriting
Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated
________, 1999, among the Issuer Trust, the Depositor and the
Underwriters, as the same may be amended from time to time.
ARTICLE II
----------
CONTINUATION OF THE ISSUER TRUST
Section 2.1. Name. The Issuer Trust continued hereby shall be
----
known as "Allegiant Capital Trust I," as such name may be modified from
time to time by the Administrators following written notice to the
Holders of Trust Securities and the other Issuer Trustees, in which name
the Administrators and the Issuer Trustees may engage in the
transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Issuer Trust and sue and be sued.
Section 2.2. Office of the Delaware Trustee; Principal Place of
---------------------------------------------------
Business. The address of the Delaware Trustee in the State of Delaware
- --------
is Bankers Trust (Delaware), E.A. Delle Donne Corporate Center,
Montgomery Building, 1101 Center Road, Suite 200, Wilmington, Delaware,
19805-1266, Attention: Lisa Wilkins, or such other address in the State
of Delaware as the Delaware Trustee may designate by written notice to
the Holders and the Depositor. The principal executive office of the
Issuer Trust is in care of Allegiant Bancorp, Inc., 2122 Kratky Road,
St. Louis, Missouri 63114, Attention: Corporate Secretary.
11
<PAGE>
<PAGE>
Section 2.3. Initial Contribution of Trust Property;
----------------------------------------
Organizational Expenses. The Issuer Trustees acknowledge receipt in
- -----------------------
trust from the Depositor in connection with this Trust Agreement of the
sum of $10, which constitutes the initial Trust Property. The Depositor
shall pay all organizational expenses of the Issuer Trust as they arise
or shall, upon request of any Issuer Trustee, promptly reimburse such
Issuer Trustee for any such reasonable expenses paid by such Issuer
Trustee. The Depositor shall make no claim upon the Trust Property for
the payment of such expenses.
Section 2.4. Issuance of the Preferred Securities. On
------------------------------------
___________, 1999, the Depositor, both on its own behalf and on behalf
of the Issuer Trust pursuant to the Original Trust Agreement, executed
and delivered the Underwriting Agreement. Contemporaneously with the
execution and delivery of this Trust Agreement, an Administrator, on
behalf of the Issuer Trust, shall manually execute in accordance with
Section 5.3 and the Property Trustee shall authenticate in accordance
with Section 5.3 and deliver to the Underwriters, Firm Securities
Certificates, registered in the names requested by the Underwriters, in
an aggregate amount of 1,500,000 Firm Securities having an aggregate
Liquidation Amount of $15,000,000, against receipt of the aggregate
purchase price of such Preferred Securities of $15,000,000, by the
Property Trustee.
At the option of the Underwriters, at any time and from time to
time within 30 days of the date of the Prospectus, and solely for the
purpose of covering an over-allotment, if any, an Administrator, on
behalf of the Issuer Trust, shall manually execute in accordance with
Section 5.3 and the Property Trustee shall authenticate in accordance
with Section 5.3 and deliver to the Underwriters, Option Preferred
Securities Certificates, registered in the names requested by the
Underwriters, representing up to 225,000 Option Securities in the
aggregate having an aggregate Liquidation Amount of up to $2,250,000
against receipt of the aggregate purchase price of such Option
Securities of up to $2,250,000 by the Property Trustee.
Section 2.5. Issuance of the Common Securities; Subscription
------------------------------------------------
and Purchase of Junior Subordinated Debentures. Contemporaneously with
- ----------------------------------------------
the execution and delivery of this Trust Agreement, an Administrator, on
behalf of the Issuer Trust, shall execute in accordance with Section 5.3
and the Property Trustee shall authenticate in accordance with
Section 5.3 and deliver to the Depositor, Common Securities
Certificates, registered in the name of the Depositor, in an aggregate
amount of 56,250 Common Securities having an aggregate Liquidation
Amount of $562,500 against receipt by the Property Trustee of the
aggregate purchase price of such Common Securities of $562,500 by the
Property Trustee. In the event of any exercise from time to time of an
over-allotment option requiring issuance of additional Option Preferred
Securities Certificates, as described in Section 2.4 above, a proportionate
number of additional Common Securities Certificates, with corresponding
aggregate Liquidation Amount, shall be delivered to the Depositor
against receipt by the Property Trustee of the aggregate purchase price
therefor. Contemporaneously with the executions, and deliveries of
Common Securities Certificates and any Preferred Securities
Certificates, an Administrator, on behalf of the Issuer Trust, shall
subscribe for and purchase from the Depositor, corresponding amounts of
Junior Subordinated Debentures, registered in the name of the Issuer
Trust and having an aggregate principal amount equal to $15,000,000,
plus, in the event of any exercise from time to time of the over-
allotment option (a) a corresponding additional number of Junior
Subordinated Debentures not exceeding an aggregate principal amount of
$2,250,000 and (b) a corresponding number of Junior Subordinated
Debentures not exceeding an aggregate principal amount equal to the
aggregate Liquidation Amount of Common Securities issued pursuant to
such exercise from time to time of an over-allotment option; and, in
satisfaction of the purchase price for such Junior Subordinated
Debentures, the Property Trustee, on behalf of the Issuer Trust, shall
deliver to the Depositor the sum of $15,000,000, plus any corresponding
over-allotment option amount(s) (being the
12
<PAGE>
<PAGE>
sum of the amounts delivered to the Property Trustee pursuant to (a) the
second sentence of the first paragraph and the second paragraph of
Section 2.4 and (b) the first and second sentences of this Section 2.5)
and receive the Junior Subordinated Debentures on behalf of the Issuer
Trust.
Section 2.6. Declaration of Trust. The exclusive purposes
--------------------
and functions of the Issuer Trust are to (a) issue and sell Trust
Securities and use the proceeds from such sale to acquire the Junior
Subordinated Debentures, and (b) engage in only those other activities
necessary, convenient, or incidental thereto. The Depositor hereby
appoints the Issuer Trustees as trustees of the Issuer Trust, to have
all the rights, powers and duties to the extent set forth herein, and
the Issuer Trustees hereby accept such appointment. The Property
Trustee hereby declares that it will hold the Trust Property in trust
upon and subject to the conditions set forth herein for the benefit of
the Issuer Trust and the Holders. The Depositor hereby appoints the
Administrators (as agents of the Issuer Trust), with such Administrators
having all rights, powers, and duties set forth herein with respect to
accomplishing the purposes of the Issuer Trust, and the Administrators
hereby accept such appointment, provided, however, that it is the intent
of the parties hereto that such Administrators shall not be trustees or
fiduciaries with respect to the Issuer Trust and this Trust Agreement
shall be construed in a manner consistent with such intent. The
Property Trustee shall have the right, power and authority to perform
those duties assigned to the Administrators. The Delaware Trustee shall
not be entitled to exercise any powers, nor shall the Delaware Trustee
have any of the duties and responsibilities, of the Property Trustee or
the Administrators set forth herein. The Delaware Trustee shall be one
of the trustees of the Issuer Trust for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Delaware Business
Trust Act and for taking such actions as are required to be taken by a
Delaware trustee under the Delaware Business Trust Act.
Section 2.7. Authorization to Enter into Certain Transactions.
------------------------------------------------
(a) The Issuer Trustees and the Administrators shall conduct the
affairs of the Issuer Trust in accordance with the terms of this Trust
Agreement. Subject to the limitations set forth in paragraph (b) of
this Section 2.7 and in accordance with the following provisions (i) and
(ii), the Issuer Trustees and the Administrators shall act as follows:
(i) Each Administrator shall have the power and authority
and is hereby authorized and directed to act on behalf of the
Issuer Trust with respect to the following:
(A) the compliance with the Underwriting Agreement
regarding the issuance and sale of the Trust Securities;
(B) the compliance with the Securities Act,
applicable state securities or blue sky laws, and the Trust
Indenture Act;
(C) execute the Trust Securities on behalf of the
Issuer Trust in accordance with this Trust Agreement;
(D) the listing of the Preferred Securities upon the
American Stock Exchange or such other securities exchange or
exchanges or upon the Nasdaq National Market as shall be
determined by the Depositor, with the registration of the
Preferred Securities under the Exchange Act, if required,
and the preparation and filing of all periodic and other
reports and other documents pursuant to the foregoing;
13
<PAGE>
<PAGE>
(E) the application for a taxpayer identification
number for the Issuer Trust;
(F) the preparation of a registration statement and
a prospectus in relation to the Preferred Securities,
including any amendments thereto and the taking of any
action necessary or desirable to sell the Preferred
Securities in a transaction or series of transactions
subject to the registration requirements of the Securities
Act;
(G) cause the Issuer Trust to enter into, and
execute, deliver and perform on behalf of the Issuer Trust
all agreements, instruments, certificates or other documents
as such Administrator deems necessary or incidental to the
purposes and functions of the Issuer Trust; and
(H) any action incidental to the foregoing as the
Administrators may from time to time determine is necessary
or advisable to give effect to the terms of this Trust
Agreement.
(ii) The Property Trustee shall have the power and
authority, and is hereby authorized and directed, to act on behalf
of the Issuer Trust with respect to the following matters:
(A) establish and maintain the Payment Account;
(B) receive, take title to, and exercise all of the
rights, powers and privileges of the holder of the Junior
Subordinated Debentures;
(C) receive and collect interest, principal and any
other payments made in respect of the Junior Subordinated
Debentures in the Payment Account;
(D) distribute amounts owed to the Holders in
respect of the Trust Securities in accordance with the terms
of this Trust Agreement;
(E) act as Paying Agent and/or Securities Registrar
to the extent appointed as such hereunder;
(F) send notices of default and other notices and
information regarding the Trust Securities and the Junior
Subordinated Debentures to the Holders in accordance with
this Trust Agreement;
(G) distribute the Trust Property in accordance with
the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
wind up the affairs of and liquidate the Issuer Trust and
prepare, execute and file the certificate of cancellation
with the Secretary of State of the State of Delaware;
(I) after an Event of Default (other than under
paragraph (b), (c) or (d) of the definition of such term if
such Event of Default is by or with respect to the Property
Trustee), comply with the provisions of this Trust Agreement
and take any action to give effect to the terms of this
Trust Agreement and protect and conserve the Trust Property
for the benefit of the Holders (without consideration of the
effect of any such action on
14
<PAGE>
<PAGE>
any particular Holder); provided, however, that nothing in
this Section 2.7(a)(ii) shall require the Property Trustee
to take any action that is not otherwise required in this
Trust Agreement; and
(J) take any action incidental or convenient to the
foregoing as the Property Trustee may from time to time
determine is necessary or advisable to give effect to the
terms of this Trust Agreement; provided, however, that
nothing in this Section 2.7(a)(ii) shall require the
Property Trustee to take any action that is not otherwise
required in this Trust Agreement.
(b) So long as this Trust Agreement remains in effect, the
Issuer Trust (or the Issuer Trustees or Administrators acting on behalf
of the Issuer Trust) shall not undertake any business, activities or
transaction except as expressly provided herein or contemplated hereby.
In particular, neither the Issuer Trustees nor the Administrators (in
each case acting on behalf of the Issuer Trust) shall (i) acquire any
investments or engage in any activities not authorized by this Trust
Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-
off, or otherwise dispose of any of the Trust Property or interests
therein, including to Holders, except as expressly provided herein,
(iii) take any action that would reasonably be expected to cause the
Issuer Trust to fail or cease to qualify as grantor trust for United
States federal income tax purposes, (iv) incur any indebtedness for
borrowed money or issue any other debt, or (v) take or consent to any
action that would result in the placement of a Lien on any of the Trust
Property. The Property Trustee shall defend all claims and demands of
all Persons at any time claiming any Lien on any of the Trust Property
adverse to the interest of the Issuer Trust or the Holders in their
capacity as Holders.
(c) In connection with the issue and sale of the Preferred
Securities, the Depositor shall have the power and authority to assist
the Issuer Trust with respect to, or effect on behalf of the Issuer
Trust, the following (and any actions taken by the Depositor in
furtherance of the following prior to the date of this Trust Agreement
are hereby ratified and confirmed in all respects):
(i) the preparation and filing by the Issuer Trust with
the Commission, and the execution and delivery on behalf of the
Issuer Trust, of a registration statement and a prospectus in
relation to the Preferred Securities, including any amendments
thereto, and the taking of any action necessary or desirable to
sell the Preferred Securities in a transaction or a series of
transactions subject to the registration requirements of the
Securities Act;
(ii) the determination of the states in which to take
appropriate action to qualify or register for sale all or part of
the Preferred Securities and the determination of any and all such
acts, other than actions that must be taken by or on behalf of the
Issuer Trust, and the advice to the Issuer Trustees of actions
they must take on behalf of the Issuer Trust, and the preparation
for execution and filing of any documents to be executed and filed
by the Issuer Trust or on behalf of the Issuer Trust, as the
Depositor deems necessary or advisable in order to comply with the
applicable laws of any such states in connection with the offer
and sale of the Preferred Securities;
(iii) the negotiation of the terms of, and the execution and
delivery of, the Underwriting Agreement providing for the sale of
the Preferred Securities;
(iv) the preparation and filing by the Issuer Trust with
the Commission and the execution on behalf of the Issuer Trust of
a registration statement on Form 8-A relating to the
15
<PAGE>
<PAGE>
registration of the Preferred Securities under Section 12(b) or
12(g) of the Exchange Act, as amended, including any amendments
thereto;
(v) compliance with the listing requirements of the
Preferred Securities upon the American Stock Exchange or such
other securities exchange or exchanges, or upon the Nasdaq
National Market, as shall be determined by the Depositor, the
registration of the Preferred Securities under the Exchange Act,
if required, and the preparation and filing of all periodic and
other reports and other documents pursuant to the foregoing; and
(vi) the taking of any other actions necessary or desirable
to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrators and the Property Trustee are authorized and directed to
conduct the affairs of the Issuer Trust and to operate the Issuer Trust
so that the Issuer Trust will not be deemed to be an "investment
company" required to be registered under the Investment Company Act, and
will be classified as a grantor trust (and not as an association taxable
as a corporation) for United States federal income tax purposes and so
that the Junior Subordinated Debentures will be treated as indebtedness
of the Depositor for United States federal income tax purposes. In this
connection, the Property Trustee, the Administrators, and the Holders of
Common Securities are authorized to take any action, not inconsistent
with applicable law, the Certificate of Trust, or this Trust Agreement,
that the Property Trustee, the Administrators, and Holders of Common
Securities determine in their discretion to be necessary or desirable
for such purposes, as long as such action does not adversely affect in
any material respect the interests of the Holders of the Outstanding
Preferred Securities. In no event shall the Administrators or the
Issuer Trustees be liable to the Issuer Trust or the Holders for any
failure to comply with this section that results from a change in law or
regulations or in the interpretation thereof.
Section 2.8. Assets of Trust. The assets of the Issuer Trust
---------------
shall consist solely of the Trust Property.
Section 2.9. Title to Trust Property. Legal title to all
Trust Property shall be vested at all times in the Issuer Trust and
shall be held and administered by the Property Trustee (in its capacity
as such) for the benefit of the Issuer Trust and the Holders in
accordance with this Trust Agreement.
ARTICLE III
-----------
PAYMENT ACCOUNT
---------------
Section 3.1. Payment Account.
---------------
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and its agents
shall have exclusive control and sole right of withdrawal with respect
to the Payment Account for the purpose of making deposits in and
withdrawals from the Payment Account in accordance with this Trust
Agreement. All monies and other property deposited or held from time to
time in the Payment Account shall be held by the Property Trustee in the
Payment Account for the exclusive benefit of the Holders and for
distribution as herein provided, including (and subject to) any priority
of payments provided for herein.
16
<PAGE>
<PAGE>
(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and
any other payments or proceeds with respect to, the Junior Subordinated
Debentures. Amounts held in the Payment Account shall not be invested
by the Property Trustee pending distribution thereof.
ARTICLE IV
----------
DISTRIBUTIONS; REDEMPTION
-------------------------
Section 4.1. Distributions.
-------------
(a) The Trust Securities represent undivided beneficial
interests in the Trust Property, and Distributions (including
Distributions of Additional Amounts) will be made on the Trust
Securities at the rate and on the dates that payments of interest
(including payments of Additional Interest are made on the Junior
Subordinated Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be
cumulative and will accumulate whether or not there are funds of
the Issuer Trust available for the payment of Distributions.
Distributions shall accumulate from _________, 1999, and, except
in the event (and to the extent) that the Depositor exercises its
right to defer the payment of interest on the Junior Subordinated
Debentures pursuant to the Indenture, shall be payable quarterly
in arrears on March 31, June 30, September 30 and December 31 of
each year, commencing on September 30, 1999. If any date on which
a Distribution is otherwise payable on the Trust Securities is not
a Business Day, then the payment of such Distribution shall be
made on the next succeeding day that is a Business Day (without
any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding
calendar year, payment of such Distributions shall be made on the
immediately preceding Business Day, in either case with the same
force and effect as if made on the date on which such payment was
originally payable (each date on which distributions are payable
in accordance with this Section 4.1(a), a "Distribution Date").
(ii) The Trust Securities shall be entitled to
Distributions payable at a rate of ____% per annum of the
Liquidation Amount of the Trust Securities. The amount of
Distributions payable for any period less than a full Distribution
period shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in a partial
month in a period. Distributions payable for each full
Distribution period will be computed by dividing the rate per
annum by four. The amount of Distributions payable for any period
shall include any Additional Amounts in respect of such period.
(iii) So long as no Debenture Event of Default has occurred
and is continuing, the Depositor has the right under the Indenture
to defer the payment of interest on the Junior Subordinated
Debentures at any time and from time to time for a period not
exceeding 20 consecutive quarterly periods (an "Extension
Period"), provided that no Extension Period may extend beyond
__________, 2029 or end on a date other than a Distribution Date.
As a consequence of any such deferral, quarterly Distributions on
the Trust Securities by the Issuer Trust will also be deferred
(and the amount of Distributions to which Holders of the Trust
Securities are entitled will accumulate additional Distributions
thereon at the rate per annum of ____% per annum, compounded
quarterly) from the relevant payment date for such Distributions,
computed on the basis of a 360-day year of twelve 30-day months and
the actual
17
<PAGE>
<PAGE>
days elapsed in a partial month in such period. Additional
Distributions payable for each full Distribution period will be
computed by dividing the rate per annum by four. The term
"Distributions" as used in Section 4.1 shall include any such
additional Distributions provided pursuant to this
Section 4.1(a)(iii). During an Extension Period, the Depositor
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 Depositor's capital stock, (ii) make any
payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Depositor
that rank pari passu with in all respects with or junior in
interest to the Securities, including the Depositor's obligations
associated with the outstanding trust preferred securities or (iii)
redeem, purchase or acquire less than all of the Junior Subordinated
Debentures or any Trust Preferred Securities (other
than (A) repurchases, redemptions or other acquisitions of shares
of capital stock of the Depositor in connection with any
employment contract, benefit plan or other similar arrangement
with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan, (B) as a result of a
reclassification, an exchange or conversion of any class or series
of the Depositor's capital stock (or any capital stock of a
subsidiary of the Depositor) for any class or series of the
Depositor's capital stock, (C) the purchase of fractional
interests in shares of the Depositor's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, (D) any declaration of a
dividend in connection with any rights plan, or the issuance of
rights, stock or other property under any rights plan, or the
redemption or repurchase of rights pursuant thereto, or (E) any
dividend in the form of stock, warrants, options or other rights
where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that
on which the dividend is being paid or ranks pari passu with or
junior to such stock).
(iv) Distributions on the Trust Securities shall be made by
the Property Trustee from the Payment Account and shall be payable
on each Distribution Date only to the extent that the Issuer Trust
has funds then available in the Payment Account for the payment
of such Distributions.
(b) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear
on the Securities Register for the Trust Securities at the close of
business on the relevant record date, which shall be at the close of
business on the 15th day of March, June, September or December (whether
or not a Business Day).
Section 4.2. Redemption.
----------
(a) On each Debenture Redemption Date and on the stated maturity
of the Junior Subordinated Debentures, the Issuer Trust will be required
to redeem a Like Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee
by first-class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date to each Holder of Trust
Securities to be redeemed, at such Holder's address appearing in the
Security Register. All notices of redemption shall state:
18
<PAGE>
<PAGE>
(i) the Redemption Date;
(ii) the Redemption Price, or if the Redemption Price
cannot be calculated prior to the time the notice is required to
be sent, the estimate of the Redemption Price provided pursuant to
the Indenture together with a statement that it is an estimate and
that the actual Redemption Price will be calculated on the third
Business Day prior to the Redemption Date (and if an estimate is
provided, a further notice shall be sent of the actual Redemption
Price on the date, or as soon as practicable thereafter, that
notice of such actual Redemption Price is received pursuant to the
Indenture);
(iii) the CUSIP number or CUSIP numbers of the Preferred
Securities affected;
(iv) if less than all the Outstanding Trust Securities are
to be redeemed, the identification and the total Liquidation
Amount of the particular Trust Securities to be redeemed;
(v) that, on the Redemption Date, the Redemption Price
will become due and payable upon each such Trust Security to be
redeemed and that Distributions thereon will cease to accumulate
on and after said date, except as provided in Section 4.2(d)
below; and
(vi) the place or places where Trust Securities are to be
surrendered for the payment of the Redemption Price.
The Issuer Trust in issuing the Trust Securities shall use "CUSIP"
numbers, and the Property Trustee shall indicate the "CUSIP" numbers of
the Trust Securities in notices of redemption and related materials as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as
printed on the Trust Securities or as contained in any notice of
redemption and related material.
(c) The Trust Securities redeemed on each Redemption Date shall
be redeemed at the Redemption Price with the applicable proceeds from
the contemporaneous redemption of Junior Subordinated Debentures.
Redemptions of the Trust Securities shall be made and the Redemption
Price shall be payable on each Redemption Date only to the extent that
the Issuer Trust has funds then available in the Payment Account for the
payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in
respect of any Preferred Securities, then, by 12:00 noon, New York City
time, on the Redemption Date, subject to Section 4.2(c), the Property
Trustee will, with respect to Preferred Securities held in global form,
irrevocably deposit with the Clearing Agency for such Preferred
Securities, to the extent available therefor, funds sufficient to pay
the applicable Redemption Price and will give such Clearing Agency
irrevocable instructions and authority to pay the Redemption Price to
the Owners of the Preferred Securities. With respect to Preferred
Securities that are not held in global form, the Property Trustee,
subject to Section 4.2(c), will irrevocably deposit with the Paying
Agent, to the extent available therefor, funds sufficient to pay the
applicable Redemption Price and will give the Paying Agent irrevocable
instructions and authority to pay the Redemption Price to the Holders of
the Preferred Securities upon surrender of their Preferred Securities
Certificates. Notwithstanding the foregoing, Distributions payable on
or prior to the Redemption Date for any Trust Securities called for
redemption shall be payable to the Holders of such Trust Securities as
they appear on the Securities Register for the Trust Securities on the
relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then,
upon the date of such deposit, all rights of Holders holding Trust
Securities
19
<PAGE>
<PAGE>
so called for redemption will cease, except the right of such Holders to
receive the Redemption Price and any Distributions payable in respect of
the Trust Securities on or prior to the Redemption Date, but without
interest, and such Trust Securities will cease to be Outstanding. In
the event that any date on which any applicable Redemption Price is
payable is not a Business Day, then payment of the applicable Redemption
Price payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect
of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case, with the same force and effect as
if made on such date. In the event that payment of the Redemption Price
in respect of any Trust Securities called for redemption is improperly
withheld or refused and not paid either by the Issuer Trust or by the
Depositor pursuant to the Guarantee Agreement, Distributions on such
Trust Securities will continue to accumulate, as set forth in
Section 4.1, from the Redemption Date originally established by the
Issuer Trust for such Trust Securities to the date such applicable
Redemption Price is actually paid, in which case the actual payment date
will be the date fixed for redemption for purposes of calculating the
applicable Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding
Trust Securities are to be redeemed on a Redemption Date, then the
particular Preferred Securities to be redeemed shall be selected not
more than 60 days prior to the Redemption Date by the Property Trustee
from the Outstanding Preferred Securities not previously called for
redemption in such a manner as the Property Trustee shall deem fair and
appropriate. The Property Trustee shall promptly notify the Securities
Registrar in writing of the Preferred Securities selected for redemption
and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all
purposes of this Trust Agreement, unless the context otherwise requires,
all provisions relating to the redemption of Preferred Securities shall
relate, in the case of any Preferred Securities redeemed or to be
redeemed only in part, to the portion of the Liquidation Amount of
Preferred Securities which has been or is to be redeemed.
(f) Payment of the Redemption Price on the Trust Securities
shall be made to the record holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record
date, which shall be the date 15 days prior to the relevant Redemption
Date.
Section 4.3. Subordination of Common Securities.
----------------------------------
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, the Redemption Price of, and the Liquidation
Distribution in respect of, the Trust Securities, as applicable, shall
be made, pro rata among the Common Securities and the Preferred
Securities based on the Liquidation Amount of such Trust Securities;
provided, however, that if on any Distribution Date or Redemption Date
any Event of Default resulting from a Debenture Event of Default shall
have occurred and be continuing, no payment of any Distribution
(including any Additional Amounts, if applicable) on, or Redemption
Price of, or Liquidation Distribution in respect of, any Common
Security, and no other payment on account of the redemption,
liquidation, or other acquisition of Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid
Distributions (including Additional Amounts, if applicable) on all
Outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or, in the case of payment of the
Redemption Price, the full amount of such Redemption Price on all
Outstanding Preferred Securities then called for redemption, or in the
case of payment of the Liquidation Distribution the full amount of such
Liquidation Distribution on all Outstanding Preferred Securities, shall
have been made or provided for, and all funds immediately available to
the Property Trustee shall first be applied to the payment in full in
cash of all Distributions (including any Additional Amounts, if
applicable) on, or the Redemption Price of, or Liquidation
20
<PAGE>
<PAGE>
Distribution in respect of Preferred Securities then due and payable.
The existence of an Event of Default does not entitle the Holders of
Preferred Securities to accelerate the maturity thereof.
(b) In the case of the occurrence of any Event of Default
resulting from any Debenture Event of Default, the Holder of the Common
Securities shall have no right to act with respect to any such Event of
Default under this Trust Agreement until the effects of all such Events
of Default with respect to the Preferred Securities have been cured,
waived, or otherwise eliminated. Until all such Events of Default under
this Trust Agreement with respect to the Preferred Securities have been
so cured, waived, or otherwise eliminated, the Property Trustee shall
act solely on behalf of the Holders of the Preferred Securities and not
on behalf of the Holder of the Common Securities, and only the Holders
of the Preferred Securities will have the right to direct the Property
Trustee to act on their behalf.
Section 4.4. Payment Procedures. Payments of Distributions
------------------
(including any Additional Amounts, if applicable) in respect of the
Preferred Securities shall be made by check mailed to the address of the
Person entitled thereto as such address shall appear on the Securities
Register or, if the Preferred Securities are held by a Clearing Agency,
such Distributions shall be made to the Clearing Agency in immediately
available funds, which will credit the relevant accounts on the
applicable Distribution Dates. Payments of Distributions to Holders of
$1,000,000 or more in aggregate Liquidation Amount of Preferred
Securities may be made by wire transfer of immediately available funds
upon written request of such Holder of Preferred Securities to the
Securities Registrar not later than 15 calendar days prior to the date
on which the Distribution is payable. Payments in respect of the Common
Securities shall be made in such manner as shall be mutually agreed
between the Property Trustee and the Holder of the Common Securities.
Section 4.5. Tax Returns and Reports.
-----------------------
(a) The Administrators shall prepare and file (or cause to be
prepared and filed), at the Depositor's expense, all United States
federal, state, and local tax and information returns and reports
required to be filed by or in respect of the Issuer Trust. In this
regard, the Administrators shall (i) prepare and file (or cause to be
prepared and filed) all Internal Revenue Service forms required to be
filed in respect of the Issuer Trust in each taxable year of the Issuer
Trust and (ii) prepare and furnish (or cause to be prepared and
furnished) to each Holder all Internal Revenue Service forms required to
be provided by the Issuer Trust. The Administrators shall provide the
Depositor and the Property Trustee with a copy of all such returns and
reports promptly after such filing or furnishing. The Issuer Trustees
and the Administrators shall comply with United States federal
withholding and backup withholding tax laws and information reporting
requirements with respect to any payments to Holders under the Trust
Securities.
(b) On or before December 15 of each year during which any
Preferred Securities are outstanding, the Administrators shall furnish
to the Paying Agent such information as may be reasonably requested by
the Property Trustee in order that the Property Trustee may prepare the
information which it is required to report for such year on Internal
Revenue Service Forms 1096 and 1099 pursuant to Section 6049 of the
Code. Such information shall include the amount of original issue
discount includible in income for each outstanding Preferred Security
during such year.
Section 4.6. Payment of Taxes; Duties, Etc. of the Issuer
--------------------------------------------
Trust. Upon receipt under the Junior Subordinated Debentures of
- -----
Additional Sums, the Property Trustee, at the written direction of an
Administrator or the Depositor, shall promptly pay any taxes, duties or
governmental charges of whatsoever nature (other than withholding taxes)
imposed on the Issuer Trust by the United States or any other taxing
authority.
21
<PAGE>
<PAGE>
Section 4.7. Payments under Indenture or Pursuant to Direct
----------------------------------------------
Actions. Any amount payable hereunder to any Holder of Preferred
- -------
Securities shall be reduced by the amount of any corresponding payment
such Holder (or any Owner related thereto) has directly received
pursuant to Section 5.8 of the Indenture or Section 5.13 of this Trust
Agreement.
Section 4.8. Liability of the Holder of Common Securities.
--------------------------------------------
The Holder of Common Securities shall be liable for the debts and
obligations of the Issuer Trust as set forth in Section 6.7(c) of the
Indenture regarding allocation of expenses.
ARTICLE V
---------
TRUST SECURITIES CERTIFICATES
-----------------------------
Section 5.1. Initial Ownership. Until the issuance of the
-----------------
Trust Securities, and at any time during which no Trust Securities are
outstanding, the Depositor shall be the sole beneficial owner of the
Issuer Trust.
Section 5.2. The Trust Securities Certificates.
---------------------------------
(a) The Trust Securities Certificates shall be executed on
behalf of the Issuer Trust by manual or facsimile signature of at least
one Administrator, except as provided in Section 5.3. Trust Securities
Certificates bearing the signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on
behalf of the Issuer Trust, shall be validly issued and entitled to the
benefits of this Trust Agreement, notwithstanding that such individuals
or any of them shall have ceased to be so authorized prior to the
delivery of such Trust Securities Certificates or did not hold such
offices at the date of delivery of such Trust Securities Certificates.
The Preferred Securities Certificate shall be issued in minimum
denominations of $10 and integral multiples of $10 in excess thereof. A
transferee of a Trust Securities Certificate shall become a Holder, and
shall be entitled to the rights and subject to the obligations of a
Holder hereunder, upon due registration of such Trust Securities
Certificate in such transferee's name pursuant to Section 5.5.
(b) Upon their original issuance, Preferred Securities
Certificates shall be issued in the form of one or more fully registered
Global Preferred Securities Certificates which will be deposited with or
on behalf of Cede as the Depositary's nominee and registered in the name
of Cede as the Depositary's nominee. Unless and until it is
exchangeable in whole or in part for the Preferred Securities in
definitive form, a global security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee
of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor.
(c) A single Common Securities Certificate representing the
Common Securities shall be issued to the Depositor in the form of a
definitive Common Securities Certificate.
Section 5.3. Execution and Delivery of Trust Securities
-------------------------------------------
Certificates. On the Closing Date, and on any Option Closing Date, if
- ------------
applicable, an Administrator shall cause Trust Securities Certificates,
in an aggregate Liquidation Amount as provided in Sections 2.4 and 2.5,
as the case may be, to be executed on behalf of the Issuer Trust and
delivered to the Property Trustee and upon such delivery the Property
Trustee shall authenticate such Trust Securities Certificates and
deliver such Trust Securities Certificates upon the written order of the
Issuer Trust, executed by an Administrator thereof, without
22
<PAGE>
<PAGE>
further corporate action by the Issuer Trust, in authorized
denominations, and whereupon the Trust Securities evidenced by such
Trust Securities Certificates shall be duly and validly issued undivided
beneficial interests in the assets of the Issuer Trust and entitled to
the benefits of this Trust Agreement.
Section 5.4. Global Preferred Security.
-------------------------
(a) Any Global Preferred Security issued under this Trust
Agreement shall be registered in the name of the nominee of the Clearing
Agency and delivered to such custodian therefor, and such Global
Preferred Security shall constitute a single Preferred Security for all
purposes of this Trust Agreement.
(b) Notwithstanding any other provision in this Trust Agreement,
a Global Preferred Security may not be exchanged in whole or in part for
Preferred Securities registered, and no transfer of the Global Preferred
Security in whole or in part may be registered, in the name of any
Person other than the Clearing Agency for such Global Preferred
Security, Cede, or other nominee thereof unless (i) such Clearing Agency
advises the Depositor and the Issuer Trustees in writing that such
Clearing Agency is no longer willing or able to properly discharge its
responsibilities as Clearing Agency with respect to such Global
Preferred Security, and the Depositor is unable to locate a qualified
successor within 90 days of receipt of such notice from the Depositary,
(ii) the Depositor at its option advises the Depositary in writing that
it elects to terminate the book-entry system through the Clearing
Agency, or (iii) there shall have occurred and be continuing an Event of
Default.
(c) If a Preferred Security is to be exchanged in whole or in
part for a beneficial interest in a Global Preferred Security, then
either (i) such Global Preferred Security shall be so surrendered for
exchange or cancellation as provided in this Article V or (ii) the
Liquidation Amount thereof shall be reduced or increased by an amount
equal to the portion thereof to be so exchanged or cancelled, or equal
to the Liquidation Amount of such other Preferred Security to be so
exchanged for a beneficial interest therein, as the case may be, by
means of an appropriate adjustment made on the records of the Security
Registrar, whereupon the Property Trustee, in accordance with the
Applicable Procedures, shall instruct the Clearing Agency or its
authorized representative to make a corresponding adjustment to its
records. Upon any such surrender or adjustment of a Global Preferred
Security by the Clearing Agency, accompanied by registration
instructions, the Property Trustee shall, subject to Section 5.4(b) and
as otherwise provided in this Article V, authenticate and deliver and an
Administrator shall execute any Preferred Securities issuable in
exchange for such Global Preferred Security (or any portion thereof) in
accordance with the instructions of the Clearing Agency. The Property
Trustee shall not be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be fully protected
in relying on, such instructions.
(d) Every Preferred Security registered, executed,
authenticated, and delivered upon registration of transfer of, or in
exchange for or in lieu of, a Global Preferred Security or any portion
thereof, whether pursuant to this Article V or Article IV or otherwise,
shall be executed, authenticated and delivered in the form of, and shall
be, a Global Preferred Security, unless such Global Preferred Security
is registered in the name of a Person other than the Clearing Agency for
such Global Preferred Security or a nominee thereof.
(e) The Clearing Agency or its nominee, as the registered owner
of a Global Preferred Security, shall be considered the Holder of the
Preferred Securities represented by such Global Preferred Security for
all purposes under this Trust Agreement and the Preferred Securities,
and Owners of beneficial interests in such Global Preferred Security
shall hold such interests pursuant to the applicable
23
<PAGE>
<PAGE>
Procedures and, except as otherwise provided herein, shall not be
entitled to receive physical delivery of any such Preferred Securities
in definitive form and shall not be considered the Holders thereof under
this Trust Agreement. Accordingly, any such Owner's beneficial interest
in the Global Preferred Security shall be shown only on, and the
transfer of such interest shall be effected only through, records
maintained by the Clearing Agency or its nominee. Neither the Property
Trustee, the Securities Registrar nor the Depositor shall have any
liability in respect of any transfers effected by the Clearing Agency.
(f) The rights of Owners of beneficial interests in a Global
Preferred Security shall be exercised only through the Clearing Agency
and shall be limited to those established by law and agreements between
such Owners and the Clearing Agency.
Section 5.5. Registration of Transfer and Exchange Generally;
------------------------------------------------
Certain Transfers and Exchanges; Preferred Securities Certificates.
- ------------------------------------------------------------------
(a) The Property Trustee shall keep or cause to be kept at its
Corporate Trust Office a register or registers for the purpose of
registering Preferred Trust Securities Certificates and transfers and
exchanges of Preferred Securities Certificates in which the registrar
and transfer agent with respect to the Preferred Securities (the
"Securities Registrar"), subject to such reasonable regulations as it
may prescribe, shall provide for the registration of Preferred
Securities Certificates and Common Securities Certificates (subject to
Section 5.11 in the case of Common Securities Certificates) and
registration of transfers and exchanges of Preferred Securities
Certificates as herein provided. Such register is herein sometimes
referred to as the "Securities Register." The Property Trustee is
hereby appointed "Securities Registrar" for the purpose of registering
Preferred Securities and transfers of Preferred Securities as herein
provided.
Upon surrender for registration of transfer of any Preferred
Security at the offices or agencies of the Property Trustee designated
for that purpose, an Administrator shall execute and the Property
Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Preferred Securities of the
same series of any authorized denominations of like tenor and aggregate
Liquidation Amount and bearing such legends as may be required by this
Trust Agreement.
At the option of the Holder, Preferred Securities may be exchanged
for other Preferred Securities of any authorized denominations, of like
tenor and aggregate Liquidation Amount and bearing such legends as may
be required by this Trust Agreement, upon surrender of the Preferred
Securities to be exchanged at such office or agency. Whenever any
Preferred Securities are so surrendered for exchange, an Administrator
shall execute and the Property Trustee shall authenticate and deliver
the Preferred Securities that the Holder making the exchange is entitled
to receive.
All Preferred Securities issued upon any transfer or exchange of
Preferred Securities shall be the valid obligations of the Issuer Trust,
evidencing the same interest, and entitled to the same benefits under
this Trust Agreement, as the Preferred Securities surrendered upon such
transfer or exchange.
Every Preferred Security presented or surrendered for transfer or
exchange shall (if so required by the Property Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Property Trustee and the Securities Registrar, duly
executed by the Holder thereof or such Holder's attorney duly authorized
in writing.
24
<PAGE>
<PAGE>
No service charge shall be made to a Holder for any transfer or
exchange of Preferred Securities, but the Property Trustee may require
payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange
of Preferred Securities.
Neither the Issuer Trust nor the Property Trustee shall be
required, pursuant to the provisions of this Section, (i) to issue,
register the transfer of, or exchange any Preferred Security during a
period beginning at the opening of business 15 days before the day of
selection for redemption of Preferred Securities pursuant to Article IV
and ending at the close of business on the day of mailing of the notice
of redemption, or (ii) to register the transfer of or exchange any
Preferred Security so selected for redemption in whole or in part,
except, in the case of any such Preferred Security to be redeemed in
part, any portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Trust Securities may only
-------------------------------
be transferred, in whole or in part, in accordance with the terms and
conditions set forth in this Trust Agreement. Any transfer or purported
transfer of any Trust Security not made in accordance with this Trust
Agreement shall be null and void.
(i) Non-Global Security to Non-Global Security. A Trust
------------------------------------------
Security that is not a Global Preferred Security may be
transferred, in whole or in part, to a Person who takes delivery
in the form of another Trust Security that is not a Global
Preferred Security as provided in Section 5.5(a).
(ii) Free Transferability. Subject to this Section 5.5,
--------------------
Preferred Securities shall be freely transferable.
(iii) Exchanges Between Global Preferred Security and Non-
----------------------------------------------------
Global Preferred Security. A beneficial interest in a Global
-------------------------
Preferred Security may be exchanged for a Preferred Security that
is not a Global Preferred Security as provided in Section 5.4.
Section 5.6. Mutilated, Destroyed, Lost or Stolen Trust
------------------------------------------
Securities Certificates. If (a) any mutilated Trust Securities
- -----------------------
Certificate shall be surrendered to the Securities Registrar, or if the
Securities Registrar shall receive evidence to its satisfaction of the
destruction, loss, or theft of any Trust Securities Certificate and
(b) there shall be delivered to the Securities Registrar and the
Administrators such security or indemnity as may be required by them to
save each of them harmless, then in the absence of notice that such
Trust Securities Certificate shall have been acquired by a bona fide
purchaser or a protected purchaser, the Administrators, or any one of
them, on behalf of the Issuer Trust shall execute and make available for
delivery, and the Property Trustee shall authenticate, in exchange for
or in lieu of any such mutilated, destroyed, lost, or stolen Trust
Securities Certificate, a new Trust Securities Certificate of like
class, tenor and denomination. In connection with the issuance of any
new Trust Securities Certificate under this Section, the Administrators
or the Securities Registrar may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Trust Securities Certificate issued
pursuant to this Section shall constitute conclusive evidence of an
undivided beneficial interest in the assets of the Issuer Trust
corresponding to that evidenced by the lost, stolen or destroyed Trust
Securities Certificate, as if originally issued, whether or not the
lost, stolen or destroyed Trust Securities Certificate shall be found at
any time.
Section 5.7. Persons Deemed Holders. The Issuer Trustees,
----------------------
the Administrators, the Securities Registrar, or the Depositor shall
treat the Person in whose name any Trust Securities are
25
<PAGE>
<PAGE>
registered in the Securities Register as the owner of such Trust
Securities for the purpose of receiving Distributions and for all other
purposes whatsoever, and none of the Issuer Trustees, the
Administrators, the Securities Registrar nor the Depositor shall be
bound by any notice to the contrary.
Section 5.8. Access to List of Holders' Names and Addresses.
----------------------------------------------
Each Holder and each Owner shall be deemed to have agreed not to hold
the Depositor, the Property Trustee, or the Administrators accountable
by reason of the disclosure of its name and address, regardless of the
source from which such information was derived.
Section 5.9. Maintenance of Office or Agency. The Property
-------------------------------
Trustee shall designate, with the consent of the Administrators, which
consent shall not be unreasonably withheld, an office or offices or
agency or agencies where Preferred Securities Certificates may be
surrendered for registration of transfer or exchange and where notices
and demands to or upon the Issuer Trustees in respect of the Trust
Securities Certificates may be served. The Property Trustee initially
designates its Corporate Trust Office for such purposes. The Property
Trustee shall give prompt written notice to the Depositor, the
Administrators and the Holders of any change in the location of the
Securities Register or any such office or agency.
Section 5.10. Appointment of Paying Agent. The Paying Agent
---------------------------
shall make Distributions to Holders from the Payment Account and shall
report the amounts of such Distributions to the Property Trustee and the
Administrators. Any Paying Agent shall have the revocable power to
withdraw funds from the Payment Account solely for the purpose of making
the Distributions referred to above. The Property Trustee may revoke
such power and remove any Paying Agent in its sole discretion. The
Paying Agent shall initially be the Property Trustee. Any Person
acting as Paying Agent shall be permitted to resign as Paying Agent upon
at least 30 days' written notice to the Administrators and the Property
Trustee. In the event that the Property Trustee shall no longer be the
Paying Agent or a successor Paying Agent shall resign or its authority
to act be revoked, the Property Trustee shall appoint a successor (which
shall be a bank or trust company) that is reasonably acceptable to the
Administrators to act as Paying Agent. Such successor Paying Agent
appointed by the Property Trustee, or any additional Paying Agent
appointed by the Administrators, shall execute and deliver to the Issuer
Trustees an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Issuer Trustees that as
Paying Agent, such successor Paying Agent or additional Paying Agent
will hold all sums, if any, held by it for payment to the Holders in
trust for the benefit of the Holders entitled thereto until such sums
shall be paid to such Holders. The Paying Agent shall return all
unclaimed funds to the Property Trustee and upon removal of a Paying
Agent such Paying Agent shall also return all funds in its possession to
the Property Trustee. The provisions of Sections 8.1, 8.3 and 8.6
herein shall apply to the Bank also in its role as Paying Agent, for so
long as the Bank shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any
reference in this Trust Agreement to the Paying Agent shall include any
co-paying agent chosen by the Property Trustee unless the context
requires otherwise.
Section 5.11. Ownership of Common Securities by Depositor. On
-------------------------------------------
the Closing Date, and on any Option Closing Date, if applicable, the
Depositor shall acquire and retain beneficial and record ownership of
the Common Securities. Neither the Depositor nor any successor Holder
of the Common Securities may transfer less than all of the Common
Securities, and the Depositor or any successor Holder may transfer the
Common Securities only (a) in connection with a consolidation or merger
of the Depositor into another corporation or any conveyance, transfer or
lease by the Depositor of its properties and assets substantially as an
entirety to any Person, pursuant to Section 8.1 of the Indenture, or
(b) a transfer to an Affiliate of the Depositor in compliance with
applicable law (including the Securities Act
26
<PAGE>
<PAGE>
and applicable state securities and blue sky laws). To the fullest
extent permitted by law, any other attempted transfer of the Common
Securities shall be void. The Administrators shall cause each Common
Securities Certificate issued to the Depositor to contain a legend
stating "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR IN
INTEREST TO THE DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN COMPLIANCE
WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST AGREEMENT."
Section 5.12. Notices to Clearing Agency. To the extent that
--------------------------
a notice or other communication to the Holders is required under this
Trust Agreement, for so long as Preferred Securities are represented by
a Global Preferred Securities Certificate, the Administrators and the
Property Trustee shall give all such notices and communications
specified herein to be given to the Clearing Agency, and shall have no
obligations to the Owners.
Section 5.13. Rights of Holders.
-----------------
(a) The legal title to all Trust Property shall be vested at all
times in the Issuer Trust and shall be held and administered by the
Property Trustee (in its capacity as such) in accordance with
Section 2.9, and the Holders shall not have any right or title therein
other than the undivided beneficial interest in the assets of the Issuer
Trust conferred by their Trust Securities and they shall have no right
to call for any partition or division of property, profits, or rights of
the Issuer Trust except as described below. The Trust Securities shall
be personal property giving only the rights specifically set forth
therein and in this Trust Agreement. The Trust Securities shall have no
preemptive or similar rights and when issued and delivered to Holders
against payment of the purchase price therefor will be validly issued,
fully paid and nonassessable undivided beneficial interests in the Trust
Property. Subject to Section 4.8 hereof, the Holders of the Trust
Securities, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of
the State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding,
if, upon a Debenture Event of Default, the Debenture Trustee fails, or
the holders of not less than 25% in principal amount of the outstanding
Junior Subordinated Debentures fail, to declare the principal of all of
the Junior Subordinated Debentures to be immediately due and payable,
the Holders of at least 25% in Liquidation Amount of the Preferred
Securities then Outstanding shall have such right to make such
declaration by a notice in writing to the Property Trustee, the
Depositor and the Debenture Trustee.
At any time after such a declaration of acceleration with respect
to the Junior Subordinated Debentures has been made and before a
judgment or decree for payment of the money due has been obtained by the
Debenture Trustee as provided in the Indenture, the Holders of a
Majority in Liquidation Amount of the Preferred Securities, by written
notice to the Property Trustee, the Depositor, and the Debenture
Trustee, may rescind and annul such declaration and its consequences if:
(i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay:
(A) all overdue installments of interest on all of
the Junior Subordinated Debentures,
(B) any accrued Additional Interest on all of the
Junior Subordinated Debentures,
27
<PAGE>
<PAGE>
(C) the principal of (and premium, if any, on) any
Junior Subordinated Debentures which have become due
otherwise than by such declaration of acceleration and
interest and Additional Interest thereon at the rate borne
by the Junior Subordinated Debentures, and
(D) all sums paid or advanced by the Debenture
Trustee under the Indenture and the reasonable compensation,
expenses, disbursements and advances of the Debenture
Trustee and the Property Trustee, their agents and counsel;
and
(ii) all Events of Default with respect to the Junior
Subordinated Debentures, other than the non-payment of the
principal of the Junior Subordinated Debentures which has become
due solely by such acceleration, have been cured or waived as
provided in Section 5.13 of the Indenture.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, on behalf of the Holders of all the Preferred
Securities, waive any past default under the Indenture, except a default
in the payment of principal or interest (unless such default has been
cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with
the Debenture Trustee) or a default in respect of a covenant or
provision which under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Junior
Subordinated Debentures affected thereby. No such rescission shall
affect any subsequent default or impair any right consequent thereon.
Upon receipt by the Property Trustee of written notice declaring
such an acceleration, or rescission and annulment thereof, by Holders of
the Preferred Securities all or part of which is represented by Global
Preferred Securities, a record date shall be established for determining
Holders of Outstanding Preferred Securities entitled to join in such
notice, which record date shall be at the close of business on the day
the Property Trustee receives such notice. The Holders on such record
date, or their duly designated proxies, and only such Persons, shall be
entitled to join in such notice, whether or not such Holders remain
Holders after such record date; provided, that, unless such declaration
of acceleration, or rescission and annulment, as the case may be, shall
have become effective by virtue of the requisite percentage having
joined in such notice prior to the day which is 90 days after such
record date, such notice of declaration of acceleration, or rescission
and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect.
Nothing in this paragraph shall prevent a Holder, or a proxy of a
Holder, from giving, after expiration of such 90-day period, a new
written notice of declaration of acceleration, or rescission and
annulment thereof, as the case may be, that is identical to a written
notice which has been canceled pursuant to the proviso to the preceding
sentence, in which event a new record date shall be established pursuant
to the provisions of this Section 5.13(b).
(c) For so long as any Preferred Securities remain Outstanding,
to the fullest extent permitted by law and subject to the terms of this
Trust Agreement and the Indenture, upon a Debenture Event of Default,
any Holder of Preferred Securities shall have the right to institute a
proceeding directly against the Depositor, pursuant to Section 5.8 of
the Indenture, for enforcement of payment to such Holder of the
principal amount of or interest on Junior Subordinated Debentures having
an aggregate principal amount equal to the aggregate Liquidation Amount
of the Preferred Securities of such Holder (a "Direct Action"). Except
as set forth in Sections 5.13(b) and 5.13(c) of this Trust Agreement, the
28
<PAGE>
<PAGE>
Holders of Preferred Securities shall have no right to exercise directly
any right or remedy available to the holders of, or in respect of, the
Junior Subordinated Debentures.
ARTICLE VI
----------
ACTS OF HOLDERS; MEETINGS; VOTING
---------------------------------
Section 6.1. Limitations on Holder's Voting Rights.
-------------------------------------
(a) Except as provided in this Trust Agreement and in the
Indenture and as otherwise required by law, no Holder of Preferred
Securities shall have any right to vote or in any manner otherwise
control the administration, operation, and management of the Issuer
Trust or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Trust Securities
Certificates be construed so as to constitute the Holders from time to
time as members of an association.
(b) So long as any Junior Subordinated Debentures are held by
the Property Trustee on behalf of the Issuer Trust, the Property Trustee
shall not (i) direct the time, method, and place of conducting any
proceeding for any remedy available to the Property Trustee, or
executing any trust or power conferred on the Debenture Trustee with
respect to such Junior Subordinated Debentures, (ii) waive any past
default that may be waived under Section 5.13 of the Indenture,
(iii) exercise any right to rescind or annul a declaration that the
principal of all the Junior Subordinated Debentures shall be due and
payable, or (iv) consent to any amendment, modification, or termination
of the Indenture or the Junior Subordinated Debentures, where such
consent shall be required, without, in each case, obtaining the prior
approval of the Holders of a Majority in Liquidation Amount of the
Preferred Securities; provided, however, that where a consent under the
Indenture would require the consent of each holder of Junior
Subordinated Debentures affected thereby, no such consent shall be given
by the Property Trustee without the prior written consent of each Holder
of Preferred Securities. The Property Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of
Preferred Securities, except by a subsequent vote of the Holders of
Preferred Securities. The Property Trustee shall notify all Holders of
the Preferred Securities of any notice of default received with respect
to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of the Holders of the Preferred Securities, prior to
taking any of the foregoing actions, the Property Trustee shall, at the
expense of the Depositor, obtain an Opinion of Counsel experienced in
such matters to the effect that such action will not cause the Issuer
Trust to fail or cease to be treated as grantor trust for United States
federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides
for, or the Issuer Trust otherwise proposes to effect, (i) any action
that would adversely affect in any material respect the interests,
powers, preferences, or special rights of the Preferred Securities,
whether by way of amendment to the Trust Agreement or otherwise, or
(ii) the dissolution of the Issuer Trust, other than pursuant to the
terms of this Trust Agreement, then the Holders of Outstanding Preferred
Securities as a class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except
with the approval of the Holders of a Majority in Liquidation Amount of
the Preferred Securities. Notwithstanding any other provision of this
Trust Agreement, no amendment to this Trust Agreement may be made if, as
a result of such amendment, it would cause the Issuer Trust fail or
cease to be treated as a grantor trust for United States federal income
tax purposes.
Section 6.2. Notice of Meetings. Notice of all meetings of
------------------
the Holders, stating the time, place, and purpose of the meeting, shall
be given by the Property Trustee pursuant to Section 10.8 to each
29
<PAGE>
<PAGE>
Holder of record, at his registered address, at least 15 days and not
more than 90 days before the meeting. At any such meeting, any business
properly before the meeting may be so considered whether or not stated
in the notice of the meeting. Any adjourned meeting may be held as
adjourned without further notice.
Section 6.3. Meetings of Holders.
-------------------
(a) No annual meeting of Holders is required to be held. The
Property Trustee, however, shall call a meeting of Holders to vote on
any matter upon the written request of the Holders of record of 25% or
more of the aggregate Liquidation Amount of the Preferred Securities and
the Administrators or the Property Trustee may, at any time in their
discretion, call a meeting of Holders of Preferred Securities to vote on
any matters as to which Holders are entitled to vote.
(b) Holders of a Majority in Liquidation Amount of the Preferred
Securities, present in person or represented by proxy, shall constitute
a quorum at any meeting of Holders of Preferred Securities.
(c) If a quorum is present at a meeting, an affirmative vote by
the Holders of record present, in person or by proxy, holding Preferred
Securities representing a Majority in Liquidation Amount of the
Preferred Securities held by the Holders present, either in person or by
proxy, at such meeting shall constitute the action of the Holders of
Preferred Securities, unless this Trust Agreement requires a greater
number of affirmative votes.
Section 6.4. Voting Rights. Holders shall be entitled to one
-------------
vote for each $10 of Liquidation Amount represented by their Outstanding
Trust Securities in respect of any matter as to which such Holders are
entitled to vote.
Section 6.5. Proxies, etc. At any meeting of Holders, any
------------
Holder entitled to vote thereat may vote by proxy, provided that no
proxy shall be voted at any meeting unless it shall have been placed on
file with the Property Trustee, or with such other officer or agent of
the Issuer Trust as the Property Trustee may direct, for verification
prior to the time at which such vote shall be taken. Pursuant to a
resolution of the Property Trustee, proxies may be solicited in the name
of the Property Trustee or one or more officers of the Property Trustee.
Only Holders of record shall be entitled to vote. When Trust Securities
are held jointly by several persons, any one of them may vote at any
meeting in person or by proxy in respect of such Trust Securities, but
if more than one of them shall be present at such meeting in person or
by proxy, and such joint owners or their proxies so present disagree as
to any vote to be cast, such vote shall not be received in respect of
such Trust Securities. A proxy purporting to be executed by or on
behalf of a Holder shall be deemed valid unless challenged at or prior
to its exercise, and the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its
date of execution.
Section 6.6. Holder Action by Written Consent. Any action
--------------------------------
which may be taken by Holders at a meeting may be taken without a
meeting if Holders holding a Majority in Liquidation Amount of all Trust
Securities entitled to vote in respect of such action (or such larger
proportion thereof as shall be required by any other provision of this
Trust Agreement) shall consent to the action in writing.
Section 6.7. Record Date for Voting and Other Purposes. For
-----------------------------------------
the purposes of determining the Holders who are entitled to notice of
and to vote at any meeting or by written consent, or to participate in
any Distribution on the Trust Securities in respect of which a record
date is not otherwise
30
<PAGE>
<PAGE>
provided for in this Trust Agreement, or for the purpose of any other
action, the Administrators (or the Property Trustee if the
Administrators are unable or unwilling to act) may from time to time fix
a date, not more than 90 days prior to the date of any meeting of
Holders or the payment of a Distribution or other action, as the case
may be, as a record date for the determination of the identity of the
Holders of record for such purposes.
Section 6.8. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice,
consent, waiver, or other action provided or permitted by this Trust
Agreement to be given, made, or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar tenor
signed by such Holders in person or by an agent duly appointed in
writing; and, except as otherwise expressly provided herein, such action
shall become effective when such instrument or instruments are delivered
to the Property Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Trust Agreement
and (subject to Section 8.1) conclusive in favor of the Issuer Trustees,
if made in the manner provided in this Section 6.8.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The
fact and date of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any
other manner which any Issuer Trustee or Administrator receiving the
same deems sufficient.
(c) The ownership of Trust Securities shall be proved by the
Securities Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver, or other Act of the Holder of any Trust Security shall
bind every future Holder of the same Trust Security and the Holder of
every Trust Security issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done,
omitted, or suffered to be done by the Issuer Trustees, the
Administrators, or the Issuer Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
(e) Without limiting the foregoing, a Holder entitled hereunder
to take any action hereunder with regard to any particular Trust
Security may do so with regard to all or any part of the Liquidation
Amount of such Trust Security or by one or more duly appointed agents
each of which may do so pursuant to such appointment with regard to all
or any part of such Liquidation Amount.
(f) If any dispute shall arise among the Holders, the
Administrators or the Issuer Trustees with respect to the authenticity,
validity or binding nature of any request, demand, authorization,
direction, consent, waiver or other Act of such Holder or Issuer Trustee
under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
31
<PAGE>
<PAGE>
Section 6.9. Inspection of Records. Upon reasonable notice
---------------------
to the Administrators and the Property Trustee, the records of the
Issuer Trust shall be open to inspection by Holders during normal
business hours for any purpose reasonably related to such Holder's
interest as a Holder.
ARTICLE VII
-----------
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 7.1. Representations and Warranties of the Property
----------------------------------------------
Trustee and the Delaware Trustee. The Property Trustee and the Delaware
- --------------------------------
Trustee (and any successors thereto at the time of their appointment),
each severally on behalf of and as to itself, hereby represents and
warrants for the benefit of the Depositor and the Holders that:
(a) The Property Trustee is a banking corporation duly
organized, validly existing and in good standing under the laws of New
York, with trust power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of this Trust
Agreement.
(b) The execution, delivery, and performance by the Property
Trustee of this Trust Agreement has been duly authorized by all
necessary corporate action on the part of the Property Trustee; and this
Trust Agreement has been duly executed and delivered by the Property
Trustee, and constitutes a legal, valid, and binding obligation of the
Property Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally
and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in
a proceeding in equity or at law).
(c) The execution, delivery and performance of this Trust
Agreement by the Property Trustee does not conflict with or constitute a
breach of the certificate of incorporation or by-laws of the Property
Trustee.
(d) At the Time of Delivery, the Property Trustee has not
knowingly created any Liens or encumbrances on the Trust Securities.
(e) No consent, approval, or authorization of, or registration
with or notice to, any New York State or federal banking authority is
required for the execution, delivery, or performance by the Property
Trustee, of this Trust Agreement.
(f) The Delaware Trustee is duly organized, validly existing,
and in good standing under the laws of the State of Delaware, with trust
power and authority to execute and deliver, and to carry out and perform
its obligations under the terms of, the Trust Agreement.
(g) The execution, delivery and performance by the Delaware
Trustee of this Trust Agreement has been duly authorized by all
necessary corporate action on the part of the Delaware Trustee; and this
Trust Agreement has been duly executed and delivered by the Delaware
Trustee, and constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' right generally
and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in
a proceeding in equity or at law).
32
<PAGE>
<PAGE>
(h) The execution, delivery and performance of this Trust
Agreement by the Delaware Trustee does not conflict with or constitute a
breach of the certificate of incorporation or by-laws of the Delaware
Trustee.
(i) No consent, approval or authorization of, or registration
with or notice to any state or Federal banking authority is required for
the execution, delivery, or performance by the Delaware Trustee, of this
Trust Agreement.
(j) The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware.
Section 7.2. Representations and Warranties of the Depositor.
-----------------------------------------------
The Depositor hereby represents and warrants for the benefit of the
Holders that:
(a) the Trust Securities Certificates issued at the Time of
Delivery on behalf of the Issuer Trust have been duly authorized and
will have been duly and validly executed, and, subject to payment
therefor, issued and delivered by the Issuer Trustees pursuant to the
terms and provisions of, and in accordance with the requirements of,
this Trust Agreement, and the Holders will be, as of each such date,
entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges
payable by the Issuer Trust (or the Issuer Trustees on behalf of the
Issuer Trust) under the laws of the State of Delaware or any political
subdivision thereof in connection with the execution, delivery and
performance by either the Property Trustee or the Delaware Trustee, as
the case may be, of this Trust Agreement.
ARTICLE VIII
------------
THE ISSUER TRUSTEES; THE ADMINISTRATORS
---------------------------------------
Section 8.1. Certain Duties and Responsibilities.
-----------------------------------
(a) The duties and responsibilities of the Issuer Trustees and
the Administrators shall be as provided by this Trust Agreement and, in
the case of the Property Trustee, by the Trust Indenture Act.
Notwithstanding the foregoing, no provision of this Trust Agreement
shall require the Issuer Trustees or the Administrators to expend or
risk their own funds or otherwise incur any financial liability in the
performance of any of their duties hereunder, or in the exercise of any
of their rights or powers, if they shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it or them. Whether
or not therein expressly so provided, every provision of this Trust
Agreement relating to the conduct or affecting the liability of or
affording protection to the Issuer Trustees or the Administrators shall
be subject to the provisions of this Section 8.1. Nothing in this Trust
Agreement shall be construed to release an Administrator or the Issuer
Trustees from liability for his or its own negligent action, his or its
own negligent failure to act, or his or its own willful misconduct. To
the extent that, at law or in equity, an Issuer Trustee or Administrator
has duties and liabilities relating to the Issuer Trust or to the
Holders, such Issuer Trustee or Administrator shall not be liable to the
Issuer Trust or to any Holder for such Issuer Trustee's or
Administrator's good faith reliance on the provisions of this Trust
Agreement. The provisions of this Trust Agreement, to the extent that
they restrict the duties and liabilities of the Issuer Trustees and
Administrators otherwise
33
<PAGE>
<PAGE>
existing at law or in equity, are agreed by the Depositor and the
Holders to replace such other duties and liabilities of the Issuer
Trustees and Administrators.
(b) All payments made by the Property Trustee or a Paying Agent
in respect of the Trust Securities shall be made only from the revenue
and proceeds from the Trust Property and only to the extent that there
shall be sufficient revenue or proceeds from the Trust Property to
enable the Property Trustee or a Paying Agent to make payments in
accordance with the terms hereof. Each Holder, by his or its acceptance
of a Trust Security, agrees that he or it will look solely to the
revenue and proceeds from the Trust Property to the extent legally
available for distribution to it or him as herein provided and that
neither the Issuer Trustees nor the Administrators are personally liable
to it or him for any amount distributable in respect of any Trust
Security or for any other liability in respect of any Trust Security.
This Section 8.1(b) does not limit the liability of the Issuer Trustees
expressly set forth elsewhere in this Trust Agreement or, in the case of
the Property Trustee, in the Trust Indenture Act.
(c) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are
specifically set forth in this Trust Agreement (including pursuant to
Section 10.10), and no implied covenants shall be read into this Trust
Agreement against the Property Trustee. If an Event of Default has
occurred (that has not been cured or waived pursuant to Section 5.13 of
the Indenture), the Property Trustee shall enforce this Trust Agreement
for the benefit of the Holders and shall exercise such of the rights and
powers vested in it by this Trust Agreement, and use the same degree of
care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Trust Agreement shall be construed to
relieve the Property Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct,
except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Trust Agreement (including pursuant to
Section 10.10), and the Property Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Trust Agreement
(including pursuant to Section 10.10); and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively
rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming to
the requirements of this Trust Agreement; but in the case of
any such certificates or opinions that by any provision
hereof or of the Trust Indenture Act are specifically
required to be furnished to the Property Trustee, the
Property Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements
of this Trust Agreement;
(ii) the Property Trustee shall not be liable for any error
of judgment made in good faith by an authorized officer of the
Property Trustee, unless it shall be proved that the Property
Trustee was negligent in ascertaining the pertinent facts;
34
<PAGE>
<PAGE>
(iii) the Property Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in
Liquidation Amount of the Preferred Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or
power conferred upon the Property Trustee under this Trust
Agreement;
(iv) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Junior
Subordinated Debentures and the Payment Account shall be to deal
with such Property in a similar manner as the Property Trustee
deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property
Trustee under this Trust Agreement and the Trust Indenture Act;
(v) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise
agree with the Depositor; and money held by the Property Trustee
need not be segregated from other funds held by it except in
relation to the Payment Account maintained by the Property Trustee
pursuant to Section 3.1 and except to the extent otherwise
required by law;
(vi) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Depositor
with their respective duties under this Trust Agreement, nor shall
the Property Trustee be liable for the default or misconduct of
any other Issuer Trustee, the Administrators or the Depositor; and
(vii) no provision of this Trust Agreement shall require the
Property Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if
the Property Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Trust Agreement or adequate
indemnity against such risk or liability is not reasonably assured
to it.
(e) The Administrators shall not be responsible for monitoring
the compliance by the Issuer Trustees or the Depositor with their
respective duties under this Trust Agreement, nor shall either
Administrator be liable for the default or misconduct of any other
Administrator, the Issuer Trustees or the Depositor.
Section 8.2. Certain Notices.
---------------
(a) Within five Business Days after the occurrence of any Event
of Default actually known to a Responsible Officer of the Property
Trustee, the Property Trustee shall transmit, in the manner and to the
extent provided in Section 10.8, notice of such Event of Default to the
Holders and the Administrators, unless such Event of Default shall have
been cured or waived.
(b) Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on
the Junior Subordinated Debentures pursuant to the Indenture, the
Property Trustee shall transmit, in the manner and to the extent
provided in Section 10.8, notice of such exercise to the Holders and the
Administrators, unless such exercise shall have been revoked.
35
<PAGE>
<PAGE>
(c) In the event the Property Trustee receives notice of the
Depositor's exercise of its right to shorten the stated maturity of the
Junior Subordinated Debentures as provided in Section 3.16 of the
Indenture, the Property Trustee shall give notice of such shortening of
the stated maturity to the Holders at least 30 but not more than 60 days
before the effective date thereof.
Section 8.3. Certain Rights of Property Trustee. Subject to
----------------------------------
the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be fully protected
in acting or refraining from acting in good faith upon any resolution,
Opinion of Counsel, certificate, written representation of a Holder or
transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any direction or act of the Depositor contemplated by this
Trust Agreement shall be sufficiently evidenced by an Officers'
Certificate;
(c) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any re-recording, refiling or re-registration
thereof;
(d) the Property Trustee may consult with counsel of its own
choosing (which counsel may be counsel to the Depositor or any of its
Affiliates, and may include any of its employees) and the advice of such
counsel shall be full and complete authorization and protection in
respect of any action taken suffered or omitted by it hereunder in good
faith and in reliance thereon and in accordance with such advice; the
Property Trustee shall have the right at any time to seek instructions
concerning the administration of this Trust Agreement from any court of
competent jurisdiction;
(e) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Trust
Agreement at the request or direction of any of the Holders pursuant to
this Trust Agreement, unless such Holders shall have offered to the
Property Trustee security or indemnity satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction; provided that, nothing
contained in this Section 8.3(e) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Trust Agreement;
(f) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, debenture, note or other evidence of
indebtedness or other paper or document, unless requested in writing to
do so by one or more Holders, but the Property Trustee may make such
further inquiry or investigation into such facts or matters as it may
see fit;
(g) the Property Trustee may execute any of the trusts or powers
hereunder or perform any of its duties hereunder either directly or by
or through its agents or attorneys, provided that the Property Trustee
shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(h) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other
36
<PAGE>
<PAGE>
action hereunder, the Property Trustee (i) may request instructions from
the Holders (which instructions may only be given by the Holders of the
same proportion in Liquidation Amount of the Trust Securities as would
be entitled to direct the Property Trustee under the terms of the Trust
Securities in respect of such remedy, right or action), (ii) may refrain
from enforcing such remedy or right or taking such other action until
such instructions are received, and (iii) shall be fully protected in
acting in accordance with such instructions; and
(i) except as otherwise expressly provided by this Trust
Agreement, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this Trust
Agreement.
No provision of this Trust Agreement shall be deemed to impose any
duty or obligation on any Issuer Trustee or Administrator to perform any
act or acts or exercise any right, power, duty or obligation conferred
or imposed on it, in any jurisdiction in which it shall be illegal, or
in which the Property Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts, or to
exercise any such right, power, duty or obligation. No permissive power
or authority available to any Issuer Trustee or Administrator shall be
construed to be a duty.
Section 8.4. Not Responsible for Recitals or Issuance of
-------------------------------------------
Securities. The recitals contained herein and in the Trust Securities
- ----------
Certificates shall be taken as the statements of the Issuer Trust, and
the Issuer Trustees and the Administrators do not assume any
responsibility for their correctness. The Issuer Trustees and the
Administrators shall not be accountable for the use or application by
the Depositor of the proceeds of the Junior Subordinated Debentures.
Section 8.5. May Hold Securities. Except as provided in the
-------------------
definition of the term "Outstanding" in Article I, the Administrators,
any Issuer Trustee or any other agent of any Issuer Trustee or the
Issuer Trust, in its individual or any other capacity, may become the
owner or pledgee of Trust Securities and, subject to Sections 8.8 and
8.13, may otherwise deal with the Issuer Trust with the same rights it
would have if it were not an Administrator, Issuer Trustee or such other
agent.
Section 8.6. Compensation; Indemnity; Fees. The Depositor
-----------------------------
agrees:
(a) to pay to the Issuer Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(b) to reimburse the Issuer Trustees and the Administrators upon
request for all reasonable expenses, disbursements, and advances
incurred or made by the Issuer Trustees in accordance with any provision
of this Trust Agreement (including the reasonable compensation, expenses
and disbursements of its agents and counsel), except any such expense,
disbursement, or advance as may be attributable to the Issuer Trustees'
bad faith, negligence or willful misconduct; and
(c) to the fullest extent permitted by applicable law, to
indemnify and hold harmless (i) each Issuer Trustee, (ii) each
Administrator, (iii) any Affiliate of any Issuer Trustee, (iv) any
officer, director, shareholder, employee, representative or agent of any
Issuer Trustee, and (v) any employee or agent of the Issuer Trust
(referred to herein as an "Indemnified Person"), from and against any
loss, damage, liability, tax (excluding income taxes, other than taxes
referred to in Sections 4.5 and 4.6 hereunder), penalty, expense or
claim of any kind or nature whatsoever incurred by such Indemnified
Person arising out of or in connection with the creation, operation, or
dissolution of the Issuer Trust or any act or
37
<PAGE>
<PAGE>
omission performed or omitted by such Indemnified Person in good faith
on behalf of the Issuer Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on
such Indemnified Person by this Trust Agreement, except that no
Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of
bad faith, negligence or willful misconduct with respect to such acts or
omissions. The indemnification provided to an Indemnified Party in this
Trust Agreement shall not be exclusive and nothing in this Trust
Agreement shall limit any indemnification for actions taken in
connection with this Trust Agreement or otherwise which may be available
or provided to such Indemnified Party under other sources.
The provisions of this Section 8.6 shall survive the termination
of this Trust Agreement.
No Issuer Trustee may claim any lien or charge on any Trust
Property as a result of any amount due pursuant to this Section 8.6.
The Depositor, any Administrator and any Issuer Trustee may engage
in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the
business of the Issuer Trust, and the Issuer Trust and the Holders of
Trust Securities shall have no rights by virtue of this Trust Agreement
in and to such independent ventures or the income or profits derived
therefrom, and the pursuit of any such venture, even if competitive with
the business of the Issuer Trust, shall not be deemed wrongful or
improper. Neither the Depositor, any Administrator, nor any Issuer
Trustee shall be obligated to present any particular investment or other
opportunity to the Issuer Trust even if such opportunity is of a
character that, if presented to the Issuer Trust, could be taken by the
Issuer Trust, and the Depositor, any Administrator or any Issuer Trustee
shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Issuer Trustee may engage or be
interested in any financial or other transaction with the Depositor or
any Affiliate of the Depositor, or may act as depository for, trustee or
agent for, or act on any committee or body of holders of, securities or
other obligations of the Depositor or its Affiliates.
Section 8.7. Corporate Property Trustee Required; Eligibility
-------------------------------------------------
of Trustees and Administrators.
- ------------------------------
(a) There shall at all times be a Property Trustee hereunder
with respect to the Trust Securities. The Property Trustee shall be a
Person that is a national or state chartered bank and eligible pursuant
to the Trust Indenture Act to act as such and has a combined capital and
surplus of at least $50,000,000. If any such Person publishes reports
of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Person shall be deemed
to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Property Trustee
with respect to the Trust Securities shall cease to be eligible in
accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in
this Article VIII. At the time of appointment, the Property Trustee
must have securities rated in one of the three highest rating categories
by a nationally recognized statistical rating organization.
(b) There shall at all times be one or more Administrators
hereunder. Each Administrator shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or
more persons authorized to bind that entity. An employee, officer, or
Affiliate of the Depositor may serve as an Administrator.
38
<PAGE>
<PAGE>
(c) There shall at all times be a Delaware Trustee. The
Delaware Trustee shall either be (i) a natural person who is at least 21
years of age and a resident of the State of Delaware or (ii) a legal
entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that
shall act through one or more persons authorized to bind such entity.
Section 8.8. Conflicting Interests.
---------------------
(a) If the Property Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Property
Trustee shall either eliminate such interest or resign, to the extent
and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Trust Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to
be specifically described in this Trust Agreement for the purposes of
clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
Section 8.9. Co-Trustees and Separate Trustee.
--------------------------------
(a) Unless an Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which
any part of the Trust Property may at the time be located, the Property
Trustee shall have power to appoint, and upon the written request of the
Property Trustee, the Depositor and the Administrators shall for such
purpose join with the Property Trustee in the execution, delivery, and
performance of all instruments and agreements necessary or proper to
appoint, one or more Persons approved by the Property Trustee either to
act as co-trustee, jointly with the Property Trustee, of all or any part
of such Trust Property, or to the extent required by law to act as
separate trustee of any such property, in either case with such powers
as may be provided in the instrument of appointment, and to vest in such
Person or Persons in the capacity aforesaid, any property, title, right
or power deemed necessary or desirable, subject to the other provisions
of this Section 8.9. Any co-trustee or separate trustee appointed
pursuant to this Section 8.9 shall either be (i) a natural person who is
at least 21 years of age and a resident of the United States or (ii) a
legal entity with its principal place of business in the United States
that shall act through one or more persons authorized to bind such
entity.
(b) Should any written instrument from the Depositor be required
by any co-trustee or separate trustee so appointed for more fully
confirming to such co-trustee or separate trustee such property, title,
right, or power, any and all such instruments shall, on request, be
executed, acknowledged and delivered by the Depositor.
(c) Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following terms, namely:
(i) The Trust Securities shall be executed by one or more
Administrators, and the Trust Securities shall be executed and
delivered and all rights, powers, duties, and obligations
hereunder in respect of the custody of securities, cash and other
personal property held by, or required to be deposited or pledged
with, the Property Trustees specified hereunder, shall be
exercised, solely by the Property Trustee and not by such co-
trustee or separate trustee.
(ii) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Property Trustee in respect of any
property covered by such appointment shall be conferred or
39
<PAGE>
<PAGE>
imposed upon and exercised or performed by the Property Trustee
and such co-trustee or separate trustee jointly, as shall be provided
in the instrument appointing such co-trustee or separate trustee,
except to the extent that under any law of any jurisdiction in which
any particular act is to be performed, the Property Trustee shall be
incompetent or unqualified to perform such act, in which event
such rights, powers, duties, and obligations shall be exercised
and performed by such co-trustee or separate trustee.
(iii) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the
Depositor, may accept the resignation of or remove any co-trustee
or separate trustee appointed under this Section, and, in case a
Debenture Event of Default has occurred and is continuing, the
Property Trustee shall have power to accept the resignation of, or
remove, any such co-trustee or separate trustee without the
concurrence of the Depositor. Upon the written request of the
Property Trustee, the Depositor shall join with the Property
Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate
trustee so resigned or removed may be appointed in the manner
provided in this Section 8.9.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property
Trustee or any other trustee hereunder.
(v) The Property Trustee shall not be liable by reason of
any act of a co-trustee or separate trustee.
(vi) Any Act of Holders delivered to the Property Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
Section 8.10. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of any Issuer Trustee (the
"Relevant Trustee") and no appointment of a successor Issuer Trustee
pursuant to this Article VIII shall become effective until the
acceptance of appointment by the successor Issuer Trustee in accordance
with the applicable requirements of Section 8.11.
(b) Subject to Section 8.10(a), a Relevant Trustee may resign at
any time by giving written notice thereof to the Holders. The Relevant
Trustee shall appoint a successor by requesting from at least three
Persons meeting the eligibility requirements its expenses and charges to
serve as the successor Issuer Trustee on a form provided by the
Administrators, and selecting the Person who agrees to the lowest
expenses and charges, subject to the prior consent of the Depositor
which consent shall not be unreasonably withheld. If the instrument of
acceptance by the successor Issuer Trustee required by Section 8.11
shall not have been delivered to the Relevant Trustee within 60 days
after the giving of such notice of resignation, the Relevant Trustee may
petition, at the expense of the Issuer Trust, any court of competent
jurisdiction for the appointment of a successor Issuer Trustee.
(c) The Property Trustee or the Delaware Trustee may be removed
at any time by Act of the Holders of a Majority in Liquidation Amount of
the Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Issuer Trust) (i) for Cause, or
(ii) if a Debenture Event of Default shall have occurred and be
continuing at any time.
40
<PAGE>
<PAGE>
(d) If a resigning Relevant Trustee shall fail to appoint a
successor, or if a Relevant Trustee shall be removed or become incapable
of acting as Issuer Trustee, or if any vacancy shall occur in the office
of any Issuer Trustee for any cause, the Holders of the Preferred
Securities, by Act of the Holders of record of not less than 25%
aggregate Liquidation Amount of the Preferred Securities then
Outstanding delivered to such Relevant Trustee, shall promptly appoint a
successor Issuer Trustee or Trustees, and such successor Issuer Trustee
shall comply with the applicable requirements of Section 8.11. If no
successor Issuer Trustee shall have been so appointed by the Holders of
the Preferred Securities and accepted appointment in the manner required
by Section 8.11, any Holder, on behalf of himself and all others
similarly situated, or any other Issuer Trustee, may petition any court
in the State of Delaware for the appointment of a successor Issuer
Trustee.
(e) The Property Trustee shall give notice of each resignation
and each removal of a Relevant Trustee and each appointment of a
successor Issuer Trustee to all Holders in the manner provided in
Section 10.8 and shall give notice to the Depositor and to the
Administrators. Each notice shall include the name of the Relevant
Trustee and the address of its Corporate Trust Office if it is the
Property Trustee.
(f) Notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event any Delaware Trustee who is a natural
person dies or becomes, in the opinion of the Holders of the Common
Securities, incompetent or incapacitated, the vacancy created by such
death, incompetence or incapacity may be filled by the Property Trustee
following the procedures regarding expenses and charges set forth above
(with the successor in each case being a Person who satisfies the
eligibility requirement for Delaware Trustee set forth in Section 8.7).
Section 8.11. Acceptance of Appointment by Successor.
--------------------------------------
(a) In case of the appointment hereunder of a successor Issuer
Trustee, the retiring Relevant Trustee and each such successor Issuer
Trustee with respect to the Trust Securities shall execute, acknowledge
and deliver an instrument wherein each successor Issuer Trustee shall
accept such appointment and which shall contain such provisions as shall
be necessary or desirable to transfer and confirm to, and to vest in,
each successor Issuer Trustee all the rights, powers, trusts and duties
of the retiring Relevant Trustee with respect to the Trust Securities
and the Issuer Trust, and upon the execution and delivery of such
instrument the resignation or removal of the retiring Relevant Trustee
shall become effective to the extent provided therein and each such
successor Issuer Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of
the Relevant Trustee; but, on request of the Issuer Trust or any
successor Issuer Trustee such Relevant Trustee shall duly assign,
transfer and deliver to such successor Issuer Trustee all Trust
Property, all proceeds thereof and money held by such Relevant Trustee
hereunder with respect to the Trust Securities and the Issuer Trust.
(b) Upon request of any such successor Issuer Trustee, the
Issuer Trust shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Issuer Trustee all
such rights, powers and trusts referred to in the first or second
preceding paragraph, as the case may be.
(c) No successor Issuer Trustee shall accept its appointment
unless at the time of such acceptance such successor Issuer Trustee
shall be qualified and eligible under this Article VIII.
Section 8.12. Merger, Conversion, Consolidation or Succession
-----------------------------------------------
to Business. Any Person into which the Property Trustee or the Delaware
- -----------
Trustee may be merged or converted or with which it may be
41
<PAGE>
<PAGE>
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Relevant Trustee shall be a party, or any
Person succeeding to all or substantially all the corporate trust
business of such Relevant Trustee, shall be the successor of such
Relevant Trustee hereunder, provided that such Person shall be otherwise
qualified and eligible under this Article VIII, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto.
Section 8.13. Preferential Collection of Claims Against
-----------------------------------------
Depositor or Issuer Trust. If and when the Property Trustee shall be or
- -------------------------
become a creditor of the Depositor (or any other obligor upon Junior
Subordinated Debentures or the Trust Securities), the Property Trustee
shall be subject to the provisions of the Trust Indenture Act regarding
the collection of claims against the Depositor or the Issuer Trust (or
any such other obligor) as is required by the Trust Indenture Act.
Section 8.14. Trustee May File Proofs of Claim. In case of
--------------------------------
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition, or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the
Trust Securities or the property of the Issuer Trust or of such other
obligor, the Property Trustee (irrespective of whether any Distributions
on the Trust Securities shall then be due and payable and irrespective
of whether the Property Trustee shall have made any demand on the Issuer
Trust for the payment of any past due Distributions) shall be entitled
and empowered, to the fullest extent permitted by law, by intervention
in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Trust Securities and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Property Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of
the Property Trustee, its agents and counsel) and of the Holders allowed
in such judicial proceeding, and
(b) to collect and receive any monies or other property payable
or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Property Trustee
and, in the event the Property Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Property Trustee
any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, its agents and
counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or
compensation affecting the Trust Securities or the rights of any Holder
thereof or to authorize the Property Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section 8.15. Reports by Property Trustee.
---------------------------
(a) Within 60 days of January 31 of each year commencing with
January 31, 2000, the Property Trustee shall transmit to all Holders in
accordance with Section 10.8, and to the Depositor, a brief report dated
as of the immediately preceding January 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof,
if to the best of its knowledge it has continued to be eligible
under said Section, a written statement to such effect; and
42
<PAGE>
<PAGE>
(ii) any change in the property and funds in its possession
as Property Trustee since the date of its last report and any
action taken by the Property Trustee in the performance of its
duties hereunder which it has not previously reported and which in
its opinion materially affects the Trust Securities.
(b) In addition, the Property Trustee shall transmit to Holders
such reports concerning the Property Trustee and its actions under this
Trust Agreement as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursuant thereto as set forth in
Section 10.10 of this Trust Agreement.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with the
Depositor.
Section 8.16. Reports to the Property Trustee. The Depositor
-------------------------------
and the Administrators on behalf of the Issuer Trust shall provide to
the Property Trustee such documents, reports and information as required
by Section 314 of the Trust Indenture Act and the compliance certificate
required by Section 314(a) of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust
Indenture Act, as set forth in Section 10.10 of this Trust Agreement.
The Depositor and the Administrators shall annually file with the
Property Trustee a certificate specifying whether such Person is in
compliance with all the terms and covenants applicable to such Person
hereunder.
Section 8.17. Evidence of Compliance with Conditions
--------------------------------------
Precedent. Each of the Depositor and the Administrators on behalf of
- ---------
the Issuer Trust shall provide to the Property Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this
Trust Agreement that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act as set forth in Section 10.10
of this Trust Agreement. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) of the Trust Indenture
Act shall be given in the form of an Officers' Certificate.
Section 8.18. Number of Issuer Trustees.
-------------------------
(a) The number of Issuer Trustees shall be two. The Property
Trustee and the Delaware Trustee may be the same Person, in which event
the number of Issuer Trustees shall be one.
(b) If an Issuer Trustee ceases to hold office for any reason, a
vacancy shall occur. The vacancy shall be filled with an Issuer Trustee
appointed in accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee
shall not operate to dissolve, terminate or annul the Issuer Trust or
terminate this Trust Agreement.
Section 8.19. Delegation of Power.
-------------------
(a) Any Administrator may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21
his or her power for the purpose of executing any documents contemplated
in Section 2.7(a) or making any governmental filing.
(b) The Administrators shall have power to delegate from time to
time to such of their number the doing of such things and the execution
of such instruments either in the name of the Issuer
43
<PAGE>
<PAGE>
Trust or the names of the Administrators or otherwise as the
Administrators may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of this Trust
Agreement.
Section 8.20. Appointment of Administrators.
-----------------------------
(a) The Administrators (other than the initial Administrators)
shall be appointed by the Holders of a Majority in Liquidation Amount of
the Common Securities and all Administrators (including the initial
Administrators) may be removed by the Holders of a Majority in
Liquidation Amount of the Common Securities or may resign at any time.
If at any time there is no Administrator, the Property Trustee or any
Holder who has been a Holder of Trust Securities for at least six months
may petition any court of competent jurisdiction for the appointment of
one or more Administrators.
(b) Whenever a vacancy in the number of Administrators shall
occur, until such vacancy is filled by the appointment of an
Administrator in accordance with this Section 8.20, the Administrators
in office, regardless of their number (and notwithstanding any other
provision of this Trust Agreement), shall have all the powers granted to
the Administrators and shall discharge all the duties imposed upon the
Administrators by this Trust Agreement.
(c) Notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event any Administrator or a Delaware Trustee
who is a natural person dies or becomes, in the opinion of the Holders
of a Majority in Liquidation Amount of the Common Securities,
incompetent, or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by the remaining
Administrators, if there were at least two of them prior to such vacancy
and by the Depositor, if there were not two such Administrators
immediately prior to such vacancy (with the successor in each case being
a Person who satisfies the eligibility requirement for Administrators or
Delaware Trustee, as the case may be, set forth in Section 8.7).
(d) Except as otherwise provided in this Trust Agreement or by
applicable law, any one Administrator may execute any document or
otherwise take any action which the Administrators are authorized to
take under this Trust Agreement.
ARTICLE IX
----------
DISSOLUTION, LIQUIDATION AND MERGER
-----------------------------------
Section 9.1. Dissolution Upon Expiration Date. Unless
--------------------------------
earlier dissolved, the Issuer Trust shall automatically dissolve on
___________, 2030 (the "Expiration Date").
Section 9.2. Early Dissolution. The first to occur of any of
-----------------
the following events is an "Early Termination Event," upon the
occurrence of which the Issuer Trust shall dissolve:
(a) the occurrence of any Bankruptcy Event with respect to the
Depositor, unless the Depositor shall transfer the Common Securities as
provided by Section 5.11, in which case this provision shall refer
instead to any Bankruptcy Event with respect to the successor Holder of
the Common Securities;
(b) delivery of the written direction to the Property Trustee
from the Holder of the Common Securities at any time to dissolve the
Issuer Trust and, after satisfaction of liabilities to creditors of the
44
<PAGE>
<PAGE>
Issuer Trust as provided by applicable law, to distribute the Junior
Subordinated Debentures to Holders in exchange for the Preferred
Securities (which direction, subject to Section 9.4(a), is optional and
wholly within the discretion of the Holder of the Common Securities);
(c) the redemption of all of the Preferred Securities in
connection with the redemption of all the Junior Subordinated
Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust by
a court of competent jurisdiction.
Section 9.3. Termination. The respective obligations and
-----------
responsibilities of the Issuer Trustees, the Administrators and the
Issuer Trust created and continued hereby shall terminate upon the
latest to occur of the following: (a) the distribution by the Property
Trustee to Holders of all amounts required to be distributed hereunder
upon the liquidation of the Issuer Trust pursuant to Section 9.4, or
upon the redemption of all of the Trust Securities pursuant to
Section 4.2, (b) the payment of any expenses owed by the Issuer Trust,
(c) the discharge of all administrative duties of the Administrators,
including the performance of any tax reporting obligations with respect
to the Issuer Trust or the Holders, and (d) the filing of a certificate
of cancellation with the Delaware Secretary of State pursuant to
Section 3810 of the Delaware Business Trust Act.
Section 9.4. Liquidation.
-----------
(a) If an Early Termination Event specified in clause (a), (b)
or (d) of Section 9.2 occurs or upon the Expiration Date, the Issuer
Trust shall be liquidated by the Property Trustee as expeditiously as
the Property Trustee determines to be possible by distributing, after
satisfaction of liabilities to creditors of the Issuer Trust as provided
by applicable law, to each Holder a Like Amount of Junior Subordinated
Debentures, subject to Section 9.4(d). Notice of liquidation shall be
given by the Property Trustee by first-class mail, postage prepaid,
mailed not later than 15 nor more than 45 days prior to the Liquidation
Date to each Holder of Trust Securities at such Holder's address
appearing in the Securities Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the
Trust Securities will no longer be deemed to be Outstanding and
any Trust Securities Certificates not surrendered for exchange
will be deemed to represent a Like Amount of Junior Subordinated
Debentures; and
(iii) provide such information with respect to the mechanics
by which Holders may exchange Trust Securities Certificates for
Junior Subordinated Debentures, or if Section 9.4(d) applies
receive a Liquidation Distribution, as the Administrators or the
Property Trustee shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to
effect the liquidation of the Issuer Trust and distribution of the
Junior Subordinated Debentures to Holders, the Property Trustee shall
establish a record date for such distribution (which shall be not more
than 30 days prior to the Liquidation Date) and, either itself acting as
exchange agent or through the appointment of a separate exchange agent,
shall establish such procedures as it shall deem appropriate to effect
the distribution of Junior Subordinated Debentures in exchange for the
Outstanding Trust Securities Certificates.
45
<PAGE>
<PAGE>
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to
be Outstanding, (ii) the Clearing Agency for the Preferred Securities or
its nominee, as the registered Holder of the Global Preferred Securities
Certificate, shall receive a registered global certificate or
certificates representing the Junior Subordinated Debentures to be
delivered upon such distribution with respect to Preferred Securities
held by the Clearing Agency or its nominee, and (iii) any Trust
Securities Certificates not held by the Clearing Agency for the
Preferred Securities or its nominee as specified in clause (ii) above
will be deemed to represent Junior Subordinated Debentures having a
principal amount equal to the stated Liquidation Amount of the Trust
Securities represented thereby and bearing accrued and unpaid interest
in an amount equal to the accumulated and unpaid Distributions on such
Trust Securities until such certificates are presented to the Securities
Registrar for transfer or reissuance.
(d) If, notwithstanding the other provisions of this
Section 9.4, whether because of an order for dissolution entered by a
court of competent jurisdiction or otherwise, distribution of the Junior
Subordinated Debentures is not practical, or if any Early Termination
Event specified in clause (c) of Section 9.2 occurs, the Trust Property
shall be liquidated, and the Issuer Trust shall be liquidated by the
Property Trustee in such manner as the Property Trustee determines. In
such event, on the date of the dissolution of the Issuer Trust, Holders
will be entitled to receive out of the assets of the Issuer Trust
available for distribution to Holders, after satisfaction of liabilities
to creditors of the Issuer Trust as provided by applicable law, an
amount equal to the aggregate of the Liquidation Amount per Trust
Security plus accumulated and unpaid Distributions thereon to the date
of payment (such amount being the "Liquidation Distribution"). If, upon
any such dissolution, the Liquidation Distribution can be paid only in
part because the Issuer Trust has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then, subject to the
next succeeding sentence, the amounts payable by the Issuer Trust on the
Trust Securities shall be paid on a pro rata basis (based upon
Liquidation Amounts). The Holders of the Common Securities will be
entitled to receive Liquidation Distributions upon any such liquidation
pro rata (determined as aforesaid) with Holders of Preferred Securities,
except that, if a Debenture Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the
Common Securities as provided in Section 4.3.
(e) Following the dissolution of the Issuer Trust and after the
completion of the winding up of the affairs of the Issuer Trust, one of
the Issuer Trustees shall file a certificate of cancellation with the
Delaware Secretary of State.
Section 9.5. Mergers, Consolidations, Amalgamations or
-----------------------------------------
Replacements of the Issuer Trust. The Issuer Trust may not merge with
- --------------------------------
or into, consolidate, amalgamate, or be replaced by, or convey, transfer
or lease its properties and assets substantially as an entirety to, any
entity, except pursuant to this Section 9.5 and Section 9.4. At the
request of the Holders of the Common Securities, and with the consent of
the Holders of a Majority in Liquidation Amount of the Preferred
Securities but without the consent of the Delaware Trustee or the
Property Trustee, the Issuer Trust may merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized
as such under the laws of any state; provided, however, that (a) such
successor entity either (i) expressly assumes all of the obligations of
the Issuer Trust with respect to the Securities or (ii) substitutes for
the Preferred Securities other securities having substantially the same
terms as the Preferred Securities (the "Successor Securities") so long
as the Successor Securities have the same priority as the Preferred
Securities with respect to distributions and payments upon liquidation,
redemption and otherwise and which are then listed or listed upon
notification of issuance on any national securities exchange or automated
quotation system on which the Trust Preferred Securities are then listed,
(b) a trustee of such successor entity possessing the same powers and
46
<PAGE>
<PAGE>
duties as the Property Trustee is appointed to hold the Junior
Subordinated Debentures, (c) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization if the Preferred
Securities were rated by any nationally recognized statistical rating
organization immediately prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, (d) such
merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and
privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect, (e) such successor entity
has a purpose substantially identical to that of the Issuer Trust,
(f) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Issuer Trustee has received an
Opinion of Counsel from independent counsel experienced in such matters
to the effect that (i) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect,
and (ii) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Issuer Trust nor
such successor entity will be required to register as an "investment
company" under the Investment Company Act, and (g) the Depositor or any
permitted transferee to whom it has transferred the Common Securities
hereunder owns all of the common securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee Agreement.
Notwithstanding the foregoing, the Issuer Trust shall not, except with
the consent of Holders of 100% in Liquidation Amount of the Preferred
Securities, consolidate, amalgamate, merge with or into, or be replaced
by or convey, transfer or lease its properties and assets substantially
as an entirety to any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer
or lease would cause the Issuer Trust or the successor entity to be fail
or cease to be classified as grantor trust for United States federal
income tax purposes. Any merger or similar agreement shall be executed
by the Administrators on behalf of the Issuer Trust.
ARTICLE X
---------
MISCELLANEOUS PROVISIONS
------------------------
Section 10.1. Limitation of Rights of Holders. Except as set
-------------------------------
forth in Section 9.2, the bankruptcy, dissolution, termination, death or
incapacity of any Person having an interest, beneficial or otherwise, in
Trust Securities shall not operate to terminate this Trust Agreement or
dissolve, terminate or annul the Issuer Trust, nor entitle the legal
representatives or heirs of such Person or any Holder for such Person,
to claim an accounting, take any action or bring any proceeding in any
court for a partition or winding-up of the arrangements contemplated
hereby, nor otherwise affect the rights, obligations and liabilities of
the parties hereto or any of them.
Section 10.2. Amendment.
---------
(a) This Trust Agreement may be amended from time to time by the
Property Trustee, the Administrators and the Holders of a Majority in
Liquidation Amount of the Common Securities, without the consent of any
Holder of the Preferred Securities, (i) to cure any ambiguity, correct
or supplement any provision herein which may be inconsistent with any
other provision herein, or to make any other provisions with respect to
matters or questions arising under this Trust Agreement; provided,
however, that such amendment shall not adversely affect in any material
respect the interests of any Holder or (ii) to modify, eliminate, or add
to any provisions of this Trust Agreement to such extent as shall be
47
<PAGE>
<PAGE>
necessary to ensure that the Issuer Trust will be classified as a grantor
trust (and not an association taxable as a corporation) for United
States federal income tax purposes at any time that any Trust Securities
are Outstanding or to ensure that the Issuer Trust will not be required
to register as an "investment company" under the Investment Company Act.
(b) Except as provided in Section 6.1(c) or Section 10.2(c), any
provision of this Trust Agreement may be amended by the Property
Trustee, the Administrators, and the Holders of a Majority in
Liquidation Amount of the Common Securities with (i) the consent of
Holders of a Majority in Liquidation Amount of the Preferred Securities
and (ii) receipt by the Issuer Trustees of an Opinion of Counsel to the
effect that such amendment or the exercise of any power granted to the
Issuer Trustees in accordance with such amendment will not cause the
Issuer Trust to fail or cease to be classified as a grantor trust for
United States federal income tax purposes or affect the Issuer Trust's
exemption from status of an "investment company" under the Investment
Company Act.
(c) In addition to and notwithstanding any other provision in
this Trust Agreement, without the consent of each affected Holder (such
consent being obtained in accordance with Section 6.3 or 6.6 hereof),
this Trust Agreement may not be amended to (i) change the amount or
timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in
respect of the Trust Securities as of a specified date or (ii) restrict
the right of a Holder to institute suit for the enforcement of any such
payment on or after such date. Notwithstanding any other provision
herein, without the unanimous consent of the Holders (such consent being
obtained in accordance with Section 6.3 or 6.6), this Section 10.2(c)
may not be amended.
(d) Notwithstanding any other provisions of this Trust
Agreement, no Issuer Trustee shall enter into or consent to any
amendment to this Trust Agreement which would cause the Issuer Trust to
fail or cease to qualify for the exemption from status as an "investment
company" under the Investment Company Act or to fail or cease to be
classified as a grantor trust for United States federal income tax
purposes.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor and the Administrators,
this Trust Agreement may not be amended in a manner which imposes any
additional obligation on the Depositor or the Administrators.
(f) In the event that any amendment to this Trust Agreement is
made, the Administrators or the Property Trustee shall promptly provide
to the Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall
be required to enter into any amendment to this Trust Agreement which
affects its own rights, duties or immunities under this Trust Agreement.
The Property Trustee shall be entitled to receive an Opinion of Counsel
and an Officers' Certificate stating that any amendment to this Trust
Agreement is in compliance with this Trust Agreement.
(h) Any amendments to this Trust Agreement pursuant to
Section 10.2(a) shall become effective when notice of such amendment is
given to the Holders of the Trust Securities.
Section 10.3. Separability. In case any provision in this
------------
Trust Agreement or in the Trust Securities Certificates shall be
invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
48
<PAGE>
<PAGE>
Section 10.4. Governing Law. THIS TRUST AGREEMENT AND THE
-------------
RIGHTS AND OBLIGATIONS OF EACH OF THE HOLDERS, THE ISSUER TRUST, THE
DEPOSITOR, THE ISSUER TRUSTEES, AND THE ADMINISTRATORS WITH RESPECT TO
THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
Section 10.5. Payments Due on Non-Business Day. If the date
--------------------------------
fixed for any payment on any Trust Security shall be a day that is not a
Business Day, then such payment need not be made on such date but may be
made on the next succeeding day that is a Business Day (except as
otherwise provided in Section 4.2(d)), except that, if such Business Day
is in the next succeeding calendar year, payment on any Trust Security
shall be made on the immediately preceding Business Day, in each case,
with the same force and effect as though made on the date fixed for such
payment, and no Distributions shall accumulate on such unpaid amount for
the period after such date.
Section 10.6. Successors and Assigns. This Trust Agreement
----------------------
shall be binding upon and shall inure to the benefit of any successor to
the Depositor, the Issuer Trust, the Administrators, and any Issuer
Trustee, including any successor by operation of law. Except in
connection with a consolidation, merger or sale involving the Depositor
that is permitted under Article VIII of the Indenture and pursuant to
which the assignee agrees in writing to perform the Depositor's
obligations hereunder, the Depositor shall not assign its obligations
hereunder.
Section 10.7. Headings. The Article and Section headings are
--------
for convenience only and shall not affect the construction of this Trust
Agreement.
Section 10.8. Reports, Notices and Demands.
----------------------------
(a) Any report, notice, demand or other communication that by
any provision of this Trust Agreement is required or permitted to be
given or served to or upon any Holder or the Depositor may be given or
served in writing by deposit thereof, first class postage prepaid, in
the United States mail, hand delivery or facsimile transmission, in each
case, addressed, (i) in the case of a Holder of Preferred Securities, to
such Holder as such Holder's name and address may appear on the
Securities Register; and (ii) in the case of the Holder of Common
Securities or the Depositor, to Allegiant Bancorp, Inc., 2122 Kratky
Road, St. Louis, Missouri 63114, Attention: Corporate Secretary,
facsimile no.: (314) 692-8200 or to such other address as may be
specified in a written notice by the Depositor to the Property Trustee.
Such notice, demand or other communication to or upon a Holder shall be
deemed to have been sufficiently given or made, for all purposes, upon
hand delivery, mailing or transmission. Such notice, demand or other
communication to or upon the Depositor shall be deemed to have been
sufficiently given or made only upon actual receipt of the writing by
the Depositor.
(b) Any notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given
or served to or upon the Issuer Trust, the Property Trustee, the
Delaware Trustee, the Administrators, or the Issuer Trust shall be given
in writing addressed (until another address is published by the Issuer
Trust) as follows: (i) with respect to the Property Trustee to Bankers
Trust Company, Four Albany Street, 4th Floor, New York, NY 10006,
Attention: Corporate Trust and Agency Group Corporate Market Services;
(ii) with respect to the Delaware Trustee to Bankers Trust (Delaware),
E.A. Delle Donne Corporate Center, Montgomery Building, 1101 Center
Road, Suite 200, Wilmington, Delaware, 19805-1266, Attention: Lisa
Wilkins, and (iii) with respect to the Administrators, to them at the
address above for notices to the Depositor, marked "Attention: Office
49
<PAGE>
<PAGE>
of the Secretary." Such notice, demand or other communication to or
upon the Issuer Trust or the Property Trustee shall be deemed to have
been sufficiently given or made only upon actual receipt of the writing
by the Issuer Trust, the Property Trustee, or such Administrator.
Section 10.9. Agreement Not to Petition. Each of the Issuer
-------------------------
Trustees, the Administrators and the Depositor agree for the benefit of
the Holders that, until at least one year and one day after the Issuer
Trust has been terminated in accordance with Article IX, they shall not
file, or join in the filing of, a petition against the Issuer Trust
under any bankruptcy, insolvency, reorganization or other similar law
(including, without limitation, the United States Bankruptcy Code)
(collectively, "Bankruptcy Laws") or otherwise join in the commencement
of any proceeding against the Issuer Trust under any Bankruptcy Law. In
the event the Depositor takes action in violation of this Section 10.9,
the Property Trustee agrees, for the benefit of Holders, that at the
expense of the Depositor, it shall file an answer with the bankruptcy
court or otherwise properly contest the filing of such petition by the
Depositor against the Issuer Trust or the commencement of such action
and raise the defense that the Depositor has agreed in writing not to
take such action and should be estopped and precluded therefrom and such
other defenses, if any, as counsel for the Issuer Trustee or the Issuer
Trust may assert. If any Issuer Trustee or Administrator takes action
in violation of this Section 10.9, the Depositor agrees, for the benefit
of the Holders, that at the expense of the Depositor, it shall file an
answer with the bankruptcy court or otherwise properly contest the
filing of such petition by such Person against the Depositor or the
commencement of such action and raise the defense that such Person has
agreed in writing not to take such action and should be estopped and
precluded therefrom and such other defenses, if any, as counsel for the
Depositor or the Issuer Trust may assert. The provisions of this
Section 10.9 shall survive the termination of this Trust Agreement.
Section 10.10. Trust Indenture Act; Conflict with Trust
-----------------------------------------
Indenture Act.
- -------------
(a) Trust Indenture Act; Application. (i) This Trust Agreement
--------------------------------
is subject to the provisions of the Trust Indenture Act that are
required to be a part of this Trust Agreement and shall, to the extent
applicable, be governed by such provisions; (ii) if and to the extent
that any provision of this Trust Agreement limits, qualifies or
conflicts with the duties imposed by Sections 310 to 317, inclusive, of
the Trust Indenture Act, such imposed duties shall control; (iii) for
purposes of this Trust Agreement, the Property Trustee, to the extent
permitted by applicable law and/or the rules and regulations of the
Commission, shall be the only Issuer Trustee which is a trustee for the
purposes of the Trust Indenture Act; and (iv) the application of the
Trust Indenture Act to this Trust Agreement shall not affect the nature
of the Preferred Securities and the Common Securities as equity
securities representing undivided beneficial interests in the assets of
the Issuer Trust.
(b) Lists of Holders of Preferred Securities. (i) Each of the
----------------------------------------
Depositor and the Administrators on behalf of the Issuer Trust shall
provide the Property Trustee with such information as is required under
Section 312(a) of the Trust Indenture Act at the times and in the manner
provided in Section 312(a) and (ii) the Property Trustee shall comply
with its obligations under Sections 310(b), 311 and 312(b) of the Trust
Indenture Act.
(c) Reports by the Property Trustee. Within 60 days after
-------------------------------
January 31 of each year, commencing January 31, 2000, the Property
Trustee shall provide to the Holders of the Trust Securities such
reports as are required by Section 313 of the Trust Indenture Act, if
any, in the form, in the manner and at the times provided by Section 313
of the Trust Indenture Act. The Property Trustee shall also comply with
the requirements of Section 313(d) of the Trust Indenture Act.
50
<PAGE>
<PAGE>
(d) Periodic Reports to Property Trustee. Each of the Depositor
------------------------------------
and the Administrators on behalf of the Issuer Trust shall provide to
the Property Trustee, the Commission and the Holders of the Trust
Securities, as applicable, such documents, reports and information as
required by Section 314(a)(1)-(3) (if any) of the Trust Indenture Act
and the compliance certificates required by Section 314(a)(4) and (c) of
the Trust Indenture Act (provided that any certificate to be provided
pursuant to Section 314(a)(4) of the Trust Indenture Act shall be
provided within 120 days of the end of each fiscal year of the Issuer
Trust).
(e) Evidence of Compliance with Conditions Precedent. Each of
------------------------------------------------
the Depositor and the Administrators on behalf of the Issuer Trust shall
provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Trust Agreement which
relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given pursuant
to Section 314(c) shall comply with Section 314(e) of the Trust
Indenture Act.
(f) Disclosure of Information. The disclosure of information as
-------------------------
to the names and addresses of the Holders of Trust Securities in
accordance with Section 312 of the Trust Indenture Act, regardless of
the source from which such information was derived, shall not be deemed
to be a violation of any existing law or any law hereafter enacted which
does not specifically refer to Section 312 of the Trust Indenture Act,
nor shall the Property Trustee be held accountable by reason of mailing
any material pursuant to a request made under Section 312(b) of the
Trust Indenture Act.
Section 10.11. Acceptance of Terms of Trust Agreement,
----------------------------------------
Guarantee and Indenture. THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY
- -----------------------
OR ANY INTEREST THEREIN BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL
OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL
CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE HOLDER AND ALL OTHERS
HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE AGREEMENT AND THE
INDENTURE, AND THE AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL CONSTITUTE
THE AGREEMENT OF THE ISSUER TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE
TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE
AND EFFECTIVE AS BETWEEN THE ISSUER TRUST AND SUCH HOLDER AND SUCH
OTHERS.
Section 10.12. Counterparts. This Trust Agreement may contain
------------
more than one counterpart of the signature page and this Trust Agreement
may be executed by the affixing of the signature of each of the Issuer
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 paper.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
51
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amended and
Restated Trust Agreement to be duly executed as of the day and year
first above written.
ALLEGIANT BANCORP, INC., as Depositor
By:
---------------------------------------
Name:
Title:
BANKERS TRUST COMPANY, as Property Trustee
By:
---------------------------------------
Name:
Title:
BANKERS TRUST (DELAWARE), as Delaware
Trustee and not in its individual capacity
By:
---------------------------------------
Name:
Title:
Subscribed to and Accepted by, as the Initial Administrators:
- ---------------------------------------
Shaun R. Hayes
- ---------------------------------------
Thomas A. Daiber
52
<PAGE>
<PAGE>
EXHIBIT A
---------
[CERTIFICATE OF TRUST FILED WITH DELAWARE SECRETARY OF STATE]
53
<PAGE>
<PAGE>
EXHIBIT B
---------
[FORM OF CERTIFICATE DEPOSITARY AGREEMENT]
54
<PAGE>
<PAGE>
EXHIBIT C
---------
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO A
SUCCESSOR IN INTEREST TO THE DEPOSITOR OR AN AFFILIATE
OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW
AND SECTION 5.11 OF THE TRUST AGREEMENT
Certificate Number Number of Common Securities
C-__
Certificate Evidencing Common Securities
of
Allegiant Capital Trust I
____% Common Securities
(liquidation amount $____ per Common Security)
Allegiant Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Issuer Trust"), hereby
certifies that Allegiant Bancorp, Inc. (the "Holder") is the registered
owner of _________ (___) common securities of the Issuer Trust
representing undivided beneficial interest in the assets of the Issuer
Trust and designated the Allegiant Capital Trust I ____% Common
Securities (liquidation amount $10 per Common Security) (the "Common
Securities"). Except in accordance with Section 5.11 of the Trust
Agreement (as defined below), the Common Securities are not transferable
and any attempted transfer hereof other than in accordance therewith
shall be void. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are
set forth in, and this certificate and the Common Securities represented
hereby are issued and shall in all respects be subject to the terms and
provisions of, the Amended and Restated Trust Agreement of the Issuer
Trust, dated as of ________, 1999, as the same may be amended from time
to time (the "Trust Agreement") among Allegiant Bancorp, Inc., as
Depositor, Bankers Trust Company, as Property Trustee, Bankers Trust
(Delaware), as Delaware Trustee, and the Holders of Trust Securities,
including the designation of the terms of the Common Securities as set
forth therein. The Issuer Trust will furnish a copy of the Trust
Agreement to the Holder without charge upon written request to the
Issuer Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Terms used but not defined herein have the meanings set forth in
the Trust Agreement.
55
<PAGE>
<PAGE>
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust
has executed this certificate this ___ day of ______________, 1999.
Allegiant Capital Trust I
By:
---------------------------------
Name:
Administrator
AUTHENTICATED AND REGISTERED:
BANKERS TRUST COMPANY,
as Property Trustee and Securities Registrar
By:
---------------------------------
Name:
Signatory Officer
56
<PAGE>
<PAGE>
EXHIBIT D
---------
[IF THE PREFERRED SECURITY CERTIFICATE IS TO BE A GLOBAL PREFERRED
SECURITY CERTIFICATE, INSERT - This Preferred Security Certificate is a
Global Preferred Security Certificate within the meaning of the Trust
Agreement hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. This Preferred Security
Certificate is exchangeable for Preferred Security Certificates
registered in the name of a person other than the Depositary or its
nominee only in the limited circumstances described in the Trust
Agreement and may not be transferred except as a whole by the Depositary
to a nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary, except in the limited
circumstances described in the Trust Agreement.
Unless this Preferred Security Certificate is presented by an
authorized representative of The Depository Trust Company, a New York
Corporation ("DTC"), to Allegiant Capital Trust I or its agent for
registration of transfer, exchange or payment, and any Preferred
Security Certificate issued is registered in the name of such nominee as
is requested by an authorized representative of DTC (and any payment is
made to such entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO A PERSON IS WRONGFUL inasmuch as the registered owner hereof, has
an interest herein.]
57
<PAGE>
<PAGE>
CERTIFICATE NUMBER NUMBER OF PREFERRED SECURITIES
P-__
CUSIP NO. ________________________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
ALLEGIANT CAPITAL TRUST I
____% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER PREFERRED SECURITY)
Allegiant Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Issuer Trust"), hereby
certifies that _______________ (the "Holder") is the registered owner of
$___________ aggregate liquidation amount of preferred securities of the
Issuer Trust representing a preferred undivided beneficial interest in
the assets of the Issuer Trust and designated the Allegiant Capital
Trust I ____% Preferred Securities (liquidation amount $10 per Preferred
Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and the records of the Issuer Trust, in person
or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer as provided in Section 5.5
of the Trust Agreement (as defined below). The designations, rights,
privileges, restrictions, preferences and other terms and provisions of
the Preferred Securities are set forth in, and this certificate and the
Preferred Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Issuer Trust, dated as of ________,
1999, as the same may be amended from time to time (the "Trust
Agreement"), among Allegiant Bancorp, Inc., as Depositor, Bankers Trust
Company, as Property Trustee, Bankers Trust (Delaware), as Delaware
Trustee, and the Holders of Trust Securities, including the designation
of the terms of the Preferred Securities as set forth therein. The
Holder is entitled to the benefits of the Guarantee Agreement entered
into by Allegiant Bancorp, Inc., a Missouri corporation, and Bankers
Trust Company, as Guarantee Trustee, dated as of ________, 1999 , as the
same may be amended from time to time (the "Guarantee Agreement"), to
the extent provided therein. The Issuer Trust will furnish a copy of
the Trust Agreement and the Guarantee Agreement to the Holder without
charge upon written request to the Issuer Trust at its principal place
of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
58
<PAGE>
<PAGE>
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust
has executed this certificate this _______ day of ____________, 1999.
ALLEGIANT CAPITAL TRUST I
By:
----------------------------------
Name:
Administrator
AUTHENTICATED AND REGISTERED:
BANKERS TRUST COMPANY,
as Property Trustee and Securities Registrar
By:
---------------------------------
Name:
Authorized Signatory
59
<PAGE>
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security Certificate to:
------------------------------------------------------
(Insert assignee's name and social security or tax
identification number)
------------------------------------------------------
------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints:
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of
the Issuer Trust. The agent may substitute another to act for him or
her.
Date:
-----------------------------------------
Signature:
-----------------------------------------
(Sign exactly as your name appears on
the other side of this Preferred Security
Certificate)
The signature(s) should be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations and
credit unions with membership in an approved signature guarantee
medallion program), pursuant to S.E.C. Rule 17Ad-15.
60
<PAGE>
=========================================================================
GUARANTEE AGREEMENT
Between
ALLEGIANT BANCORP, INC.
(as Guarantor)
and
BANKERS TRUST COMPANY
(as Guarantee Trustee)
dated as of
________________, 1999
=========================================================================
<PAGE>
<PAGE>
ALLEGIANT CAPITAL TRUST I
Certain Sections of this Guarantee Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Guarantee Agreement
Act Section Section
- --------------- -------------------
Section 310 (a)(1) 4.1(a)
(a)(2) 4.1(a)
(a)(3) Not Applicable
(a)(4) Not Applicable
(b) 2.8, 4.1(c)
Section 311 (a) Not Applicable
(b) Not Applicable
Section 312 (a) 2.2(a)
(b) 2.2(b)
(c) Not Applicable
Section 313 (a) 2.3
(a)(4) 2.3
(b) 2.3
(c) 2.3
(d) 2.3
Section 314 (a) 2.4
(b) 2.4
(c)(1) 2.5
(c)(2) 2.5
(c)(3) 2.5
(e) 1.1, 2.5, 3.2
Section 315 (a) 3.1(d)
(b) 2.7
(c) 3.1(c)
(d) 3.1(d)
(e) Not Applicable
Section 316 (a) 1.1, 2.6, 5.4
(a)(1)(A) 5.4
(a)(1)(B) 5.4
(a)(2) Not Applicable
(b) 5.3
(c) Not Applicable
Section 317 (a)(1) Not Applicable
(a)(2) Not Applicable
(b) Not Applicable
Section 318 (a) 2.1
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Guarantee Agreement.
<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
Section 1.1. Definitions 1
ARTICLE II TRUST INDENTURE ACT 5
Section 2.1. Trust Indenture Act; Application 5
Section 2.2. List of Holders 5
Section 2.3. Annual Reports by the Guarantee Trustee 5
Section 2.4. Periodic Reports to the Guarantee Trustee 5
Section 2.5. Evidence of Compliance with Conditions Precedent 6
Section 2.6. Events of Default; Waiver 6
Section 2.7. Event of Default; Notice 6
Section 2.9. Conflicting Interests 6
ARTICLE III POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE 6
Section 3.1. Powers and Duties of the Guarantee Trustee 6
Section 3.2. Certain Rights of Guarantee Trustee 8
Section 3.3. Indemnity 9
Section 3.4. Expenses 10
ARTICLE IV GUARANTEE TRUSTEE 10
Section 4.1. Guarantee Trustee; Eligibility 10
Section 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee 10
ARTICLE V GUARANTEE 11
Section 5.1. Guarantee 11
Section 5.2. Waiver of Notice and Demand 11
Section 5.3. Obligations Not Affected 11
Section 5.4. Rights of Holders 12
Section 5.5. Guarantee of Payment 13
Section 5.6. Subrogation 13
Section 5.7. Independent Obligations 13
ARTICLE VI COVENANTS AND SUBORDINATION 13
Section 6.1. Subordination 13
Section 6.2. Pari Passu Guarantees 14
ARTICLE VII TERMINATION 14
Section 7.1. Termination 14
ARTICLE VIII MISCELLANEOUS 14
Section 8.1. Successors and Assigns 14
Section 8.2. Amendments 14
Section 8.3. Notices 14
Section 8.4. Benefit 16
Section 8.5. Interpretation 16
Section 8.6. Governing Law 16
Section 8.7. Counterparts 16
- i -
<PAGE>
<PAGE>
GUARANTEE AGREEMENT
THIS GUARANTEE AGREEMENT, dated as of _____, 1999 (this "Guarantee
Agreement"), is executed and delivered by ALLEGIANT BANCORP, INC., a
Missouri corporation (the "Guarantor"), having its principal office at
2122 Kratky Road, St. Louis, Missouri 63114 and BANKERS TRUST COMPANY, a
New York banking corporation, having its principal office at Four Albany
Street, Fourth Floor, New York, New York 10006, as trustee, for the
benefit of the Holders (as defined herein) from time to time of the
Preferred Securities (as defined herein) of Allegiant Capital Trust I, a
Delaware statutory business trust (the "Issuer Trust").
RECITALS
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of _____, 1999, among Allegiant Bancorp,
Inc., as Depositor, Bankers Trust Company, as Property Trustee (the
"Property Trustee"), Bankers Trust (Delaware), as Delaware Trustee (the
"Delaware Trustee") (collectively, the "Issuer Trustees"), and the
Holders from time to time of preferred undivided beneficial ownership
interests in the assets of the Issuer Trust, the Issuer Trust is issuing
up to $15,000,000 aggregate Liquidation Amount (as defined herein) of
its ____% Preferred Securities, Liquidation Amount $10 per preferred
security (the "Preferred Securities"), representing preferred undivided
beneficial ownership interests in the assets of the Issuer Trust and
having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer
Trust and the proceeds thereof, together with the proceeds from the
issuance of the Issuer Trust's Common Securities (as defined herein),
will be used to purchase the Junior Subordinated Debentures due ______,
2029 (as defined in the Trust Agreement) (the "Junior Subordinated
Debentures") of the Guarantor which will be deposited with Bankers Trust
Company, as Property Trustee under the Trust Agreement, as trust assets;
and
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to
agree to the extent set forth herein, to pay to the Holders of the
Preferred Securities the Guarantee Payments (as defined herein) and to
make certain other payments on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the purchase of the Preferred
Securities by each Holder, which purchase the Guarantor hereby
acknowledges shall benefit the Guarantor, and intending to be legally
bound hereby, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders from time to time of the
Preferred Securities.
ARTICLE I
DEFINITIONS
Section 1.1. Definitions
As used in this Guarantee Agreement, the terms set forth below
shall, unless the context otherwise requires, have the following
meanings. Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to such terms in the Trust Agreement as in
effect on the date hereof.
<PAGE>
<PAGE>
"Act" shall have the meaning specified in the Trust Agreement.
"Additional Amount" shall have the meaning specified in the Trust
Agreement.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control," when used with respect to any specified
Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Cause" means any one of the following reasons:
(a) the Guarantee Trustee is incapable of acting as
Guarantee Trustee;
(b) the Guarantee Trustee is adjudged a bankrupt or
insolvent, or a receiver of the Guarantee Trustee or of its
property is appointed; or
(c) any public officer takes charge or control of the
Guarantee Trustee or of its property or affairs for the purposes
of rehabilitation, conservation or liquidation.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer Trust.
"Delaware Trustee" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Distributions" means preferential cumulative cash distributions
accumulating from ______, 1999 and payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year, commencing
__________, 1999 at the annual rate of ____% of the Liquidation Amount.
"Event of Default" means (a) a default by the Guarantor in any of
its payment obligations under this Guarantee Agreement, or (b) a default
by the Guarantor in any other obligation hereunder that remains
unremedied for 30 days.
"Extended Interest Payment Period" shall have the meaning
specified in the Indenture.
"Guarantee Agreement" means this Guarantee Agreement, as modified,
amended or supplemented from time to time.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred
Securities, to the extent not paid or made by or on behalf of the Issuer
Trust: (a) any accumulated and unpaid Distributions required to be paid
on the Preferred Securities, to the extent the Issuer Trust shall have
funds available therefor at such time; (b) the Redemption Price, with
respect to the Preferred Securities called for redemption by the Issuer
Trust to the extent that the Issuer Trust shall have funds available
therefor at such time; and (c) upon a voluntary or involuntary
termination, winding-up or liquidation of the Issuer Trust, unless the
Junior Subordinated Debentures are distributed to the Holders, the
lesser of (in either case, the "Liquidation Distribution") (i) the
aggregate of
- 2 -
<PAGE>
<PAGE>
the Liquidation Amount and all accumulated and unpaid Distributions to
the date of payment to the extent the Issuer Trust shall have funds
available to make such payment at such time and (ii) the amount of
assets of the Issuer Trust remaining available for distribution to
Holders in liquidation of the Issuer Trust.
"Guarantee Trustee" means Bankers Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement and thereafter means
each such Successor Guarantee Trustee.
"Guarantor" shall have the meaning specified in the preamble of
this Guarantee Agreement.
"Holder" means any holder, as registered on the books and records
of the Issuer Trust, of any Preferred Securities; provided, however,
that, in determining whether the holders of the requisite percentage of
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include the Guarantor, the Guarantee
Trustee or any Affiliate of the Guarantor or the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of
_______, 1999, between Allegiant Bancorp, Inc. and Bankers Trust
Company, as trustee, as may be modified, amended or supplemented from
time to time.
"Issuer Trust" shall have the meaning specified in the preamble of
this Guarantee Agreement.
"Issuer Trustees" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Junior Subordinated Debentures" shall have the meaning specified
in the first recital of this Guarantee Agreement.
"Like Amount" means (a) with respect to a redemption of Preferred
Securities, Preferred Securities having a Liquidation Amount equal to
the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, the
proceeds of which will be used to pay the Redemption Price of such
Preferred Securities, (b) with respect to a distribution of Junior
Subordinated Debentures to Holders of Preferred Securities in connection
with a termination, winding up or liquidation of the Issuer Trust,
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Preferred Securities of the Holder to whom
such Junior Subordinated Debentures are distributed, and (c) with
respect to any distribution of an Additional Amount to Holders of
Preferred Securities, Junior Subordinated Debentures having a principal
amount equal to the Liquidation Amount of the Preferred Securities in
respect of which such distribution is made.
"Liquidation Amount" means the stated amount of $10 per Preferred
Security.
"Liquidation Distribution" shall have the meaning specified in the
definition of Guarantee Payments.
"Majority in Liquidation Amount of the Preferred Securities"
means, except as provided by the Trust Indenture Act, Preferred
Securities representing more than 50% of the aggregate Liquidation
Amount of all then outstanding Preferred Securities issued by the Issuer
Trust.
- 3 -
<PAGE>
<PAGE>
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Chief Executive Officer,
President or a Vice President, and by the Chief Financial Officer,
Treasurer, an Associate Treasurer, an Assistant Treasurer, the Secretary
or an Assistant Secretary of such Person, and delivered to the Guarantee
Trustee. Any Officers' Certificate delivered with respect to compliance
with a condition or covenant provided for in this Guarantee Agreement
shall include:
(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition
and the definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in
rendering the Officers' Certificate;
(c) a statement that such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as
to whether or not such covenant or condition has been complied
with; and
(d) a statement as to whether, in the opinion of such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint
stock company, limited liability company, trust, unincorporated
association, or government or any agency or political subdivision
thereof, or any other entity of whatever nature.
"Preferred Securities" shall have the meaning specified in the
first recital of this Guarantee Agreement.
"Property Trustee" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Redemption Date" means, with respect to any Preferred Security to
be redeemed, the date fixed for such redemption by or pursuant to the
Trust Agreement; provided that each Junior Subordinated Debenture
Redemption Date (as such term is defined in the Indenture) and the
stated maturity of the Junior Subordinated Debentures shall be a
Redemption Date for a Like Amount of Preferred Securities.
"Redemption Price" shall have the meaning specified in the Trust
Agreement.
"Responsible Officer" means, when used with respect to the
Guarantee Trustee, any officer assigned to the Corporate Trust Office of
the Guarantee Trustee, including any managing director, principal, vice
president, assistant vice president, assistant treasurer, assistant
secretary or any other officer of the Guarantee Trustee customarily
performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the
administration of this Guarantee Agreement, and also, with respect to a
particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the
particular subject.
"Senior Indebtedness" shall have the meaning specified in the
Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section
4.1.
- 4 -
<PAGE>
<PAGE>
"Trust Agreement" shall have the meaning specified in the Recitals
to this Guarantee Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended by the Trust Indenture Reform Act of 1990, or any successor
statute, in each case as amended from time to time.
ARTICLE II
TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required to be a part of
and govern this Guarantee Agreement, the provision of the Trust
Indenture Act shall control. If any provision of this Guarantee
Agreement modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be
deemed to apply to this Guarantee Agreement as so modified or excluded,
as the case may be.
Section 2.2. List of Holders.
(a) The Guarantor will furnish or cause to be furnished
to the Guarantee Trustee:
(i) quarterly, not more than 15 days after March
15, June 15, September 15 and December 15 in each year, a
list, in such form as the Guarantee Trustee may reasonably
require, of the names and addresses of the Holders as of
such date; and
(ii) at such other times as the Guarantee Trustee
may request in writing, within 30 days after the receipt by
the Guarantor of any such request, a list of similar form
and content as of a date not more than 15 days prior to the
time such list is furnished.
(b) The Guarantee Trustee shall comply with the
requirements of Section 312(b) of the Trust Indenture Act.
Section 2.3. Annual Reports by the Guarantee Trustee.
Within 60 days of January 31 of each year commencing January 31,
2000, the Guarantee Trustee shall provide to the Holders such reports,
if any, as are required by Section 313 of the Trust Indenture Act in the
form and in the manner provided by Section 313 of the Trust Indenture
Act. The Guarantee Trustee also shall comply with the requirements of
Section 313(d) of the Trust Indenture Act.
Section 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee and the
Holders such documents, reports and information, if any, as required by
Section 314 of the Trust Indenture Act and the compliance certificate
required by Section 314 of the Trust Indenture Act, in the form, in the
manner and at the times required by Section 314 of the Trust Indenture
Act.
- 5 -
<PAGE>
<PAGE>
Section 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence
of compliance with such conditions precedent, if any, provided for in
this Guarantee Agreement that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be
given in the form of an Officers' Certificate.
Section 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders, waive any past Event
of Default and its consequences. Upon such waiver, any such Event of
Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of this Guarantee
Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent therefrom.
Section 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first
class postage prepaid, to the Holders, notices of all Events of
Default known to the Guarantee Trustee, unless such Events of
Default have been cured before the giving of such notice; provided
that, except in the case of a default in the payment of a
Guarantee Payment, the Guarantee Trustee shall be protected in
withholding such notice if and so long as the Board of Directors,
the executive committee or a trust committee of directors and/or
Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests
of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless (i) a Responsible Officer
charged with the administration of this Guarantee Agreement shall
have received written notice of such Event of Default, or (ii) a
Responsible Officer of the Guarantee Trustee charged with
administration of the Trust Agreement shall have obtained actual
knowledge thereof.
Section 2.8. Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described
in this Guarantee Agreement for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
Section 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the
Guarantee Trustee for the benefit of the Holders, and the
Guarantee Trustee shall not transfer this Guarantee Agreement to
any Person except to a Holder exercising his or her rights
pursuant to Section 5.4(d) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment
to act as Successor Guarantee Trustee hereunder. The right, title
and interest of the Guarantee Trustee, as such, hereunder shall
automatically vest in any Successor Guarantee Trustee, upon
acceptance
- 6 -
<PAGE>
<PAGE>
by such Successor Guarantee Trustee of its appointment hereunder,
and such vesting and cessation of title shall be effective whether
or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is
continuing, the Guarantee Trustee shall enforce this Guarantee
Agreement for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default
that may have occurred, shall be obligated to perform only such
duties as are specifically set forth in this Guarantee Agreement
(including pursuant to Section 2.1), and no implied covenants
shall be read into this Guarantee Agreement against the Guarantee
Trustee. If an Event of Default has occurred (that has not been
cured or waived pursuant to Section 2.6), the Guarantee Trustee
shall exercise such of the rights and powers vested in it by this
Guarantee Agreement, and use the same degree of care and skill in
its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act or its own
bad faith or willful misconduct, except that:
(i) prior to the occurrence of any Event of
Default and after the curing or waiving of all such Events
of Default that may have occurred:
(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the
express provisions of this Guarantee Agreement
(including pursuant to Section 2.1), and the
Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement
(including pursuant to Section 2.1); and
(B) in the absence of bad faith on the
part of the Guarantee Trustee, the Guarantee Trustee
may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee Agreement; but in
the case of any such certificates or opinions that
by any provision hereof or of the Trust Indenture
Act are specifically required to be furnished to the
Guarantee Trustee, the Guarantee Trustee shall be
under a duty to examine the same to determine
whether or not they conform to the requirements of
this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer of the Guarantee Trustee, unless it shall be proved
that the Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the
Holders of not less than a Majority in Liquidation Amount of
the Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy available
to the
- 7 -
<PAGE>
<PAGE>
Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee
Agreement; and
(iv) no provision of this Guarantee Agreement
shall require the Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of
any of its rights or powers if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of
such funds or liability is not assured to it under the terms
of this Guarantee Agreement or adequate indemnity against
such risk or liability is not reasonably assured to it.
Section 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) the Guarantee Trustee may conclusively rely
and shall be fully protected in acting or refraining from
acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably believed
by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(ii) any direction or act of the Guarantor
contemplated by this Guarantee Agreement shall be
sufficiently evidenced by an Officers' Certificate unless
otherwise prescribed herein;
(iii) whenever, in the administration of this
Guarantee Agreement, the Guarantee Trustee shall deem it
desirable that a matter be proved or established before
taking, suffering or omitting to take any action hereunder,
the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request from the
Guarantee Trustee, shall be promptly delivered by the
Guarantor;
(iv) the Guarantee Trustee may consult with legal
counsel, and the written advice or opinion of such legal
counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice
or opinion. Such legal counsel may be legal counsel to the
Guarantor or any of its Affiliates and may be one of its
employees. The Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of
this Guarantee Agreement from any court of competent
jurisdiction;
(v) the Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested
in it by this Guarantee Agreement at the request or
direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee such security and
indemnity as would satisfy a reasonable person in the
position of the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with
such request or direction, including such reasonable
advances as may be requested by the Guarantee Trustee;
provided, however, that nothing herein shall relieve the
Guarantee Trustee of its obligations upon the occurrence of
an Event of Default that has not been cured or waived
- 8 -
<PAGE>
<PAGE>
to exercise the rights and powers vested in the Guarantee
Trustee by this Guarantee, and to use the same degree of
care and skill in exercising such rights and powers as a
reasonably prudent person would use under the circumstances
in the conduct of his own affairs;
(vi) the Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit;
(vii) the Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder
either directly or by or through its agents or attorneys,
and the Guarantee Trustee shall not be responsible for any
negligence or willful misconduct on the part of any such
agent or attorney appointed with due care by it hereunder.
Nothing herein shall be construed as limiting or restricting
the right of the Guarantor to bring any action directly
against any agent or attorney appointed by the Guarantee
Trustee for any negligence or willful misconduct on the part
of such agent or attorney; and
(viii) whenever in the administration of this
Guarantee Agreement the Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder,
the Guarantee Trustee:
(A) may request instructions from the
Holders;
(B) may refrain from enforcing such remedy
or right or taking such other action until such
instructions are received; and
(C) shall be fully protected in acting in
accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be
deemed to impose any duty or obligation on the Guarantee Trustee
to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which
it shall be illegal, or in which the Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power,
duty or obligation. No permissive power or authority available to
the Guarantee Trustee shall be construed to be a duty to act in
accordance with such power and authority.
Section 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee (which for
purposes of this Section 3.3 shall include its directors, officers,
employees and agents) for, and to hold the Guarantee Trustee harmless
against, any loss, liability or expense incurred without negligence,
willful misconduct or bad faith on the part of the Guarantee Trustee,
arising out of or in connection with the acceptance or administration of
this Guarantee Agreement, including the reasonable costs and expenses of
defending
- 9 -
<PAGE>
<PAGE>
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Guarantee
Trustee will not claim or exact any lien or charge on any Guarantee
Payments as a result of any amount due to it under this Guarantee
Agreement.
Section 3.4. Expenses.
The Guarantor shall from time to time reimburse the Guarantee
Trustee for its reasonable expenses and costs (including reasonable
attorneys' or agents' fees) incurred in connection with the performance
of its duties hereunder.
ARTICLE IV
GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the
Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000, and shall be a
corporation meeting the requirements of Section 310(a) of
the Trust Indenture Act. If such corporation publishes
reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining
authority, then, for the purposes of this Section and to the
extent permitted by the Trust Indenture Act, the combined
capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Guarantee Trustee
shall immediately resign in the manner and with the effect set out
in Section 4.2(b).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Guarantee Trustee and Guarantor shall in
all respects comply with the provisions of Section 310(b) of the
Trust Indenture Act.
Section 4.2. Appointment, Removal and Resignation of the
Guarantee Trustee.
(a) No resignation or removal of the Guarantee Trustee
and no appointment of a Successor Guarantee Trustee pursuant to
this Article IV shall become effective until the acceptance of
appointment by the Successor Guarantee Trustee by written
instrument executed by the Successor Guarantee Trustee and
delivered to the Holders and the Guarantee Trustee.
(b) Subject to Section 4.2(a), a Guarantee Trustee may
resign at any time by giving written notice thereof to the
Holders. The Guarantee Trustee shall appoint a successor by
requesting from at least three Persons meeting the eligibility
requirements such Person's expenses and charges to serve as the
Guarantee Trustee, and selecting the Person who agrees to the
lowest expenses and charges. If the instrument of acceptance by
the Successor Guarantee
- 10 -
<PAGE>
<PAGE>
Trustee shall not have been delivered to the Guarantee Trustee
within 60 days after the giving of such notice of resignation,
the Guarantee Trustee may petition, at the expense of the Guarantor,
any court of competent jurisdiction for the appointment of a
Successor Guarantee Trustee.
(c) The Guarantee Trustee may be removed for Cause at
any time by Act of the Holders of at least a Majority in
Liquidation Amount of the Preferred Securities, delivered to the
Guarantee Trustee.
(d) If a resigning Guarantee Trustee shall fail to
appoint a successor, or if a Guarantee Trustee shall be removed
or become incapable of acting as Guarantee Trustee, or if any
vacancy shall occur in the office of any Guarantee Trustee for any
cause, the Holders of the Preferred Securities, by Act of the
Holders of record of not less than 25% in aggregate Liquidation
Amount of the Preferred Securities then outstanding delivered to
such Guarantee Trustee, shall promptly appoint a successor
Guarantee Trustee. If no Successor Guarantee Trustee shall have
been so appointed by the Holders of the Preferred Securities and
such appointment accepted by the Successor Guarantee Trustee, any
Holder, on behalf of himself and all others similarly situated,
may petition any court of competent jurisdiction for the
appointment of a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
Section 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in
full on a subordinated basis as set forth in Section 6.1 hereof to the
Holders the Guarantee Payments (without duplication of amounts
theretofore paid by or on behalf of the Issuer Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which the
Issuer Trust may have or assert, except the defense of payment. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders
or by causing the Issuer Trust to pay such amounts to the Holders. The
Guarantor shall give prompt written notice to the Guarantee Trustee in
the event it makes any direct payment hereunder.
Section 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first
against the Guarantee Trustee, the Issuer Trust or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and
demands.
- 11 -
<PAGE>
<PAGE>
Section 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer Trust of
any express or implied agreement, covenant, term or condition
relating to the Preferred Securities to be performed or observed
by the Issuer Trust;
(b) the extension of time for the payment by the Issuer
Trust of all or any portion of the Distributions (other than an
extension of time for payment of Distributions that results from
the extension of any interest payment period on the Junior
Subordinated Debentures as so provided in the Indenture),
Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred
Securities;
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to
the terms of the Preferred Securities, or any action on the part
of the Issuer Trust granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer Trust or
any of the assets of the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) any failure or omission to receive any regulatory
approval or consent required in connection with the Preferred
Securities (or the common equity securities issued by the Issuer
Trust), including, without limitation, the failure to receive any
approval of the Board of Governors of the Federal Reserve System
required for the redemption of the Preferred Securities;
(g) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(h) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of
a guarantor (other than payment of the underlying obligation), it
being the intent of this Section 5.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain the consent of, the Guarantor with respect to the happening of
any of the foregoing.
Section 5.4. Rights of Holders.
The Guarantor expressly acknowledges that:
(a) this Guarantee Agreement will be deposited with the
Guarantee Trustee to be held for the benefit of the Holders;
- 12 -
<PAGE>
<PAGE>
(b) the Guarantee Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders;
(c) the Holders of a Majority in Liquidation Amount of
the Preferred Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of this Guarantee
Agreement or exercising any trust or power conferred upon the
Guarantee Trustee under this Guarantee Agreement; and
(d) any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against
the Guarantee Trustee, the Issuer Trust or any other Person.
Section 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by
payment of the Guarantee Payments in full (without duplication of
amounts theretofore paid by the Issuer Trust) or upon the distribution
of Junior Subordinated Debentures to Holders as provided in the Trust
Agreement.
Section 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the
Holders against the Issuer Trust in respect of any amounts paid to the
Holders by the Guarantor under this Guarantee Agreement; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any
rights which it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment
under this Guarantee Agreement, if at the time of any such payment, any
amounts are due and unpaid under this Guarantee Agreement. If any amount
shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to
pay over such amount to the Holders.
Section 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer Trust with respect to the
Preferred Securities and that the Guarantor shall be liable as principal
and as debtor hereunder to make Guarantee Payments pursuant to the terms
of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (h), inclusive, of Section 5.3
hereof.
ARTICLE VI
COVENANTS AND SUBORDINATION
Section 6.1. Subordination.
This Guarantee Agreement will constitute an unsecured obligation
of the Guarantor and will rank subordinate and junior in right of
payment to all Senior Indebtedness of the Guarantor to the extent and in
the manner set forth in the Indenture with respect to the Junior
Subordinated Debentures, and the provisions of Article XIII of the
Indenture will apply, mutatis mutandis, to the obligations of the
Guarantor hereunder. The obligations of the Guarantor hereunder do not
constitute Senior Indebtedness of the Guarantor.
- 13 -
<PAGE>
<PAGE>
Section 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement
shall rank pari passu with any similar guarantee agreements issued by
the Guarantor on behalf of the holders of preferred or capital
securities issued by the Issuer Trust and with any other security,
guarantee or other obligation that is expressly stated to rank pari
passu with the obligations of the Guarantor under this Guarantee
Agreement.
ARTICLE VII
TERMINATION
Section 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further
force and effect upon (a) full payment of the Redemption Price of all
Preferred Securities, (b) the distribution of Junior Subordinated
Debentures to the Holders in exchange for all of the Preferred
Securities or (c) full payment of the amounts payable in accordance with
Article IX of the Trust Agreement upon liquidation of the Issuer Trust.
Notwithstanding the foregoing, this Guarantee Agreement will continue to
be effective or will be reinstated, as the case may be, if at any time
any Holder is required to repay any sums paid with respect to the
Preferred Securities or this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee
Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger or sale involving the Guarantor
that is permitted under Article VIII of the Indenture and pursuant to
which the assignee agrees in writing to perform the Guarantor's
obligations hereunder, the Guarantor shall not assign its obligations
hereunder, and any purported assignment that is not in accordance with
these provisions shall be void.
Section 8.2. Amendments.
Except with respect to any changes that do not materially
adversely affect the rights of the Holders (in which case no consent of
the Holders will be required), this Guarantee Agreement may only be
amended with the prior approval of the Holders of not less than a
Majority in Liquidation Amount of the Preferred Securities. The
provisions of Article VI of the Trust Agreement concerning meetings of
the Holders shall apply to the giving of such approval.
- 14 -
<PAGE>
<PAGE>
Section 8.3. Notices.
Any notice, request or other communication required or permitted
to be given hereunder shall be in writing, duly signed by the party
giving such notice, and delivered, telecopied (confirmed by delivery of
the original) or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or
telecopy number set forth below or such other address or telecopy
number or to the attention of such other Person as the Guarantor
may give notice to the Holders:
Allegiant Bancorp, Inc.
2122 Kratky Road
St. Louis, Missouri 63114
Facsimile No.: (314) 692-8500
Attention: President
(b) if given to the Issuer Trust, in care of the
Guarantee Trustee, at the Issuer Trust's (and the Guarantee
Trustee's) address set forth below or such other address or
telecopy number or to the attention of such other Person as the
Guarantee Trustee on behalf of the Issuer Trust may give notice to
the Holders:
Allegiant Capital Trust I
c/o Allegiant Bancorp, Inc.
2122 Kratky Road
St. Louis, Missouri 63114
Facsimile No.: (314) 692-8500
Attention: President
with a copy to:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group;
Corporate Market Services
(c) if given to the Guarantee Trustee:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group
Corporate Market Services
(d) if given to any Holder, at the address set forth on
the books and records of the Issuer Trust.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by
first class mail, postage prepaid, except that if a notice or other
document is refused delivery or cannot be delivered because of a changed
address of which no notice was given, such notice or other document
shall be deemed to have been delivered on the date of such refusal or
inability to deliver.
- 15 -
<PAGE>
<PAGE>
Section 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders
and is not separately transferable from the Preferred Securities.
Section 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise
requires:
(a) capitalized terms used in this Guarantee Agreement
but not defined in the preamble hereto have the respective
meanings assigned to them in Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement
has the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified,
supplemented or amended from time to time;
(d) all references in this Guarantee Agreement to
Articles and Sections are to Articles and Sections of this
Guarantee Agreement unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Guarantee Agreement unless
otherwise defined in this Guarantee Agreement or unless the
context otherwise requires;
(f) a reference to the singular includes the plural and
vice versa;
(g) the masculine, feminine or neuter genders used
herein shall include the masculine, feminine and neuter genders;
(h) the words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation";
and
(i) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Guarantee Agreement as
a whole and not to any particular Article, Section or other
subdivision.
Section 8.6. Governing Law.
This Guarantee Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Delaware without
regard to the conflict of law principles thereof.
Section 8.7. Counterparts.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all
such counterparts shall together constitute but one and the same
instrument.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
- 16 -
<PAGE>
<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
ALLEGIANT BANCORP, INC., as Guarantor
By:
-----------------------------------------
Name:
Title:
BANKERS TRUST COMPANY, as Guarantee and
in its individual capacity
By:
-----------------------------------------
Name:
Title:
- 17 -
<PAGE>
<TABLE>
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
<CAPTION>
Three Months
Ended
March 31, Years Ended December 31,
--------------- ----------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------ ------ ------- ------- ------- ------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Earnings before income tax expenses $1,671 $1,020 $ 7,560 $ 4,131 $ 2,983 $ 2,098 $1,310
Add: 639 564 2,624 2,895 1,542 703 550
Interest on advances and other borrowings 593 659 2,694 1,318 1,397 1,456 210
Interest component of rental expense 44 33 164 105 75 60 40
------ ------ ------- ------- ------- ------- ------
Earnings before fixed charges excluding
interest on customer deposits 2,947 2,276 13,042 8,449 5,997 4,317 2,110
Interest on customer deposits 4,856 5,618 21,949 17,253 12,060 9,047 3,824
------ ------ ------- ------- ------- ------- ------
Earnings before fixed charges $7,803 $7,894 $34,991 $25,702 $18,057 $13,364 $5,934
====== ====== ======= ======= ======= ======= ======
Fixed charges: $ 639 $ 564 $ 2,624 $ 2,895 $ 1,542 $ 703 $ 550
Interest on advances and other borrowings 593 659 2,694 1,318 1,397 1,456 210
Interest component of rental expense 44 33 164 105 75 60 40
------ ------ ------- ------- ------- ------- ------
Fixed charges excluding interest on
customer deposits 1,276 1,256 5,482 4,318 3,014 2,219 800
Interest on customer deposits 4,856 5,618 21,949 17,253 12,060 9,047 3,824
------ ------ ------- ------- ------- ------- ------
Total fixed charges $6,132 $6,874 $27,431 $21,571 $15,074 $11,266 $4,624
====== ====== ======= ======= ======= ======= ======
Ratio of earnings to fixed charges including interest
on customer deposits 1.27x 1.16x 1.28x 1.19x 1.20x 1.19x 1.28x
Ratio of earnings to fixed charges excluding interest
on customer deposits 2.31x 1.81x 2.38x 1.96x 1.99x 1.95x 2.64x
</TABLE>
For purposes of calculating the ratio of earnings to combined fixed
charges, earnings consist of earnings before income taxes plus interest
and one-half rental expense. Fixed charges, excluding interest on deposits,
consist of interest on indebtedness and one-half of rental expense (which
is deemed representative of the interest factor). Fixed charges, including
interest on deposits, consist of the foregoing items plus interest on
deposits.
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement Form S-2 No. 333-XXXXX and the related Prospectus
of Allegiant Bancorp, Inc. for the registration of 1,725,000 Preferred
Securities of Allegiant Capital Trust I and approximately $17,250,000 of
Fixed Rate Subordinated Debentures of Allegiant Bancorp, Inc. and to the
inclusion and incorporation by reference therein of our report dated
January 21, 1999, with respect to the consolidated financial statements of
Allegiant Bancorp, Inc. included in and incorporated by reference therein
from its Annual Report (Form 10-K) for the year ended December 31, 1998,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
June 29, 1999
St. Louis, Missouri
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Allegiant Bancorp, Inc.
St. Louis, Missouri
We hereby consent to the use in the Prospectus constituting a part of
this Registration Statement of our report dated March 13, 1998, relating
to the consolidated financial statements of Allegiant Bancorp, Inc.,
which is contained in that Prospectus.
We also consent to the reference of us under the caption "Experts" in
the Prospectus.
/s/BDO Seidman, LLP
St. Louis, Missouri
June 30, 1999
<PAGE>
_______________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b)(2)
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a Identification no.)
U.S. national bank)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
BANKERS TRUST COMPANY
LEGAL DEPARTMENT
130 LIBERTY STREET, 31ST FLOOR
NEW YORK, NEW YORK 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
ALLEGIANT BANCORP, INC.
ALLEGIANT CAPITAL TRUST I
(Exact name of Registrant as specified in its charter)
MISSOURI 43-1519382
DELAWARE TO BE APPLIED FOR
State or other jurisdiction of (IRS employer
Incorporation or organization) Identification no.)
2122 KRATKY ROAD
ST. LOUIS, MISSOURI 63114
(ADDRESS, INCLUDING ZIP CODE
OF PRINCIPAL EXECUTIVE OFFICES)
ALLEGIANT CAPITAL TRUST I
TRUST PREFERRED SECURITIES
(Title of the securities)
<PAGE>
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority
to which it is subject.
NAME ADDRESS
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
ITEM 3.-15. NOT APPLICABLE
ITEM 16. LIST OF EXHIBITS.
EXHIBIT 1 - Restated Organization Certificate of Bankers
Trust Company dated August 7, 1990, Certificate
of Amendment of the Organization Certificate of
Bankers Trust Company dated June 21, 1995 -
Incorporated herein by reference to Exhibit 1
filed with Form T-1 Statement, Registration No.
33-65171, Certificate of Amendment of the
Organization Certificate of Bankers Trust
Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1
Statement, Registration No. 333-25843 and
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated June
19, 1997, copy attached.
EXHIBIT 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2
filed with Form T-1 Statement, Registration No.
33-21047.
EXHIBIT 3 - Authorization of the Trustee to exercise
corporate trust powers - Incorporated herein by
reference to Exhibit 2 filed with Form T-1
Statement, Registration No. 33-21047.
EXHIBIT 4 - Existing By-Laws of Bankers Trust Company, as
amended on November 18, 1997. Copy attached.
-2-
<PAGE>
<PAGE>
EXHIBIT 5 - Not applicable.
EXHIBIT 6 - Consent of Bankers Trust Company required by
Section 321(b) of the Act. - Incorporated herein
by reference to Exhibit 4 filed with Form T-1
Statement, Registration No. 22-18864.
EXHIBIT 7 - The latest report of condition of Bankers Trust
Company dated as of December 31, 1998. Copy
attached.
EXHIBIT 8 - Not Applicable.
EXHIBIT 9 - Not Applicable.
-3-
<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, Bankers Trust Company, a corporation organized
and existing under the laws of the State of New York, has duly caused
this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 1st day of July, 1999.
BANKERS TRUST COMPANY
By: /s/ Ednora G. Linares
-------------------------------
Ednora G. Linares
Assistant Vice President
-4-
<PAGE>
<PAGE>
STATE OF NEW YORK,
BANKING DEPARTMENT
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of
New York, DO HEREBY APPROVE the annexed Certificate entitled
"CERTIFICATE OF AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS
TRUST COMPANY UNDER SECTION 8005 OF THE BANKING LAW," dated June 19,
1997, providing for an increase in authorized capital stock from
$1,601,666,670 consisting of 100,166,667 shares with a par value of $10
each designated as Common Stock and 600 shares with a par value of
$1,000,000 each designated as Series Preferred Stock to $2,001,666,670
consisting of 100,166,667 shares with a par value of $10 each designated
as Common Stock and 1,000 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
WITNESS, my hand and official seal of the Banking Department at the City
of New York,
this 27TH day of June in the Year of our Lord
--------- -----------
one thousand nine hundred and NINETY-SEVEN.
Manuel Kursky
------------------------------
Deputy Superintendent of Banks
<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
_____________________________
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a
Managing Director and an Assistant Secretary of Bankers Trust Company,
do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by
the Superintendent of Banks on the 5th of March, 1903.
3. The organization certificate as heretofore amended is hereby
amended to increase the aggregate number of shares which the corporation
shall have authority to issue and to increase the amount of its
authorized capital stock in conformity therewith.
4. Article III of the organization certificate with reference to
the authorized capital stock, the number of shares into which the
capital stock shall be divided, the par value of the shares and the
capital stock outstanding, which reads as follows:
"III. The amount of capital stock which the corporation is
hereafter to have is One Billion, Six Hundred and One Million, Six
Hundred Sixty-Six Thousand, Six Hundred Seventy Dollars
($1,601,666,670), divided into One Hundred Million, One Hundred
Sixty-Six Thousand, Six Hundred Sixty-Seven (100,166,667) shares
with a par value of $10 each designated as Common Stock and 600
shares with a par value of One Million Dollars ($1,000,000) each
designated as Series Preferred Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is
hereafter to have is Two Billion One Million, Six Hundred Sixty-
Six Thousand, Six Hundred Seventy Dollars ($2,001,666,670),
divided into One Hundred Million, One Hundred Sixty-Six Thousand,
Six Hundred Sixty-Seven (100,166,667) shares with a par value of
$10 each designated as Common Stock and 1000 shares with a par
value of One Million Dollars ($1,000,000) each designated as
Series Preferred Stock."
<PAGE>
<PAGE>
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all
outstanding shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate
this 19th day of June, 1997.
James T. Byrne, Jr.
------------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described
in the foregoing certificate; that she has read the foregoing
certificate and knows the contents thereof, and that the statements
herein contained are true.
Lea Lahtinen
------------------------
Lea Lahtinen
Sworn to before me this 19th day
of June, 1997.
Sandra L. West
- ---------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 1998
<PAGE>
<PAGE>
BY-LAWS
NOVEMBER 18, 1997
BANKERS TRUST COMPANY
NEW YORK
<PAGE>
<PAGE>
BY-LAWS
OF
BANKERS TRUST COMPANY
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall
be held at the office of the Company in the Borough of Manhattan, City
of New York, on the third Tuesday in January of each year, for the
election of directors and such other business as may properly come
before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated
by statute may be called at any time by a majority of the directors. It
shall be the duty of the Chairman of the Board, the Chief Executive
Officer or the President to call such meetings whenever requested in
writing to do so by stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present,
either in person or by proxy, stockholders owning a majority of the
capital stock of the Company, in order to constitute a quorum, except at
special elections of directors, as provided by law, but less than a
quorum shall have power to adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief
Executive Officer or, in his absence, the President or, in their
absence, the senior officer present, shall preside at meetings of the
stockholders and shall direct the proceedings and the order of business.
The Secretary shall act as secretary of such meetings and record the
proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its
corporate powers exercised by a Board of Directors consisting of such
number of directors, but not less than ten nor more than twenty-five, as
may from time to time be fixed by resolution adopted by a majority of
the directors then in office, or by the stockholders. In the event of
any increase in the number of directors, additional directors may be
elected within the limitations so fixed, either by the stockholders or
within the limitations imposed by law, by a majority of directors then
in office. One-third of the number of directors, as fixed from time to
time, shall constitute a quorum. Any one or more members of the Board
of Directors or any Committee thereof may participate in a meeting of
the Board of Directors or Committee thereof by means of a conference
telephone or similar communications equipment which allows all persons
participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at such
a meeting.
<PAGE>
<PAGE>
All directors hereafter elected shall hold office until the next annual
meeting of the stockholders and until their successors are elected and
have qualified. No person who shall have attained age 72 shall be
eligible to be elected or re-elected a director. Such director may,
however, remain a director of the Company until the next annual meeting
of the stockholders of Bankers Trust New York Corporation (the Company's
parent) so that such director's retirement will coincide with the
retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier
relinquishes his responsibilities and title, shall be eligible to serve
as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the
Board of Directors may be filled by the affirmative vote of a majority
of the directors then in office, and the directors so elected shall hold
office for the balance of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the
Board of Directors. In his absence, the Chief Executive Officer or, in
his absence, such other director as the Board of Directors from time to
time may designate shall preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations
for the conduct of its meetings and the management of the affairs of the
Company as it may deem proper, not inconsistent with the laws of the
State of New York, or these By-Laws, and all officers and employees
shall strictly adhere to, and be bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held
from time to time on the third Tuesday of the month. If the day
appointed for holding such regular meetings shall be a legal holiday,
the regular meeting to be held on such day shall be held on the next
business day thereafter. Special meetings of the Board of Directors may
be called upon at least two day's notice whenever it may be deemed
proper by the Chairman of the Board or, the Chief Executive Officer or,
in their absence, by such other director as the Board of Directors may
have designated pursuant to Section 3 of this Article, and shall be
called upon like notice whenever any three of the directors so request
in writing.
SECTION 6. The compensation of directors as such or as members of
committees shall be fixed from time to time by resolution of the Board
of Directors.
<PAGE>
<PAGE>
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board
consisting of not less than five directors who shall be appointed
annually by the Board of Directors. The Chairman of the Board shall
preside at meetings of the Executive Committee. In his absence, the
Chief Executive Officer or, in his absence, such other member of the
Committee as the Committee from time to time may designate shall preside
at such meetings.
The Executive Committee shall possess and exercise to the extent
permitted by law all of the powers of the Board of Directors, except
when the latter is in session, and shall keep minutes of its
proceedings, which shall be presented to the Board of Directors at its
next subsequent meeting. All acts done and powers and authority
conferred by the Executive Committee from time to time shall be and be
deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee
may act only by the concurrent vote of not less than one-third of its
members, at least one of whom must be a director other than an officer.
Any one or more directors, even though not members of the Executive
Committee, may attend any meeting of the Committee, and the member or
members of the Committee present, even though less than a quorum, may
designate any one or more of such directors as a substitute or
substitutes for any absent member or members of the Committee, and each
such substitute or substitutes shall be counted for quorum, voting, and
all other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by
resolution adopted by a majority of the entire Board of Directors which
shall consist of such number of directors, who are not also officers of
the Company, as may from time to time be fixed by resolution adopted by
the Board of Directors. The Chairman shall be designated by the Board of
Directors, who shall also from time to time fix a quorum for meetings of
the Committee. Such Committee shall conduct the annual directors'
examinations of the Company as required by the New York State Banking
Law; shall review the reports of all examinations made of the Company by
public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems
advisable with respect to the Company, its various departments and the
conduct of its operations.
In the performance of its duties, the Audit Committee may employ or
retain, from time to time, expert assistants, independent of the
officers or personnel of the Company, to make studies of the Company's
assets and liabilities as the Committee may request and to make an
examination of the accounting and auditing methods of the Company and
its system of internal protective controls to the extent considered
necessary or advisable in order to determine that the operations of the
Company, including its fiduciary departments, are being audited by the
General Auditor in such a manner as to provide prudent and adequate
protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to
the Company, its various departments and the conduct of its operations.
The
<PAGE>
<PAGE>
Committee shall hold regular quarterly meetings and during the intervals
thereof shall meet at other times on call of the Chairman.
SECTION 3. The Board of Directors shall have the power to appoint any
other Committees as may seem necessary, and from time to time to suspend
or continue the powers and duties of such Committees. Each Committee
appointed pursuant to this Article shall serve at the pleasure of the
Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a
Chairman of the Board and a Chief Executive Officer; and shall also
elect a President, and may also elect a Senior Vice Chairman, one or
more Vice Chairmen, one or more Executive Vice Presidents, one or more
Senior Managing Directors, one or more Managing Directors, one or more
Senior Vice Presidents, one or more Principals, one or more Vice
Presidents, one or more General Managers, a Secretary, a Controller, a
Treasurer, a General Counsel, one or more Associate General Counsels, a
General Auditor, a General Credit Auditor, and one or more Deputy
Auditors, who need not be directors. The officers of the corporation
may also include such other officers or assistant officers as shall from
time to time be elected or appointed by the Board. The Chairman of the
Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman, may from time
to time appoint assistant officers. All officers elected or appointed
by the Board of Directors shall hold their respective offices during the
pleasure of the Board of Directors, and all assistant officers shall
hold office at the pleasure of the Board or the Chairman of the Board or
the Chief Executive Officer or, in their absence, the President, the
Senior Vice Chairman or any Vice Chairman. The Board of Directors may
require any and all officers and employees to give security for the
faithful performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive
Officer of the Company who may also hold the additional title of
Chairman of the Board, President, Senior Vice Chairman or Vice Chairman
and such person shall have, subject to the supervision and direction of
the Board of Directors or the Executive Committee, all of the powers
vested in such Chief Executive Officer by law or by these By-Laws, or
which usually attach or pertain to such office. The other officers
shall have, subject to the supervision and direction of the Board of
Directors or the Executive Committee or the Chairman of the Board or,
the Chief Executive Officer, the powers vested by law or by these By-
Laws in them as holders of their respective offices and, in addition,
shall perform such other duties as shall be assigned to them by the
Board of Directors or the Executive Committee or the Chairman of the
Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee,
to the Board of Directors for the determination of the program of the
internal audit function and the evaluation of the adequacy of the system
of internal controls. Subject to the Board of Directors, the General
Auditor shall have and may exercise all the powers and shall perform all
the duties usual to such office and shall have such other powers as may
be prescribed or assigned to him from time to time by the Board of
Directors or vested in him by law or by these By-Laws. He shall perform
such other duties and shall make such investigations, examinations and
reports as may be prescribed or required by the Audit Committee. The
General Auditor shall have unrestricted access to all records
<PAGE>
<PAGE>
and premises of the Company and shall delegate such authority to his
subordinates. He shall have the duty to report to the Audit Committee
on all matters concerning the internal audit program and the adequacy of
the system of internal controls of the Company which he deems advisable
or which the Audit Committee may request. Additionally, the General
Auditor shall have the duty of reporting independently of all officers
of the Company to the Audit Committee at least quarterly on any matters
concerning the internal audit program and the adequacy of the system of
internal controls of the Company that should be brought to the attention
of the directors except those matters responsibility for which has been
vested in the General Credit Auditor. Should the General Auditor deem
any matter to be of special immediate importance, he shall report
thereon forthwith to the Audit Committee. The General Auditor shall
report to the Chief Financial Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive
Officer and, through the Audit Committee, to the Board of Directors for
the systems of internal credit audit, shall perform such other duties as
the Chief Executive Officer may prescribe, and shall make such
examinations and reports as may be required by the Audit Committee. The
General Credit Auditor shall have unrestricted access to all records and
may delegate such authority to subordinates.
SECTION 3. The compensation of all officers shall be fixed under such
plan or plans of position evaluation and salary administration as shall
be approved from time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the
Chairman of the Board, the Chief Executive Officer or any person
authorized for this purpose by the Chief Executive Officer, shall
appoint or engage all other employees and agents and fix their
compensation. The employment of all such employees and agents shall
continue during the pleasure of the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer or
any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any
such authorized person may discharge any such employees and agents at
will.
<PAGE>
<PAGE>
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by
Section 7018 of the New York Banking Law, indemnify any person who is or
was made, or threatened to be made, a party to an action or proceeding,
whether civil or criminal, whether involving any actual or alleged
breach of duty, neglect or error, any accountability, or any actual or
alleged misstatement, misleading statement or other act or omission and
whether brought or threatened in any court or administrative or
legislative body or agency, including an action by or in the right of
the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee benefit plan
or other enterprise, which any director or officer of the Company is
servicing or served in any capacity at the request of the Company by
reason of the fact that he, his testator or intestate, is or was a
director or officer of the Company, or is serving or served such other
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise in any capacity, against judgments, fines, amounts paid
in settlement, and costs, charges and expenses, including attorneys'
fees, or any appeal therein; provided, however, that no indemnification
shall be provided to any such person if a judgment or other final
adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and
deliberate dishonesty and, in either case, were material to the cause of
action so adjudicated, or (ii) he personally gained in fact a financial
profit or other advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the
Company is permitted to provide indemnification or the advancement of
expenses by applicable law, whether pursuant to rights granted pursuant
to, or provided by, the New York Banking Law or other rights created by
(i) a resolution of stockholders, (ii) a resolution of directors, or
(iii) an agreement providing for such indemnification, it being
expressly intended that these By-Laws authorize the creation of other
rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance
to any person referred to in Section 1 the funds necessary for payment
of expenses, including attorneys' fees, incurred in connection with any
action or proceeding referred to in Section 1, upon receipt of a written
undertaking by or on behalf of such person to repay such amount(s) if a
judgment or other final adjudication adverse to the director or officer
establishes that (i) his acts were committed in bad faith or were the
result of active and deliberate dishonesty and, in either case, were
material to the cause of action so adjudicated, or (ii) he personally
gained in fact a financial profit or other advantage to which he was not
legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the
election of its directors is held by the Company, or (ii) any employee
benefit plan of the Company or any corporation referred to in clause (i)
in any capacity shall be deemed to be doing so at the request of the
Company. In all other cases, the provisions of this Article V will
apply (i) only if the person serving another corporation or any
partnership, joint venture, trust, employee benefit plan or other
enterprise so served at the specific request of the Company,
<PAGE>
<PAGE>
evidenced by a written communication signed by the Chairman of the
Board, the Chief Executive Officer or the President, and (ii) only if
and to the extent that, after making such efforts as the Chairman of the
Board, the Chief Executive Officer or the President shall deem adequate
in the circumstances, such person shall be unable to obtain
indemnification from such other enterprise or its insurer.
SECTION 5. Any person entitled to be indemnified or to the
reimbursement or advancement of expenses as a matter of right pursuant
to this Article V may elect to have the right to indemnification (or
advancement of expenses) interpreted on the basis of the applicable law
in effect at the time of occurrence of the event or events giving rise
to the action or proceeding, to the extent permitted by law, or on the
basis of the applicable law in effect at the time indemnification is
sought.
SECTION 6. The right to be indemnified or to the reimbursement or
advancement of expense pursuant to this Article V (i) is a contract
right pursuant to which the person entitled thereto may bring suit as if
the provisions hereof were set forth in a separate written contract
between the Company and the director or officer, (ii) is intended to be
retroactive and shall be available with respect to events occurring
prior to the adoption hereof, and (iii) shall continue to exist after
the rescission or restrictive modification hereof with respect to events
occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the
Company within thirty days after a written claim has been received by
the Company, the claimant may at any time thereafter bring suit against
the Company to recover the unpaid amount of the claim and, if successful
in whole or in part, the claimant shall be entitled also to be paid the
expenses of prosecuting such claim. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of
such action that indemnification of or reimbursement or advancement of
expenses to the claimant is proper in the circumstance, nor an actual
determination by the Company (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant is not
entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that
the claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or
otherwise, in the defense of a civil or criminal action or proceeding of
the character described in Section 1 shall be entitled to
indemnification only as provided in Sections 1 and 3, notwithstanding
any provision of the New York Banking Law to the contrary.
<PAGE>
<PAGE>
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company,
the counterpart dies of which shall be in the charge of the Secretary of
the Company and such officers as the Chairman of the Board, the Chief
Executive Officer or the Secretary may from time to time direct in
writing, to be affixed to certificates of stock and other documents in
accordance with the directions of the Board of Directors or the
Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a
specified occasion and for a specified transaction or transactions, for
the use of a printed or engraved facsimile seal of the Company.
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon
the books of the Company by the registered holder in person, or by power
of attorney, duly executed, witnessed and filed with the Secretary or
other proper officer of the Company, on the surrender of the certificate
or certificates of such shares properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall
be deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the
Board of Directors at any meeting, or by the stockholders at any annual
or special meeting, provided notice thereof has been given.
<PAGE>
<PAGE>
I, Ednora G. Linares, Assistant Vice President of Bankers Trust
Company, New York, New York, hereby certify that the foregoing is a
complete, true and correct copy of the By-Laws of Bankers Trust Company,
and that the same are in full force and effect at this date.
/s/ Ednora G. Linares
_____________________________________
ASSISTANT VICE PRESIDENT
DATED: July 1, 1999
<PAGE>
<PAGE>
Legal Title of Bank: Bankers Trust Company
Address: 130 Liberty Street
City, State ZIP: New York, NY 10006
FDIC Certificate No.: / 0 / 0 / 6 / 2 / 3
Call Date: 12/31/98 ST-BK: 36-4840 FFIEC 031
Vendor ID: D CERT: 00623 Page RC-1
11
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1998
All schedules are to be reported in thousands of dollars. Unless
otherwise indicated, reported the amount outstanding as of the last
business day of the quarter.
<TABLE>
SCHEDULE RC--BALANCE SHEET
<CAPTION>
----------------
C400
---------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions
(from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin <F1> 0081 2,772,000 1.a.
b. Interest-bearing balances <F2> 0071 2,497,000 1.b.
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) 1773 8,907,000 2.b.
3. Federal funds sold and securities purchased under agreements to
resell 1350 22,851,000 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 21,882,000 4.a.
b. LESS: Allowance for loan and lease losses RCFD 3123 620,000 4.b.
c. LESS: Allocated transfer risk reserve RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 21,262,000 4.d.
5. Trading Assets (from schedule RC-D) 3545 39,983,000 5.
6. Premises and fixed assets (including capitalized leases) 2145 974,000 6.
7. Other real estate owned (from Schedule RC-M) 2150 80,000 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 2130 97,000 8.
9. Customers' liability to this bank on acceptances outstanding 2155 232,000 9.
10. Intangible assets (from Schedule RC-M) 2143 278,000 10.
11. Other assets (from Schedule RC-F) 2160 4,625,000 11.
12. Total assets (sum of items 1 through 11) 2170 104,558,000 12.
<FN>
__________________________
<F1> Includes cash items in process of collection and unposted debits.
<F2> Includes time certificates of deposit not held for trading.
<PAGE>
<PAGE>
<CAPTION>
Legal Title of Bank: Bankers Trust Company
Address: 130 Liberty Street
City, State Zip: New York, NY 10006
FDIC Certificate No.: / 0 / 0 / 6 / 2 / 3
Call Date: 12/31/98 ST-BK: 36-4840 FFIEC 031
Vendor ID: D CERT: 00623 Page RC-2
12
SCHEDULE RC--CONTINUED
------------------------------
Dollar Amounts in Thousands Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part I) RCON 2200 20,409,000 13.a.
(1) Noninterest-bearing<F1> RCON 6631 3,124,000 13.a.<F1>
(2) Interest-bearing RCON 6636 17,285,000 13.a.<F2>
b. In foreign offices, Edge and Agreement subsidiaries,
and IBFs (from Schedule RC-E
part II) RCFN 2200 20,167,000 13.b.
(1) Noninterest-bearing RCFN 6631 1,781,000 13.b.<F1>
(2) Interest-bearing RCFN 6636 18,386,000 13.b.<F2>
14. Federal funds purchased and securities sold under
agreements to repurchase RCFD 2800 13,919,000 14.
15. a. Demand notes issued to the U.S. Treasury RCON 2840 0 15.a.
b. Trading liabilities (from Schedule RC-D) RCFD 3548 26,175,000 15.b.
16. Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
a. With a remaining maturity of one year or less RCFD 2332 5,422,000 16.a.
b. With a remaining maturity of more than one year
through three years A547 1,766,000 16.b.
c. With a remaining maturity of more than three years A548 2,884,000 16.c
17. Not Applicable. 17.
18. Bank's liability on acceptances executed and outstanding RCFD 2920 232,000 18.
19. Subordinated notes and debentures <F2> RCFD 3200 984,000 19.
20. Other liabilities (from Schedule RC-G) RCFD 2930 5,657,000 20.
21. Total liabilities (sum of items 13 through 20) RCFD 2948 97,615,000 21.
22. Not Applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus RCFD 3838 1,500,000 23.
24. Common stock RCFD 3230 2,127,000 24.
25. Surplus (exclude all surplus related to preferred stock) RCFD 3839 541,000 25.
26. a. Undivided profits and capital reserves RCFD 3632 3,200,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities RCFD 8434 (36,000) 26.b.
27. Cumulative foreign currency translation adjustments RCFD 3284 (389,000) 27.
28. Total equity capital (sum of items 23 through 27 RCFD 3210 6,943,000 28.
29. Total liabilities and equity capital (sum of items 21 and 28) RCFD 3300 104,558,000 29
------------------------------
<CAPTION>
Memorandum
To be reported only with the December Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external -----------
auditors as of any date during 1998 RCFD 6724 N/A M.1
-----------------------
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state
public accounting firm which submits a report on the bank chartering authority)
2 = Independent audit of the bank's parent holding company 5 = Review the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation
3 = Directors' examination of the bank conducted in work)
accordance with generally accepted auditing standards 8 = No external audit work
by a certified public accounting firm (may be required by
state chartering authority)
<FN>
______________________
<F1> Including total demand deposits and noninterest-bearing time and savings deposits.
<F2> Includes limited-life preferred stock and related surplus.
</TABLE>
