As filed with the Securities and Exchange Commission on April 3, 1998
Registration No. 333____
Registration No. 333____-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
MASON-DIXON BANCSHARES, INC.
MASON-DIXON CAPITAL TRUST II
(Exact name of registrants as specified in their Charters)
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Maryland 6712 52-1764929
Delaware 6719 51-6507171
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Numbers) Numbers)
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45 W. Main Street, Westminster, Maryland 21157 (410) 857-3401
(Address, including zip code, and telephone number, including area code,
of registrants' principal executive offices)
Thomas K. Ferguson, 45 W. Main Street, Westminster, Maryland 21157
(410) 857-3401
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With copies to:
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Abba David Poliakoff, Esquire Steven Kaplan, Esquire
Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC Arnold & Porter
233 E. Redwood Street, Baltimore, Maryland 21202 555 12th Street, N.W., Washington, D. C. 20004
(410) 576-4067 (202) 942-5998
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Approximate date of commencement of the proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |_|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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==================================================================================================================================
CALCULATION OF REGISTRATION FEE
==================================================================================================================================
Title of each Class Proposed Maximum Proposed Maximum
of Securities Amount to be Offering Price Aggregate Offering Amount of
to be Registered Registered Per Unit Price (1) Registration Fee
- ----------------------------------------------------------------------------------------------------------------------------------
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___% Preferred Securities of Mason-Dixon
Capital Trust II $800,000 $25 $20,000,000 $5,900
- ----------------------------------------------------------------------------------------------------------------------------------
___% Junior Subordinated Deferrable
Interest Debentures of
Mason-Dixon Bancshares, Inc.(2) _______ _______ ________ _______
- ----------------------------------------------------------------------------------------------------------------------------------
Guarantee of Mason-Dixon Bancshares, Inc.
of certain obligations under the
Preferred Securities(3) _______ _______ ________ _______
- ----------------------------------------------------------------------------------------------------------------------------------
Total Registration Fee _______ _______ ________ $5,900
==================================================================================================================================
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(1) Estimated solely for the purpose of calculating the registration fee,
exclusive of accrued interest and dividends, if any.
(2) The Junior Subordinated Deferrable Interest Debentures will be purchased by
Mason-Dixon Capital Trust II. Such securities may later be distributed for
no additional consideration to the holders of the Preferred Securities upon
the dissolution of the Issuer Trust and the distribution of its assets.
(3) This Registration Statement is deemed to cover the Guarantee. Pursuant to
Rule 457(n) under the Securities Act, no separate registration fee is
payable for the Guarantee.
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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 Commission, acting pursuant to said Section 8(a),
may determine.
EXPLANATORY NOTE
The prospectus contained in this Registration Statement will be used in
connection with the offering of the following securities: (1) _________%
Preferred Securities of Mason-Dixon Capital Trust II; (2) _________% Junior
Subordinated Deferrable Interest Debentures of Mason-Dixon Bancshares, Inc.; (3)
a Guarantee of Mason-Dixon Bancshares, Inc. of certain obligations under the
Preferred Securities.
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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 by 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 Preliminary Prospectus dated
April 3, 1998
$20,000,000
(Aggregate Liquidation Amount)
Mason-Dixon Capital Trust II
_______% Preferred Securities
(Liquidation Amount $25 per Preferred Security)
fully and unconditionally guaranteed, to the extent described herein, by
Mason-Dixon Bancshares, Inc.
---------------
The Preferred Securities offered hereby represent preferred undivided
beneficial interests in the assets of Mason-Dixon Capital Trust II, a statutory
business trust created under the laws of the State of Delaware (the "Issuer
Trust"). Mason- Dixon Bancshares, Inc. (the "Company") will initially be the
holder of all of the beneficial interests represented by common securities of
the Issuer Trust (the "Common Securities" and together with the Preferred
Securities, the "Trust Securities").
(Continued on next page)
---------------
See "Risk Factors" beginning on page 11 hereof for
certain information relevant to an investment in
the Preferred Securities.
---------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------
===============================================================================
Underwriting
Price to Discounts or Proceeds to the
Public(1) Commissions(2) Issuer Trust(3)
- -------------------------------------------------------------------------------
Per Preferred Security..... $ (4) $
- -------------------------------------------------------------------------------
Total...................... $ (4) $
===============================================================================
(1) Plus accrued Distributions, if any, from _________, 1998.
(2) The Company and the Issuer Trust have each agreed to indemnify the
Underwriters against certain liabilities under the Securities Act of 1933.
See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at
$_______________.
(4) In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Deferrable
Interest Debentures, the Company has agreed to pay to the Underwriters, as
compensation for arranging the investment therein of such proceeds, $______
per Preferred Security (or $____________ in the aggregate). See
"Underwriting."
The Preferred Securities are offered by the Underwriters subject to
receipt and acceptance by them, prior sale and the Underwriters' right to reject
any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that delivery of the Preferred Securities will be
made in book-entry form through the book-entry facilities of The Depository
Trust Company on or about ____, 1998 against payment therefor in immediately
available funds.
BT ALEX. BROWN KEEFE, BRUYETTE & WOODS, INC.
The date of this Prospectus is _______, 1998
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(Cover page continued)
The Issuer Trust exists for the sole purpose of issuing the Trust
Securities and investing the proceeds thereof in _______% Junior Subordinated
Deferrable Interest Debentures (the "Junior Subordinated Debentures" and
together with the Trust Securities, the "Securities") to be issued by the
Company. The Junior Subordinated Debentures will mature on _______ __, 2028,
which date may be shortened (such date, as it may be shortened, the "Stated
Maturity") to a date not earlier than _______ __, 2003 if certain conditions are
met (including the Company having received the prior approval of the Board of
Governors of the Federal Reserve System (the "Federal Reserve") if then required
under applicable capital guidelines or policies of the Federal Reserve (such
shortening of the maturity date, the "Maturity Adjustment")). See "Description
of Junior Subordinated Debentures - General." The Preferred Securities will have
a preference under certain circumstances over the Common Securities with respect
to cash distributions and amounts payable on liquidation, redemption or
otherwise. See "Description of Preferred Securities--Subordination of Common
Securities."
The Preferred Securities will be represented by one or more global
securities registered in the name of a nominee of The Depository Trust Company,
as depositary ("DTC"). Beneficial interests in the global securities will be
shown on, and transfer thereof will be effected only through, records maintained
by DTC and its participants. Except as described under "Description of Preferred
Securities," Preferred Securities in definitive form will not be issued and
owners of beneficial interests in the global securities will not be considered
holders of the Preferred Securities. Application has been made to include the
Preferred Securities in NASDAQ's National Market. Settlement for the Preferred
Securities will be made in immediately available funds. The Preferred Securities
will trade in DTC's Same-Day Funds Settlement System, and secondary market
trading activity for the Preferred Securities will therefore settle in
immediately available funds.
Holders of the Preferred Securities will be entitled to receive
preferential cumulative cash distributions accumulating from ___________, 1998
and payable quarterly in arrears on March 31, June 30, September 30 and December
31 of each year, commencing June 30, 1998, at the annual rate of ________% of
the Liquidation Amount of $25 per Preferred Security ("Distributions"). The
first Distribution will be on June 30, 1998. The distribution rate and the
distribution payment dates and other payment dates for the Preferred Securities
will correspond to the interest rate and interest payment dates and other
payment dates on the Junior Subordinated Debentures, which will be the sole
assets of the Issuer Trust. The Company has the right to defer payment of
interest on the Junior Subordinated Debentures at any time from time to time for
a period not exceeding 20 consecutive quarterly periods with respect to each
deferral period (each, an "Extension Period"), provided that no Extension Period
may extend beyond the Stated Maturity of the Junior Subordinated Debentures. No
interest shall be due and payable during any Extension Period, except at the end
thereof. Upon the termination of any such Extension Period and the payment of
all amounts then due, the Company may elect to begin a new Extension Period
subject to the requirements set forth herein. If interest payments on the Junior
Subordinated are so deferred, Distributions on the Preferred Securities will
also be deferred and the Company will not be permitted, subject to certain
exceptions described herein, to declare or pay any cash distributions with
respect to the Company's capital stock or with respect to debt securities of the
Company that rank pari passu in all respects with or junior to the Junior
Subordinated Debentures, including the Company's obligations associated with the
$20 million in aggregate liquidation amount of $2.5175 Preferred Securities
issued by Mason-Dixon Capital Trust (the "Outstanding Capital Securities").
During an Extension Period, interest on the Junior Subordinated Debentures will
continue to accrue (and the amount of Distributions to which holders of the
Preferred Securities are entitled will accumulate) at the rate of ________% per
annum, compounded quarterly, and holders of Preferred Securities will be
required to accrue interest income for United States federal income tax
purposes. See "Description of Junior Subordinated Debentures - Option to Extend
Interest Payment Period" and "Certain Federal Income Tax Consequences-US
Holders-Interest Income and Original Issue Discount."
The Company will through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture (each as defined
herein), taken together, fully, irrevocably and unconditionally guarantee all
the Issuer Trust's obligations under the Preferred Securities as described
below. See "Relationship Among the Preferred Securities, the Junior Subordinated
Debentures and the Guarantee - Full and Unconditional Guarantee." The Guarantee
of the Company will guarantee the payment of Distributions and payments on
liquidation or redemption of the Preferred Securities, but only in each case to
the extent of funds held by the Issuer Trust, as
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described herein (the "Guarantee"). See "Description of Guarantee." If the
Company does not make payments on the Junior Subordinated Debentures held by the
Issuer Trust, the Issuer Trust may have insufficient funds to pay Distributions
on the Preferred Securities. The Guarantee does not cover payment of
Distributions when the Issuer Trust does not have sufficient funds to pay such
Distributions. In such event, a holder of Preferred Securities may institute a
legal proceeding directly against the Company to enforce payment of such
Distributions to such holder. See "Description of Junior Subordinated Debentures
- - Enforcement of Certain Rights by Holders of Preferred Securities." The
obligations of the Company under the Guarantee and the Preferred Securities will
be subordinate and junior in right of payment to all Senior Indebtedness (as
defined in "Description of Junior Subordinated Debentures - Subordination") of
the Company and will be pari passu with the Company's obligations associated
with the Outstanding Capital Securities.
The Preferred Securities will be subject to mandatory redemption (i) in
whole, but not in part, upon repayment of the Junior Subordinated Debentures at
Stated Maturity or their earlier redemption in whole upon the occurrence of a
Tax Event, an Investment Company Event or a Capital Treatment Event (each as
defined herein) and (ii) in whole or in part at any time on or after , 2003
contemporaneously with the optional redemption by the Company of the Junior
Subordinated Debentures in whole or in part. The Junior Subordinated Debentures
will be redeemable prior to maturity at the option of the Company (i) on or
after , 2003, in whole at any time or in part from time to time, or (ii) in
whole, but not in part, at any time within 90 days following the occurrence and
continuation of a Tax Event, Investment Company Event or Capital Treatment Event
(each as defined herein), in each case at a redemption price set forth herein,
which includes the accrued and unpaid interest on the Junior Subordinated
Debentures so redeemed to the date fixed for redemption. The ability of the
Company to exercise its rights to redeem the Junior Subordinated Debentures or
to cause the redemption of the Preferred Securities prior to the Stated Maturity
may be subject to prior regulatory approval by the Federal Reserve, if then
required under applicable Federal Reserve capital guidelines or policies. See
"Description of Junior Subordinated Debentures--Redemption" and "Description of
Preferred Securities--Liquidation Distribution Upon Dissolution."
The holders of the outstanding Common Securities will have the right at
any time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust. The ability
of the Company to dissolve the Issuer Trust may be subject to prior regulatory
approval of the Federal Reserve, if then required under applicable Federal
Reserve capital guidelines or policies. See "Description of Preferred
Securities--Liquidation Distribution Upon Dissolution."
In the event of the dissolution of the Issuer Trust, after satisfaction
of liabilities to creditors of the Issuer Trust as provided by applicable law,
the holders of the Preferred Securities will be entitled to receive a
Liquidation Amount of $25 per Preferred Security plus accumulated and unpaid
Distributions thereon to the date of payment, subject to certain exceptions,
which may be in the form of a distribution of such amount in Junior Subordinated
Debentures. See "Description of Preferred Securities--Liquidation Distribution
Upon Dissolution."
The Junior Subordinated Debentures will be unsecured and subordinated
to all Senior Indebtedness of the Company and pari passu with the Company's
obligations associated with the Outstanding Capital Securities. See "Description
of Junior Subordinated Debentures--Subordination."
Prospective purchasers must carefully consider the restrictions on
purchase set forth in "Certain ERISA Considerations."
THE JUNIOR SUBORDINATED DEBENTURES ARE DIRECT AND UNSECURED OBLIGATIONS
OF THE COMPANY, DO NOT EVIDENCE DEPOSITS AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and Suite
1400, Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material can also be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Such material may also be accessed electronically
by means of the Commission's home page on the Internet at http://www.sec.gov.
This Prospectus does not contain all the information set forth in the
Registration Statement and Exhibits thereto, which the Company has filed with
the Commission under the Securities Act of 1933, as amended (the "Securities
Act") and to which reference is hereby made.
No separate financial statements of the Issuer Trust have been included
or incorporated by reference herein. The Company and the Issuer Trust do not
consider that such financial statements would be material to holders of the
Preferred Securities because the Issuer Trust is a newly formed special purpose
entity, has no operating history or independent operations and is not engaged in
and does not propose to engage in any activity other than holding as trust
assets the Junior Subordinated Debentures and issuing the Trust Securities. See
"Mason-Dixon Capital Trust II," "Description of Preferred Securities,"
"Description of Junior Subordinated Debentures" and "Description of Guarantee."
In addition, the Company does not expect that the Issuer Trust will be filing
reports under the Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997
and the Current Report on Form 8-K dated February 26, 1998 which were previously
filed by the Company with the Commission pursuant to Section 13 of the Exchange
Act.
In addition, all reports and definitive proxy statements or information
statements filed by the Company with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of any offering of securities made by this
Prospectus shall be deemed to be incorporated herein by reference and to be a
part hereof from the date of filing of such documents. Any statement contained
herein or in any document all or a portion of which is incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the foregoing documents
incorporated herein by reference (other than certain exhibits to such
documents). Requests should be made to Vivian A. Davis, Corporate Secretary,
Mason-Dixon Bancshares, Inc., 45 W. Main Street, Westminster, Maryland 21157,
(410) 857-3401.
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
PREFERRED SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTTING THE PREFERRED
SECURITIES AND BIDDING FOR AND PURCHASING THE PREFERRED SECURITIES AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING." SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus.
As used herein, (i) the "Junior Subordinated Indenture" means the
Junior Subordinated Indenture, as amended and supplemented from time to time,
between the Company and Bankers Trust Company, as trustee (the "Debenture
Trustee"), pursuant to which the Junior Subordinated Debentures are issued, (ii)
the "Trust Agreement" means the Amended and Restated Trust Agreement relating to
the Issuer Trust, as amended and supplemented from time to time, among the
Company, as Depositor, Bankers Trust Company, as Property Trustee (the "Property
Trustee") and Bankers Trust (Delaware), as Delaware Trustee (the "Delaware
Trustee") (collectively, the "Issuer Trustees") and (iii) the "Guarantee" means
the Guarantee Agreement relating to the Preferred Securities, as amended and
supplemented from time to time, between the Company and Bankers Trust Company,
as Guarantee Trustee.
Mason-Dixon Bancshares, Inc.
The Company is a multi-bank holding company organized in 1991 under the
laws of the State of Maryland. The Company operates two bank subsidiaries,
Carroll County Bank and Trust Company ("Carroll County Bank") and Bank of
Maryland ("Bank of Maryland" and, together with Carroll County Bank, the "Bank
Subsidiaries"). Carroll County Bank has been providing banking services to
residents of Carroll County, Maryland for over 100 years. As part of a large
community based multi-bank holding company, the Bank Subsidiaries are able to
provide the services and efficiencies of a large bank, yet maintain the
flexibility and authority at the local level to meet the personalized needs of
their individual customers.
The Company also operates a consumer finance company, Rose Shanis
Loans, LLC, and an insurance agency subsidiary, Bay Insurance, LLC ("Bay
Insurance" and together with Rose Shanis Loans, LLC, the "Consumer Finance
Subsidiaries"). The Bank Subsidiaries and the Consumer Finance Subsidiaries are
referred to collectively as the "Subsidiaries."
Banking. Through the Bank Subsidiaries, the Company provides corporate,
consumer and mortgage banking services, trust services, and non-deposit
investment products for its customers. These services are provided through 17
retail banking offices which are located primarily in central Maryland and five
on Maryland's Eastern Shore.
The Bank Subsidiaries engage in commercial lending, savings, and trust
business, including the receiving of demand and time deposits, and the making of
loans to individuals, associations, partnerships and corporations. Real estate
financing comprises residential first and second mortgages, construction and
land development loans, home equity lines of credit, and commercial mortgages.
Consumer lending is direct to individuals on both a secured and unsecured basis.
Commercial loans include lines of credit, term and demand loans for the purchase
of equipment, inventory and accounts receivable financing. Some insurance
products are offered through Carrollco Insurance, Inc., a wholly-owned
subsidiary of Carroll County Bank. At December 31, 1997, the Bank Subsidiaries
had consolidated assets of $983 million and loans of $460 million.
On March 12, 1998, the Company announced an agreement to sell its five
Bank of Maryland branches on Maryland's Eastern Shore. Under the agreement,
Farmers Bank of Maryland and Atlantic Bank, subsidiaries of First Virginia
Banks, Inc. ("First Virginia"), will acquire approximately $87 million in
deposits, $59 million in loans, and 41 employees (the "Eastern Shore Branch
Sale"). The Eastern Shore Branch Sale will allow the Company to focus its
strategy and devote its resources to enhancing the profitability of its
remaining branch offices and further penetrating the Central Maryland market.
The
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Company believes that this market holds great opportunity for growth for
financial service companies.
(See "Recent Developments")
Consumer Finance. On February 11, 1998, the Company acquired
substantially all of the assets and assumed certain liabilities of the Rose
Shanis Companies (as defined below), which were engaged in the consumer finance
business (the "Acquisition"). The consumer finance business is now conducted by
the Company through two wholly owned limited liability company subsidiaries,
Rose Shanis Loans, LLC, and Bay Insurance, LLC. (As used herein, the "Rose
Shanis Companies" refers to the business and entities prior to the Acquisition,
and "Rose Shanis" or "Rose Shanis Loans, LLC" refers to the consumer finance
business being conducted by the Company after the acquisition).
The business conducted by the Rose Shanis Companies was established 66
years ago in Baltimore by Rose Shanis Glick and remained family owned and
managed until the Acquisition. The Rose Shanis Companies established a
reputation as a successful and dependable personal lender servicing second and
even third generations of borrowers. The Rose Shanis Companies have historically
served those individuals who, for various reasons, are unwilling or unable to
access traditional lending sources. Norman Glick, the founder's son and one of
the owners of the Rose Shanis Companies, has continued on the management team of
Rose Shanis Loans, LLC. The consumer finance business is now conducted by the
Company through twelve branches located in the greater Baltimore area and in
Annapolis, Bel Air, and Easton, Maryland. Bay Insurance, LLC is engaged in the
business of selling insurance products that are directly related to extensions
of credit by Rose Shanis Loans, LLC. At December 31, 1997, the Rose Shanis
Companies had loans, net of loan loss reserves, of $43 million.
The Acquisition furthers the Company's strategy to expand its business
by acquiring banks and other financial service providers in its market area, to
provide a range of financial services offering the opportunity for larger net
interest margins and a broader customer base.
Mason-Dixon Capital Trust II
The Issuer Trust is a statutory business trust created under Delaware
law on February 20, 1998. The Issuer Trust will be governed by an Amended and
Restated Trust Agreement among the Company, as Depositor, Bankers Trust
(Delaware), as Delaware Trustee, and Bankers Trust Company, as Property Trustee.
The Issuer Trust exists for the exclusive purposes of (i) issuing and selling
the Trust Securities, (ii) using the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debentures and (iii) engaging in
only those other activities necessary, convenient or incidental thereto (such as
registering the transfer of the Trust Securities). Accordingly, the Junior
Subordinated Debentures are the sole assets of the Issuer Trust, and payments
under the Junior Subordinated Debentures will be the sole source of revenue of
the Issuer Trust.
The Offering
Securities Offered..... $20,000,000 aggregate Liquidation Amount of _________%
Preferred Securities (Liquidation Amount $25 per
Preferred Security).
Offering Price......... $_________ per Preferred Security (Liquidation Amount
$25), plus accumulated Distributions, if any, from
_____ __, 1998.
Distributions.......... The Distributions payable on each Preferred Security
will be fixed at a rate per annum of _____% of the
Liquidation Amount of $25 per Preferred Security, will
be cumulative, will accrue from the date of issuance
of the Preferred Securities and will be payable
quarterly in arrears on March 31, June 30, September 30
and
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December 31 of each year, commencing June 30, 1998.
See "Description of Preferred Securities-Distributions"
Junior Subordinated
Debentures............. The Issuer Trust will invest the proceeds from the
issuance of the Preferred Securities and Common
Securities in an equivalent amount of _____% Junior
Subordinated Debentures of the Company. The Junior
Subordinated Debentures will mature on __________,
subject to the Maturity Adjustment. The Junior
Subordinated Debentures will rank subordinate and
junior in right of payment to all Senior Indebtedness
of the Company. In addition, the Company's obligations
under the Junior Subordinated Debentures will be
structurally subordinated to all existing and future
liabilities and obligations of its subsidiaries.
Guarantee.............. Under the terms of the Guarantee, the Company has
guaranteed the payment of Distributions and payments on
liquidation or redemption of the Preferred Securities,
but only in each case to the extent of funds held by
the Issuer Trust described herein. The Company and the
Issuer Trust believe that the obligations of the
Company under the Guarantee, the Trust Agreement, the
Junior Subordinated Debentures and the Junior
Subordinated Indenture taken together, fully,
irrevocably and unconditionally guarantee all of the
Issuer Trust's obligations relating to the Preferred
Securities. The obligations of the Company under the
Guarantee and the Junior Subordinated Debentures are
subordinate and junior in right of payment to all
Senior Indebtedness and pari pasu with its obligations
associated with the Outstanding Capital Securities.
See "Description of Guarantee."
Right to Defer
Interest............... The Company has the right, at any time, to defer
payments of interest on the Junior Subordinated
Debentures for a period not exceeding 20 consecutive
quarters; provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated
Debentures. As a consequence of the Company's
extension of the interest payment period, quarterly
Distributions on the Preferred Securities will be
deferred (though such Distribution would continue to
accrue with interest thereon compounded quarterly,
since interest will continue to accrue and compound on
the Junior Subordinated Debentures during any such
Extension Period). During an Extension Period, the
Company will be prohibited, subject to certain
exceptions described herein, from declaring or paying
any cash distributions with respect to its capital
stock or debt securities that rank pari passu with or
junior to the Junior Subordinated Debentures, including
the Company's obligations associated with the
Outstanding Capital Securities. Upon the termination
of any Extension Period and the payment of all amounts
then due, the Company may commence a new Extension
Period, subject to the foregoing requirements. See
"Description of Junior Subordinated Debentures-Option
to Extend Interest Payment Period."
Should an Extension Period occur, Preferred Security
holders will continue to accrue interest income (and de
minimis original issue discount, if any) for United
States federal income tax purposes.
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See "Certain Federal Income Tax Consequences-Interest
Income and Original Issue Discount."
Liquidation of the
Issuer Trust........... The Company, as holder of the Common Securities, has
the right at any time to dissolve the Issuer Trust and
cause the Junior Subordinated Debentures to be
distributed to holders of Preferred Securities in
liquidation of the Issuer Trust, subject to the Company
having received prior approval of the Federal Reserve
to do so if then required under applicable capital
guidelines or policies of the Federal Reserve. See
"Description of Preferred Securities-Liquidation
Distribution Upon Dissolution."
Voting Rights.......... Generally, the holders of the Preferred Securities will
not have any voting rights. See "Description of
Preferred Securities-Voting Rights; Amendment of Trust
Agreement" and "Risk Factors Relating to the
Offering-Limited Voting Rights."
Ranking................ The Preferred Securities will rank pari passu, and
payments thereon will be made pro rata, with the
Common Securities except as described under
"Description of Preferred Securities--Subordination of
Common Securities." The Junior Subordinated Debentures
will be unsecured and subordinate and junior in right
of payment to the extent and in the manner set forth in
the Junior Subordinated Indenture to all Senior
Indebtedness (as defined herein) and will be pari passu
with the Company's obligations associated with the
Outstanding Capital Securities. See "Description of
Junior Subordinated Debentures." The Guarantee will
constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to
the extent and in the manner set forth in the Guarantee
to all Senior Indebtedness and will be pari passu with
the Company's obligations associated with the
Outstanding Capital Securities. See "Description of
Guarantee." In addition, because the Company is a
holding company, the Junior Subordinated Debentures and
the Guarantee effectively will be subordinated to all
existing and future liabilities of the Company's
subsidiaries, including the deposit liabilities of the
Bank Subsidiaries and the liabilities of the Consumer
Finance Subsidiaries (collectively, the
"Subsidiaries"). See "Description of Junior
Subordinated Debentures-Subordination."
Redemption............. The Trust Securities will be subject to mandatory
redemption (i) in whole, but not in part, at the Stated
Maturity upon repayment of the Junior Subordinated
Debentures, (ii) in whole, but not in part,
contemporaneously with the optional redemption at any
time by the Company of the Junior Subordinated
Debentures upon the occurrence and continuation of a
Tax Event, Investment Company Event or Capital
Treatment Event and (iii) in whole or in part, at any
time on or after _____ __, 2003, contemporaneously with
the optional redemption by the Company of the Junior
Subordinated Debentures in whole or in part, in each
case at the applicable Redemption Price. See
"Description of Preferred Securities--Redemption."
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No Rating.............. The Preferred Securities are not expected to be rated
by any rating service, nor is any other security issued
by the Company so rated.
ERISA Considerations... Prospective purchasers should carefully consider the
restrictions on purchase set forth under "Certain ERISA
Considerations."
Use of Proceeds........ All proceeds to the Issuer Trust from the sale of the
Preferred Securities will be invested by the Issuer
Trust in the Junior Subordinated Debentures. All the
net proceeds received by the Company from the sale of
the Junior Subordinated Debentures, together with the
proceeds to be received by the Company from its
proposed sale of $20 million Senior Notes (as defined
under "Recent Developments--Senior Notes"), will be
used for general corporate purposes, including
repayment of the outstanding balance of the Company's
Credit Facility (as defined under "Recent Developments
--Rose Shanis Acquisition"). See "Recent
Developments," "Use of Proceeds" and "Capitalization."
The Trust Securities may qualify in whole or in part as
Tier 1 or core capital of the Company, subject to the
25% Capital Limitation (as defined under "Use of
Proceeds"), under the risk-based capital guidelines of
the Federal Reserve. The portion of the Trust
Securities that exceeds the 25% Capital Limitation will
qualify as Tier 2 or supplementary capital of the
Company. See "Use of Proceeds."
NASDAQ National Market
Symbol............... Application has been made to have the Preferred
Securities approved for quotation on the NASDAQ
National Market under the symbol "MSDXO".
For additional information regarding the Preferred Securities, see
"Description of Preferred Securities," "Description of Junior Subordinated
Debentures," "Description of Guarantee," "Relationship Among the Preferred
Securities, the Junior Subordinated Debentures and the Guarantee" and "Certain
Federal Income Tax Consequences."
Risk Factors
Prospective investors should carefully consider the matters set forth
under "Risk Factors" beginning on page 11.
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RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
Preferred Securities offered by this Prospectus. Certain statements in this
Prospectus and documents incorporated herein by reference are forward-looking
and are identified by the use of forward-looking words or phrases such as
"intended," "will be positioned," "expects," is or are "expected,"
"anticipates," and "anticipated." These forward-looking statements are based on
the Company's current expectations. To the extent any of the information
contained or incorporated by reference in this Prospectus constitutes a
"forward-looking statement" as defined in Section 27A(i)(1) of the Securities
Act and Section 21E(i)(1) of the Exchange Act, the risk factors set forth below
are cautionary statements identifying important factors that could cause actual
results to differ materially from those in the forward-looking statement.
Risk Factors Relating to the Offering
Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures. The obligations of the Company under the Guarantee
issued by the Company for the benefit of the holders of Preferred Securities and
under the Junior Subordinated Debentures are subordinate and junior in right of
payment to all Senior Indebtedness and pari passu with the Company's obligations
associated with the Outstanding Capital Securities. At March 31, 1998, the
Senior Indebtedness of the Company aggregated approximately $3 million. In
addition, the Company guaranteed certain debt of Rose Shanis which approximates
$29 million, but which is expected to be discharged upon completion of the sale
of the Preferred Securities. See "Use of Proceeds." None of the Junior
Subordinated Indenture, the Guarantee or the Trust Agreement places any
limitation on the amount of secured or unsecured debt, including Senior
Indebtedness, that may be incurred by the Company. See "Description of
Guarantee--Status of the Guarantee" and "Description of Junior Subordinated
Debentures-- Subordination."
The ability of the Issuer Trust to pay amounts due on the Preferred
Securities is solely dependent upon the Company's making payments on the Junior
Subordinated Debentures as and when required.
Option to Extend Interest Payment Period; Tax Consequences. So long as
no Event of Default (as defined in the Junior Subordinated Indenture) has
occurred and is continuing with respect to the Junior Subordinated Debentures (a
"Debenture Event of Default"), the Company has the right under the Junior
Subordinated Indenture to defer the payment of interest on the Junior
Subordinated Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarterly periods with respect to each Extension
Period, provided that no Extension Period may extend beyond the Stated Maturity
of the Junior Subordinated Debentures. See "Description of Junior Subordinated
Debentures--Debenture Events of Default." As a consequence of any such deferral,
quarterly Distributions on the Preferred Securities by the Issuer Trust will be
deferred during any such Extension Period. Distributions to which holders of the
Preferred Securities are entitled will accumulate additional Distributions
thereon during any Extension Period at the rate equal to __________% 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
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 "Distribution" as used herein shall include any such
additional Distributions. During any such Extension Period, the Company may not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock or (ii) make any payment
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<PAGE>
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 in all respects
with or junior in interest to the Junior Subordinated Debentures, including the
Company's obligations associated with the Outstanding Capital 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 benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of 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 or of any class or series of the Company's indebtedness 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 stockholder's rights
plan, or the issuance of rights, stock or other property under any stockholder's
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 Extension Period may exceed 20 consecutive quarterly periods or
extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon
the termination of any Extension Period and the payment of all interest then
accrued and unpaid (together with interest thereon at the rate equal to _____%
per annum, compounded quarterly, to the extent permitted by applicable law), 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. The Company must give the Issuer Trustees notice of
its election of such Extension Period at least one Business Day prior to the
earlier of (i) the date the Distributions on the Preferred Securities would have
been payable but for the election to begin such Extension Period and (ii) the
date the Property Trustee is required to give notice to holders of the 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. The Property
Trustee will give notice of the Company's election to begin a new Extension
Period to the holders of the Preferred Securities. Subject to the foregoing,
there is no limitation on the number of times that the Company may elect to
begin an Extension Period. See "Description of Preferred
Securities--Distributions" and "Description of Junior Subordinated
Debentures--Option to Extend Interest Payment Period."
Should an Extension Period occur, a holder of Preferred Securities will
continue to accrue income (in the form of original issue discount) for United
States federal income tax purposes in respect of its pro rata share of the
Junior Subordinated Debentures held by the Issuer Trust (which will include a
holder's pro rata share of both the stated interest and de minimis original
issue discount, if any, on the Junior Subordinated Debentures). As a result, a
holder of Preferred Securities will include such interest income in gross income
for United States federal income tax purposes in advance of the receipt of cash
attributable to such original issue discount interest income, and will not
receive the cash related to such income from the Issuer Trust if the holder
disposes of the Preferred Securities prior to the record date for the payment of
Distributions with respect to such Extension Period. See "Certain Federal Income
Tax Consequences--US Holders--Interest Income and Original Issue Discount" and
"--Sales of Preferred Securities."
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<PAGE>
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Preferred Securities is likely to
be affected. A holder that disposes of its Preferred Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Preferred Securities. In addition, as a
result of the existence of the Company's right to defer interest payments, the
market price of the Preferred Securities (which represent preferred undivided
beneficial interests in the assets of the Issuer Trust) may be more volatile
than the market prices of other securities on which original issue discount
accrues that are not subject to such deferrals.
Tax Event, Investment Company Event or Capital Treatment Event
Redemption. Upon the occurrence and during the continuation of a Tax Event,
Investment Company Event or Capital Treatment Event, the Company has the right
to redeem the Junior Subordinated Debentures in whole, but not in part, at any
time within 90 days following the occurrence of such Tax Event, Investment
Company Event or Capital Treatment Event and thereby cause a mandatory
redemption of the Preferred Securities and Common Securities. Any such
redemption shall be at a price equal to the liquidation amount of the Preferred
Securities and Common Securities, respectively, together with accumulated
Distributions to but excluding the date fixed for redemption. The ability of the
Company to exercise its rights to redeem the Junior Subordinated Debentures
prior to the stated maturity may be subject to prior regulatory approval by the
Federal Reserve, if then required, as it currently is, under applicable Federal
Reserve capital guidelines or policies. See "Description of Junior Subordinated
Debentures--Redemption" and "Description of Preferred Securities--Liquidation
Distribution Upon Dissolution."
A "Tax Event" means the receipt by the Issuer Trust of an opinion of
counsel to the Company 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, there is more than an insubstantial
risk that (i) the Issuer 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, (ii) interest payable
by the Company on the Junior Subordinated Debentures is not, or within 90 days
of the delivery of such opinion will not be, deductible by the Company, in whole
or in part, for United States federal income tax purposes or (iii) the Issuer
Trust is, or will be within 90 days of the delivery of the opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company 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 (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), which change or prospective change becomes
effective or would become effective, as the case may be, on or after the date of
the issuance of the Preferred Securities.
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A "Capital Treatment Event" means the reasonable determination by the
Company 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 issuance of the
Preferred Securities, there is more than an insubstantial risk that the Company
will not be entitled to treat an amount equal to the Liquidation Amount of the
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof),
except as otherwise restricted under the 25% Capital Limitation (as defined
herein), for purposes of the risk-based capital adequacy guidelines of the
Federal Reserve, as then in effect and applicable to the Company.
Exchange of Preferred Securities for Junior Subordinated Debentures.
The holders of all the outstanding Common Securities have the right at any time
to dissolve the Issuer Trust and, after satisfaction of liabilities to creditors
of the Issuer Trust as provided by applicable law, cause the Junior Subordinated
Debentures to be distributed to the holders of the Preferred Securities and
Common Securities in liquidation of the Issuer Trust. The ability of the Company
to dissolve the Issuer Trust may be subject to prior regulatory approval of the
Federal Reserve, if then required under applicable Federal Reserve capital
guidelines or policies. See "Description of Preferred Securities--Liquidation
Distribution Upon Dissolution." The Junior Subordinated Debentures, if
distributed, may be subject to restrictions on transfer as described under
"Notice to Investors."
Under current United States federal income tax law and interpretations
and assuming, as expected, that the Issuer Trust will not be taxable as a
corporation, a distribution of the Junior Subordinated Debentures upon a
liquidation of the Issuer Trust will not be a taxable event to holders of the
Preferred Securities. However, if a Tax Event were to occur that would cause the
Issuer Trust to be subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures, a distribution
of the Junior Subordinated Debentures by the Issuer Trust would be a taxable
event to the Issuer Trust and the holders of the Preferred Securities. See
"Certain Federal Income Tax Consequences--Receipt of Junior Subordinated
Debentures or Cash Upon Liquidation of the Trust."
Rights Under the Guarantee. Bankers Trust Company acts as the trustee
under the Guarantee (the "Guarantee Trustee") and holds the Guarantee for the
benefit of the holders of the Preferred Securities. Bankers Trust Company also
acts as Debenture Trustee for the Junior Subordinated Debentures and as Property
Trustee under the Trust Agreement. Bankers Trust (Delaware) will act as Delaware
Trustee under the Trust Agreement. The Guarantee guarantees to the holders of
the Preferred Securities the following payments, to the extent not paid by or on
behalf of the Issuer Trust: (i) any accumulated and unpaid Distributions
required to be paid on the Preferred Securities, to the extent that the Issuer
Trust has funds on hand available therefor at such time, (ii) the Redemption
Price with respect to any Preferred Securities called for redemption, to the
extent that the Issuer Trust has funds on hand available therefor at such time,
and (iii) upon a voluntary or involuntary dissolution of the Issuer Trust
(unless the Junior Subordinated Debentures are distributed to holders of the
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 Issuer Trust has funds on hand available therefor at such time,
and (b) the amount of assets of the Issuer Trust remaining available for
distribution to holders of the Preferred Securities on liquidation of the Issuer
Trust. The Guarantee is subordinated as described under "--Ranking of
Subordinated Obligations Under the Guarantee and the Junior Subordinated
Debentures" and "Description of Guarantee--Status of the Guarantee" and pari
passu with the obligations associated with the Outstanding
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Capital Securities. The holders of not less than a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct the
exercise of any trust power conferred upon the Guarantee Trustee under the
Guarantee. Any holder of the Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Issuer Trust,
the Guarantee Trustee or any other person or entity.
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Issuer Trust may lack funds for
the payment of Distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of the Preferred Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, if a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the Junior Subordinated Debentures on the payment date on which
such payment is due and payable, then a holder of Preferred Securities may
institute a legal proceeding directly against the Company for enforcement of
payment to such holder of any amounts payable in respect of such Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Preferred Securities of such holder (a "Direct
Action"). In connection with such Direct Action, the Company will have a right
of set-off under the Junior Subordinated Indenture to the extent of any payment
made by the Company to such holder of Preferred Securities in the Direct Action.
Except as described herein, holders of Preferred Securities will not be able to
exercise directly any other remedy available to the holders of the Junior
Subordinated Debentures or assert directly any other rights in respect of the
Junior Subordinated Debentures. See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Preferred Securities,"
"--Debenture Events of Default" and "Description of Guarantee." The Trust
Agreement provides that each holder of Preferred Securities by acceptance
thereof agrees to the provisions of the Guarantee and the Junior Subordinated
Indenture.
Limited Voting Rights. Holders of Preferred Securities have limited
voting rights relating generally to the modification of the Preferred Securities
and the Guarantee and the exercise of the Issuer Trust's rights as holder of
Junior Subordinated Debentures. Holders of Preferred Securities are not entitled
to appoint, remove or replace the Property Trustee or the Delaware Trustee
except upon the occurrence of certain events specified in the Trust Agreement
and described herein. The Property Trustee and the holders of all the Common
Securities may, subject to certain conditions, amend the Trust Agreement without
the consent of holders of Preferred Securities to cure any ambiguity or make
other provisions not inconsistent with the Trust Agreement or to ensure that the
Issuer Trust (i) will not be taxable as a corporation for United States federal
income tax purposes, or (ii) will not be required to register as an "investment
company" under the Investment Company Act. See "Description of Preferred
Securities--Voting Rights; Amendment of Trust Agreement" and "--Removal of
Issuer Trustees; Appointment of Successors."
Absence of Market. The Preferred Securities are a new issue of
securities with no established trading market. Application has been made to list
the Preferred Securities in the Nasdaq National Market. One of the requirements
for initial listing is the presence of three market makers for the Preferred
Securities. Nasdaq National Market maintenance standards require the existence
of two market makers for continued listing. The Company and the Issuer Trust
have been advised by the Underwriters and a third broker-dealer that they intend
to make a market in the Preferred Securities. However, such firms are not
obligated to do so and such market making may be interrupted or discontinued at
any time without
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notice at their sole discretion. Accordingly, no assurance can be given as to
the development or liquidity of any market for the Preferred Securities.
Market Prices. There can be no assurance as to the market prices for
Preferred Securities, or the market prices for Junior Subordinated Debentures
that may be distributed in exchange for Preferred Securities if a liquidation of
the Issuer Trust occurs. Accordingly, the Preferred Securities or the Junior
Subordinated Debentures that a holder of Preferred Securities may receive on
liquidation of the Issuer Trust may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. Because
holders of Preferred Securities may receive Junior Subordinated Debentures on
termination of the Issuer Trust, prospective purchasers of Preferred Securities
are also making an investment decision with regard to the Junior Subordinated
Debentures and should carefully review all the information regarding the Junior
Subordinated Debentures contained herein. See "Description of Junior
Subordinated Debentures."
Risk Factors Relating to the Company
Status of the Company as a Bank Holding Company. The Company is a legal
entity separate and distinct from the Bank Subsidiaries and Consumer Finance
Subsidiaries, although the principal source of the Company's cash revenues is
dividends from the Bank Subsidiaries and the Consumer Finance Subsidiaries. The
ability of the Company to pay the interest on, and principal of, the Junior
Subordinated Debentures will be significantly dependent on the ability of the
Subsidiaries to pay dividends to the Company and the ability of the Company to
realize a return on its investments in amounts sufficient to service the
Company's debt obligations. Payment of dividends by the Bank Subsidiaries is
restricted by various legal and regulatory limitations. Under federal law, no
dividend may be paid, unless, following the payment of such dividend, the
capital stock of the bank will be unimpaired. In addition, under state law, a
Bank Subsidiary may pay dividends only out of undivided profits or, with the
prior approval of the Maryland Commissioner of Financial Regulation (the
"Maryland Commissioner"), from surplus in excess of 100% of required capital
stock.
The right of the Company to participate in the assets of any subsidiary
upon the latter's liquidation, reorganization or otherwise (and thus the ability
of the holders of Preferred Securities to benefit indirectly from any such
distribution) will be subject to the claims of the Subsidiaries' creditors,
which will take priority except to the extent that the Company may itself be a
creditor with a recognized claim. At March 31, 1998, the Company's Subsidiaries
had indebtedness and other liabilities of approximately $959 million.
The Bank Subsidiaries are also subject to restrictions under federal
law which limit the transfer of funds by them to the Company, whether in the
form of loans, extensions of credit, investments, asset purchases or otherwise.
Such transfers by either Bank Subsidiary to the Company or any nonbank
subsidiary of the Company are limited in amount of 10% of the bank's capital and
surplus and, with respect to the Company and all its nonbank subsidiaries, to an
aggregate of 20% of the bank's capital and surplus. Furthermore, such loans and
extensions of credit are required to be secured in specified amounts. Federal
law also prohibits banks from purchasing "low-quality" assets from affiliates.
Competition. The banking business is highly competitive. In their
primary market areas, the Bank Subsidiaries compete with other commercial banks,
savings and loan associations, credit unions, finance companies, mutual funds,
insurance companies, and brokerage and investment banking firms operating
locally and elsewhere. Some of the Bank Subsidiaries' primary competitors have
substantially greater
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resources and lending limits than the Bank Subsidiaries and may offer certain
services that the Bank Subsidiaries do not provide at this time. The
profitability of the Company depends upon the Bank Subsidiaries' ability to
compete in their primary market area.
Rose Shanis Loans, LLC operates predominately in the Baltimore market
area with additional branches in Annapolis (Anne Arundel County), Bel Air
(Harford County) and Easton (Talbot County), in Maryland. The consumer finance
business is also highly competitive. Although Rose Shanis Loans, LLC is the
third largest consumer finance company in its primary market area, many other
consumer finance companies compete with Rose Shanis Loans, LLC for local loans.
Rose Shanis Loans, LLC competes with many larger national finance companies,
many of which have greater resources. The profitability of Rose Shanis Loans,
LLC depends on its continued ability to maintain its personalized business and
quality service in its local market areas, and to preserve its relationships
with the third party dealer network that indirectly sources prospective Rose
Shanis borrowers.
Developments in Technology. The market for financial services,
including banking services and consumer finance services, is increasingly
affected by advances in technology, including developments in
telecommunications, data processing, computers, automation, Internet-based
banking, telebanking, debit cards and so-called "smart" cards. The ability of
the Company, including its Bank Subsidiaries and Consumer Finance Subsidiaries,
to compete successfully in its markets may depend on the extent to which it is
able to exploit such technological changes. However, there can be no assurance
that the development of these or any other new technologies, or the Company's
success or failure in anticipating or responding to such developments, will
materially affect the Company's business, financial condition and operating
results.
Year 2000 Issues. The "Year 2000" issue is the result of computer
programs and equipment which are dependent on "embedded chip technology" using
two digits rather than four to define the applicable year. Any of the Company's
computer programs or equipment that are date dependent 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, a temporary
inability to process transactions, send invoices, or engage in similar normal
business activity. Based on assessments made to date, the Company has determined
that it may be required to modify or replace portions of its software and other
equipment so that its computer, security, and communications systems will
properly utilize dates beyond December 31, 1999. The Company believes that with
modifications or conversions of software, and replacement of equipment which
cannot be made Year 2000 compliant, the Year 2000 issue can be mitigated. If
such modifications, conversions or equipment replacements are not made, or are
not completed in a timely manner, the Year 2000 issue could have a material
impact on the operations of the Company. In addition to issues relating to
internal Year 2000 compliance, the Company may be vulnerable to third party
suppliers and large customers to remedy their own Year 2000 Issue. There can be
no guarantee that the systems of other companies on which the Company's systems
rely will be timely converted, or that a failure to convert by another company,
or a conversion that is incompatible with the Company's systems, would not have
a material adverse effect on the Company.
Growth and Acquisition Strategies. The Company has pursued and intends
to continue to pursue an internal growth strategy, the success of which will
depend primarily on generating an increasing level of loans and deposits at
acceptable risk levels and terms without significant increases in noninterest
expenses relative to revenues generated. There can be no assurance that the
Company will be successful in implementing its internal growth strategy.
17
<PAGE>
In addition, the Company has pursued and will continue to pursue an
expansion plan which involves, among other things, the acquisition of other
financial institutions and financial service providers. Acquisitions will be
subject to regulatory approvals, and there can be no assurance that the Company
will obtain such approvals. Although relating to an acquisition, the Company
does not have any signed contracts, letters of intent or agreements in
principle, the Company routinely reviews acquisition opportunities. The Company
may not be successful in identifying additional acquisition candidates,
integrating acquired institutions or preventing deposit or loan erosion at
acquired institutions. Competition for acquisitions in the Company's market area
is highly competitive, and the Company may not be able to acquire other
institutions on attractive terms. Furthermore, the success of the growth
strategy of the Company will depend on maintaining sufficient regulatory capital
levels and on economic conditions.
The Company's financial performance also depends, in part, on the
Company's ability to manage its various portfolios and the Company's ability to
successfully introduce additional financial products and services. There can be
no assurance that additional financial products and services will be introduced
or, if introduced, that such financial products and services will be successful.
Market Value of Investments. Approximately 55% of the Company's
securities investment portfolio has been designated as available-for-sale
pursuant to Statement of Financial Accounting Standards No. 115 ("SFAS 115")
relating to accounting for investments. SFAS 115 requires that unrealized gains
and losses in the estimated value of the available-for-sale portfolio be "marked
to market" and reflected as a separate item in shareholders' equity (net of
tax). At December 31, 1997, the Company maintained approximately 25% of its
total assets in securities available-for-sale. Shareholders' equity will
continue to reflect the unrealized gains and losses (net of tax) of these
investments. There can be no assurance that the market value of the Company's
investment portfolio will not decline, causing a corresponding decline in
shareholders' equity.
Management believes that several factors will affect the market values
of the Company's investment portfolio. These include, but are not limited to,
changes in interest rates or expectations of changes, the degree of volatility
in the securities markets, inflation rates or expectations of inflation and the
slope of the interest rate yield curve. (The yield curve refers to the
differences between longer-term and shorter-term interest rates. A positively
sloped yield curve means shorter-term rates are lower than longer-term rates.)
Also, the passage of time will affect the market values of the securities, in
that the closer they are to maturing, the closer the market price should be to
par value. In addition to the foregoing, there are other factors that impact
specific categories of the portfolio differently.
Allowance for Loan Losses. The inability of borrowers to repay loans
can erode the earnings and capital of banks and consumer finance companies. Like
all financial institutions, the Company's subsidiaries maintain an allowance for
loan losses to provide for loan defaults and nonperformance. The allowance is
based on prior experience with loan losses, as well as an evaluation of the
risks in the current portfolio, and is maintained at a level considered adequate
by management to absorb anticipated losses. The amount of future losses is
susceptible to changes in economic, operating and other conditions, including
changes in interest rates, that may be beyond management's control, and such
losses may exceed current estimates. At December 31, 1997, the Bank Subsidiaries
had nonperforming loans (i.e., loans 90 days or more delinquent on a contractual
basis or on a non-accrual status) of $3.786 million and an allowance for loan
losses of $5.231 million on gross loans of $460 million; thus, the allowance for
loan losses at December 31, 1997 represented 1.14% of total loans and 138% of
nonperforming loans. At December 31, 1997, the Rose Shanis Companies had
nonperforming loans of $6.0 million and an allowance for loan losses of $2.6
million or 5.6% of total loans and 43% of nonperforming loans. There
18
<PAGE>
can be no assurance that the Company's allowance for loan losses will be
adequate to cover actual losses. Future provisions for loan losses could
materially and adversely affect results of operations of the Company.
The level of loan loss allowance has been based upon management's
continual review of the loan portfolio. Management reviews the loans by type and
nature of collateral and establishes a provision for loan losses based upon
historical charge-off experience, the present and prospective financial
condition of specific borrowers, industry concentrations within the loan
portfolio, size of the credit, existence and quality of any collateral,
profitability, and general economic conditions. Based on its review, management
expects to increase the allowance for loan losses for the consumer finance
business. Although management uses the best information available to make
determinations with respect to the allowance for loan losses, future adjustments
may be necessary in the event there are additional loan losses from the consumer
finance business in future periods and if economic conditions differ
substantially from the assumptions uses. Material additions to the Company's
allowance for loan losses would result in a decrease in the Company's net income
and capital.
Credit Risk Associated With Consumer Finance Customers. As with many
customers of consumer finance companies, the Rose Shanis customers are typically
unable or unwilling to secure credit from traditional lending services. In
making a credit decision, in addition to the size of the obligation, Rose Shanis
Loans, LLC generally considers a customer's income level, type and length of
employment, stability of residence, personal references, purpose of loan,
available collateral, overall credit rating and prior credit history with the
Rose Shanis Companies. Rose Shanis Loans, LLC, however, is more susceptible to
the risk that its customers will not satisfy their repayment obligations than
are consumer finance companies that have more stringent underwriting criteria.
Because Rose Shanis Loans, LLC relies primarily on the creditworthiness
of its customers for repayment and relies less so on collateral securing the
debt, the Rose Shanis Companies have historically experienced actual rates of
losses higher than lenders who have collateral which they can repossess in the
event of a borrower's default. At December 31, 1997, the Rose Shanis Companies
had loans of $46 million, or 9% of the Company's total loans on a pro forma
basis. At December 31, 1997, the Rose Shanis Companies' loans had accounts with
payments 61 days or more past due as a percentage of end of period gross loans
of 16%. There can be no assurance that the Company will not continue to
experience increases in delinquencies and net write-offs which may require
additional increases in the provisions for credit losses which may adversely
affect results of operations.
Underwriting Criteria for Consumer Finance Loans. Although competition
in the so called "sub- prime" lending market has increased, the Company believes
that these borrowers represent a substantial market and their demand for
financing has not been adequately served by traditional lending sources. The
underwriting criteria for loans originated by consumer finance companies are
generally less stringent than those historically adhered to by banks, including
the Bank Subsidiaries, and, as a result, carry a higher level of credit risk
which is mitigated by larger and more frequently incurred late charges and
higher interest rates. These portfolios also represent an increased risk of loss
in the event of adverse economic developments such as a recession. The Company
believes that important determinants of success in sub- prime financing include
the ability to control borrower and dealer misrepresentations at the point of
origination; the evaluation of the creditworthiness of sub-prime borrowers; and
the maintenance of an active program to monitor performance and collect
payments. Sub-prime lending is inherently more risky than traditional lending
and there can be no assurance that all appropriate underwriting criteria have
been identified or weighted properly in the assessment of credit risk, or will
afford adequate protection against the higher risks inherent in lending to
sub-prime borrowers.
19
<PAGE>
Seasonality. The consumer finance business operated by Rose Shanis
Loans, LLC experiences the highest demand for its financial products and
services between October and December, and experiences the lowest demand for its
financial products and services between January and March. These significant
seasonal fluctuations in its business directly impact Rose Shanis Loans, LLC's
operating results and cash needs.
General Economic Risk. The risks associated with the consumer finance
business become more significant in an economic slowdown or recession. During
periods of economic slowdown or recession, the consumer finance business has
experienced and may again experience a decreased demand for its financial
products and services and an increase in rates of delinquencies and frequency
and severity of losses. The rates of delinquencies and frequency and severity of
losses among consumer finance companies have been in the past and may be in the
future higher under adverse economic conditions than those generally
experienced. Any sustained period of economic slowdown or recession could
materially adversely affect the financial condition and results of operations of
the Consumer Finance Subsidiaries.
Impact of Interest Rates and Other Economic Conditions. Results of
operations for financial institutions, including the Company, may be materially
and adversely affected by changes in prevailing economic conditions, including
declines in real estate values, rapid changes in interest rates and the monetary
and fiscal policies of the federal government. The profitability of the Company
is in part a function of the spread between the interest rates earned on assets
and the interest rates paid on deposits and other interest-bearing liabilities
(net interest income), including advances from the Federal Home Loan Bank of
Atlanta ("FHLB"). Interest rate risk arises from mismatches (i.e., the interest
sensitivity gap) between the dollar amount of repricing or maturing assets and
liabilities and is measured in terms of the ratio of the interest rate
sensitivity gap to total assets. More assets repricing or maturing than
liabilities over a given time period is considered asset-sensitive and is
reflected as a positive gap, and more liabilities repricing or maturing than
assets over a given time period is considered liability-sensitive and is
reflected as negative gap. An asset-sensitive position (i.e., a positive gap)
will generally enhance earnings in a rising interest rate environment and will
negatively impact earnings in a falling interest rate environment, while a
liability-sensitive position (i.e., a negative gap) will generally enhance
earnings in a falling interest rate environment and negatively impact earnings
in a rising interest rate environment. Fluctuations in interest rates are not
predictable or controllable. The Company has attempted to structure its asset
and liability management strategies to mitigate the impact on net interest
income of changes in market interest rates. However, there can be no assurance
that the Company will be able to manage interest rate risk so as to avoid
significant adverse effects in net interest income. At December 31, 1997, the
Company had a one year cumulative positive gap of $42.8 million or 4% of total
assets. This positive one year gap position may, as noted above, have a negative
impact on earnings in a declining interest rate environment.
Considerations Relating to Loan Portfolio of Banks. During the past
three years, the Company has experienced significant growth in its banking loan
portfolio. Loans increased 16% during 1997 to $460 million at December 31, 1997,
from $398 million at December 31, 1996. Commercial real estate loans increased
by 22% or $24 million during 1997 and comprised 29% of total loans as of
December 31, 1997. The nature of commercial real estate loans is such that they
may present more credit risk to the Company than other types of loans such as
home equity or residential real estate loans. Further, these loans are
concentrated in Central Maryland. As a result, a decline in the general economic
conditions of Central Maryland could have a material adverse effect on the
Company's financial condition and results of operations taken as a whole.
20
<PAGE>
Supervision and Regulation of Bank Holding Companies and their
Subsidiaries. Bank holding companies and their subsidiaries operate in a highly
regulated environment and are subject to the supervision and examination by
several federal and state regulatory agencies. The Company and its subsidiaries
are subject to the Bank Holding Company Act of 1956, as amended (the "BHC Act")
and to regulation and supervision by the Federal Reserve and the Maryland
Commissioner, and the Bank Subsidiaries are subject to regulation and
supervision by the Maryland Commissioner and the Federal Deposit Insurance
Corporation ("FDIC"). The Bank Subsidiaries are also members of the FHLB and are
subject to regulation thereby. Federal and state banking laws and regulations
govern matters ranging from restrictions on permissible investments and
activities, the regulation of certain debt obligations, changes in the control
of bank holding companies, and the maintenance of adequate capital to the
general business operations and financial condition of the Bank Subsidiaries,
including permissible types, amounts and terms of loans and investments, the
amount of reserves against deposits, restrictions on dividends, establishment of
branch offices, and the maximum rate of interest that may be charged by law. The
Federal Reserve, the FDIC, and the Maryland Commissioner also possess cease and
desist powers over bank holding companies and banks, to prevent or remedy unsafe
or unsound practices or violations of law. These and other restrictions limit
the manner in which the Company and the Bank Subsidiaries may conduct their
business and obtain financing. Furthermore, the commercial banking business is
affected not only by general economic conditions but also by the monetary
policies of the Federal Reserve. These monetary policies have had and are
expected to continue to have significant effects on the operating results of
commercial banks. Changes in monetary or legislative policies may affect the
ability of the Bank Subsidiaries to attract deposits and make loans. See
"Supervision, Regulation and Other Matters Banking."
Supervision and Regulation of Consumer Finance Companies and Insurance
Agencies. Consumer finance companies and insurance agencies operate in a highly
regulated environment and are subject to supervision and examination by several
federal and state regulatory agencies. Rose Shanis Loans, LLC is subject to
regulation and supervision by the Maryland Commissioner and Bay Insurance is
subject to regulation and supervision by the Maryland Insurance Administration.
Federal and state laws and regulations govern matters ranging from permissible
lending activities, reserves, permissible types, amounts and terms of loans, the
maximum rate of interest that may be charged, and comprehensive and strict
disclosure obligations. These and other restrictions limit the manner in which
the Consumer Finance Subsidiaries may conduct their business. See "Supervision,
Regulation and Other Matters - Consumer Finance."
The consumer finance loans are subject to numerous Federal and state
consumer protection laws which impose requirements on the solicitation, making,
enforcement and collection of consumer loans. Such laws, as well as any new laws
or rulings which may be adopted may adversely affect Rose Shanis' ability to
collect on the loans or attain the historic level of periodic finance charges
and other fees. In addition, failure by Rose Shanis to comply with such
requirements could adversely affect Rose Shanis' ability to enforce the loans.
Congress and the states may enact new laws and amendments to existing laws to
regulate further the consumer finance industry or to reduce finance charges or
other fees or charges applicable to the accounts. The potential effect of any
such legislation could be to reduce the total revenues related to yield on the
loans.
Forward Looking Information. In recent years, significant new federal
legislation has imposed numerous new legal and regulatory requirements on
financial institutions. In addition to the uncertainties posed by possible
legislative change, there are many other uncertainties that may make the
Company's historical performance an unreliable indicator of its future
performance, and forward-looking information,
21
<PAGE>
including projections of future performance, is subject to numerous possible
adverse developments, including, but not limited to, the possibility of adverse
economic developments which may increase default and delinquency risks in the
Company's loan portfolios; shifts in interest rates which may result in
shrinking interest margins; deposit outflows; interest rates on competing
investments; shifts in demand for financial services and loan products;
increases generally in competitive pressure in the banking and financial
services industry; changes in accounting policies or guidelines, or monetary and
fiscal policies of the Federal government; changes in the quality or composition
of the Company's loan and investment portfolios; or other significant
uncertainties.
The Company's recently completed acquisition of Rose Shanis Companies
is subject to additional uncertainties, including lower than expected income or
revenues following the transaction, or higher than expected operating costs;
business disruption relating to the Acquisition; greater than expected costs or
difficulties related to the integration of the management of Rose Shanis
Companies with that of the Company; and other unanticipated occurrences which
may increase the costs related to the Acquisition or decrease the expected
financial benefits of the Acquisition.
22
<PAGE>
MASON-DIXON BANCSHARES, INC.
The Company is a multi-bank holding company organized in 1991 under the
laws of the State of Maryland. The Company operates two bank subsidiaries,
Carroll County Bank and Bank of Maryland. Through the Bank Subsidiaries, the
Company provides corporate, consumer and mortgage banking services, trust
services, and non-deposit investment products for its customers. Carroll County
Bank has been providing banking services to residents of Carroll County,
Maryland for over 100 years.
The Company also operates a consumer finance company, Rose Shanis
Loans, LLC, and an insurance agency subsidiary, Bay Insurance, LLC.
Banking
Banking services are provided through 17 retail banking offices which
are located primarily in central Maryland and five on Maryland's Eastern Shore.
On March 12, 1998, the Company announced that the Bank of Maryland entered into
an agreement for the Eastern Shore Branch Sale whereby all five branches on
Maryland's Eastern Shore will be sold to subsidiaries of First Virginia.
Through the Bank Subsidiaries, the Company engages in commercial and
consumer lending, depository business, and trust business, including the
receiving of demand, savings and time deposits, and the making of loans to
individuals, associations, partnerships and corporations. Real estate financing
comprises residential first and second mortgages, construction and land
development, home equity lines of credit, and commercial mortgages. Consumer
lending is direct to individuals on both a secured and unsecured basis.
Commercial loans include lines of credit, term and demand loans for the purchase
of equipment, inventory and accounts receivable financing. Some insurance
products are offered through Carrollco Insurance, Inc., a wholly-owned
subsidiary of Carroll County Bank.
The Company offers traditional demand deposit accounts for individuals,
associations, partnerships, governments, and corporations. Also offered are NOW,
savings, and money market accounts, as well as certificates of deposit and
Individual Retirement Accounts. Deposits are insured by the FDIC.
Carroll County Bank provides 24-hour access to customer information
through its XpressLine automated voice response system, and both Bank
Subsidiaries operate 24-hour automated teller machines. Safe deposit facilities
are available at most locations, as are after-hour depository services.
Customers may also obtain travelers checks, money orders, and cashier's and
treasurer's checks at all locations. Carroll County Bank provides a full range
of trust services to individuals, corporations, and non-profit organizations
under the trade name, "Mason-Dixon Trust Company." Services to individuals
include investment management, living and testamentary trusts, estate
management, and custody of securities. Corporate financial services and employee
benefit plans are provided to businesses. Services provided to non-profit
organizations include management of endowment trusts. Carroll County Bank also
originates and services real estate mortgage and construction loans as a
principal and as an agent under the name "Mason-Dixon Bancshares Mortgage
Company."
The Bank Subsidiaries are not dependent upon a single customer or small
group of customers, the loss of which would have a material adverse effect on
the Company, nor are they dependent on a single product or small number of
products, and do not experience any significant fluctuations in loan or deposit
activity which are seasonal in nature.
23
<PAGE>
Consumer Finance
On February 11, 1998, the Company acquired substantially all of the
assets and assumed certain liabilities of the Rose Shanis Companies. "The Rose
Shanis Companies" were comprised of three consumer finance companies, Rose
Shanis & Sons, Inc., Rose Shanis & Co., Inc., and Rose Shanis Co., and one
insurance agency, Stephen Corp. The Company's wholly-owned subsidiary, Rose
Shanis Loans, LLC, acquired the consumer finance business of the Rose Shanis
Companies and Bay Insurance, LLC, another wholly-owned subsidiary of the
Company, acquired the insurance business of the Rose Shanis Companies.
The business conducted by the Rose Shanis Companies was established 66
years ago in Baltimore by Rose Shanis Glick and this business remained family
owned and managed until the Acquisition. The Rose Shanis Companies established a
reputation as a successful and dependable personal lender servicing second and
even third generations of borrowers. Norman Glick, the founder's son and one of
the owners of the Rose Shanis Companies, has continued on the management team of
Rose Shanis Loans, LLC.
Rose Shanis originates its consumer loans, conducts all of its loan
servicing functions and maintains its dealer relationships through its branch
offices. Rose Shanis' main office and eight branches are located in Baltimore
City and County, two branches are in Anne Arundel County, Maryland, one branch
is in Harford County, Maryland, and one branch is in Talbot County, Maryland.
Rose Shanis offers consumer loans, sales finance, second mortgage
loans, and various related products through two main lines of business: the
purchase of credit sales contracts ("Sales Finance Business"), and lending cash
to consumers directly through its branches ("Direct Cash Business"). The Sales
Finance Business represents financed sales of a range of products including
health club memberships, household furniture and appliances, used automobiles
and boats. These contracts are purchased through a wide variety of consumer
dealers, both national and local, with which Rose Shanis has relationships. The
contracts related to the Sales Finance Business have a maximum term of 60
months, and in some cases, a dealer reserve is held to cover potentially
doubtful accounts.
The loans related to the Direct Cash Business have historically
represented approximately half of the loan volume for the Rose Shanis Companies.
Most of the loans have maximum terms of 60 months; a major portion of the loans
are renewed in less than 12 months. Interest-bearing real estate secured loans
have a maximum term of 60 months. Rose Shanis also generates loans through
direct mail marketing, targeting present, former and potential customers who
have used other sources of consumer credit. As of December 31, 1997, the Direct
Cash Business composed approximately 60% of the Rose Shanis loan portfolio.
Rose Shanis also earns commissions by selling credit related insurance
products to its borrowers. Bay Insurance, LLC, sells single and joint credit
life insurance, single accident and health insurance, involuntary unemployment
insurance, and Vendors Single Interest Automobile insurance. Each Rose Shanis
branch has at least one employee who is licensed to sell insurance products.
Business Strategy
As part of a large community based multi-bank holding company, the Bank
Subsidiaries are able to provide the services and efficiencies of a large bank,
yet maintain the flexibility and authority at the local level to meet the
personalized needs of their individual customers. The Company, through its
subsidiaries, provides a range of financial services, principally to consumers
and small to medium-sized
24
<PAGE>
businesses in its market areas. The Company's business strategy has been to
focus primarily on providing quality, community-based financial services adapted
to the needs of the market it serves.
The Company conducts its banking business through its two Bank
Subsidiaries. Carroll County Bank has a strong presence in Carroll County, while
Bank of Maryland maintains strategically located branches around the greater
Baltimore metropolitan area in Central Maryland. To coordinate the activities of
the Bank Subsidiaries, and to maintain internal controls, the Company utilizes a
planning and budgeting process which involves the officers and principal
department heads of the Bank Subsidiaries. Performance targets and budget goals
are developed for each subsidiary on an annual basis, with financial and
operating results reported and reviewed periodically during the year. The
centralization of these processes has enabled the Company to maintain consistent
quality of these functions and to achieve certain economies of scale.
As part of its operations, the Company regularly evaluates the
potential acquisition of, and holds discussions with, various financial
institutions and other businesses of a type eligible for bank holding company
acquisition. In addition, the Company regularly analyzes the values of, and
submits bids for, the acquisition of customer-based funds and other liabilities
and assets of such financial institutions and other businesses.
The Company is pursuing a banking strategy of deeper penetration in its
core market, Central Maryland. The Company believes that the Central Maryland
market is a growth area with significant potential for banking products and
services. As part of this business strategy, on March 12, 1998, the Company
announced the Eastern Shore Branch Sale whereby the Bank of Maryland entered
into an agreement to sell its five branches on Maryland's Eastern Shore to
subsidiaries of First Virginia. Under the terms of the agreement, the
purchasers, Farmers Bank of Maryland and Atlantic Bank, will acquire
approximately $87 million in deposits, $59 million in loans, and 41 employees.
The sale of the Eastern Shore branches will allow the Company to focus on its
banking strategy and devote its resources for consumer banking to the Central
Maryland market. In furtherance of this strategy, the purchase agreement
provides the Company a right of first refusal to purchase the bank branches of
Farmers Bank and Atlantic Bank located in Baltimore County and Harford County,
Maryland, in the event of a proposed sale of those branches.
The Company continues to conduct business on Maryland's Eastern Shore
through a consumer finance branch of Rose Shanis Loans LLC, and a branch of
Mason-Dixon Bancshares Mortgage Company, a division of Carroll County Bank. As
part of the Eastern Shore Branch Sale, the Company has agreed that, for two
years after the closing, it will not open or acquire a banking branch or loan
production office on Maryland's Eastern Shore; this restriction does not apply
to the existing Rose Shanis branch office or to the Company's existing mortgage
company office on the Eastern Shore. The Company will continue to focus on the
development of specialty lines of business such as mortgage lending and consumer
finance in markets which may differ from markets pursued for traditional
banking.
To broaden the range of financial services offered and to broaden its
customer base in the Company's core market, on February 11, 1998, the Company
acquired substantially all of the assets of The Rose Shanis Companies, which
were engaged in the consumer finance business. The Rose Shanis Companies has
historically served those individuals who, for various reasons, are unwilling or
unable to access traditional lending sources. This Acquisition has opened to the
Company new segments of the Company's core market.
25
<PAGE>
Among the obvious differences between the two industries are the
atmosphere in which business is conducted and the speed with which industry
participants can complete most transactions. Offices of consumer finance
companies are located in neighborhoods, stores, shopping centers and strip
malls, providing ready access to the mainstream population. These offices tend
to be smaller and less formal than bank branches, and are designed to project a
more personal, friendly image. Geared for service and speed, consumer finance
companies can complete most loan or sales transactions in a matter of hours.
With rate differences narrowing and time being a commodity, even cost-conscious
consumers have opted for the convenience and efficiency provided by
organizations involved in the consumer finance industry.
NEITHER THE PREFERRED SECURITIES NOR THE JUNIOR SUBORDINATED
DEBENTURES ARE OBLIGATIONS OF OR GUARANTEED BY THE BANK SUBSIDIARIES
OR ANY OTHER BANK.
26
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA AND OTHER INFORMATION
Presented below is selected unaudited consolidated financial
information for the Company for the periods specified. The consolidated
financial information is not necessarily indicative of the results for any
future period and is qualified in its entirety by the detailed information
available in the Company's reports as described under "Available Information."
<TABLE>
<CAPTION>
As of or for the year ended
December 31,
------------
(Dollars in thousands) 1997 1996 1995(1) 1994 1993
--------- --------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Interest income...................................... $ 67,435 $ 58,796 $ 46,737 $ 34,790 $ 35,008
Interest expense..................................... 36,175 29,244 23,071 15,392 15,217
--------- --------- --------- ---------- ---------
Net interest income.................................. 31,260 29,552 23,666 19,398 19,791
Provision for credit losses.......................... 138 836 0 0 329
--------- --------- --------- ---------- ---------
Net interest income after provision
for credit losses.................................. 31,122 28,716 23,666 19,398 19,462
Other operating income............................... 7,990 7,481 4,159 3,245 4,031
Other operating expense.............................. 26,791 24,758 17,944 13,806 13,793
--------- --------- --------- ---------- ---------
Income before income taxes and
cumulative effect of accounting changes 12,321 11,439 9,881 8,837 9,700
Applicable income taxes.............................. 3,162 3,003 2,582 2,225 3,082
--------- --------- --------- ---------- ---------
Income before cumulative effect of
accounting changes................................. 9,159 8,436 7,299 6,612 6,718
Cumulative effect of accounting change for:
Post-retirement benefits....................... -- -- -- -- (482)
Income taxes................................... -- -- -- -- 471
--------- --------- --------- ---------- ---------
Net income........................................... $ 9,159 $ 8,436 $ 7,299 $ 6,612 $ 6,607
========= ========= ========= ========== =========
Other Data
Total assets......................................... $992,180 $841,074 $765,781 $507,572 $489,058
Total deposits....................................... 651,249 620,735 593,835 383,058 373,022
Total loans-net of reserve........................... 455,160 392,997 348,221 192,885 195,779
Total equity......................................... 75,449 72,699 66,596 42,773 44,797
Intangible assets(2)................................. 2,956 4,799 5,292 -- --
Tangible equity...................................... 72,493 67,900 61,304 -- --
Key Ratios
Return on average stockholders' equity............... 12.63% 12.27% 13.69% 15.28% 16.53%
Return on average total assets....................... 1.00% 1.05% 1.18% 1.34% 1.40%
Dividends declared to net income..................... 35.10% 32.60% 31.83% 29.71% 27.71%
Average stockholders' equity to average
total assets....................................... 7.88% 8.54% 8.60% 8.75% 8.50%
Credit Quality Ratios
Nonperforming assets to period-end loans
and foreclosed assets.............................. 0.93% 0.84% 0.59% 0.14% 0.65%
Net chargeoffs (recoveries) to average loans......... 0.02% 0.11% 0.10% 0.03% 0.03%
Allowance as a percent of period-end loans........... 1.14% 1.30% 1.34% 1.34% 1.33%
Allowance as a percent of period-end
nonperforming loans................................ 138.00% 170.20% 257.40% 962.30% 209.00%
Ratios of Earnings to Fixed Charges(3)
Excluding interest on deposits....................... 2.03x 2.83x 2.82x 3.74x 5.52x
Including interest on deposits....................... 1.34 1.39 1.43 1.57 1.64
<FN>
(1) The results of operations and other financial data for the year ended
December 31, 1995 includes the operations and other financial data for
the Bank of Maryland for the period following the acquisition on July 17,
1995 to the end of that fiscal year.
(2) Represents goodwill and core deposit intangibles.
(3) The consolidated ratio of earnings to fixed charges has been computed by
dividing income before income taxes, cumulative effect of changes in
accounting principles and fixed charges by fixed charges. Fixed charges
represent all interest expense (ratios are presented both excluding and
including interest on deposits). There were no amortization of notes and
debentures expense nor any portion of net rental expense which was deemed
to be equivalent to interest on debt. Interest expenses (other than on
deposits) includes interest on notes, federal funds purchased and
securities sold under agreements to repurchase, and other funds borrowed.
</FN>
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following tables set forth certain pro forma combined condensed
financial information of Mason-Dixon and Rose Shanis giving effect to the
Acquisition accounted for as a purchase. The pro forma combined condensed
balance sheet gives effect to the Acquisition as of December 31, 1997. The pro
forma combined condensed statement of income gives effect to the Acquisition as
of January 1, 1997.
The information in the following tables is not necessarily indicative
of the results that would have been achieved had such transaction been
consummated on such dates and should not be construed as representative of
future operations. Such information is subject to the assumptions set forth in
the notes of these Unaudited Pro Forma Financial Statements.
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
Rose Shanis
Mason-Dixon Rose Pro Forma Pro Forma
(Dollars in thousands) Bancshares, Inc. Shanis Adjustments Consolidated
- ---------------------- ---------------- ------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash and due from banks.................. $ 20,245 $ 159 $ (312) (a) $ 20,092
Interest bearing deposits in other banks. 482 - 482
Federal funds sold....................... 17,236 - 17,236
Investment securities available for sale. 249,855 - (6,684) (b) 243,171
Investment securities held to maturity... 204,045 - 204,045
Loans held for sale...................... 4,439 - 4,439
Loans (net of unearned income)........... 460,391 46,254 (980) (c) 505,665
Less: Allowance for credit losses...... (5,231) (2,561) (7,792)
----------- ---------- --------- -----------
Loans, net........................... 455,160 43,693 (980) 497,873
Premises and equipment................... 15,530 383 (131) (d) 15,782
Other real estate owned.................. 685 - 685
Deferred income taxes.................... 6,089 - 6,089
Mortgage servicing and sub-servicing rights 3,412 - 3,412
Intangible assets........................ 2,956 85 5,642 (e) 8,683
Accrued interest receivable and other assets 12,046 53 (4) (f) 12,095
----------- ---------- --------- -----------
Total Assets......................... $ 992,180 $ 44,373 $ (2,469) $ 1,034,084
=========== ========== ========= ===========
Liabilities
Non-interest bearing deposits............ $ 89,692 $ - $ 89,692
Interest bearing deposits................ 561,557 - 561,557
----------- ---------- -----------
Total deposits......................... 651,249 - 651,249
Short-term borrowings.................... 97,203 30,343 127,546
Long-term borrowings..................... 160,889 - 9,000 (g) 169,889
Accrued expenses and other liabilities... 7,390 2,884 (323) (h) 9,951
----------- ---------- --------- -----------
Total Liabilities.................... $ 916,731 $ 33,227 $ 8,677 $ 958,635
----------- ---------- --------- -----------
Stockholders' Equity
Common Stock............................. 5,077 6 (6) (i) 5,077
Surplus.................................. 35,948 - 35,948
Retained earnings........................ 32,275 11,140 (11,140) (i) 32,275
Unrealized appreciation in certain debt
and equity securities.................. 2,149 - 2.149
----------- ---------- --------- -----------
Total Stockholders' Equity........... 75,449 11,146 (11,146) 75,449
----------- ---------- --------- -----------
Total Liabilities And
Stockholders' Equity............... $ 992,180 $ 44,373 $ (2,469) $ 1,034,084
=========== ========== ========= ===========
- --------------------------
<FN>
(a) Reflects cash paid for dealer reserves not assumed.
(b) Reduction of securities to fund a portion of the cash purchase price.
(c) Reflects certain loans not acquired.
(d) Reflects land and certain fixed assets not acquired.
(e) Reflects excess of purchase price over net assets acquired ($5,725,000),
less intangible assets not acquired ($83,000).
(f) Cash value of life insurance policies not acquired.
(g) Reflects an increase of borrowed funds to fund a portion of the cash
purchase price.
(h) Constitutes liability for deferred compensation ($11,000) and certain
dealer reserves ($312,000) not assumed.
(i) Elimination of common stock and retained earnings.
</FN>
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
Rose Shanis
Mason-Dixon Rose Pro Forma Pro Forma
(Dollars in thousands except per share data) Bancshares, Inc. Shanis Adjustments Consolidated
---------------- ------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans............................ $ 39,011 $12,393 $ (85) (b) $51,319
Interest on deposits in other banks................... 23 - - 23
Interest on Federal funds sold........................ 1,110 - - 1,110
Interest and dividends on investment securities:...... 0
Taxable interest on mortgage-backed securities..... 17,579 - - 17,579
Other taxable interest and dividends............... 5,063 - (468) (c) 4,595
Tax exempt interest and dividends.................. 4,649 - - 4,649
-------- ------- ------- -------
Total interest income............................ 67,435 12,393 (553) 79,275
-------- ------- ------- -------
Interest Expense
Interest on deposits:
Time certificates of deposit of $100,000 or more... 2,168 - - 2,168
Other deposits..................................... 22,030 - - 22,030
-------- ------- ------- -------
Total interest on deposits....................... 24,198 0 0 24,198
Interest on short-term borrowings..................... 4,880 2,638 - 7,518
Interest on long-term borrowings...................... 7,097 - 906 (d) 8,003
-------- ------- ------- -------
Total interest expense........................... 36,175 2,638 906 39,719
-------- ------- ------- -------
Net interest income.............................. 31,260 9,755 (1,459) 39,556
Provision For Credit Losses.............................. 138 2,645 - 2,783
-------- ------- ------- -------
Net interest income after
provision for credit losses.................... 31,122 7,110 (1,459) 36,773
-------- ------- ------- -------
Other Operating Income
Service charges on deposit accounts................... 2,228 - - 2,228
Trust Division income................................. 1,471 - - 1,471
Gain on sale of securities............................ 554 - - 554
Gain on sale of mortgage loans........................ 1,843 - - 1,843
Gain on sale of deposits.............................. - - - 0
Other income.......................................... 1,894 1,990 - 3,884
-------- ------- ------- -------
Total other operating income..................... 7,990 1,990 0 9,980
-------- ------- ------- -------
Other Operating Expenses
Salaries and employee benefits........................ 16,109 4,460 - 20,569
Net occupancy expenses................................ 2,533 224 - 2,757
Equipment expenses.................................... 1,654 125 - 1,779
Legal and professional fees........................... 1,078 552 80 (e) 1,710
FDIC insurance expense................................ 78 - - 78
Outside data processing expense....................... 1,068 17 - 1,085
Amortization of mortgage sub-servicing rights......... 415 - - 415
Amortization of other intangible assets............... 444 - 573 (f) 1,017
Other expenses........................................ 3,412 1,649 - 5,061
-------- ------- ------- -------
Total other operating expenses................... 26,791 7,027 653 34,471
-------- ------- ------- -------
Income Before Taxes...................................... 12,321 2,073 (2,112) 12,282
Applicable Income Taxes.................................. 3,162 808 (a) (824) (g) 3,146
-------- ------- ------- -------
Net Income............................................... $ 9,159 $ 1,265 $(1,288) $ 9,136
======== ======= ======= =======
Per Share Data
Net Income Per Common Share (Basic)................... $ 1.77 $ 1.76
======== =======
Net Income Per Common Share (Diluted)................. $ 1.77 $ 1.76
======== =======
- --------------------------
<FN>
(a) Reflects the income tax expenses attributable to the pretax earnings of
Rose Shanis at the marginal tax rate of Mason-Dixon (39%).
(b) Reflects the reduction of interest income attributable to certain assets
not acquired.
(c) Reflects the loss of interest income attributable to the reduction in
securities necessary to fund a portion of the cash purchase price
($6,684,000 @ 7%).
(d) Reflects the increase in interest expense attributable to the cash
borrowed to fund a portion of the purchase price ($9,000,000 @ 10.07%).
(e) Reflects the estimated amortization of merger related expenses using the
straight-line method over 5 years.
(f) Reflects the amortization of the excess of the purchase price over net
assets acquired (goodwill) using the straight-line method over 10 years.
(g) Reflects the income tax expense attributable to adjustments (b) through
(f) at the marginal tax rate of Mason-Dixon (39%).
</FN>
</TABLE>
29
<PAGE>
RECENT DEVELOPMENTS
Review of Calendar Year 1997
The Company achieved a record level of earnings for 1997, marking the
13th consecutive year of higher profits. Net income for 1997 totaled $9,159,000,
an increase of 9% over 1996's net income of $8,436,000. Factors contributing to
the increase in net income were higher levels of net interest income and other
operating income. The favorable impact of these items was partially offset by
higher levels of other operating expenses mainly due to an expansion of mortgage
banking activities and legal fees associated with a dissident stockholder group.
The Company's return on average assets was 1.00%, lower than the 1.05% posted in
1996. Return on average stockholders' equity was 12.63%, increasing from 12.27%
in 1996. Tangible net income totaled $9,864,000 for 1997 compared to $8,960,000
in 1996, an increase of 10%. Tangible return on average assets and return on
average equity were 1.08% and 14.51% respectively for 1997, compared to 1.12%
and 14.02% in 1996.
Net interest income continued to be the principal component of net
income and totaled $31,260,000. Net interest income for 1996 was $29,552,000.
The increase in net interest income was primarily attributable to the growth in
earning assets.
Interest income on a tax equivalent basis totaled $69,983,000, an
increase of $8,972,000 or 15% from 1996. The increase was primarily attributable
to higher levels of average earning assets which grew $116,372,000 or 16%
compared to 1996. The mix of average earning assets changed little from 1996.
Average yields declined 6 basis points due to lower yields on loans.
Interest expense totaled $36,175,000, up $6,931,000 or 24% from
$29,244,00 in 1996. Average interest bearing deposits increased $17,256,000 and
average borrowings increased $88,689,000, resulting in higher interest expense.
The mix of interest bearing liabilities shifted to more costly borrowings and
time deposits, and resulted in an overall increase in average rates paid for
interest bearing liabilities of 28 basis points. Included in the increase in
borrowings is the issuance of $20,000,000 of Preferred Securities by Mason-Dixon
Capital Trust which carry an annual distribution rate of 10.07%. A portion of
the proceeds from the issuance of these securities was used to repurchase and
retire approximately 250,000 shares of common stock for total consideration of
$5,413,000. The issuance of these securities and the subsequent repurchase of
common stock contributed to the increase in the weighted average cost of
borrowings.
Total other operating income amounted to $7,990,000, up $509,000 or 7%
from 1996. Other operating income in 1996 included a one-time gain on the sale
of deposits of $1,469,000. Excluding the one-time gain, other operating income
increased by $1,978,000 or 33%. Contributing to the increase was significant
growth in mortgage banking revenue as well as increases in most other components
of other operating income.
Total other operating expenses increased by $2,033,000 or 8%. Salaries
and employee benefits increased by $1,676,000 or 12%. Salary costs related to
mortgage banking activities increased approximately $826,000 due to a higher
origination volume. Otherwise, salaries and benefits increased by $850,000 or
6%. This increase resulted from normal increases in salaries as well as staff
increases. Retirement plan expenses decreased by $168,000.
30
<PAGE>
Net occupancy expenses grew by $214,000 or 9% due primarily to
increases in maintenance and repairs as well as rental expenses for additional
mortgage offices. Equipment expenses increased by $50,000 due primarily to
higher depreciation expenses associated with technology related initiatives.
Legal and other professional fees increased by $388,000 as a result of
litigation expenses associated with a group of dissident stockholders, as well
as increased consulting fees. Federal Deposit Insurance Corporation (FDIC)
insurance expenses increased to $78,000 in 1997 compared to $4,000 in 1996 as a
result of increased annual assessments for banks beginning in 1997 implemented
pursuant to the merger of the Bank Insurance Fund (BIF) with the Savings
Association Insurance Fund (SAIF). Additional account volume resulted in
increased outside data processing expenses of $60,000 or 6%.
Amortization of mortgage sub-servicing rights totaled $415,000 in each
of 1997 and 1996. This expense reflects the amortization of the purchase price
of mortgage sub-servicing rights acquired in the purchase of Bank of Maryland in
1995 (the "Merger"). Mortgage sub-servicing rights permit the Company to
maintain escrow and other deposits for loans serviced by a third party.
Amortization of intangible assets totaled $444,000 in 1997, compared to $493,000
in 1996. Intangible assets being amortized included goodwill created as a result
of the Merger, as well as a core deposit intangible acquired in the Merger. The
lower amortization amount for 1997 reflects a reduction in amortization for the
core deposit intangible, which was fully amortized at November 30, 1997. Other
expenses decreased by $380,000 or 10%. The 1996 expenses included $256,000 for
costs associated with the disposition of the Bethesda branch of Bank of
Maryland.
Total assets at December 31, 1997 were at $992,180,000, increasing
$151,106,000 or 18% over total assets at December 31, 1996. The growth in total
assets reflected increased levels of cash, loans, and investment securities. The
increase in assets was funded through increases in deposits, borrowed funds, and
stockholders' equity. Investment securities totaled $453,900,000, an increase of
$95,369,000 or 27%. Much of the increase occurred as deposits and borrowings
grew more than loans, resulting in an increase in investment securities.
Securities classified as held to maturity increased $10,801,000 or 6%. The
market value of the held to maturity investments was $206,515,000, a 1%
unrealized appreciation over the amortized cost of $204,045,000. Securities
classified as available for sale increased by $84,568,000. The available for
sale portfolio, which totaled $249,855,000 at December 31, 1997, is considered
more than sufficient to allow for prudent management of liquidity and interest
rate risk and to fund anticipated growth in the loan portfolio.
Loans increased by $62,227,000 during 1997 to $460,391,000, a 16%
increase over December 31, 1996 levels of $398,164,000. Growth in residential
real estate mortgages ($22,322,000 or 14%) was spurred by the expansion of
mortgage banking activities during 1997, which resulted in increased
originations of adjustable rate mortgages. Deposits grew by $30,514,000 during
1997 to $651,249,000, a 5% increase over December 31, 1996 levels of
$620,735,000. Trends continued toward growth in higher cost deposits. Most of
the growth in deposits occurred in time deposits which grew by $26,860,000 or 9%
to $314,421,000 at December 31, 1997.
Short-term borrowings increased by $43,469,000 during 1997 to
$97,203,000, a 81% increase over December 31, 1996 levels of $53,734,000. Higher
short-term borrowings occurred as growth in earning assets exceeded growth in
deposits and long-term borrowings. Long-term borrowings increased by $75,614,000
or 89%. Borrowings from the Federal Home Loan Bank of Atlanta (FHLB) increased
$57,514,000, supporting significant growth in earning assets throughout 1997.
The use of advances from the FHLB has increased over the last several years.
These advances often carry longer term fixed rates and provide a funding source
that minimizes interest rate risk on long-term fixed rate loans. Variable rate
31
<PAGE>
advances are also utilized to lower funding costs, as FHLB advances can be an
alternative to repurchase agreements or other short-term funding sources.
Rose Shanis Acquisition
On February 11, 1998, the Company acquired substantially all of the
assets and assumed certain liabilities of Rose Shanis Companies, a 66 year old
consumer finance company with nine branch offices in the Baltimore metropolitan
area, and one each in Annapolis, Easton and Bel Air, Maryland. The Company
purchased approximately $43,000,000 in assets consisting primarily of finance
receivables, and assumed liabilities approximating $33,000,000. The Rose Shanis
Companies had pre-tax net income of $2,073,000 for 1997. The purchase price of
the Acquisition was $15,684,000
One of the assumed liabilities of the Rose Shanis Companies was bank
debt of approximately $29,000,000 as of February 11, 1998. At the closing, the
Company and Rose Shanis Loans, LLC entered into a $38,000,000 short-term
revolving credit facility with three unaffiliated banks (the "Credit Facility"),
the proceeds of which were used to repay the assumed loan in full. The Credit
Facility is secured by all assets of Rose Shanis Loans, LLC, guaranteed by the
Company and payable on June 11, 1998. As part of its obligations under the
guaranty, the Company is prohibited from, among other things, pledging the
common stock of the Bank Subsidiaries or pledging or transferring its interests
in Rose Shanis Loans, LLC. Events of default under the guaranty include the
failure of the Bank Subsidiaries to maintain a "well-capitalized" equity
position, the failure of the Company to maintain certain cash flow to debt
service ratios and the payment of distributions by Rose Shanis Loans, LLC to the
Company in excess of stated amounts.
Proceeds of the Credit Facility in excess of the amount of the assumed
loan are being used for working capital for Rose Shanis Loans, LLC. As of March
31, 1998, approximately $29,000,000 was outstanding under the Credit Facility.
The net proceeds from the sale by the Company of the Junior Subordinated
Debentures will be used to repay a portion of the outstanding balance of the
Credit Facility. See "Use of Proceeds."
The purchase of the business of the Rose Shanis Companies increases the
Company's presence in the Central Maryland area and further diversifies the
Company's lending activities. The Acquisition and addition of consumer finance
activities to the Company will accelerate changes to the Company's loan mix, net
interest margin, and asset quality measurements.
Consumer finance companies differ from banks in several respects. Due
to the nature of lending to individuals with limited or impaired credit
histories, delinquencies and write-off levels are generally higher than those
experienced in the banking industry. In addition, consumer finance companies
typically place a lesser reliance on collateral as a repayment source. To
mitigate these characteristics, rates charged on loans by consumer finance
companies are typically higher than rates charged by banks and late payment
charges are higher and more frequently incurred, which taken together, result in
higher interest income and total revenues to compensate for this increased risk
in lending. In addition, consumer finance companies attempt to mitigate their
losses by using aggressive collection remedies allowed by law, including wage
garnishment.
32
<PAGE>
With the addition of the consumer finance business, the Company as a
whole is likely to experience higher net interest margins, greater consumer
balances in its loan mix, higher delinquencies, higher net charge-offs and
increased levels of reserves. The following table highlights, on a pro forma
basis, some of the changes in the Company's profile in these areas as of or for
the year ended December 31, 1997:
<TABLE>
<CAPTION>
Rose Shanis Pro Forma
(Dollars in thousands) The Company Companies Adjustment(1) Combined
- ---------------------- ----------- --------- ------------- --------
<S> <C> <C> <C> <C>
Consumer Loans $17,464 $46,254 (980) $62,738
Consumer Loans as a
percentage of total loans 4% 100% 12%
Net interest margin 3.91% 19.70% 4.64%
Non-performing loans (2) $3,786 $5,989 (525) 9,250
Non-performing loans as a
percentage of total loans 0.82% 12.95% 1.83%
Net Charge-offs $74 $2,240 (93) $2,221
Net Charge-offs as a
percentage of average loans 0.02% 4.52% 0.44%
Reserve for loan losses $5,231 $2,561 $7,792
Reserve for loan losses as a
percentage of loans 1.14% 5.54% - 1.54%
Reserve for loan losses as a
percentage of non-performing
loans 138% 43% 84%
- ---------------
<FN>
(1) Reflects adjustments made for certain loans not acquired.
(2) Non-performing loans are defined as loans 90 days or more delinquent on
a contractual basis or on a non- accrual status.
</FN>
</TABLE>
Compared to other bank holding companies of similar size, the Company's
current asset quality measures are favorable. The addition of the consumer
finance business will change the Company's overall profile, since a relatively
small number of bank holding companies with assets of between $1 billion and $2
billion operate consumer finance affiliates.
Compared to industry averages for consumer finance companies, the Rose
Shanis Companies have historically had higher delinquency, lower charge-offs,
and higher reserve levels. These results were influenced by a charge-off policy
based on delinquency of 270 days on a contractual basis, compared to a more
common industry practice of 180 days. This policy resulted in more loans being
characterized as delinquent and fewer loans charged-off. The Rose Shanis
Companies historically carried significantly higher levels of reserves which
were available to absorb potential losses of delinquent loans. The Company
anticipates phasing in the shorter delinquency 180-day period to be more
consistent with general industry standards, and expects that the modification
may result in additional charge-offs in the current fiscal year. In addition,
the Company intends to take a proactive approach to dealing with the loan
33
<PAGE>
delinquencies; consequently, the amount of any additional charge-offs that may
result from the modification of the delinquency period cannot be ascertained at
this time.
While the Acquisition will likely have some negative effect on certain
asset quality measurements, higher reserves and substantially higher net
interest income are available to mitigate the increased credit risk. Overall,
the Company expects the Acquisition to have a positive impact on its financial
performance. (See "Risk Factors")
Eastern Shore Divestiture
On March 12, 1998, the Company announced that the Bank of Maryland
signed an agreement to sell five branches located on the Eastern Shore of
Maryland to First Virginia's subsidiaries, Farmers Bank of Maryland and Atlantic
Bank. The branches being sold are located in Bishopville, Salisbury, Princess
Anne, Crisfield, and Federalsburg. The proposed sale is subject to regulatory
approvals and other conditions. Under the terms of the agreement, Farmers Bank
of Maryland and Atlantic Bank will acquire substantially all of the branches'
approximately $87 million in deposits, $59 million in loans, and 41 employees.
The sale of the Eastern Shore branches will allow the Company to focus on its
strategy and devote its resources for consumer banking to further penetrating
its core market in Central Maryland. The Company plans to replace the Eastern
Shore assets with temporary investments that will be funded by additional
borrowings. The Company believes that the sale of the Eastern Shore branches
will not have a material adverse effect on future earnings of the Company. The
closing of the transaction is expected to be completed in mid-1998.
Senior Notes
The Company has reached agreement in principle for the private sale to
a private institutional investor of Senior Notes due 2008 (the "Senior Notes")
in the aggregate principal amount of $20,000,000. The Senior Notes will rank
senior to the Junior Subordinated Debentures and the Company's obligations
associated with the Outstanding Capital Securities.
The net proceeds from the sale of the Senior Notes, together with the
net proceeds of the sale of Junior Subordinated Debentures, will be used by the
Company to repay the outstanding balance of the Credit Facility. All the
remaining net proceeds will be used for general corporate purposes, which may
include the repayment of indebtedness, investments in or extensions of credit to
its subsidiaries and/or the financing of possible acquisitions. Pending such
use, the net proceeds may be temporarily invested. The precise amounts and
timing of the application of proceeds will depend upon the funding requirements
of the Company and its subsidiaries and the availability of other funds.
MASON-DIXON CAPITAL TRUST II
The Issuer 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 February 20, 1998. The Issuer Trust will be governed by an Amended
and Restated Trust Agreement among the Company, as Depositor, Bankers Trust
(Delaware), as Delaware Trustee, and Bankers Trust Company, as Property Trustee.
Under the Trust Agreement, two individuals selected by the holders of the Common
Securities act as administrators with respect to the Issuer Trust (the
"Administrators"). The Company, as holder of the Common Securities, has selected
two individuals who are employees of and affiliated with the Company to serve as
the
34
<PAGE>
Administrators. See "Description of Preferred Securities--Miscellaneous." The
Issuer Trust exists for the exclusive purposes of (i) issuing the Trust
Securities, (ii) using the proceeds from the sale of the Trust Securities to
acquire the Junior Subordinated Debentures and (iii) engaging in only those
other activities necessary, convenient or incidental thereto (such as
registering the transfer of Trust Securities). Accordingly, the Junior
Subordinated Debentures are the sole assets of the Issuer Trust, and payments
under the Junior Subordinated Debentures will be the sole source of revenue of
the Issuer Trust.
All the Common Securities are owned by the Company. The Common
Securities rank pari passu, and payments will be made thereon pro rata, with the
Preferred Securities, except that upon the occurrence and during the
continuation of a Debenture Event of Default arising as a result of any failure
by the Company to pay any amounts in respect of the Junior Subordinated
Debentures when due, the rights of the holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. See "Description of Preferred Securities--Subordination of Common
Securities." The Company has acquired Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of the Issuer Trust. The
Issuer Trust has a term of 31 years, but may terminate earlier as provided in
the Trust Agreement. The address of the Delaware Trustee is Bankers Trust
(Delaware), 1011 Centre Road, Suite 200, Wilmington, Delaware 19805-1266,
telephone number (302) 636-3305. The address of the Property Trustee, the
Guarantee Trustee and the Debenture Trustee is Bankers Trust Company, Four
Albany Street, 4th Floor, New York, New York 10006, telephone number (212)
250-2500.
USE OF PROCEEDS
All the proceeds to the Issuer Trust from the sale of the Preferred
Securities will be invested by the Issuer Trust in the Junior Subordinated
Debentures. The proceeds from the Preferred Securities may qualify in whole or
in part as Tier 1 or core capital with respect to the Company under the
risk-based capital guidelines established by the Federal Reserve; however,
capital received from the proceeds of the sale of Preferred Securities, together
with the Outstanding Capital Securities and any other cumulative preferred stock
of the Company, cannot constitute more than 25% of the total Tier 1 capital of
the Company (the "25% Capital Limitation"). Amounts in excess of the 25% Capital
Limitation will constitute Tier 2 or supplementary capital of the Company.
The Company has reached agreement in principle for the private sale to
a private institutional investor of Senior Notes due 2008 in the aggregate
principal amount of $20,000,000. The Senior Notes will rank senior to the Junior
Subordinated Debentures and the Company's obligations associated with the
Outstanding Capital Securities.
The net proceeds from the sale of the Junior Subordinated Debentures in
the amount of approximately $19,235,000, together with the net proceeds to the
Company of $20,000,000 from the sale of the Senior Notes, will be used by the
Company to repay the outstanding balance of the Credit Facility. All the
remaining net proceeds received by the Company will be used for general
corporate purposes, which may include the repayment of indebtedness, investments
in or extensions of credit to its subsidiaries and/or the financing of possible
acquisitions. Pending such use, the net proceeds may be temporarily invested.
The precise amounts and timing of the application of proceeds will depend upon
the funding requirements of the Company and its subsidiaries and the
availability of other funds.
35
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated
capitalization of the Company as of December 31, 1997, and as adjusted to give
effect to the Acquisition, the proposed sale of the Senior Notes, and this
Offering. The following data should be read in conjunction with the Company's
reports filed with the Commission under the Exchange Act. See "Incorporation of
Certain Documents by Reference."
<TABLE>
<CAPTION>
December 31, 1997
-----------------
Actual As Adjusted(1)
------ --------------
(Dollars in thousands-unaudited)
<S> <C>
Long-term debt: .............................................. $ $
-------- -------
Other...................................................... 140,889 149,889
Senior Notes............................................... - 20,000
Existing Guaranteed preferred beneficial interests in
Company's 10.07% junior subordinated debentures
held by Mason-Dixon Capital Trust (2)....................... 20,000 20,000
Additional Guaranteed preferred beneficial interests in
Company's Junior Subordinated Debentures to be
held by Mason-Dixon Capital Trust II (3).................. - 20,000
Stockholders' Equity:
Preferred Stock............................................. - -
Common stock, $1.00 par value; authorized
10,000, 5,307,078 shares issued............................. 5,077 5,077
Additional paid-in-capital.................................. 35,948 35,948
Retained Earnings........................................... 32,275 32,275
Net unrealized appreciation in certain
debt and equity securities................................ 2,149 2,149
Total stockholders' equity............................ $ 75,449 75,449
Total Capitalization............................. $ 236,338 285,338
Risk-based capital ratios:
Tier 1 capital to risk-adjusted assets (4).................. 14.74% 13.57%
Regulatory minimum.......................................... 4.00% 4.00%
Total capital to risk-adjusted assets (4)................... 15.64% 17.32%
Regulatory minimum.......................................... 8.00% 8.00%
Leverage ratio.............................................. 8.74% 8.30%
Regulatory minimum.......................................... 3.00% 3.00%
<FN>
(1) Adjusted for Rose Shanis acquisition, the proposed sale of the Senior
Note, and this offering.
(2) On June 6, 1997, the Company issued $20,000,000 principal amount of 10.07%
junior subordinated debentures to Mason-Dixon Capital Trust in connection
with the issuance by Mason-Dixon Capital Trust of the Outstanding Capital
Securities. The 10.07% junior subordinated debentures will mature on June
15, 2027. The Company owns all of the Common Securities of Mason-Dixon
Capital Trust.
(3) As described herein, the sole assets of the Issuer Trust will be
$__________ principal amount of Junior Subordinated Debentures issued by
the Company to the Issuer Trust. The Junior Subordinated Debentures will
bear interest at a fixed rate of ______% per annum and will mature on
_________________. The Company will own all the Common Securities of the
Issuer Trust. The Junior Subordinated Debentures will rank pari passu with
the outstanding 10.07% junior subordinated debentures referred to in
footnote (2).
(4) Assumes net proceeds of the offering of the Preferred Securities are
invested in assets with a 100% risk weighting under the risk-based capital
rules of the Federal Reserve.
</FN>
</TABLE>
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ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Issuer Trust
will be included in the consolidated financial statements of the Company. The
Preferred Securities will be included in the consolidated balance sheets of the
Company and appropriate disclosures about the Preferred Securities, the
Guarantee and the Junior Subordinated Debentures will be included in the notes
to the consolidated financial statements of the Company. For financial reporting
purposes, Distributions on the Preferred Securities will be recorded in the
consolidated statements of income of the Company.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for the Issuer Trust, the
Issuer Trustees on behalf of the Issuer Trust will issue the Preferred
Securities and the Common Securities. The Preferred Securities will represent
preferred undivided beneficial interests in the assets of the Issuer Trust. The
holders of the Preferred Securities will be entitled to a preference in certain
circumstances with respect to Distributions and amounts payable on redemption or
liquidation over the Common Securities, as well as other benefits as described
in the Trust Agreement. This summary of the material provisions of the Preferred
Securities and the Trust Agreement does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions of
the Trust Agreement, including the definitions therein of certain terms.
Wherever particular defined terms of the Trust Agreement are referred to herein,
such defined terms are incorporated herein by reference. A copy of the form of
the Trust Agreement is available upon request from the Issuer Trustees.
General
The Preferred Securities will be limited to $20,000,000 aggregate
Liquidation Amount outstanding. The Preferred Securities will rank pari passu,
and payments will be made thereon pro rata, with the Common Securities except as
described under "--Subordination of Common Securities." The Junior Subordinated
Debentures will be registered in the name of the Issuer Trust and held by the
Property Trustee in trust for the benefit of the holders of the Preferred
Securities and Common Securities. The Guarantee will be a guarantee on a
subordinated basis with respect to the Preferred Securities but will not
guarantee payment of Distributions or amounts payable on redemption or
liquidation of such Preferred Securities when the Issuer Trust does not have
funds on hand available to make such payments. See "Description of Guarantee."
Distributions
The Preferred Securities represent preferred undivided beneficial
interests in the assets of the Issuer Trust, and Distributions on each Preferred
Security will be payable at an annual rate of ____% the stated Liquidation
Amount of $25 per Preferred Security, payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year (each a "Distribution Date"),
to the holders of the Preferred Securities at the close of business on the 15th
day of each March, June, September and December (whether or not a Business Day
(as defined below)) next preceding the relevant Distribution Date. Distributions
on the Preferred Securities will be cumulative. Distributions will accumulate
from _____ _, 1998. The first Distribution Date for the Preferred Securities
will be June 30, 1998. The amount
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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. Distributions payable for
each full Distribution period will be computed by dividing the rate per annum by
four. If any date on which Distributions are payable on the Preferred Securities
is not a Business Day, then payment of the Distributions payable on such date
will be made on the next succeeding day that is a Business Day (without any
additional Distributions or other payment in respect of any such delay), with
the same force and effect as if made on the date such payment was originally
payable.
So long as no Debenture Event of Default has occurred and is
continuing, the Company has the right under the Junior Subordinated Indenture to
defer the payment of interest on the Junior Subordinated Debentures at any time
or from time to time for a period not exceeding 20 consecutive quarterly periods
with respect to each Extension Period, provided that no Extension Period may
extend beyond the Stated Maturity of the Junior Subordinated Debentures. As a
consequence of any such deferral, quarterly Distributions on the Preferred
Securities by the Issuer Trust will be deferred during any such Extension
Period. Distributions to which holders of the Preferred Securities are entitled
will accumulate additional Distributions thereon at the rate 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
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 herein shall include any such
additional Distributions. During any such Extension Period, the Company may not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock or (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 in all respects with or junior in interest to the Junior
Subordinated Debentures, including the Company's obligations associated with the
Outstanding Capital 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
benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of 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 or of any class or series
of the Company's indebtedness 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 stockholder's rights plan, or the issuance of
rights, stock or other property under any stockholder's 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
Extension Period may exceed 20 consecutive quarterly periods or extend beyond
the Stated Maturity of the Junior Subordinated Debentures. Upon the termination
of any such Extension Period and the payment of all amounts then due, the
Company may elect to begin a new Extension Period. No interest shall be due and
payable during an Extension Period, except at the end thereof. The Company must
give the Issuer Trustees notice of its election of such Extension Period at
least one Business Day prior to the earlier of (i) the date the Distributions on
the Preferred Securities would have been payable but for the election to begin
such
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Extension Period and (ii) the date the Property Trustee is required to give
notice to holders of the 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. The Property Trustee will give notice of the
Company's election to begin a new Extension Period to the holders of the
Preferred Securities. Subject to the foregoing, there is no limitation on the
number of times that the Company may elect to begin an Extension Period. See
"Description of Junior Subordinated Debentures--Option To Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences--US
Holders--Interest Income and Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures.
The revenue of the Issuer Trust available for distribution to holders
of the Preferred Securities will be limited to payments under the Junior
Subordinated Debentures. See "Description of Junior Subordinated Debentures." If
the Company does not make payments on the Junior Subordinated Debentures, the
Issuer Trust may not have funds available to pay Distributions or other amounts
payable on the Preferred Securities. The payment of Distributions and other
amounts payable on the Preferred Securities (if and to the extent the Issuer
Trust has funds legally available for and cash sufficient to make such payments)
is guaranteed by the Company on a limited basis as set forth herein under
"Description of Guarantee."
Redemption
Upon the repayment or redemption, in whole or in part, of the Junior
Subordinated Debentures, whether at maturity or upon earlier redemption as
provided in the Junior Subordinated Indenture, the proceeds from such repayment
or redemption shall be applied by the Property Trustee to redeem a Like Amount
(as defined below) of the Preferred Securities, upon not less than 30 nor more
than 60 days' notice, at a redemption price (the "Redemption Price") equal to
the aggregate Liquidation Amount of such Preferred Securities plus accumulated
but unpaid Distributions thereon to the date of redemption (the "Redemption
Date"). If less than all the Junior Subordinated Debentures are to be repaid or
redeemed on a Redemption Date, then the proceeds from such repayment or
redemption shall be allocated to the redemption pro rata of the Preferred
Securities and the Common Securities. The amount of premium, if any, paid by the
Company upon the redemption of all or any part of the Junior Subordinated
Debentures to be repaid or redeemed on a Redemption Date shall be allocated to
the redemption pro rata of the Preferred Securities and the Common Securities.
The Company has the right to redeem the Junior Subordinated Debentures
(i) on or after _____ __, 2003, in whole at any time or in part from time to
time, or (ii) 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 possible regulatory approval. See "--Liquidation Distribution Upon
Dissolution." A redemption of the Junior Subordinated Debentures would cause a
mandatory redemption of a Like Amount of the Preferred Securities and Common
Securities at the Redemption Price.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in the City of New York or the State of
Maryland 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, the
Delaware Trustee's Corporate Trust Office or the Debenture Trustee's Corporate
Trust Office is closed for business.
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<PAGE>
"Like Amount" means (i) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount (as defined below)
equal to that portion of the principal amount of Junior Subordinated Debentures
to be contemporaneously redeemed in accordance with the Junior Subordinated
Indenture, allocated to the Common Securities and to the Preferred Securities
based upon the relative Liquidation Amounts of such classes and (ii) with
respect to a distribution of Junior Subordinated Debentures to holders of Trust
Securities in connection with a dissolution or liquidation of the 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.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Tax Event" means the receipt by the Issuer Trust of an opinion of
counsel to the Company 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, there is more than an insubstantial
risk that (i) the Issuer 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, (ii) interest payable
by the Company on the Junior Subordinated Debentures is not, or within 90 days
of the delivery of such opinion, will not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes or (iii) the
Issuer 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.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company 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 (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act, which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Preferred Securities.
"Capital Treatment Event" means the reasonable determination by the
Company 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 issuance of the
Preferred Securities, there is more than an insubstantial risk that the Company
will not be entitled to treat an amount equal to the Liquidation Amount of the
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 Company.
If a Tax Event described in clause (i) or (iii) of the definition of
Tax Event above has occurred and is continuing and the Issuer Trust is the
holder of all the Junior Subordinated Debentures, the Company will pay
Additional Sums (as defined below), if any, on the Junior Subordinated
Debentures.
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<PAGE>
"Additional Sums" means the additional amounts as may be necessary in order that
the amount of Distributions then due and payable by the Issuer Trust on the
outstanding Preferred Securities and Common Securities of the Issuer Trust will
not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject as a result of
a Tax Event.
Redemption Procedures
Preferred Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated Debentures. Redemptions of the Preferred
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 on hand
available for the payment of such Redemption Price. See also "--Subordination of
Common Securities."
If the Issuer Trust gives a notice of redemption in respect of the
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are available, in the case of Preferred Securities
held in book-entry form, the Property Trustee will deposit irrevocably with DTC
funds sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Preferred Securities. With respect to 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 Preferred
Securities funds sufficient to pay the applicable Redemption Price and will give
such paying agent irrevocable instructions and authority to pay the Redemption
Price to the holders thereof upon surrender of their certificates evidencing the
Preferred Securities. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date for any Preferred Securities called for redemption
shall be payable to the holders of the Preferred Securities on the relevant
record dates for the related Distribution Dates. If notice of redemption shall
have been given and funds deposited as required, then upon the date of such
deposit all rights of the holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price and any Distribution payable in
respect of the Preferred Securities on or prior to the Redemption Date, but
without interest on such Redemption Price, and such Preferred Securities will
cease to be outstanding. If any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day which is a Business Day
(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 in respect of Preferred Securities called for redemption is
improperly withheld or refused and not paid either by the Issuer Trust or by the
Company pursuant to the Guarantee as described under "Description of Guarantee,"
Distributions on such Preferred Securities will continue to accumulate at the
then applicable rate, from the Redemption Date originally established by the
Issuer Trust for such 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), the Company or its affiliates may at any time and from
time to time purchase outstanding Preferred Securities by tender, in the open
market or by private agreement, and may resell such securities.
If less than all the Preferred Securities and Common Securities are to
be redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Preferred Securities and Common Securities to be redeemed shall be allocated pro
rata to the Preferred Securities and the Common Securities
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<PAGE>
based upon the relative Liquidation Amounts of such classes. The particular
Preferred Securities to be redeemed shall be selected on a pro rata basis not
more than 60 days prior to the Redemption Date by the Property Trustee from the
outstanding Preferred Securities not previously called for redemption, or if the
Preferred Securities are then held in the form of a Global Preferred Security
(as defined below), in accordance with DTC's customary procedures. The Property
Trustee shall promptly notify the securities registrar for the Trust Securities
in writing of the Preferred Securities selected for redemption and, in the case
of any Preferred Securities selected for partial redemption, the Liquidation
Amount thereof to be redeemed. For all purposes of the Trust Agreement, unless
the context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each registered holder of Preferred
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Company defaults 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 (and, unless payment of the Redemption Price in
respect of the Preferred Securities is withheld or refused and not paid either
by the Issuer Trust or the Company pursuant to the Guarantee, Distributions will
cease to accumulate on the Preferred Securities or portions thereof) called for
redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, and the
Liquidation Distribution in respect of, the Preferred Securities and Common
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of such Preferred Securities and Common Securities. However, if on any
Distribution Date or Redemption Date a Debenture Event of Default has occurred
and is continuing as a result of any failure by the Company to pay any amounts
in respect of the Junior Subordinated Debentures when due, no payment of any
Distribution on, or Redemption Price of, or the Liquidation Distribution in
respect of, any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of such Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid Distributions
on all the outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all the 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 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 Preferred
Securities then due and payable.
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holders of the Common Securities will be deemed
to have waived any right to act with respect to any such Event of Default under
the Trust Agreement until the effects of all such Events of Default with respect
to such 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 such Events of Default under
the Trust Agreement with respect to the Preferred Securities have been so cured,
waived or otherwise eliminated, the Property Trustee will act solely on behalf
of the holders of the Preferred Securities and not on behalf of the holders of
the Common Securities, and only
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the holders of the Preferred Securities will have the right to direct the
Property Trustee to act on their behalf.
Liquidation Distribution Upon Dissolution
The amount payable on the Preferred Securities in the event of any
liquidation of the Issuer Trust is $25 per Preferred Security plus accumulated
and unpaid Distributions, subject to certain exceptions, which may be in the
form of a distribution of such amount in Junior Subordinated Debentures.
The holders of all the outstanding Common Securities have the right at
any time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust.
The Federal Reserve'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 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 (unless the equity
or capital instrument were redeemed with the proceeds of, or replaced by, a like
amount of a similar or higher quality capital instrument and the Federal Reserve
considers the organization's capital position to be fully adequate after the
redemption).
In the event the Company, while a holder of Common Securities,
dissolves the Issuer Trust prior to the stated maturity of the Preferred
Securities and the dissolution of the Issuer Trust is deemed to constitute the
redemption of capital instruments by the Federal Reserve under its risk-based
capital guidelines or policies, the dissolution of the Issuer Trust by the
Company may be subject to the prior approval of the Federal Reserve. Moreover,
any changes in applicable law or changes in the Federal Reserve's risk-based
capital guidelines or policies could impose a requirement on the Company that it
obtain the prior approval of the Federal Reserve to dissolve the Issuer Trust.
Pursuant to the Trust Agreement, the Issuer Trust will automatically
dissolve upon expiration of its term or, if earlier, will dissolve on the first
to occur of: (i) certain events of bankruptcy, dissolution or liquidation of the
Company or the holder of the Common Securities, (ii) the distribution of a Like
Amount of the Junior Subordinated Debentures to the holders of the Trust
Securities, if the holders of Common Securities have given written direction to
the Property Trustee to dissolve the Issuer Trust (which direction, subject to
the foregoing restrictions, is optional and wholly within the discretion of the
holders of Common Securities), (iii) the repayment of all the Preferred
Securities in connection with the redemption of all the Trust Securities as
described under "--Redemption" and (iv) the entry of an order for the
dissolution of the Issuer Trust by a court of competent jurisdiction.
If dissolution of the Issuer Trust occurs as described in clause (i),
(ii) or (iv) above, the Issuer 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 Issuer Trust
as provided by applicable law, to the holders of such Trust Securities a Like
Amount of the Junior Subordinated Debentures, unless such distribution is not
practical, in which event such 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, in the case of holders of
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<PAGE>
Preferred Securities, the aggregate of the Liquidation Amount plus accumulated
and unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Issuer Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Issuer Trust on its Preferred Securities shall be paid on a pro rata
basis. The holders of the Common Securities will be entitled to receive
distributions upon any such liquidation pro rata with the holders of the
Preferred Securities, except that if a Debenture Event of Default has occurred
and is continuing as a result of any failure by the Company to pay any amounts
in respect of the Junior Subordinated Debentures when due, the Preferred
Securities shall have a priority over the Common Securities. See
"--Subordination of Common Securities."
After the liquidation date fixed for any distribution of Junior
Subordinated Debentures (i) the Preferred Securities will no longer be deemed to
be outstanding, (ii) DTC or its nominee, as the registered holder of Preferred
Securities, will 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 DTC or its nominee and
(iii) any certificates representing the 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
Preferred Securities and bearing accrued and unpaid interest in an amount equal
to the accumulated and unpaid Distributions on the Preferred Securities until
such certificates are presented to the security registrar for the Trust
Securities for transfer or reissuance.
If the Company does not redeem the Junior Subordinated Debentures prior
to maturity and the Issuer Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Preferred Securities, the
Preferred Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures and the distribution of the Liquidation Distribution to
the holders of the Preferred Securities.
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution and liquidation of the Issuer
Trust were to occur. Accordingly, the Preferred Securities that an investor may
purchase, or the Junior Subordinated Debentures that the investor may receive on
dissolution and liquidation of the Issuer Trust, may trade at a discount to the
price that the investor paid to purchase the Preferred Securities offered
hereby.
Events of Default; Notice
Any one of the following events constitutes an "Event of Default" under
the Trust Agreement (an "Event of Default") with respect to the Preferred
Securities (whatever the reason for such Event of Default and whether it is
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description of
Junior Subordinated Debentures--Debenture Events of Default"); or
(ii) 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; or
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<PAGE>
(iii) default by the Issuer Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trust 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 clause (ii) or (iii) above), and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Issuer Trustees and the Company by the
holders of at least 25% in aggregate Liquidation Amount of the outstanding
Preferred Securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee or all or substantially all of its property if a
successor Property Trustee has not been appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of Trust Securities and the
Administrators, unless such Event of Default has been cured or waived. The
Company, as Depositor, and the Administrators are required to file annually with
the Property Trustee a certificate as to whether or not they are in compliance
with all the conditions and covenants applicable to them under the Trust
Agreement.
If a Debenture Event of Default has occurred and is continuing as a
result of any failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Preferred Securities will have a
preference over the Common Securities with respect to payments of any amounts in
respect of the Preferred Securities as described above. See "--Subordination of
Common Securities," "--Liquidation Distribution Upon Dissolution" and
"Description of Junior Subordinated Debentures--Debenture Events of Default."
Removal of Issuer Trustees; Appointment of Successors
The holders of at least a majority in aggregate Liquidation Amount of
the outstanding Preferred Securities may remove an Issuer Trustee for cause or,
if a Debenture Event of Default has occurred and is continuing, with or without
cause. If an Issuer Trustee is removed by the holders of the outstanding
Preferred Securities, the successor may be appointed by the holders of at least
25% in Liquidation Amount of Preferred Securities. If an Issuer Trustee resigns,
such Trustee will appoint its successor. If an Issuer Trustee fails to appoint a
successor, the holders of at least 25% in Liquidation Amount of the outstanding
Preferred Securities may appoint a successor. If a successor has not been
appointed by the holders, any holder of Preferred Securities or Common
Securities or the other Issuer 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 at the time of appointment have securities rated in
one of the three highest rating categories by a nationally recognized
statistical rating organization and have capital and surplus of at least
$50,000,000. No resignation or removal of an Issuer Trustee and no appointment
of a successor trustee shall be effective until the acceptance of appointment by
the successor trustee in accordance with the provisions of the Trust Agreement.
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Merger or Consolidation of Issuer 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 Issuer
Trustee is a party, or any entity succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Trust Agreement, provided such entity is otherwise
qualified and eligible.
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 as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust may, at the request
of the holders of the Common Securities and with the consent of the holders of
at least a majority in aggregate Liquidation Amount of the outstanding Preferred
Securities, 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, so long as (i) such
successor entity either (a) expressly assumes all the obligations of the Issuer
Trust with respect to the Preferred Securities or (b) substitutes for the
Preferred Securities other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as the Successor
Securities have the same priority as the Preferred Securities with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) a
trustee of such successor entity, possessing the same powers and duties as the
Property Trustee, is appointed to hold the Junior Subordinated Debentures, (iii)
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 then rated, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Preferred Securities (including
any Successor Securities) in any material respect, (v) such successor entity has
a purpose substantially identical to that of the Issuer Trust, (vi) prior to
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease, the Issuer Trust has received an opinion from independent counsel
experienced in such matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect and (b)
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 (vii) the Company or any permitted successor or assignee owns all the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, the Issuer Trust may not,
except with the consent of holders of 100% in aggregate 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 taxable as a corporation for United
States federal income tax purposes.
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Voting Rights; Amendment of Trust Agreement
Except as provided below and under "--Removal of Issuer Trustees;
Appointment of Successors" and "Description of Guarantee--Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the holders of
a majority of the Common Securities and the Property Trustee, without the
consent of the holders of the Preferred Securities, (i) to cure any ambiguity,
correct or supplement any provisions in the Trust Agreement that may be
inconsistent with any other provision, or to make any other provisions with
respect to matters or questions arising under the Trust Agreement, provided that
any such amendment does not adversely affect in any material respect the
interests of any holder of Trust Securities, or (ii) to modify, eliminate or add
to any provisions of the Trust Agreement to such extent as may be necessary to
ensure that the Issuer Trust will not be 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, and any amendments
of the Trust Agreement will become effective when notice of such amendment is
given to the holders of Trust Securities. The Trust Agreement may be amended by
the holders of a majority of the Common Securities and the Property Trustee with
(i) the consent of holders representing not less than a majority in aggregate
Liquidation Amount of the outstanding 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 affect the Issuer Trust's not being taxable as a
corporation for United States federal income tax purposes or the Issuer Trust's
exemption from status as an "investment company" under the Investment Company
Act, except that, without the consent of each holder of Trust Securities
affected thereby, the Trust Agreement may not be amended to (i) change the
amount or timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Issuer
Trust, the Property Trustee will not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Property Trustee with respect to the
Junior Subordinated Debentures, (ii) waive any past default that is waivable
under Section 513 of the Junior Subordinated Indenture, (iii) exercise any right
to rescind or annul a declaration that the Junior Subordinated Debentures shall
be due and payable or (iv) consent to any amendment, modification or termination
of the Junior Subordinated Indenture or the Junior Subordinated Debentures,
where such consent shall be required, without, in each case, obtaining the prior
approval of the holders of at least a majority in aggregate Liquidation Amount
of the outstanding Preferred Securities, except that, if a consent under the
Junior Subordinated 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 such holder of the Preferred
Securities. The Property Trustee may not revoke any action previously authorized
or approved by a vote of the holders of the Preferred Securities except by
subsequent vote of the holders of the Preferred Securities. The Property Trustee
will notify each holder of Preferred Securities of any notice of default with
respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of the holders of the Preferred Securities, before taking
any of the foregoing actions, the Property Trustee will obtain an opinion of
counsel experienced in such
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matters to the effect that the Issuer Trust will not be taxable as a corporation
for United States federal income tax purposes on account of such action.
Any required approval of holders of Preferred Securities may be given
at a meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be given to each registered holder of Preferred Securities in the manner set
forth in the Trust Agreement.
No vote or consent of the holders of Preferred Securities will be
required to redeem and cancel Preferred Securities in accordance with the Trust
Agreement.
Notwithstanding that holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the Issuer Trustees or any
affiliate of the Company or any Issuer Trustees, will, for purposes of such vote
or consent, be treated as if they were not outstanding.
Expenses and Taxes
In the Indenture, the Company, as borrower, has agreed to pay all debts
and other obligations (other than with respect to the Preferred Securities) and
all costs and expenses of the Issuer Trust (including costs and expenses
relating to the organization of the Issuer Trust, the fees and expenses of the
Trustees and the costs and expenses relating to the operation of the Issuer
Trust) and to pay any and all taxes and all costs and expenses with respect
thereto (other than United States withholding taxes) to which the Issuer Trust
might become subject. The foregoing obligations of the Company under the
Indenture are for the benefit of, and shall be enforceable by, any person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice thereof. Any such
Creditor may enforce such obligations of the Company directly against the
Company, and the Company has irrevocably waived 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 has also 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 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 DTC'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 DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC
or any such nominee to a successor of such Depository or a nominee of such
successor.
Ownership of beneficial interests in a global security will be limited
to persons that have accounts with DTC or its nominee ("Participants") or
persons that may hold interests through Participants. The Company expects 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 interests in the 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
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maintained by DTC (with respect to interests of Participants) and on the records
of Participants (with respect to interests of Persons held through
Participants). Beneficial owners will not receive written confirmation from DTC
of their purchase, but are expected to receive written confirmations from the
Participants through which the beneficial owner entered into the transaction.
Transfers of ownership interests will be accomplished by entries on the books of
Participants acting on behalf of the beneficial owners.
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 Preferred Securities represented by such global security
for all purposes under the Junior Subordinated Indenture. Except as provided
below, owners of beneficial interests in a global security will not be entitled
to receive physical delivery of the Preferred Securities in definitive form and
will not be considered the owners or holders thereof under the Junior
Subordinated Indenture. Accordingly, each person owning a beneficial interest in
such a global security must rely on the procedures of DTC and, if such person is
not a Participant, on the procedures of the Participant through which such
person owns its interest, to exercise any rights of a holder of Preferred
Securities under the Junior Subordinated Indenture. The Company understands
that, under DTC's existing practices, in the event that the Company requests any
action of holders, or an owner of a beneficial interest in such a global
security desires to take any action which a holder is entitled to take under the
Junior Subordinated Indenture, DTC would authorize the Participants holding the
relevant beneficial interests to take such action, and such Participants would
authorize beneficial owners owning through such Participants to take such action
or would otherwise act upon the instructions of beneficial owners owning through
them. Redemption notices will also be sent to DTC. If less than all of the
Preferred Securities are being redeemed, the Company understands that it is
DTC's existing practice to determine by lot the amount of the interest of each
Participant to be redeemed.
Distributions on the 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 Preferred Securities.
None of the Company, the Trustees, the Administrators, any Paying Agent or any
other agent of the Company 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 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 beneficial
owners 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, the Company, the Trustees, the Paying Agent or any other agent
of the Company, subject to any statutory or regulatory requirements as may be in
effect from time to time.
DTC may discontinue providing its services as securities depository
with respect to the Preferred Securities at any time by giving reasonable notice
to the Company or the Trustees. If DTC notifies the Company 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 the Company within ninety days after receiving such notice or
becoming aware that DTC is no longer so registered, the Company will issue the
Preferred Securities in definitive form upon registration of transfer of, or in
exchange for, such global security. In addition, the Company may at any time and
in its sole discretion determine not to have the Preferred Securities
represented by one or more global securities and, in such
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event, will issue Preferred Securities in definitive form in exchange for all of
the global securities representing such Preferred Securities.
DTC has advised the Company and the Issuer Trust as follows: DTC is a
limited purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its 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.
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.
Same Day Settlement and Payment
Settlement for the Preferred Securities will be made by the
Underwriters in immediately available funds.
Secondary trading in Preferred Securities of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Preferred
Securities will trade in DTC's Same-Day Funds Settlement System, and secondary
market trading activity in the Preferred Securities will therefore be required
by DTC to settle in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the Preferred Securities.
Payment and Paying Agency
Payments in respect of the Preferred Securities will be made to DTC,
which will credit the relevant accounts at DTC on the applicable Distribution
Dates or, if the Preferred Securities are not held by DTC, such payments will be
made by check mailed to the address of the holder entitled thereto as such
address appears on the securities register for the Trust Securities. The paying
agent (the "Paying Agent") initially will be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrators. 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 will
appoint a successor (which must be a bank or trust company reasonably acceptable
to the Administrators) to act as Paying Agent.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of the Issuer Trust, but upon payment of any tax
or other governmental charges that may be imposed in connection with any
transfer or exchange. The Issuer Trust will not be required to register or cause
to be registered the transfer of the Preferred Securities after the Preferred
Securities have been called for redemption.
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Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance
of an Event of Default, undertakes to perform only such duties as are
specifically set forth in the Trust Agreement and, 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 the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
For information concerning the relationships between Bankers Trust
Company, the Property Trustee, and the Company, see "Description of
JuniorSubordinated 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 Issuer Trust in such a way that the
Issuer Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or 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 Company for United States
federal income tax purposes. In this connection, the Property Trustee and the
holders of Common Securities are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of the Issuer Trust or the Trust
Agreement, that the Property Trustee and the holders of Common Securities
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar
rights.
The Issuer Trust may not borrow money or issue debt or mortgage or
pledge any of its assets.
Governing Law
The Trust Agreement will be governed by and construed in accordance
with the laws of the State of Delaware.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under the Junior
Subordinated Indenture, under which Bankers Trust Company is acting as Debenture
Trustee. This summary of certain terms and provisions of the Junior Subordinated
Debentures and the Junior Subordinated Indenture does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Junior Subordinated Indenture, including the definitions
therein of certain terms. Whenever particular defined terms of the Junior
Subordinated Indenture (as amended or supplemented from time to time) are
referred to herein, such defined terms are incorporated herein by reference. A
copy of the form of Junior Subordinated Indenture is available from the
Debenture Trustee upon request.
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General
Concurrently with the issuance of the Preferred Securities, the Issuer
Trust will invest the proceeds thereof, together with the consideration paid by
the Company for the Common Securities, in the Junior Subordinated Debentures
issued by the Company. The Junior Subordinated Debentures will bear interest,
accruing from the date of original issuance, at a rate equal to _____% per annum
on the principal amount thereof, payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year (each, an "Interest Payment
Date"), commencing June 30, 1998, to the person in whose name each Junior
Subordinated Debenture is registered at the close of business on the March 15,
June 15, September 15 or December 15 (whether or not a Business Day) next
preceding such Interest Payment Date. It is anticipated that, until the
liquidation, if any, of the Issuer Trust, each Junior Subordinated Debenture
will be registered in the name of the Issuer Trust and held by the Property
Trustee in trust for the benefit of the holders of the Trust Securities. 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. The amount of interest
payable for any full interest period will be computed by dividing the rate per
annum by four. If any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (without any interest or other payment in respect of any such delay), 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 a rate equal to _____% per annum, compounded quarterly and
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 additional
interest payable for any full interest period will be computed by dividing the
rate per annum by four. The term "interest" as used herein includes quarterly
interest payments, interest on quarterly interest payments not paid on the
applicable Interest Payment Date and Additional Sums (as defined below), as
applicable.
The Junior Subordinated Debentures will mature on , 2028, subject to
the Maturity Adjustment (such date, as it may be shortened by the Maturity
Adjustment is referred to herein as the Stated Maturity). The Maturity
Adjustment represents the right of the Company to shorten the maturity date once
at any time to any date not earlier than , 2003, subject to the Company having
received prior approval of the Federal Reserve if then required under applicable
capital guidelines or policies of the Federal Reserve. In the event the Company
elects to shorten the Stated Maturity of the Junior Subordinated Debentures, it
will give notice to the registered holders of the Junior Subordinated
Debentures, the Debenture Trustee and the Issuer Trust of such shortening no
less than 90 days prior to the effectiveness thereof. The Property Trustee must
give notice to the holders of the Trust Securities of the shortening of the
Stated Maturity at least 30 but not more than 60 days before such date.
The Junior Subordinated Debentures will be unsecured and rank junior
and subordinate in right of payment to all Senior Indebtedness of the Company
and pari passu with the Company's obligations associated with the Outstanding
Capital Securities. The Junior Subordinated Debentures will not be subject to a
sinking fund and are not eligible as collateral for any loan made by the Bank
Subsidiaries. The Junior Subordinated Indenture does not limit the incurrence or
issuance of other secured or unsecured debt by the Company, including Senior
Indebtedness, whether under the Junior Subordinated Indenture or any existing or
other indenture or agreement that the Company may enter into in the future or
otherwise. See "--Subordination."
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Option To Extend Interest Payment Period
So long as no Debenture Event of Default has occurred and is
continuing, the Company has the right at any time during the term of the Junior
Subordinated Debentures to defer the payment of interest at any time or from
time to time for a period not exceeding 20 consecutive quarterly periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. At the end of
such Extension Period, the Company must pay all interest then accrued and unpaid
(together with interest thereon at a rate equal to _____% per annum, compounded
quarterly and 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, to the extent
permitted by applicable law). The amount of additional interest payable for any
full interest period will be computed by dividing the rate per annum by four.
During an Extension Period, interest will continue to accrue and holders of
Junior Subordinated Debentures (or holders of Preferred Securities while
outstanding) will be required to accrue interest income for United States
federal income tax purposes. See "Certain Federal Income Tax Consequences--US
Holders--Interest Income and Original Issue Discount."
During any such Extension Period, the Company may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock or (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 in
all respects with or junior in interest to the Junior Subordinated Debentures,
including the Company's obligations associated with the Outstanding Capital
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 benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of 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 or of any class or series of the
Company's indebtedness 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 stockholder's rights plan, or the issuance of rights, stock
or other property under any stockholders 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 Extension Period may
exceed 20 consecutive quarterly periods or extend beyond the Stated Maturity of
the Junior Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all amounts then due, 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. The Company
must give the Issuer Trustees notice of its election of such Extension Period at
least one Business Day prior to the earlier of (i) the date the Distributions on
the Preferred Securities would have been payable but for the election to begin
such Extension Period and (ii) the date the Property Trustee is required to give
notice to holders of the 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. The Property Trustee will give notice of the
Company's
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election to begin a new Extension Period to the holders of the Preferred
Securities. There is no limitation on the number of times that the Company may
elect to begin an Extension Period.
Redemption
The Junior Subordinated Debentures are redeemable prior to maturity at
the option of the Company (i) on or after , 2003, in whole at any time or in
part from time to time, or (ii) 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 Preferred Securities--Redemption"), in each case at the
redemption price described below. The proceeds of any such redemption will be
used by the Issuer Trust to redeem the Preferred Securities.
The Federal Reserve's risk-based capital guidelines, which are subject
to change, currently provide that redemptions of permanent equity or other
capital instruments before stated maturity and that any organization considering
such a redemption, depending on the circumstances, either: (i) must obtain
Federal Reserve approval prior to redemption, or (ii) should consult with the
Federal Reserve 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 (unless the equity or capital
instrument were redeemed with the proceeds of, or replaced by, a like amount of
a similar or higher quality capital instrument and the Federal Reserve considers
the organization's capital position to be fully adequate after the redemption).
The redemption of the Junior Subordinated Debentures by the Company
prior to their Stated Maturity would constitute the redemption of capital
instruments under the Federal Reserve's current risk- based capital guidelines
and may be subject, as it currently is, to the prior approval of the Federal
Reserve.
The redemption price for Junior Subordinated Debentures is the
outstanding principal amount of the Junior Subordinated Debentures plus accrued
interest (including any Additional Sums) thereon to but excluding the date fixed
for redemption.
Additional Sums
The Company has covenanted in the Junior Subordinated Indenture that,
if and for so long as (i) the Issuer Trust is the holder of all Junior
Subordinated Debentures and (ii) the Issuer Trust is required to pay any
additional taxes, duties or other governmental charges as a result of a Tax
Event, the Company will pay as additional sums on the Junior Subordinated
Debentures such amounts as may be required so that the Distributions payable by
the Issuer Trust will not be reduced as a result of any such additional taxes,
duties or other governmental charges. See "Description of Preferred
Securities--Redemption."
Registration, Denomination and Transfer
The Junior Subordinated Debentures will initially be registered in the
name of the Issuer Trust. If the Junior Subordinated Debentures are distributed
to holders of Preferred Securities, it is anticipated that the depositary
arrangements for the Junior Subordinated Debentures will be substantially
identical to those in effect for the Preferred Securities. See "Description of
Preferred Securities--Book Entry, Delivery and Form."
Although DTC has agreed to the procedures described above, it is under
no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC
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is at any time unwilling or unable to continue as depositary and a successor
depositary is not appointed by the Company within 90 days of receipt of notice
from DTC to such effect, the Company 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, as described under "Description of
the 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 registrable,
and Junior Subordinated Debentures will be exchangeable for 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 appointed by the
Company, provided that payment of interest may be made at the option of the
Company by check mailed to the address of the persons entitled thereto. However,
a holder of $1 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.
The Junior Subordinated Debentures are issuable only in registered form
without coupons in integral multiples of $25. Junior Subordinated Debentures are
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
Junior Subordinated Debenture or at the office of any transfer agent designated
by the Company for such purpose without service charge and upon payment of any
taxes and other governmental charges as described in the Junior Subordinated
Indenture. The Company has appointed the Debenture Trustee as securities
registrar under the Junior Subordinated Indenture. The Company may at any time
designate additional transfer agents with respect to the Junior Subordinated
Debentures.
In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of 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 (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
Any monies deposited with the Debenture 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 on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
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Restrictions on Certain Payments; Certain Covenants of the Company
The Company has covenanted that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (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 in
all respects with or junior in interest to the Junior Subordinated Debentures,
including the Company's obligations associated with the Outstanding Capital
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 benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period or other event
referred to below, (b) as a result of 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 or of any
class or series of the Company's indebtedness 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 stockholder's rights plan, or
the issuance of rights, stock or other property under any stockholder's 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), if at such time (i) there has
occurred any event (a) of which the Company has actual knowledge that with the
giving of notice or the lapse of time, or both, would constitute a Debenture
Event of Default and (b) that the Company has not taken reasonable steps to
cure, (ii) if the Junior Subordinated Debentures are held by the Issuer Trust,
the Company is in default with respect to its payment of any obligations under
the Guarantee or (iii) the Company has given notice of its election of an
Extension Period as provided in the Junior Subordinated Indenture and has not
rescinded such notice, or such Extension Period, or any extension thereof, is
continuing.
The Company has covenanted in the Junior Subordinated Indenture (i) to
continue to hold, directly or indirectly, 100% of the Common Securities,
provided that certain successors that are permitted pursuant to the Junior
Subordinated Indenture may succeed to the Company's ownership of the Common
Securities, (ii) as holder of the Common Securities, not to voluntarily
terminate, windup or liquidate the Issuer Trust, other than (a) in connection
with a distribution of Junior Subordinated Debentures to the holders of the
Preferred Securities in liquidation of the Issuer Trust or (b) in connection
with certain mergers, consolidations or amalgamations permitted by the Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Issuer Trust to continue not to
be taxable as a corporation for United States federal income tax purposes.
Modification of Junior Subordinated Indenture
From time to time, the Company and 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 Junior Subordinated
Indenture to: (1) evidence succession of another corporation or association to
the Company and the assumption by such person of the obligations of the Company
under the Junior Subordinated Debentures, (2) add further covenants,
restrictions or conditions for the protection of holders of the Junior
Subordinated Debentures, (3) cure ambiguities or correct the Junior Subordinated
Debentures
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in the case of defects or inconsistencies in the provisions thereof, so long as
any such cure or correction does not adversely affect the interest of the
holders of the Junior Subordinated Debentures in any material respect, (4)
change the terms of the Junior Subordinated Debentures to facilitate the
issuance of the Junior Subordinated Debentures in certificated or other
definitive form, (5) evidence or provide for the appointment of a successor
Debenture Trustee, or (6) qualify, or maintain the qualification of, the Junior
Subordinated Indentures under the Trust Indenture Act. The Junior Subordinated
Indenture contains provisions permitting the Company and the Debenture Trustee,
with the consent of the holders of not less than a majority in principal amount
of the Junior Subordinated Debentures, to modify the Junior Subordinated
Indenture in a manner affecting the rights of the holders of the Junior
Subordinated Debentures, except that no such modification may, without the
consent of the holder of each outstanding Junior Subordinated Debenture so
affected, (i) change the Stated Maturity of the Junior Subordinated Debentures,
or reduce the principal amount thereof, the rate of interest thereon or any
premium payable upon the redemption thereof, 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 Junior Subordinated Debenture or
(ii) reduce the percentage of principal amount of Junior Subordinated
Debentures, the holders of which are required to consent to any such
modification of the Junior Subordinated Indenture. Furthermore, so long as any
of the Preferred Securities remain outstanding, no such modification may be made
that adversely affects the holders of such Preferred Securities in any material
respect, and no termination of the Junior Subordinated Indenture may occur, and
no waiver of any Debenture Event of Default or compliance with any covenant
under the Junior Subordinated Indenture may be effective, without the prior
consent of the holders of at least a majority of the aggregate Liquidation
Amount of the outstanding Preferred Securities unless and until the principal of
(and premium, if any, on) the Junior Subordinated Debentures and all accrued and
unpaid interest thereon have been paid in full and certain other conditions are
satisfied.
Debenture Events of Default
The Junior Subordinated 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 constitutes an "Event of Default" with
respect to the Junior Subordinated Debentures:
(i) failure to pay any interest on the Junior Subordinated Debentures
when 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); or
(ii) failure to pay any principal of or premium, if any, on the Junior
Subordinated Debentures when due whether at maturity, upon redemption, by
declaration of acceleration or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Junior Subordinated Indenture for 90 days after
written notice to the Company from the Debenture Trustee or the holders of at
least 25% in aggregate outstanding principal amount of the outstanding Junior
Subordinated Debentures; or
(iv) 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.
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For purposes of the Trust Agreement and this Prospectus, each such
Event of Default under the Junior Subordinated Debenture is referred to as a
"Debenture Event of Default." As described in "Description of Preferred
Securities--Events of Default; Notice," the occurrence of a Debenture Event of
Default will also constitute an Event of Default in respect of the Trust
Securities.
The holders of at least a majority in aggregate principal amount of
outstanding Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25% in
aggregate principal amount of outstanding Junior Subordinated Debentures may
declare the principal due and payable immediately upon a Debenture 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 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 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
Preferred Securities shall have such right.
The holders of at least a majority in aggregate principal amount of the
outstanding Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal (or premium, if any) 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 Junior Subordinated Indenture cannot be modified or
amended without the consent of the holder of each outstanding Junior
Subordinated Debenture affected thereby. See "--Modification of Junior
Subordinated Indenture." The Company is required to file annually with the
Debenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Junior Subordinated Indenture.
If a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on the
Junior Subordinated Debentures, and any other amounts payable under the Junior
Subordinated Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to the Junior Subordinated Debentures.
Enforcement of Certain Rights by Holders of Preferred Securities
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the Junior Subordinated Debentures on the date such amounts are
otherwise payable, a registered holder of Preferred Securities may institute a
legal proceeding directly against the Company for enforcement of payment to such
holder 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 Preferred Securities held by such holder (a "Direct
Action"). The Company may not amend the Junior Subordinated Indenture to remove
the foregoing right to bring a Direct Action without the prior written consent
of the holders of all the Preferred Securities. The Company has the right under
the Junior Subordinated Indenture to set-off any payment made to such holder of
Preferred Securities by the Company in connection with a Direct Action.
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The holders of the Preferred Securities would 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.
See "Description of Preferred Securities--Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Junior Subordinated Indenture provides that the Company may 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
may consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless (i) if
the Company consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially as an entirety to any Person,
the successor Person is organized under the laws of the United States or any
state or the District of Columbia, and such successor Person expressly assumes
the Company's obligations in respect of the Junior Subordinated Debentures,
provided, however, that nothing in the Junior Subordinated Indenture shall be
deemed to restrict or prohibit, and no supplemental indenture shall be required
in the case of, the merger of a Principal Subsidiary Bank with and into a
Principal Subsidiary Bank or the Company, the consolidation of Principal
Subsidiary Banks into a Principal Subsidiary Bank or the Company, or the sale or
other disposition of all or substantially all of the assets of any Principal
Subsidiary Bank to another Principal Subsidiary Bank or the Company, if, in any
such case in which the surviving, resulting or acquiring entity is not the
Company, the Company would own, directly or indirectly, at least 80% of the
voting securities of the Principal Subsidiary Bank (and of any other Principal
Subsidiary Bank any voting securities of which are owned, directly or
indirectly, by such Principal Subsidiary Bank) surviving such merger, resulting
from such consolidation or acquiring such assets; (ii) immediately after giving
effect thereto, no Debenture Event of Default, and no event which, after notice
or lapse of time or both, would constitute a Debenture Event of Default, has
occurred and is continuing; and (iii) certain other conditions as prescribed in
the Junior Subordinated Indenture are satisfied.
For purposes of clause (i) above, the term "Principal Subsidiary Bank"
means each of (i) the Bank Subsidiaries, (ii) any other banking subsidiary of
the Company, the consolidated assets of which constitute 20% or more of the
consolidated assets of the Company and its consolidated subsidiaries, (iii) any
other banking subsidiary designated as a Principal Subsidiary Bank pursuant to a
resolution of the Board of Directors of the Company and set forth in an
officers' certificate delivered to the Debenture Trustee, and (iv) 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 Principal Subsidiary Bank under clause (i), (ii) or (iii),
and in the case of clause (i), (ii), (iii) or (iv) 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 clause (i), (ii) or (iii) or a subsidiary (in
the case of clause (iv)) of the Company.
The provisions of the Junior Subordinated Indenture do not afford
holders of the Junior Subordinated Debentures protection in the event of a
highly leveraged or other transaction involving the Company that may adversely
affect holders of the Junior Subordinated Debentures.
Satisfaction and Discharge
The Junior Subordinated Indenture provides that when, among other
things, all Junior Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation (i) have become due and payable or (ii) will
become due and payable at the Stated Maturity within one year, and
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the Company deposits or causes to be deposited with the Debenture Trustee funds,
in trust, for the purpose and in an amount sufficient to pay and discharge the
entire indebtedness on the 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, as the case may be, then the Junior Subordinated Indenture will cease
to be of further effect (except as to the Company's obligations to pay all other
sums due pursuant to the Junior Subordinated Indenture and to provide the
officers' certificates and opinions of counsel described therein), and the
Company will be deemed to have satisfied and discharged the Junior Subordinated
Indenture.
Subordination
The Junior Subordinated Debentures will be subordinate and junior in
right of payment, to the extent set forth in the Junior Subordinated Indenture,
to all Senior Indebtedness (as defined below) of the Company and pari passu with
the Company's obligations associated with the Outstanding Capital Securities. If
the Company defaults in the payment of any principal, premium, if any, or
interest, if any, or any other amount payable on any Senior 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 setoff 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" means, whether recourse is to all
or a portion of the assets of the Company and whether or not contingent, (i)
every obligation of the Company for money borrowed; (ii) every obligation of the
Company evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of the Company with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company; (iv) every obligation of the Company issued or
assumed as the deferred purchase price of property services (but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of the Company; (vi) 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; and (vii) every obligation of the type referred to in
clauses (i) through (vi) of another person and all dividends of another person
the payment of which, in either case, the Company has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise. Without
limiting the generality of the foregoing, Senior Indebtedness shall include the
Senior Notes. "Senior Indebtedness" shall not include (i) 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, (ii) 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, (iii)
any Senior Indebtedness of the Company to any of its subsidiaries, (iv) Senior
Indebtedness to any executive officer or director of the Company, or (v) 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 Outstanding Capital Securities.
In the event of (i) certain events of bankruptcy, dissolution or
liquidation of the Company or the holder of the Common Securities, (ii) any
proceeding for the liquidation, dissolution or other winding up
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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, 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 on
account of the Junior Subordinated Debentures. 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 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 such proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Company ranking
on a parity with the Junior Subordinated Debentures, will be entitled to be paid
from the remaining assets of the Company the amounts at the time due and owing
on the Junior Subordinated Debentures and such other obligations before any
payment or other distribution, whether in cash, property or otherwise, will be
made on account of any capital stock or obligations of the Company ranking
junior to the Junior Subordinated Debentures and such other obligations. If any
payment or distribution on account of the Junior Subordinated Debentures of any
character or any 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 hereof and before all the 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 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. By reason of such subordination, in the event of
the insolvency of the Company, holders of Senior Indebtedness may receive more,
ratably, and holders of the Junior Subordinated Debentures may receive less,
ratably, than the other creditors of the Company. Such subordination will not
prevent the occurrence of any Event of Default in respect of the Junior
Subordinated Debentures.
The Junior Subordinated Indenture places no limitation on the amount of
additional Senior Indebtedness that may be incurred by the Company. The Company
expects from time to time to incur additional indebtedness constituting Senior
Indebtedness.
Information Concerning the Debenture Trustee
The Debenture Trustee, other than during the occurrence and continuance
of a default by the Company in performance of its obligations under the Junior
Subordinated Debenture, is under no obligation to exercise any of the powers
vested in it by the Junior Subordinated 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
thereby. The Debenture Trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its duties
if the Debenture Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
Bankers Trust Company, the Debenture Trustee, serves as trustee under
the indenture and trust agreement associated with the Outstanding Capital
Securities. In addition, Bankers Trust Company may serve from time to time as
trustee under other indentures or trust agreements with the Company or its
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subsidiaries relating to other issues of their securities. In addition, the
Company and certain of its affiliates may have other banking relationships with
Bankers Trust Company and its affiliates.
Governing Law
The Junior Subordinated Indenture and the Junior Subordinated
Debentures will be governed by and construed in accordance with the laws of the
State of New York.
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Company
concurrently with the issuance of Preferred Securities by the Issuer Trust for
the benefit of the holders from time to time of the Preferred Securities.
Bankers Trust Company will act as Guarantee Trustee under the Guarantee. This
summary of certain provisions of the Guarantee does not purport to be complete
and is subject to, and qualified in its entirety by reference to, all the
provisions of the Guarantee, including the definitions therein of certain terms.
A copy of the form of Guarantee is available upon request from the Guarantee
Trustee. The Guarantee Trustee will hold the Guarantee for the benefit of the
holders of the Preferred Securities.
General
The Company will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer Trust may have or
assert other than the defense of payment. The following payments with respect to
the Preferred Securities, to the extent not paid by or on behalf of the Issuer
Trust (the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on such Preferred
Securities, to the extent that the Issuer Trust has funds on hand available
therefor at such time, (ii) the Redemption Price with respect to any Preferred
Securities called for redemption, to the extent that the Issuer Trust has funds
on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution of the Issuer Trust (unless the Junior Subordinated
Debentures are distributed to holders of the 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 Issuer Trust has
funds on hand available therefor at such time, and (b) the amount of assets of
the Issuer Trust remaining available for distribution to holders of the
Preferred Securities on liquidation of the Issuer Trust. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of the Preferred Securities or by
causing the Issuer Trust to pay such amounts to such holders.
The Guarantee is an irrevocable guarantee on a subordinated basis of
the Issuer Trust's obligations under the Preferred Securities, but applies only
to the extent that the Issuer Trust has funds sufficient to make such payments,
and is not a guarantee of collection.
If the Company does not make payments on the Junior Subordinated
Debentures held by the Issuer Trust, the Issuer Trust will not be able to pay
any amounts payable in respect of the Preferred Securities and will not have
funds legally available therefor. The Guarantee ranks subordinate and junior in
right of payment to all Senior Indebtedness of the Company. See "--Status of the
Guarantee." The Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, including Senior Indebtedness, whether
under the Junior Subordinated Indenture, any other indenture that the Company
may enter into in the future or otherwise.
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The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture, taken together,
fully, irrevocably and unconditionally guaranteed all the Issuer Trust's
obligations under the 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
Issuer Trust's obligations in respect of the Preferred Securities. See
"Relationship Among the Preferred Securities, the Junior Subordinated Debentures
and the Guarantee."
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the Company
and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Company and pari passu with the Company's obligations
association with the Outstanding Capital Securities in the same manner as the
Junior Subordinated Debentures.
The Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Preferred Securities. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Issuer
Trust or distribution to the holders of the Preferred Securities of the Junior
Subordinated Debentures.
Amendments and Assignment
Except with respect to any changes which do not materially adversely
affect the rights of holders of the Preferred Securities (in which case no vote
will be required), the Guarantee may not be amended without the prior approval
of the holders of not less than a majority of the aggregate Liquidation Amount
of the outstanding Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of the Preferred
Securities--Voting Rights; Amendment of Trust Agreement." All guarantees and
agreements contained in the Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Company and shall inure to the
benefit of the holders of the Preferred Securities then outstanding.
Events of Default
An event of default under the Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder, or to
perform any non-payment obligation if such non-payment default remains
unremedied for 30 days. The holders of not less than a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under the
Guarantee.
Any registered holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Issuer Trust,
the Guarantee Trustee or any other person or entity.
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The Company, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance
of a default by the Company in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after the occurrence of an event of default with respect to the Guarantee, must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, the
Guarantee Trustee is under no obligation to exercise any of the powers vested in
it by the Guarantee at the request of any holder of the Preferred Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
For information concerning the relationship between Bankers Trust
Company, the Guarantee Trustee, and the Company, 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 Preferred Securities, upon full
payment of the amounts payable with respect to the Preferred Securities upon
liquidation of the Issuer Trust or upon distribution of Junior Subordinated
Debentures to the holders of the Preferred Securities. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the Preferred Securities must restore payment of any sums
paid under the Preferred Securities or the Guarantee.
Governing Law
The Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Preferred
Securities (to the extent the Issuer Trust has funds available for such payment)
are irrevocably guaranteed by the Company as and to the extent set forth under
"Description of Guarantee." Taken together, the Company's obligations under the
Junior Subordinated Debentures, the Junior Subordinated 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 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 Issuer Trust's
obligations in respect of the Preferred Securities. If and to the extent that
the Company does not make payments on the Junior Subordinated Debentures, the
Issuer Trust will not have sufficient funds to pay Distributions or other
amounts due on the Preferred Securities.
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The Guarantee does not cover payment of amounts payable with respect to the
Preferred Securities when the Issuer Trust does not have sufficient funds to pay
such amounts. In such event, the remedy of a holder of the Preferred Securities
is to institute a legal proceeding directly against the Company for enforcement
of payment of the Company's obligations under Junior Subordinated Debentures
having a principal amount equal to the Liquidation Amount of the Preferred
Securities held by such holder.
The obligations of the Company under the Junior Subordinated Debentures
and the Guarantee are subordinate and junior in right of payment to all Senior
Indebtedness.
Sufficiency of Payments
As long as payments are made when due on the Junior Subordinated
Debentures, such payments will be sufficient to cover Distributions and other
payments distributable on the Preferred Securities, primarily because (i) the
aggregate principal amount of the Junior Subordinated Debentures will be equal
to the sum of the aggregate stated Liquidation Amount of the Preferred
Securities and Common Securities; (ii) 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 Preferred Securities;
(iii) the Company will pay for all and any costs, expenses and liabilities of
the Issuer Trust except the Issuer Trust's obligations to holders of the Trust
Securities; and (iv) the Trust Agreement further provides that the Issuer Trust
will not engage in any activity that is not consistent with the limited purposes
of the Issuer Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Company has the right to set-off any payment it is otherwise
required to make thereunder against and to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee.
Enforcement Rights of Holders of Preferred Securities
A holder of any Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
Trust or any other person or entity. See "Description of Guarantee."
A default or event of default under any Senior Indebtedness of the
Company would not constitute a default or Event of Default in respect of the
Preferred Securities. However, in the event of payment defaults under, or
acceleration of, Senior Indebtedness of the Company, the subordination
provisions of the Junior Subordinated Indenture provide that no payments may be
made in respect of the Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. See "Description of Junior Subordinated
Debentures--Subordination."
Limited Purpose of Issuer Trust
The Preferred Securities represent preferred undivided beneficial
interests in the assets of the Issuer Trust, and the Issuer Trust exists for the
sole purpose of issuing its Preferred Securities and Common Securities and
investing the proceeds thereof in Junior Subordinated Debentures. A principal
difference between the rights of a holder of a Preferred Security and a holder
of a Junior Subordinated Debenture is that a holder of a Junior Subordinated
Debenture is entitled to receive from the Company payments on Junior
Subordinated Debentures held, while a holder of Preferred Securities is entitled
to
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receive Distributions or other amounts distributable with respect to the
Preferred Securities from the Issuer Trust (or from the Company under the
Guarantee) only if and to the extent the Issuer Trust has funds available for
the payment of such Distributions.
Rights Upon Dissolution
Upon any voluntary or involuntary dissolution of the Issuer Trust,
other than any such dissolution involving the distribution of the Junior
Subordinated Debentures, after satisfaction of liabilities to creditors of the
Issuer Trust as required by applicable law, the holders of the Preferred
Securities will be entitled to receive, out of assets held by the Issuer Trust,
the Liquidation Distribution in cash. See "Description of Preferred
Securities--Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Issuer Trust, as
registered holder of the Junior Subordinated Debentures, would be a subordinated
creditor of the Company, subordinated and junior in right of payment to all
Senior Indebtedness as set forth in the Junior Subordinated Indenture, but
entitled to receive payment in full of all amounts payable with respect to the
Junior Subordinated Debentures before any stockholders of the Company receive
payments or distributions. Since the Company is the guarantor under the
Guarantee and has agreed under the Junior Subordinated Indenture to pay for all
costs, expenses and liabilities of the Issuer Trust (other than the Issuer
Trust's obligations to the holders of the Trust Securities), the positions of a
holder of the Preferred Securities and a holder of such Junior Subordinated
Debentures relative to other creditors and to stockholders of the Company in the
event of liquidation or bankruptcy of the Company are expected to be
substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
In the opinion of Gordon, Feinblatt, Rothman, Hoffberger & Hollander,
LLC, in its capacity as special tax counsel to the Company ("Tax Counsel"), the
discussion of United States federal income taxation which follows summarizes the
material United States federal income tax consequences of the purchase,
ownership and disposition of the Preferred Securities.
This summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury regulations thereunder, and administrative and judicial
interpretations thereof, each as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. The authorities on which this summary
is based are subject to various interpretations, and the opinions of Tax Counsel
are not binding on the Internal Revenue Service (the "IRS") or the courts,
either of which could take a contrary position. Moreover, no rulings have been
or will be sought from the IRS with respect to the transactions described
herein. Accordingly, there can be no assurance that the IRS will not challenge
the opinions expressed herein or that a court would not sustain such a
challenge.
Except as otherwise stated, this summary deals only with the Preferred
Securities held as a capital asset by a holder who or which (i) purchased the
Preferred Securities upon original issuance at their original offering price and
(ii) is a US Holder (as defined below). This summary does not address all the
tax consequences that may be relevant to a US Holder, nor does it address the
tax consequences, except as stated below, to holders that are not US Holders
("Non-US Holders") or to holders that may be subject to special tax treatment
(such as banks, thrift institutions, real estate investment trusts, regulated
investment companies, insurance companies, brokers and dealers in securities or
currencies, other financial institutions, tax-exempt organizations, persons
holding the Preferred Securities as a position in a "straddle," as part of
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a "synthetic security," "hedging," "conversion" or other integrated investment,
persons having a functional currency other than the U.S. Dollar and certain
United States expatriates). Further, this summary does not address (a) the
income tax consequences to shareholders in, or partners or beneficiaries of, a
holder of the Preferred Securities, (b) the United States federal alternative
minimum tax consequences of the purchase, ownership or disposition of the
Preferred Securities, or (c) any state, local or foreign tax consequences of the
purchase, ownership and disposition of Preferred Securities.
A "US Holder" is a holder of the Preferred Securities who or which is
(i) a citizen or individual resident (or is treated as a citizen or individual
resident) of the United States for income tax purposes, (ii) a corporation or
partnership created or organized (or treated as created or organized for income
tax purposes) in or under the laws of the United States or any political
subdivision thereof, (iii) 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 (iv) a trust if (a) a court within the United States is able to
exercise primary supervision over the administration of the trust and (b) one or
more United States trustees have the authority to control all substantial
decisions of the trust.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER
TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE PREFERRED
SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE "DESCRIPTION OF
PREFERRED SECURITIES--REDEMPTION."
US Holders
Characterization of the Issuer Trust
In connection with the issuance of the Preferred Securities, Tax
Counsel will render its opinion generally to effect that, under then current law
and based on the representations, facts and assumptions set forth in this
Prospectus, and assuming full compliance with the terms of the Trust Agreement
(and other relevant documents), and based on certain assumptions and
qualifications referenced in the opinion, the Issuer Trust will be characterized
for United States federal income tax purposes as a grantor trust and will not be
characterized as an association taxable as a corporation. Accordingly, for
United States federal income tax purposes, each holder of the Preferred
Securities generally will be considered the owner of an undivided interest in
the Junior Subordinated Debentures owned by the Issuer Trust, and each US Holder
will be required to include all income or gain recognized for United States
federal income tax purposes with respect to its allocable share of the Junior
Subordinated Debentures on its own income tax return.
Characterization of the Junior Subordinated Debentures
The Company and the Issuer Trust will agree to treat the Junior
Subordinated Debentures as indebtedness for all United States federal income tax
purposes. In connection with the issuance of the Junior Subordinated Debentures,
Tax Counsel will render its opinion generally to the effect that, under then
current law and based on the representations, facts and assumptions set forth in
this Prospectus, and assuming full compliance with the terms of the Indenture
(and other relevant documents), and based on certain assumptions and
qualifications referenced in the opinion, the Junior Subordinated Debentures
will be characterized for United States federal income tax purposes as debt of
the Company.
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Interest Income and Original Issue Discount
Under the terms of the Junior Subordinated Debentures, the Company has
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.
Treasury regulations under Section 1273 of the Code provide that debt
instruments like the Junior Subordinated Debentures will not be considered
issued with original issue discount ("OID") by reason of the Company's ability
to defer payments of interest if the likelihood of such deferral is "remote."
The Company has concluded, and this discussion assumes, that, as of the
date of this Prospectus the likelihood of deferring payments of interest under
the terms of the Junior Subordinated Debentures is "remote" within the meaning
of the applicable Treasury regulations, in part because exercising that option
would prevent the Company from declaring dividends on its stock and would
prevent the Company from making any payments with respect to debt securities
that rank pari passu with or junior to the Junior Subordinated Debentures.
Therefore, the Junior Subordinated Debentures should not be treated as issued
with OID by reason of the Company's deferral option. Consequently, stated
interest on the Junior Subordinated Debentures will generally be taxable to a US
Holder as ordinary income when paid or accrued in accordance with that holder's
method of accounting for income tax purposes. It should be noted, however, that
these regulations may in the future be analyzed and interpreted by the IRS in
rulings or other published documents. Accordingly, it is possible that the IRS
could take a position contrary to the interpretation described herein.
In the event the Company exercises its option to defer payments of
interest, the Junior Subordinated Debentures would be treated as reissued for
OID purposes and the sum of the remaining interest payments (and any de minimis
OID) on the Junior Subordinated Debentures would thereafter be treated as OID,
which would accrue, and be includible in a US Holder's taxable income, on an
economic accrual basis (regardless of the US Holder's 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, US Holders will include OID in gross income in
advance of the receipt of cash, and a US Holder which disposes of a Preferred
Security prior to the record date for payment of distributions on the Junior
Subordinated Debentures following that period will be subject to income tax on
OID accrued through the date of disposition (and not previously included in
income), but will not receive cash from the Issuer Trust with respect to such
OID.
If the possibility of the Company's exercise of its option to defer
payments of interest was not 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 minimis OID) over the term of the Junior Subordinated
Debentures. That OID would generally be includible in a US Holder's taxable
income, over the term of the Junior Subordinated Debentures, on an economic
accrual basis.
Characterization of Income
Because the income underlying the Preferred Securities will not be
characterized as dividends for income tax purposes, corporate holders of the
Preferred Securities will not be entitled to a dividends-received deduction for
any income recognized with respect to the Preferred Securities.
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Market Discount and Bond Premium
U.S. Holders of Preferred Securities may be considered to have acquired
their undivided interests in the Junior Subordinated Debentures with market
discount or acquisition premium (as each phrase is defined for United States
federal income tax purposes).
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of
the Issuer Trust
Under certain circumstances described herein (See "Description of the
Preferred Securities--Liquidation Distribution Upon Dissolution"), the Issuer
Trust may distribute the Junior Subordinated Debentures to holders in exchange
for the Preferred Securities and in liquidation of the Issuer Trust. Except as
discussed below, such a distribution would not be a taxable event for United
States federal income tax purposes, and each US Holder would have an aggregate
adjusted basis in its Junior Subordinated Debentures for United States federal
income tax purposes equal to such holder's aggregate adjusted basis in its
Preferred Securities. For United States federal income tax purposes, a US
Holder's holding period in the Junior Subordinated Debentures received in such a
liquidation of the Issuer Trust would include the period during which the
Preferred Securities were held by the holder. If, however, the relevant event is
a Tax Event which results in the Issuer Trust being treated as an association
taxable as a corporation, the distribution would likely constitute a taxable
event to US Holders of the Preferred Securities for United States federal income
tax purposes.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Such a redemption would be taxable for United States
federal income tax purposes, and a US Holder generally would recognize gain or
loss as if it had sold the Preferred Securities for cash. See "--Sales of
Preferred Securities" below.
Sales of Preferred Securities
A US Holder that sells Preferred Securities will recognize gain or loss
equal to the difference between its adjusted basis in the Preferred Securities
and the amount realized on the sale of such Preferred Securities. A US Holder's
adjusted basis in the Preferred Securities generally will be its initial
purchase price, increased by OID previously included (or currently includible)
in such holder's gross income to the date of disposition, and decreased by
payments received on the Preferred Securities (other than any interest received
with respect to the period prior to the effective date of the Company's first
exercise of its 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 the Preferred Securities have been held for more than
one year prior to the date of disposition.
A holder who disposes of his Preferred Securities between record dates
for payments of distributions thereon will be required to include accrued but
unpaid interest (or OID) on the Junior Subordinated Debentures through the date
of disposition in its taxable income for United States federal income tax
purposes (notwithstanding that the holder may receive a separate payment from
the purchaser with respect to accrued interest), and to deduct that amount from
the sales proceeds received (including the separate payment, if any, with
respect to accrued interest) for the Preferred Securities (or as to OID only, to
add such amount to such holder's adjusted tax basis in its Preferred
Securities). To the extent the selling price is less than the holder's adjusted
tax basis (which will include accrued but unpaid OID, if any), a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes.
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Non-US Holders
The following discussion applies to a Non-US Holder.
Payments to a holder of a Preferred Security which is a Non-US Holder
will generally not be subject to withholding of income tax, provided that (a)
the beneficial owner of the Preferred Security does not (directly or indirectly,
actually or constructively) own 10% or more of the total combined voting power
of all classes of stock of the Company entitled to vote, (b) the beneficial
owner of the Preferred Security is not a controlled foreign corporation that is
related to the Company through stock ownership, and (c) either (i) the
beneficial owner of the Preferred Securities certifies to the Issuer Trust or
its agent, under penalties of perjury, that it is a Non-US Holder and provides
its name and address, or (ii) 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 Preferred
Security in such capacity, certifies to the Issuer Trust or its agent, under
penalties of perjury, that such a statement has been received from the
beneficial owner by it or by another Financial Institution between it and the
beneficial owner in the chain of ownership, and furnishes the Issuer Trust or
its agent with a copy thereof.
A Non-US Holder of a Preferred Security will generally not be subject
to withholding of income tax on any gain realized upon the sale or other
disposition of a Preferred Security.
A Non-US Holder which holds the Preferred Securities in connection with
the active conduct of a United States trade or business will be subject to
income tax on all income and gains recognized with respect to its proportionate
share of the Junior Subordinated Debentures.
Information Reporting
In general, information reporting requirements will apply to payments
made on, and proceeds from the sale of, the Preferred Securities held by a
noncorporate US Holder within the United States. In addition, payments made on,
and payments of the proceeds from the sale of, the Preferred Securities to or
through the United States office of a broker are subject to information
reporting unless the holder thereof certifies as to its Non-United States status
or otherwise establishes an exemption from information reporting and backup
withholding. See "--Backup Withholding." Taxable income on the Preferred
Securities for a calendar year should be reported to US Holders on the
appropriate form by the following January 31st.
Backup Withholding
Payments made on, and proceeds from the sale of, the Preferred
Securities may be subject to a "backup" withholding tax of 31% unless the holder
complies with certain identification or exemption requirements. Any amounts so
withheld will be allowed as a credit against the holder's income tax liability,
or refunded, provided the required information is provided to the IRS.
The preceding discussion is only a summary and does not address the
consequences to a particular holder of the purchase, ownership and disposition
of the Preferred Securities. Potential holders of the Preferred Securities are
urged to contact their own tax advisors to determine their particular tax
consequences.
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CERTAIN ERISA CONSIDERATIONS
The Company and certain affiliates of the Company may each be
considered a "party in interest" within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or a "disqualified person"
within the meaning of Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code") with respect to certain employee benefit plans ("Plans")
that are subject to ERISA. The purchase of the Preferred Securities by a Plan
that is subject to the fiduciary responsibility provisions of ERISA or the
prohibited transaction provisions of Section 4975(e)(1) of the Code and with
respect to which the Company, or any affiliate of the Company is a service
provider (or otherwise is a party in interest or a disqualified person) may
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Code, unless the Preferred Securities are acquired pursuant to and in
accordance with an applicable exemption. Any pension or other employee benefit
plan proposing to acquire any Preferred Securities should consult with its
counsel.
SUPERVISION, REGULATION AND OTHER MATTERS
The following information is not intended to be an exhaustive
description of the statutes and regulations applicable to the Company. The
discussion is qualified in its entirety by reference to all particular statutory
or regulatory provisions. Additional information regarding supervision and
regulation is included in the documents incorporated herein by reference. See
"Available Information."
Banking
The business of the Company is influenced by prevailing economic
conditions and governmental policies, both foreign and domestic. The actions and
policy directives of the Federal Reserve determine to a significant degree the
cost and the availability of funds obtained from money market sources for
lending and investing. The Federal Reserve's policies and regulations also
influence, directly and indirectly, the rates of interest paid by commercial
banks on their time and savings deposits. The nature and impact on the Company
of future changes in economic conditions and monetary and fiscal policies, both
foreign and domestic, are not predictable.
The Company is subject to supervision and examination by federal bank
regulatory authorities. As a bank holding company registered under the BHC Act,
the Company's primary bank regulatory authority is the Federal Reserve. Bank
holding companies are expected to serve as a source of strength to their
subsidiary banks under the Federal Reserve's regulations and policies.
The federal bank regulatory authorities have each adopted risk-based
capital guidelines to which the Company and the Bank Subsidiaries are subject.
These guidelines are based on an international agreement developed by the Basle
Committee on Banking Regulations and Supervisory Practices, which consists of
representatives of central banks and supervisory authorities in 12 countries
including the United States of America. The guidelines establish a systematic
analytical framework that makes regulatory capital requirements more sensitive
to differences in risk profiles among banking organizations, takes off-balance
sheet exposures into explicit account in assessing capital adequacy and
minimizes disincentives to holding liquid, low-risk assets. Risk-based assets
are determined by allocating assets and specified off-balance sheet commitments
and exposures into four weighted categories, with higher levels of capital being
required for the categories perceived as representing greater risk.
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The Bank Subsidiaries are required to maintain a minimum total
risk-based ratio of 8%, of which half (4%) must be "Tier 1" capital. In
addition, the federal bank regulators' established leverage ratio (Tier 1
capital to total adjusted average assets) guidelines provide for a minimum
leverage ratio of 3% for banks meeting certain specified criteria, including
excellent asset quality, high liquidity, low interest rate exposure and the
highest regulatory rating. Institutions not meeting these criteria are expected
to maintain a ratio which exceeds the 3% minimum by at least 100 to 200 basis
points. The federal bank regulatory authorities may, however, set higher capital
requirements when a bank's particular circumstances warrant.
From time to time, the federal bank regulatory authorities, including
the Federal Reserve and the FDIC, propose amendments to and issue
interpretations of their risk-based capital guidelines and reporting
instructions, which can affect reported capital ratios and net risk-adjusted
assets. For example, effective June 26, 1996, the Federal Reserve, the Office of
the Comptroller of the Currency and the FDIC issued a joint policy statement
that provides guidance on sound practices for interest rate risk management and
describes critical factors affecting the agencies' evaluation of a bank's
interest rate risk when making a determination of capital adequacy.
The federal banking agencies possess broad powers to take corrective
action as deemed appropriate for an insured depository institution and its
holding company. The extent of these powers depends upon whether the institution
in question is considered "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." Generally, as an institution is deemed to be less well
capitalized, the scope and severity of the agencies' powers increase. The
agencies' corrective powers can include, among other things, requiring an
insured financial institution to adopt a capital restoration plan which cannot
be approved unless guaranteed by the institution's parent holding company;
placing limits on asset growth and restrictions on activities; placing
restrictions on transactions with affiliates; restricting the interest rates the
institution may pay on deposits; prohibiting the institution from accepting
deposits from correspondent banks; prohibiting the payment of principal or
interest on subordinated debt; prohibiting the holding company from making
capital distributions without prior regulatory approval; and, ultimately,
appointing a receiver for the institution. Business activities may also be
influenced by an institution's capital classification. For instance, only a
"well capitalized" depository institution may accept brokered deposits without
prior regulatory approval and only an "adequately capitalized" depository
institution may accept brokered deposits with prior regulatory approval. At
December 31, 1997, the Company, on a consolidated basis, and the Bank
Subsidiaries exceeded the required capital ratios for classification as a "well
capitalized" bank holding company and commercial bank, respectively.
The deposits of the Bank Subsidiaries are insured by the FDIC and are
subject to FDIC insurance assessments. The amount of FDIC assessments paid by
individual insured depository institutions is based on their relative risk as
measured by regulatory capital ratios and certain other factors. Currently, the
Bank Subsidiaries are not assessed any premiums for deposits insured by either
the Bank Insurance Fund or the Savings Association Insurance Fund.
Under federal law, a financial institution insured by the FDIC under
common ownership with a failed institution can be required to indemnify the FDIC
for its losses resulting from the insolvency of the failed institution, even if
such indemnification causes the affiliated institution also to become insolvent.
As a result, each Bank Subsidiary could, under certain circumstances, be
obligated for the liabilities of its affiliates that are FDIC-insured
institutions. In addition, if any insured depository institution becomes
insolvent and the FDIC is appointed its conservator or receiver, the FDIC may
disaffirm or repudiate any contract or lease to which such institution is a
party, the performance of which is determined to be
72
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burdensome and the disaffirmance or repudiation of which is determined to
promote the orderly administration of the institution's affairs. If federal law
were construed to permit the FDIC to apply these provisions to debt obligations
of an insured depository institution, the result could be that such obligations
would be prepaid without premium. Federal law also accords the claims of a
receiver of an insured depository institution for administrative expenses and
the claims of holders of deposit liabilities of such an institution priority
over the claims of general unsecured creditors of such an institution in the
event of a liquidation or other resolution of such institution.
The BHC Act currently permits adequately capitalized and adequately
managed bank holding companies from any state to acquire banks and bank holding
companies located in any other state, subject to certain conditions. Competition
may increase as banks branch across state lines and enter new markets.
Consumer Finance
The business of Rose Shanis Loans, LLC, and Bay Insurance, LLC, is
subject to the restrictions of the BHC Act which apply to subsidiaries of bank
holding companies registered under the BHC Act. In addition, Rose Shanis Loans,
LLC, is licensed by the Maryland Commissioner under the Maryland Consumer Loan
Law -- Licensing Provisions and the Maryland Sales Finance Companies Licensing
Law and is supervised and examined by the Maryland Commissioner. Bay Insurance,
LLC, is licensed as an agent with the Maryland Insurance Administration and is
supervised and examined by the Maryland Insurance Commissioner.
The interest rates, fees and charges, terms and other aspects of the
loans which may be made by Rose Shanis Loans, LLC, are established by Maryland
credit laws. The Maryland Commissioner possesses broad powers to take corrective
action with respect to any violations of Maryland law by Rose Shanis Loans, LLC.
The Maryland Commissioner may investigate the loans made and business of
licensees, may issue cease and desist orders, may suspend or revoke the license
of any licensee who violates any provision of the Maryland Consumer Loan Law or
knowingly and repeatedly violates any provision of the Maryland Consumer Debt
Collection Act. The Maryland Insurance Commissioner may take similar actions
with respect to violations of the Maryland Insurance Code by Bay Insurance, LLC.
Consumer credit is highly regulated and subject to numerous federal and
state laws which require disclosure, govern collection procedures, govern
application procedures, establish maximum interest rates, fees and charges.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement"), dated ________________ ___, 1998, BT Alex. Brown
Incorporated and Keefe, Bruyette & Woods, Inc. (the "Underwriters") have agreed
to purchase from the Issuer Trust $20,000,000 aggregate Liquidation Amount of
Preferred Securities at the public offering price.
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the Preferred Securities offered hereby if any
of such Preferred Securities are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Preferred Securities to the public at the public offering
price set forth on the cover page of this Prospectus
73
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and to certain dealers at such price less a concession not in excess of $0.____
per share. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $0._____ per share to certain other dealers. After
the public offering, the offering price and other selling terms may be changed
by the Underwriters.
In connection with the offering of the Preferred Securities, the
Underwriters and any selling group members and their respective affiliates may
engage in transactions effected in accordance with Rule 104 of the Securities
and Exchange Commission's Regulation M that are intended to stabilize, maintain
or otherwise affect the market price of the Preferred Securities. Such
transactions may include over-allotment transactions in which an Underwriter
creates a short position for its own account by selling more Preferred
Securities than it is committed to purchase from the Issuer Trust. In such a
case, to cover all or part of the short position, the Underwriters may purchase
Preferred Securities in the open market following completion of the initial
offering of the Preferred Securities. The Underwriters also may engage in
stabilizing transactions in which they bid for, and purchase, Preferred
Securities at a level 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 Preferred Securities. The Underwriters also may reclaim any selling
concessions allowed to a dealer if the Underwriters repurchase shares
distributed by that dealer. Any of the foregoing transactions may result in the
maintenance of a price for the Preferred Securities at a level above that which
might otherwise prevail in the open market. Neither the Company nor the
Underwriters make any representation or prediction as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the Preferred Securities. The Underwriters are not required to engage
in any of the foregoing transactions and, if commenced, such transactions may be
discontinued at any time without notice.
In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued by
the Company, the Underwriting Agreement provides that the Company will pay as
compensation for the Underwriters' arranging the investment therein of such
proceeds an amount of $0._____ per Preferred Security (or $_______ in the
aggregate) for the account of the Underwriters.
Because the National Association of Securities Dealers, Inc. ("NASD")
is expected to view the Preferred Securities as interests in a direct
participation program, the offering of the Preferred Securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.
The Preferred Securities are a new issue of securities with no
established trading market. The Company and the Issuer Trust have been advised
by the Underwriters that they intend to make a market in the Preferred
Securities. However, the Underwriters are not obligated to do so and such market
making may be interrupted or discontinued at any time without notice at the sole
discretion of the Underwriters. Application has been made by the Company and the
Issuer Trust to list the Preferred Securities in the Nasdaq National Market.
Nasdaq, National Market maintenance standards require the existence of two
market makers for continued listing, and the presence of such market makers
cannot be assured. Accordingly, no assurance can be given as to the development
or liquidity of any market for the Preferred Securities.
The Company and Issuer Trust have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act.
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<PAGE>
The Underwriters or their affiliates have in the past performed and may
in the future perform various services to the Company, including investment
banking services, for which they have or may receive customary fees for such
services.
On June 6, 1997, the Company issued $20,000,000 aggregate principal
amount of 10.07% junior subordinated debentures to Mason-Dixon Capital Trust in
connection with the issuance by Mason-Dixon Capital Trust of the Outstanding
Capital Securities to BT Securities, which has since merged into BT Alex. Brown
Incorporated, as the initial purchaser, at the price of 97% of the aggregate
principal amount. The Outstanding Capital Securities were thereafter remarketed
in a public offering wherein BT Alex. Brown Incorporated, formerly known as
Alex. Brown & Sons Incorporated, was the sole Underwriter. The 10.07% junior
subordinated debentures will mature on June 15, 2027 and the Company owns all of
the Common Securities of Mason-Dixon Capital Trust.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the
Preferred Securities, the enforceability of the Trust Agreement and the creation
of the Issuer Trust will be passed upon by Richards, Layton & Finger, special
Delaware counsel to the Company and the Issuer Trust. The validity of the
Guarantee and the Junior Subordinated Debentures will be passed upon for the
Company by Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC, counsel to
the Company, and for the Underwriters by Arnold & Porter. Gordon, Feinblatt,
Rothman, Hoffberger & Hollander, LLC and Arnold & Porter will rely as to certain
matters of Delaware law on the opinion of Richards, Layton & Finger.
EXPERTS
The consolidated financial statements incorporated by reference from
the Company's Annual Report on Form 10-K for the year ended December 31, 1997
(contained in the Company's Annual Report to Stockholders) are incorporated by
reference in this Prospectus (and elsewhere in the Registration Statement) in
reliance upon the reports of Stegman & Company, independent certified public
accountants, given on the authority of that firm as experts in accounting and
auditing.
The combined consolidated financial statements for the Rose Shanis
Companies contained in the Current Report on Form 8-K filed by the Company on
April __, 1998 are incorporated by reference in this Prospectus (and elsewhere
in the Registration Statement) in reliance upon the reports of Grabush, Newman &
Co., P.A., independent certified public accountants, given on the authority of
that firm as experts in accounting and auditing.
Documents incorporated herein by reference in the future will include
financial statements, related schedules (if required) and auditors' reports,
which financial statements and schedules will have been audited to the extent
and for the periods set forth in such reports by the firm or firms rendering
such reports, and, to the extent so audited and consent to incorporation by
reference is given, will be incorporated herein by reference in reliance upon
such reports given upon the authority to such firms as experts in accounting and
auditing.
C72564o.636 R:3
75
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====================================================== =========================================================
No person has been authorized to give any
information or to make any representations
other than those contained in this Prospectus in
connection with the offer made by this
Prospectus and, if given or made, such
information or representations must not be
relied upon as having been authorized. Neither
the delivery of this Prospectus nor any sale
made hereunder and thereunder shall under any
circumstances create an implication that there $20,000,000
has been no change in the affairs of the Aggregate Liquidation Amount
Company or the Issuer Trust since the date
hereof. This Prospectus does not constitute an
offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is
not authorized or in which the person making Mason-Dixon Capital Trust II
such offer or solicitation is not qualified to do so
or to anyone to whom it is unlawful to make
such offer or solicitation. ______% Preferred Securities
_______________ (Liquidation Amount $25
per Preferred Security)
Fully and Unconditionally Guaranteed,
to the Extent Described Herein, by
Mason-Dixon Bancshares, Inc.
---------------
Prospectus
---------------
BT ALEX. BROWN
KEEFE, BRUYETTE & WOODS, INC.
_____________, 1998
TABLE OF CONTENTS
Page
Summary........................................... 6
Risk Factors...................................... 11
Mason-Dixon Bancshares, Inc....................... 23
Selected Consolidated Financial Data and
Other Information............................. 27
Unaudited Pro Forma Financial Statements ......... 28
Recent Developments............................... 30
Mason-Dixon Capital Trust II...................... 34
Use of Proceeds................................... 35
Capitalization.................................... 36
Accounting Treatment.............................. 37
Description of Preferred Securities............... 37
Description of Junior Subordinated Debentures..... 51
Description of Guarantee.......................... 62
Relationship Among The Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee.................. 64
Certain Federal Income Tax Consequences........... 66
Certain ERISA Considerations...................... 71
Supervision, Regulation and Other Matters......... 71
Underwriting...................................... 73
Validity of Securities............................ 75
Experts........................................... 75
====================================================== =========================================================
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following expenses will be incurred in connection with the issuance
and distribution of the Securities being registered, other than underwriting
discounts and commissions.
SEC registration fee $ 5,900
Printing and engraving 10,000
Accounting fees and expenses 5,500
Legal fees and expenses 50,000
Transfer agent fee 5,000
Trustee fee 3,500
Trustee counsel fee 12,500
Listing fees 4,000
Blue sky fees and expenses 3,500
Miscellaneous 15,100
------------
Total $ 115,000
===========
Item 15. Indemnification of Directors and Officers
Section 2-418 of the Maryland Annotated Code, Corporations and
Associations Article (1993) ("Maryland Code") provides that a corporation may
indemnify directors and officers against liabilities they may incur in such
capacities unless it is established that: (a) the directors act or omission was
material and (i) was committed in bad faith or (ii) was the result of active and
deliberate dishonesty; or (b) the director actually received an improper
personal benefit; or (c) the director had reasonable cause to believe that the
act or omission was unlawful. A corporation is required to indemnify directors
and officers against expenses they may incur in defending actions against them
in such capacities if they are successful on the merits or otherwise in the
defense of such actions.
The Maryland Code provides that the foregoing provisions shall not be
deemed exclusive of any other rights to which a director or officer seeking
indemnification may be entitled under, among other things, any by-law provision.
The Bylaws of the Company provide that it shall indemnify and advance
expenses to an officer or director in connection with a proceeding to the
fullest extent permitted by and in accordance with the Maryland Code and federal
law.
II-1
<PAGE>
Item 16. Exhibits
The exhibits listed on the Exhibit Index on page II-5 of this
Registration Statement are filed herewith or will be filed by amendment.
Item 17. Undertakings
Each of the undersigned Registrants hereby undertakes:
1. That, for purposes of determining any liability under the Securities
Act of 1933 as amended (the "Securities Act"), 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.
2. That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared
effective.
3. That, for the purpose of determining any lability under the Securities
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrants
pursuant to the provisions set forth in Item 15 hereof, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission ("Commission") such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrants of expenses incurred or paid by a director, officer
or controlling person of the Registrants in the successful defense of any
action, suit or proceedings) is asserted by such director, officer or
controlling person in connection with the securities being registered and the
Commission remains of the same opinion, the Registrants 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 and will be governed by the final adjudication of such issue.
II-2
<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 on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Westminster, State of Maryland, on April 3, 1998.
MASON-DIXON BANCSHARES, INC.
By: /s/ Thomas K. Ferguson
------------------------------
Thomas K. Ferguson, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Thomas K. Ferguson Chief Executive Officer April 3, 1998
- ------------------------------------ and Director (Principal
Thomas K. Ferguson Executive Officer)
/s/ Mark A. Keidel Chief Financial Officer April 3, 1998
- ------------------------------------ (Principal Financial and
Mark A. Keidel Accounting Officer)
/s/ David S. Babylon, Jr.* Director April 3, 1998
- ------------------------------------
David S. Babylon, Jr.
/s/ Henry S. Baker, Jr.* Director April 3, 1998
- ------------------------------------
Henry S. Baker, Jr.
/s/ Miriam F. Beck* Director April 3, 1998
- ------------------------------------
Miriam F. Beck
Director _____________
- ------------------------------------
Donald H. Campbell
/s/ William B. Dulany* Director April 3, 1998
- ------------------------------------
William B. Dulany
II-3
<PAGE>
/s/ R. Neal Hoffman* Director April 3, 1998
- ------------------------------------
R. Neal Hoffman
Director _____________
- ------------------------------------
S. Ray Hollinger
/s/ J. William Middleton* Director April 3, 1998
- ------------------------------------
J. William Middleton
Director _____________
- ------------------------------------
Edwin W. Shauck
Director _____________
- ------------------------------------
James Snyder
/s/ Stevenson B. Yingling* Director April 3, 1998
- ------------------------------------
Stevenson B. Yingling
*By: /s/ Thomas K. Ferguson
-------------------------------
Thomas K. Ferguson, Attorney-in-Fact April 3, 1998
Pursuant to the requirements of the Securities Act of 1933, the Issuer
Trust has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Westminster, State of
Maryland, on April 3, 1998.
MASON-DIXON CAPITAL TRUST II
By: Mason-Dixon Bancshares, Inc.,
as Depositor
By: /s/ Thomas K. Ferguson
-------------------------------
Thomas K. Ferguson, President
C72564o.636 R
3:4/2 /98
II-4
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
1.1 Form of Underwriting Agreement*
4.1 Form of Junior Subordinated Indenture
4.2 Form of Amended and Restated Trust Agreement
4.3 Form of Guarantee by Mason-Dixon Bancshares, Inc.
5.1 Opinion of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
5.2 Opinion of Richards, Layton & Finger
8.1 Tax opinion of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
23.1 Consent of Stegman & Company
23.2 Consent of Grabush, Newman & Co., P.A.
23.3 Consent of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
(included in Exhibits 5.1 and 8.1) 23.4 Consent of Richards, Layton &
Finger (included in Exhibit 5.2)
24.1 Powers of Attorney of certain directors of Mason-Dixon Bancshares,
Inc.
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Bankers Trust Company, as trustee under the Junior
Subordinated Indenture, the Amended and Restated Trust Agreement and
the Guarantee
_____________________
*To be filed by amendment.
II-5
<PAGE>
JUNIOR SUBORDINATED INDENTURE
Between
MASON-DIXON BANCSHARES, INC.
and
BANKERS TRUST COMPANY
(as Trustee)
dated as of
____ __, 1998
<PAGE>
MASON-DIXON CAPITAL TRUST II
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>
TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.1. Definitions............................................................. 1
Section 1.2. Compliance Certificate and Opinions..................................... 10
Section 1.3. Forms of Documents Delivered to Trustee................................. 11
Section 1.4. Acts of Holders......................................................... 11
Section 1.5. Notices, Etc. to Trustee and Company.................................... 13
Section 1.6. Notice to Holders; Waiver............................................... 14
Section 1.7. Conflict with Trust Indenture Act....................................... 14
Section 1.8. Effect of Headings and Table of Contents................................ 14
Section 1.9. Successors and Assigns.................................................. 14
Section 1.10. Separability Clause..................................................... 15
Section 1.11. Benefits of Indenture................................................... 15
Section 1.12. Governing Law........................................................... 15
Section 1.13. Non-Business Days....................................................... 15
ARTICLE II. SECURITY FORMS
Section 2.1. Forms Generally......................................................... 15
Section 2.2. Form of Face of Security................................................ 16
Section 2.3. Form of Reverse of Security............................................. 20
Section 2.4. Additional Provisions Required in Global Security....................... 23
Section 2.5. Form of Trustee's Certificate of Authentication......................... 23
ARTICLE III. THE SECURITIES
Section 3.1. Title and Terms......................................................... 24
Section 3.2. Denominations........................................................... 24
Section 3.3. Execution, Authentication, Delivery and Dating.......................... 24
Section 3.4. Temporary Securities.................................................... 26
Section 3.5. Global Securities....................................................... 26
Section 3.6. Registration, Transfer and Exchange Generally;
Certain Transfers and Exchanges;
Securities Act Legends.................................................. 27
Section 3.7. Mutilated, Lost and Stolen Securities................................... 30
Section 3.8. Payment of Interest and Additional Interest;
Interest Rights Preserved............................................... 31
Section 3.9. Persons Deemed Owners................................................... 32
Section 3.10. Cancellation............................................................ 32
Section 3.11. Computation of Interest................................................. 33
Section 3.12. Deferrals of Interest Payment Dates..................................... 33
Section 3.13. Right of Set-Off........................................................ 34
Section 3.14. Agreed Tax Treatment.................................................... 34
Section 3.15. CUSIP Numbers........................................................... 34
2
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Section 3.16. Shortening of Stated Maturity........................................... 35
ARTICLE IV. SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture................................. 35
Section 4.2. Application of Trust Money.............................................. 36
ARTICLE V. REMEDIES
Section 5.1. Events of Default....................................................... 36
Section 5.2. Acceleration of Maturity; Rescission and Annulment 37
Section 5.3. Collection of Indebtedness and Suits
for Enforcement by Trustee.............................................. 38
Section 5.4. Trustee May File Proofs of Claim........................................ 39
Section 5.5. Trustee May Enforce Claim Without
Possession of Securities................................................ 39
Section 5.6. Application of Money Collected.......................................... 40
Section 5.7. Limitation on Suits..................................................... 40
Section 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders
of Preferred Securities................................................. 41
Section 5.9. Restoration of Rights and Remedies...................................... 41
Section 5.10. Rights and Remedies Cumulative.......................................... 41
Section 5.11. Delay or Omission Not Waiver............................................ 42
Section 5.12. Control by Holders...................................................... 42
Section 5.13. Waiver of Past Defaults................................................. 42
Section 5.14. Undertaking for Costs................................................... 43
Section 5.15. Waiver of Usury, Stay or Extension Laws................................. 43
ARTICLE VI. THE TRUSTEE
Section 6.1. Certain Duties and Responsibilities..................................... 43
Section 6.2. Notice of Defaults...................................................... 44
Section 6.3. Certain Rights of Trustee............................................... 45
Section 6.4. Not Responsible for Recitals or Issuance of Securities 46
Section 6.5. May Hold Securities..................................................... 46
Section 6.6. Money Held in Trust..................................................... 46
Section 6.7. Compensation and Reimbursements......................................... 46
Section 6.8. Disqualification; Conflicting Interests................................. 47
Section 6.9. Corporate Trustee Required;
Eligibility............................................................. 47
Section 6.10. Resignation and Removal; Appointment
of Successor............................................................ 48
Section 6.11. Acceptance of Appointment by
Successor............................................................... 49
Section 6.12. Merger, Conversion, Consolidation or
Succession to Business.................................................. 50
Section 6.13. Preferential Collection of Claims Against
Company................................................................. 50
Section 6.14. Appointment of Authenticating Agent..................................... 50
3
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ARTICLE VII. HOLDER'S LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY
Section 7.1. Company to Furnish Trustee Names and
Addresses of Holders.................................................... 52
Section 7.2. Preservation of Information,
Communications to Holders............................................... 52
Section 7.3. Reports by Trustee and Paying Agent..................................... 52
Section 7.4. Reports by Company...................................................... 53
ARTICLE VIII. CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 8.1. Company May Consolidate, Etc., Only
on Certain Terms........................................................ 53
Section 8.2. Successor Company Substituted........................................... 54
ARTICLE IX. SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures Without Consent
of Holders.............................................................. 55
Section 9.2. Supplemental Indentures With Consent of
Holders................................................................. 55
Section 9.3. Execution of Supplemental Indentures.................................... 57
Section 9.4. Effect of Supplemental Indentures....................................... 57
Section 9.5. Conformity with Trust Indenture Act..................................... 57
Section 9.6. Reference in Securities to Supplemental
Indentures.............................................................. 57
ARTICLE X. COVENANTS
Section 10.1. Payment of Principal, Premium and Interest.............................. 57
Section 10.2. Maintenance of Office or Agency......................................... 57
Section 10.3. Money for Security Payments to be Held in
Trust................................................................... 58
Section 10.4. Statement as to Compliance.............................................. 59
Section 10.5. Waiver of Certain Covenants............................................. 60
Section 10.6. Additional Sums......................................................... 60
Section 10.7. Additional Covenants.................................................... 60
Section 10.8. Federal Tax Reports..................................................... 61
ARTICLE XI. REDEMPTION OF SECURITIES
Section 11.1. Applicability of This Article........................................... 62
Section 11.2. Election to Redeem; Notice to Trustee................................... 62
Section 11.3. Selection of Securities to be Redeemed.................................. 62
Section 11.4. Notice of Redemption.................................................... 62
Section 11.5. Deposit of Redemption Price............................................. 63
Section 11.6. Payment of Securities Called for Redemption............................. 64
Section 11.7. Right of Redemption of Securities
Initially Issued to the Issuer Trust.................................... 64
ARTICLE XII. SINKING FUNDS
4
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Sinking Funds........................................................... 65
ARTICLE XIII. SUBORDINATION OF SECURITIES
Section 13.1. Securities Subordinate to Senior Indebtedness........................... 65
Section 13.2. No Payment When Senior Indebtedness
in Default; Payment Over of Proceeds
Upon Dissolution, Etc................................................... 65
Section 13.3 Payment Permitted If No Default......................................... 66
Section 13.4. Subrogation to Rights of Holders of
Senior Indebtedness..................................................... 67
Section 13.5. Provisions Solely to Define Relative Rights............................. 67
Section 13.6. Trustee to Effectuate Subordination..................................... 68
Section 13.7. No Waiver of Subordination Provisions................................... 68
Section 13.8. Notice to Trustee....................................................... 68
Section 13.9. Reliance on Judicial Order or
Certificate of Liquidating Agent........................................ 69
Section 13.10. Trustee Not Fiduciary for Holders of
Senior Indebtedness..................................................... 69
Section 13.11. Rights of Trustee as Holder of Senior
Indebtedness; Preservation of Trustee's Rights.......................... 69
Section 13.12. Article Applicable to Paying Agents..................................... 69
Section 13.13. Certain Conversions or Exchanges
Deemed Payment.......................................................... 70
</TABLE>
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JUNIOR SUBORDINATED INDENTURE
-----------------------------
THIS JUNIOR SUBORDINATED INDENTURE, dated as of _____ __, 1998 between
MASON-DIXON BANCSHARES, INC., a Maryland corporation (the "Company"), having its
principal office at 45 West Main Street, Westminster, MD 21158, 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 ____ __, 2028 (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 Mason-Dixon Capital Trust II, 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 or of any series thereof, 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 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>
(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 like the Trust
Securities will qualify as Tier 1 capital of the issuer up to an amount not to
exceed 25% of the Issuer'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 of any series 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
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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 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 (i) a Saturday or Sunday, (ii)
a day on which banking institutions in the State of Maryland or the City of New
York are authorized or required by law or executive order to remain closed, or
(iii) 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, in respect of the Issuer Trust, the
reasonable determination by the Company 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 (as such term is defined in
the Trust Agreement) 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
Board of Governors of the Federal Reserve System, as then in effect and
applicable to the Company.
"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, no par value per share, of the
Company.
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"Company" means the Person named as the "Company" in the first
paragraph 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 any Chairman of the Board
of Directors, any Vice Chairman of the Board of Directors, its President or a
Vice President, and by its Chief Financial Officer, its Treasurer, its Secretary
or an 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.
"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
designated as Depositary by the Company pursuant to Section 3.1 (or any
successor thereto).
"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.
"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.
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<PAGE>
"Guarantee" means, with respect to the Issuer Trust, the Guarantee
Agreement, dated _____ __, 1998, 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.
"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 Issuer 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
(including any announced prospective change) in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Issuer
Trust is or will be considered an "investment company" that is required to be
registered under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or after the
date of the issuance of the Preferred Securities of the Issuer Trust.
"Issuer Trust" has the meaning specified in the first recital of this
Indenture.
"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;
5
<PAGE>
(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;
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 counsel, who may be
counsel for or an employee of the Company or any Affiliate of 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 of the applicable series 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,
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<PAGE>
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.
"Outstanding Preferred Securities" means the $20,000,000 aggregate
liquidation amount of $2.5175 preferred securities issued by Mason-Dixon Capital
Trust.
"Paying Agent" means the Trustee or any Person authorized by the
Company to pay the principal of or interest on, or other amounts in respect of
any Securities on behalf of the Company.
"Person" means any individual, partnership, trust, unincorporated
organization or entity (as defined herein) 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 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.
"Principal Subsidiary Bank" means each of (i) Carroll County Bank and
Trust Company and Bank of Maryland, (ii) any other banking subsidiary of the
Company the consolidated assets of which constitute 20% or more of the
consolidated assets of the Company and its consolidated subsidiaries, (iii) any
other banking subsidiary designated as a Principal Subsidiary Bank pursuant to a
Board Resolution and set forth in an Officers' Certificate delivered to the
Trustee, and (iv) 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 Principal Subsidiary Bank under clause
(i), (ii) or (iii), and in the case of clause (i), (ii), (iii) or (iv) 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 clause (i), (ii) or (iii)) or
a subsidiary (in the case of clause (iv)) of the Company.
"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.
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"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.
"Restricted Security" means each Security required pursuant to Section
3.6(c) to bear a Restricted Securities Legend.
"Restricted Securities Certificate" means a certificate substantially
in the form set forth in Annex A.
"Restricted Securities Legend" means a legend substantially in the form
of the legend required in the form of Security set forth in Section 2.2 to be
placed upon a Restricted Security.
"Rights Plan" means any plan of the Company providing for the issuance
by the Company to all holders of its Common Stock, no 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 (i) are deemed to
be transferred with such shares of such Common Stock, (ii) are not exercisable,
and (iii) 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.
"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, (i) every obligation of
the Company for money borrowed; (ii) every obligation of the Company evidenced
by bonds, debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or businesses;
(iii) every reimbursement obligation of the Company with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account of the
Company; (iv) every obligation of the Company issued or assumed as the deferred
purchase price of property
8
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or services (but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business); (v) every capital lease obligation of the
Company; (vi) 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; and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another person and all dividends
of another person the payment of which, in either case, the Company has
guaranteed or is responsible or liable, directly or indirectly, as obligor or
otherwise. Without limiting the generality of the foregoing, Senior Indebtedness
shall include the Company's $_________ aggregate principal amount of ____%
Senior Subordinated Notes issued on _____ __, 1998. Senior Indebtedness shall
not include (i) 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, (ii) 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, (iii) any indebtedness of the Company to any of
its subsidiaries, (iv) indebtedness to any executive officer or director of the
Company, or (v) 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 Outstanding
Preferred Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.8.
"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 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 or decision is
9
<PAGE>
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 corresponding series of 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.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
as of _____ __, 1998, 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 first
paragraph 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 the
Securities shall mean the Trustee with respect to 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.
"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:
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(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, 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 to 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
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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.
(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 paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in the
next succeeding paragraph. If any record date is set pursuant to this paragraph,
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 paragraph shall
be construed to prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled 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 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.
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,
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(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 paragraph, 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 paragraph 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 paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be cancelled 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.
With respect to any record date set pursuant to this Section, 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 paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
(g) 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.
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
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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.
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.
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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 NEW YORK.
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 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).
ARTICLE II
SECURITY FORMS
Section 2.1. Generally.
(a) The Securities and the Trustee's certificate of authentication
shall be in substantially the forms set forth in this Article, 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
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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.
MASON-DIXON BANCSHARES, INC.
____% Junior Subordinated Deferrable Interest Debentures due ____ __, 2028
[If the Security is a Restricted Security, insert -- THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) BY ANY INITIAL INVESTOR THAT IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT,
(I) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 903
OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (III) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), OR (B) BY AN INITIAL INVESTOR THAT IS A QUALIFIED
INSTITUTIONAL BUYER OR BY ANY SUBSEQUENT INVESTOR, AS SET FORTH IN (A) ABOVE
AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH
CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS OF THE UNITED STATES. THE HOLDER OF THIS SECURITY AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS. SECURITIES OWNED BY AN INITIAL
INVESTOR THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN GLOBAL
FORM AND MAY NOT BE TRANSFERRED WITHOUT CERTIFICATION THAT THE TRANSFER COMPLIES
WITH THE FOREGOING RESTRICTIONS, AS PROVIDED IN THE INDENTURE REFERRED TO BELOW.
NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED
BY RULE 144 FOR RESALES OF THE SECURITIES.]
No. $___________
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MASON-DIXON BANCSHARES, INC., a Maryland 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 Mason-Dixon Capital Trust II, or registered assigns, the principal sum of
_________ Dollars on ____ __, 2028, 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 earlier than ____ __, 2003. The Company further promises to pay
interest on said principal from ________ __, 1998, 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 ________ __, 1998 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 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 March, June, September and December
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. 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 of this series
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 (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, or (ii) make any payment of principal of or interest
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or premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu in all respects with or junior in interest to this
Security, including the Company's obligations associated with the Outstanding
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
benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of 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 or of any class or series
of the Company's indebtedness 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 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 Mason-Dixon Capital Trust II,
at least one Business Day prior to the earlier of (i) the next succeeding date
on which Distributions on the Preferred Securities of the Issuer Trust would be
payable but for such deferral, and (ii) 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 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 (i)
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Securities 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
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<PAGE>
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.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual 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 under its corporate seal.
MASON-DIXON BANCSHARES, INC.
By:______________________________
Name:____________________________
Title:___________________________
Attest:
____________________________________
Secretary or Assistant Secretary
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 ________ __, 1998 (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
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<PAGE>
delivered. This security is one of the series designated on the face hereof,
limited in aggregate principal amount to $__________.
All terms used in this Security that are defined in the Indenture or in
the Amended and Restated Trust Agreement dated as of ________ __, 1998 (as
modified, amended or supplemented from time to time the "Trust Agreement"),
relating to Mason-Dixon Capital Trust II (the "Issuer Trust") among the Company,
as Depositor, the Trustees named therein and the Holders from time to time 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 (i) on or after ____
__, 2003 in whole at any time or in part from time to time, or (ii) 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 possible regulatory approval. 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 not less than 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
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<PAGE>
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
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 (i) of the amount of principal so declared due and
payable and (ii) 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 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.
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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 NEW YORK.
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.
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
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By:_________________________
Authorized Signatory
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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
____ __, 2028.
(c) The Securities, established pursuant to a Board Resolution, shall
bear interest at a per annum rate equal to ____% from ________ __, 1998 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 ________ __, 1998, 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.
(d) The principal of 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) by wire transfer in
immediately available funds at such place and to such account as may be
designated by the Person entitled thereto as specified in the Security Register.
(e) Securities shall 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 $___ 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 Vice Chairman of the Board, its President or one of
its Vice Presidents, and attested by
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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
(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 the preceding
paragraph, 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 such preceding paragraph 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
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substantially in the form provided for herein executed by the Trustee by the
manual 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.
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 ninety 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.
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(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 cancelled 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 cancelled, 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.
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
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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 and bearing such restrictive legends as may
be required by this Indenture.
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, register the transfer of or exchange
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) Restricted Non-Global Security to Global Security. If the
Holder of a Restricted Security (other than a Global Security) wishes
at any time to transfer all or any portion of such Security to a Person
who wishes to take delivery thereof in the form of a beneficial
interest in a Global Security, such transfer may be effected only in
accordance with the provisions of this clause (b)(i) and subject to the
Applicable Procedures. Upon receipt by the Securities Registrar of (A)
such Security as provided in Section 3.6(a) and instructions
satisfactory to the Securities Registrar directing that a beneficial
interest in the Global Security in a specified principal amount not
greater than the principal amount of such Security be credited to a
specified Agent Member's account and (B) a Restricted Securities
Certificate duly executed by such Holder or such Holder's attorney duly
authorized in writing, then the Securities Registrar shall cancel such
Security (and issue a new Security in respect of any untransferred
portion thereof) as provided in
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Section 3.6(a) and increase the aggregate principal amount of the
Global Security by the specified principal amount as provided in
Section 3.5(c).
(ii) 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), provided that if
the Security to be transferred in whole or in part is a Restricted
Security, the Securities Registrar shall have received a Restricted
Securities Certificate duly executed by the transferor Holder or such
Holder's attorney duly authorized in writing.
(iii) 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.
(iv) Initial Transfers of Non-Global Securities. In the case
of Securities initially issued other than in global form, an initial
transfer or exchange of such Securities that does not involve any
change in beneficial ownership may be made to an Institutional
Accredited Investor or Investors as if such transfer or exchange were
not an initial transfer or exchange; provided, however that written
certification shall be provided by the transferee and transferor of
such Securities to the Securities Registrar that such transfer or
exchange does not involve a change in beneficial ownership.
(c) Restricted Securities Legend. Except as set forth below, all
Securities shall bear a Restricted Securities Legend:
(i) subject to the following clauses of this Section 3.6(c), a
Security or any portion thereof that is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear the
Restricted Securities Legend while represented thereby;
(ii) subject to the following clauses of this Section 3.6(c),
a new Security which is not a Global Security and is issued in exchange
for another Security (including a Global Security) or any portion
thereof, upon transfer or otherwise, shall, if such new Security is
required pursuant to Section 3.6(b)(ii) or (iii) to be issued in the
form of a Restricted Security, bear a Restricted Securities Legend;
(iii) a new Security (other than a Global Security) that does
not bear a Restricted Security Legend may be issued in exchange for or
in lieu of a Restricted Security or any portion thereof that bears such
a legend if, in the Company's judgment, placing such a legend upon such
new Security is not necessary to ensure compliance with the
registration requirements of the Securities Act, and the Trustee, at
the written direction of the Company in the form of an Officer's
Certificate, shall authenticate and deliver such a new Security as
provided in this Article III;
(iv) notwithstanding the foregoing provisions of this Section
3.6(c), a Successor Security of a Security that does not bear a
Restricted Securities Legend shall not bear such form of legend unless
the Company has reasonable cause to believe that such Successor
Security is a "restricted security" within the meaning of Rule 144, in
which case the Trustee, at the written direction of the Company in the
form of an Officer's
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Certificate, shall authenticate and deliver a new Security bearing a
Restricted Securities Legend in exchange for such Successor Security as
provided in this Article III; and
(v) Securities distributed to a holder of Preferred Securities
upon dissolution of an Issuer Trust shall bear a Restricted Securities
Legend if the Preferred Securities so held bear a similar legend.
Section 3.7. Mutilated, Lost and Stolen Securities.
(a) If any mutilated 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
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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 the Securities.
(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,
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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 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,
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 the number of
interest periods that together constitute a full twelve months.
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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 five years 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, or (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 in all respects with or junior in interest to the Securities
including the Company's obligations associated with the Outstanding 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 benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (B) as a
result of 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 or of any class or series of the
Company's indebtedness 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 the
period or periods specified in such Securities, 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
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prior to the earlier of (x) the next succeeding date on which Distributions 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 relating to
such Security 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.
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 ____ __,
2003, 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.
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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 interest (including any Additional Interest) to the date of such
deposit (in the 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.
(d) 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.
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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 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 at its Stated Maturity;
(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, 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;
(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; or
(e) any other Event of Default provided with respect to the Securities.
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
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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 (as
defined in the Trust Agreement) 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
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.
(c) If the Holders of Securities fail to annul such declaration and
waive such default, the holders of a majority in aggregate Liquidation Amount
(as defined in the Trust Agreement) of Preferred Securities issued by the Issuer
Trust then outstanding shall also have the right to rescind
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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, 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 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 or
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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 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 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 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;
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SECOND: Subject to Article XIII, to the payment of the amounts then due
and unpaid upon Securities for principal 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 priority of any kind, according to the
amounts due and payable on such Securities for principal 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;
(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 (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),
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to institute a suit directly against the Company for enforcement of payment to
such holder of principal of 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 (as defined in the Trust Agreement) of
such Preferred Securities held by such holder.
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 or by law to the
Trustee or to the Holders and the right and remedy given to the holders of
Preferred Securities by Section 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 not less than 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,
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(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.
Section 5.13. Waiver of Past Defaults.
(a) The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities affected thereby and, the holders of a
majority in aggregate Liquidation Amount (as defined in the Trust Agreement) 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 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 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 interest (including any Additional Interest) on
any Security on or after the Stated Maturity.
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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.
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;
(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
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(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 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
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, 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,
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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;
(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
(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. 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.
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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 or bad faith.
(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
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 or bad
faith, 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.
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Section 6.8. Disqualification; Conflicting Interests.
The Trustee for the Securities issued hereunder shall be subject to 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 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, 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 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. 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:
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(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,
(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 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
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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 paragraph (a) of this Section.
(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.
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, 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).
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
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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, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
(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.
(c) 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.
(d) If an appointment is made pursuant to this Section, 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
By:____________________________
As Authenticating Agent
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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.
(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, 1999.
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(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. 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 interest (including any Additional Interest) on all
the Securities of every series and the performance of every covenant of this
Indenture on the part of the Company to be performed or observed; provided,
however, that nothing herein shall be deemed to restrict or prohibit, and no
supplemental indenture shall be required in the case of, the merger of a
Principal Subsidiary Bank with and into a Principal Subsidiary Bank or the
Company, the consolidation of Principal Subsidiary Banks into a Principal
Subsidiary Bank or the Company, or the sale or other disposition of all or
substantially all of the assets of any Principal Subsidiary Bank to another
Principal Subsidiary Bank or the Company, if, in any such case in which the
surviving, resulting or acquiring entity is not the Company, the
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Company would own, directly or indirectly, at least 80% of the voting securities
of the Principal Subsidiary Bank (and of any other Principal Subsidiary Bank any
voting securities of which are owned, directly or indirectly, by such Principal
Subsidiary 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.
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 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.
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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 or to surrender any right or power herein conferred upon the
Company;
(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.
Section 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than 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,
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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 at least a majority of the aggregate
Liquidation Amount (as defined in the Trust Agreement) 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 of such series 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 or the modifications thereby of
the trusts created by this Indenture, the
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Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon, an Officers' 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,
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 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 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 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
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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.
(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 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 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
interest, including Additional Interest on any Securities, deposit with a Paying
Agent a sum sufficient to pay the principal 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 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 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 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.
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(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.
(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 or interest
(including Additional Interest) on any Security and remaining unclaimed for two
years after such principal 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 at least 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.
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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
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, or (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 in all respects with or junior in interest to the
Securities including the Company's obligations associated with the Outstanding
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 or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period or
other event referred to below, (ii) as a result of 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 or of any class or series of the Company's indebtedness 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 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
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such stock) if at such time (A) there shall have occurred 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 not to be taxable as a
corporation for United States federal income tax purposes.
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 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, 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
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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,
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;
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(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.
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
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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 (i) on or
after ____ __, 2003, 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.
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 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
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
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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 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 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 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.
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(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 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 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 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 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
65
<PAGE>
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 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 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
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 and voting claims in any
Proceeding, subject to the rights, if any, under this Article 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 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 the immediately
preceding paragraph, 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 or the obligations hereunder of such Holders of the Securities to
the holders of Senior Indebtedness, do any one or more of 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;
66
<PAGE>
(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 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.
67
<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 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]
68
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective seals to be hereunto affixed, all as of the
day and year first above written.
MASON-DIXON BANCSHARES, INC.
By:
Name:
Title:
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
69
<PAGE>
ANNEX A
FORM OF RESTRICTED SECURITIES CERTIFICATE
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 3.6(b) of
the Indenture referred to below)
[ ],
as Securities Registrar
[address]
Re: [Title of Securities] of Mason-Dixon Bancshares, Inc. (the "Securities")
Reference is made to the Junior Subordinated Indenture, dated as of
____ __, 1998 (the "Indenture"), between Mason-Dixon Bancshares, Inc. a Maryland
corporation, and Bankers Trust Company, as Trustee. Terms used herein and
defined in the Indenture or in Regulation S, Rule 144A or Rule 144 under the
U.S. Securities Act of 1933, as amended (the "Securities Act") are used here as
so defined.
This certificate relates to $ aggregate principal amount of Securities,
which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s).
CERTIFICATE No(s).
CURRENTLY IN GLOBAL FORM: Yes No (check one)
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (a) it is the sole beneficial owner of the
Specified Securities or (b) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through a Depositary or an Agent Member in the name of the Undersigned, as or on
behalf of the Owner. If the Specified Securities are not represented by a Global
Security, they are registered in the name of the Undersigned, as or on behalf of
the Owner.
<PAGE>
The Owner has requested that the Specified Securities be transferred to
a person (the "Transferee") who will take delivery in the form of a Restricted
Security. In connection with such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, it is being effected in accordance with Rule
144A, Rule 904 of Regulation S or Rule 144 under the Securities Act and all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies that:
(a) Rule 144A Transfers. If the transfer is being effected in
accordance with Rule 144A:
(i) the Specified Securities are being transferred to a person
that the Owner and any person acting on its behalf reasonably believe
is a "qualified institutional buyer" within the meaning of Rule 144A,
acquiring for its own account or for the account of a qualified
institutional buyer; and
(ii) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the Owner
may be relying on Rule 144A in connection with the transfer; and
(b) Rule 904 Transfers. If the transfer is being effected in accordance
with Rule 904:
(i) the Owner is not a distributor of the Securities, an
affiliate of the Company or any such distributor or a person acting in
behalf of any of the foregoing;
(ii) the offer of the Specified Securities was not made to a
person in the United States;
(iii) either;
(A) at the time the buy order was
originated, the Transferee was outside the United States or
the Owner and any person acting on its behalf reasonably
believed that the Transferee was outside the United States, or
(B) the transaction is being executed in, on
or through the facilities of the Eurobond market, as regulated
by the Association of International Bond Dealers, or another
designated offshore securities market and neither the Owner
nor any person acting on its behalf know that the transaction
has been prearranged with a buyer in the United States;
<PAGE>
(iv) no directed selling efforts within the meaning of Rule
902 of Regulation S have been made in the United States by or on behalf
of the Owner or any affiliate thereof; and
(v) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
(c) Rule 144 Transfers. If the transfer is being effected pursuant to
Rule 144:
(i) the transfer is occurring after a holding period of at
least two years (computed in accordance with paragraph (d) of Rule 144)
has elapsed since the date the Specified Securities were acquired from
the Company or from an affiliate (as such term is defined in Rule 144)
of the Company, whichever is later, and is being effected in accordance
with the applicable amount, manner of sale and notice requirements of
paragraphs (e), (f) and (h) of Rule 144;
(ii) the transfer is occurring after a holding period by the
Owner of at least three years has elapsed since the date the Specified
Securities were acquired from the Company or from an affiliate (as such
term is defined in Rule 144) of the Company, whichever is later, and
the Owner is not, and during the preceding three months has not been,
an affiliate of the Company; or
(iii) the Owner is a Qualified Institutional Buyer under Rule
144A or has acquired the Securities otherwise in accordance with
Sections (1), (2) or (3) hereof and is transferring the Securities to
an institutional accredited investor in a transaction exempt from the
requirements of the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers (as defined in
the Trust Agreement relating to the Issuer Trust to which the Securities were
initially issued).
(Print the name of the Undersigned, as such
term is defined in the second paragraph of
this certificate.)
Dated: By:
Name:
Title:
(If the Undersigned is a corporation, partnership or fiduciary, the title of the
person signing on behalf of the Undersigned must be stated.)
<PAGE>
EXHIBIT 4.2
AMENDED AND RESTATED
TRUST AGREEMENT
among
MASON-DIXON BANCSHARES, INC.,
as Depositor
BANKERS TRUST COMPANY,
as Property Trustee,
and
BANKERS TRUST (DELAWARE),
as Delaware Trustee
Dated as of ________, 1998
MASON-DIXON CAPITAL TRUST II
<PAGE>
MASON-DIXON CAPITAL TRUST II
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)..................................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>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I. DEFINED TERMS
Section 1.1. Definitions..........................................1
ARTICLE II. CONTINUATION OF THE ISSUER TRUST
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............................11
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
Section 3.1. Payment Account......................................16
ARTICLE IV. DISTRIBUTIONS; REDEMPTION
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..................................21
Section 4.8. Liability of the Holder of Common
Securities.........................................22
ARTICLE V. TRUST SECURITIES CERTIFICATES
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...............................26
Section 5.8. Access to List of Holders'
Names and Addresses................................26
<PAGE>
Section 5.9. Maintenance of Office or Agency......................26
Section 5.10. Appointment of Paying Agent..........................26
Section 5.11. Ownership of Common Securities
by Depositor.......................................27
Section 5.12. Notices to Clearing Agency...........................27
Section 5.13. Rights of Holders....................................27
ARTICLE VI. ACTS OF HOLDERS; MEETINGS; VOTING
Section 6.1. Limitations on Holder's Voting
Rights.............................................29
Section 6.2. Notice of Meetings...................................30
Section 6.3. Meetings of Holders..................................30
Section 6.4. Voting Rights........................................31
Section 6.5. Proxies, etc.........................................31
Section 6.6. Holder Action by Written Consent.....................31
Section 6.7. Record Date for Voting and Other
Purposes...........................................31
Section 6.8. Acts of Holders......................................32
Section 6.9. Inspection of Records................................33
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
Section 7.1. Representations and Warranties
of the Property Trustee and
the Delaware Trustee...............................33
Section 7.2. Representations and Warranties of
Depositor..........................................34
ARTICLE VIII. THE ISSUER TRUSTEES; THE ADMINISTRATORS
Section 8.1. Certain Duties and Responsibilities..................34
Section 8.2. Certain Notices......................................37
Section 8.3. Certain Rights of Property Trustee...................37
Section 8.4. Not Responsible for Recitals
or Issuance of Securities..........................39
Section 8.5. May Hold Securities..................................39
Section 8.6. Compensation; Indemnity; Fees........................39
Section 8.7. Corporate Property Trustee Required;
Eligibility of Trustees and
Administrators.....................................40
Section 8.8. Conflicting Interests................................40
Section 8.9. Co-Trustees and Separate Trustee.....................41
Section 8.10. Resignation and Removal; Appointment
of Successor.......................................42
Section 8.11. Acceptance of Appointment by
Successor..........................................43
Section 8.12. Merger, Conversion, Consolidation or
Succession to Business.............................44
Section 8.13. Preferential Collection of Claims
Against Depositor or Issuer Trust..................44
Section 8.14. Trustee May File Proofs of Claim.....................44
Section 8.15. Reports by Property Trustee..........................45
Section 8.16. Reports to the Property Trustee......................45
Section 8.17. Evidence of Compliance with Conditions
Precedent.........................................45
-ii-
<PAGE>
Section 8.18. Number of Issuer Trustees............................45
Section 8.19. Delegation of Power..................................46
Section 8.20. Appointment of Administrators........................46
ARTICLE IX. DISSOLUTION, LIQUIDATION AND MERGER
Section 9.1. Dissolution Upon Expiration Date.....................47
Section 9.2. Early Termination....................................47
Section 9.3. Dissolution..........................................47
Section 9.4. Liquidation..........................................47
Section 9.5. Mergers, Consolidations, Amalgamations
or Replacements of the Issuer Trust................49
ARTICLE X. MISCELLANEOUS PROVISIONS
Section 10.1. Limitation of Rights of Holders......................50
Section 10.2. Amendment............................................50
Section 10.3. Separability.........................................51
Section 10.4. Governing Law........................................51
Section 10.5. Payments Due on Non-Business Day.....................51
Section 10.6. Successors...........................................52
Section 10.7. Headings.............................................52
Section 10.8. Reports, Notices and Demands.........................52
Section 10.9. Agreement Not to Petition............................53
Section 10.10. Trust Indenture Act; Conflict with
Trust Indenture Act................................53
Section 10.11. Acceptance of Terms of Trust Agreement,
Guarantee and Indenture............................54
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
-iii-
<PAGE>
AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of ________, 1998, among
(a) MASON-DIXON BANCSHARES, INC., a Maryland 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"), and (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") and (d) the several Holders, as hereinafter defined.
WITNESSETH:
WHEREAS, the Depositor and the Delaware Trustee have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into a certain Trust Agreement, dated as of ________,
1998 (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 _______ __, 1998 (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, (d) the appointment of the
Administrators and (e) the addition of the Property Trustee as a party to the
Original Trust Agreement.
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:
<PAGE>
ARTICLE I
DEFINED TERMS
Section 1.1. Definitions
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article 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";
(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 25% of the issuer's Tier 1 capital, or any subsequent 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
- 2 -
<PAGE>
Additional Interest (as defined in the Indenture) paid by the Depositor on a
Like Amount of Debentures for such period.
"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 Mark A. Keidel and Vivian A.
Davis.
"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.
"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
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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 Maryland 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, in respect of the Issuer Trust, the
reasonable determination by the Depositor 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
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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 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
Board of Governors of the Federal Reserve System, as then in effect and
applicable to the Depositor.
"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 Trust 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.
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"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_$__ 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 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.
"Debenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption of such 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
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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; or
(d) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trust 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 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_90 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.
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"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 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
deemed to 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 ______
__, 1998, 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 Issuer 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
(including any announced prospective change) in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Issuer
Trust is or will be considered an "investment company" that is required to be
registered under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or after the
date of the issuance of the Preferred Securities.
"Issuer Trust" means Mason-Dixon Capital Trust_II.
"Issuer Trustees" means, collectively, the Property Trustee
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and the Delaware Trustee.
"Junior Subordinated Debentures" means the aggregate principal amount
of the Depositor's_____% junior subordinated deferrable interest debentures, due
_______, 2028, which date may be shortened once at any time by the Company to
any date not earlier than _______, 2003, 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.
"Liquidation Amount" means the stated amount of $__ per Trust Security.
"Liquidation Date" means the date on which Junior Subordinated
Debentures 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, with respect to any Person, a
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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 the Depositor, and delivered to the Issuer Trustees. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Trust 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 each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Depositor or any Affiliate of the Depositor.
"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
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delivered pursuant to Sections_5.4,_5.5,_5.6 and_5.13; 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 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
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 with 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.
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"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached hereto as
Exhibit D.
"Preferred Security" means a preferred undivided beneficial interest in
the assets of the Issuer Trust, having a Liquidation Amount of $_____ 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 formed and continued hereunder and not in
its individual capacity, or its successor in interest in such capacity, or any
successor property trustee appointed as herein provided.
"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 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
this Trust 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.
"Securities Act" means the Securities Act of_1933, as amended,
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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 Preferred 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 Preferred Security" has the meaning specified in
Section_9.5.
"Tax Event" means the receipt by 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
minimis amount of other taxes, duties or other governmental charges.
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"Time of Delivery" means the date and time of delivery and payment
specified at the Closing Date in the Underwriting Agreement.
"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 as of
________, 1998, 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 "Mason-Dixon
Capital Trust_II," as such name may be modified from time to time by the
Administrators following written notice to the
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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), 1011 Centre Road Suite_200 Trust Department, Wilmington, DE
19805, 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
Mason-Dixon Bancshares, Inc., 45 West Main Street, Westminster, MD 21158,
Attention: Office of the Secretary.
Section 2.3. Initial Contribution of Trust Property; Organizational Expenses.
The Property Trustee acknowledges 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 _______, 1998, 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, Preferred Securities Certificates, registered in the names
requested by the Underwriters, in an aggregate amount of ________ Preferred
Securities having an aggregate Liquidation Amount of $________, against receipt
of the aggregate purchase price of such Preferred Securities of $________, by
the Property Trustee.
Section 2.5. Issuance of the Common Securities; Subscription and
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Purchase of Junior Subordinated Debentures.
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_5.2 and deliver to the Depositor, Common
Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of ______ Common Securities having an aggregate Liquidation
Amount of $_______ against receipt by the Property Trustee of the aggregate
purchase price of such Common Securities of $_______ by the Property Trustee.
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 Property Trustee and having an aggregate principal amount equal to
$_________ 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 $_________, and receive on behalf of
the Issuer Trust the Junior Subordinated Debentures.
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,
to the fullest extent permitted by law, fiduciaries with respect to the Issuer
Trust and this Agreement shall be construed in a manner consistent with such
intent. The Property Trustee shall have the right and power 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
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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
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 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) the listing of the Preferred Securities upon such
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;
(D) the application for a taxpayer identification
number for the Issuer Trust;
(E) 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; and
(F) any action incidental to the foregoing as
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necessary or advisable to give effect to the terms of this Trust Agreement.
(ii) The Property Trustee shall have the power and authority
to act on behalf of the Issuer Trust with respect to the following
matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Junior Subordinated
Debentures;
(C) the receipt and collection of interest, principal
and any other payments made in respect of the Junior
Subordinated Debentures in the Payment Account;
(D) the distribution of amounts owed to the Holders
in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Junior Subordinated Debentures;
(F) the sending of notices of default and other
information regarding the Trust Securities and the Junior
Subordinated Debentures to the Holders in accordance with this
Trust Agreement;
(G) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
the winding up of the affairs of and liquidation of the Issuer
Trust and the preparation, execution and filing of the
certificate of cancellation with the Secretary of State of the
State of Delaware; and
(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 any particular Holder); provided, however,
that nothing in this Section_2.7(a)(ii) shall require the
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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 become taxable as a corporation 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 by the Issuer Trust of, and the execution
and delivery 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
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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 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 taking of any other actions necessary or desirable to
carry out any of the foregoing activities; and
(v) compliance with the listing requirements of the Preferred
Securities upon such 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.
(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 not be taxable as a corporation for the 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.
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Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the 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.
(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, as defined in
the Indenture) 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
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of the Issuer Trust available for the payment of Distributions. Distributions
shall accumulate from _______ __, 1998, and, except in the event (and to the
extent) that the Depositor exercises its right to defer the payment of interest
on the 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 _______ __, 1998. If any date on which a Distribution is otherwise
payable on the Trust Securities is not a Business Day, then the payment of such
Distribution shall be made on the next succeeding day that is a Business Day
(without any interest or other payment in respect of any such delay), 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 _______, 2028. As a consequence of
any such deferral, quarterly Distributions on the Trust Securities by
the 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 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 (4). The term
"Distributions" as used in Section_4.1 shall include any such
additional Distributions
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provided pursuant to this Section_4.1(a)(iii).
(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 on hand and 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 Junior Subordinated 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:
(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
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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 on hand
and available in the Payment Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of
any Preferred Securities, then, by 12:00 noon, 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 Holders 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
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on or prior to the Redemption Date for any Trust Securities called for
redemption shall be payable to the Holders of such Trust Securities as they
appear on the Register for the Trust Securities on the relevant record dates for
the related Distribution Dates. If notice of redemption shall have been given
and funds deposited as required, then, upon the date of such deposit, all rights
of Holders holding Trust Securities 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 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 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 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.
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, subject to
Section_4.2(e), 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
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from a Debenture Event of Default in Section_5.1(a) or_5.1(b) of the Indenture
shall have occurred and be continuing, no payment of any Distribution (including
any Additional Amounts) on, 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 any Additional Amounts) 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) on, or the Redemption Price 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) 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
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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 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.
Section 4.7. Payments under Indenture or Pursuant to Direct Actions.
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Any amount payable hereunder to any Holder of Preferred Securities
shall be reduced by the amount of any corresponding payment such Holder 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.
Upon the formation of the Issuer Trust and the contribution by the
Depositor pursuant to Section_2.3 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the 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. 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 the Depositary's nominee.
Unless and until it is exchangeable in whole or in part for the Preferred
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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.
At the Time of Delivery, an Administrator shall cause Trust Securities
Certificates, in an aggregate Liquidation Amount as provided in Sections_2.4
and_2.5, to be executed on behalf of the 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 Trust, executed by an Administrator
thereof, without further corporate action by the Trust, in authorized
denominations.
Section 5.4. Global Preferred Security.
(a) Any Global Preferred Security issued under this Trust Agreement
shall be registered in the name of the nominee of the Clearing Agency and
delivered to such custodian therefor, and such Global Preferred Security shall
constitute a single Preferred Security for all purposes of this Trust Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, a
Global Preferred Security may not be exchanged in whole or in part for Preferred
Securities registered, and no transfer of the Global Preferred Security in whole
or in part may be registered, in the name of any Person other than the Clearing
Agency for such Global Preferred Security, Cede or other nominee thereof unless
(i)_such Clearing Agency advises the Property Trustee in writing that such
Clearing Agency is no longer willing or able to properly discharge its
responsibilities as Clearing Agency with respect to such Global Preferred
Security, and the Depositor is unable to locate a qualified successor within
90_days of receipt of such notice from the Depositary, (ii)_the Issuer Trust at
its option advises the Depositary in writing that it elects to terminate the
book-entry system through the Clearing Agency, or (iii)_there shall have
occurred and be continuing an
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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 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 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 adjustment of a Global
Preferred Security by the Clearing Agency, accompanied by registration
instructions, the Property Trustee shall, subject to Section_5.4(b) and as
otherwise provided in this Article V, authenticate and deliver any Preferred
Securities issuable in exchange for such Global Preferred Security (or any
portion thereof) in accordance with the instructions of the Clearing Agency. The
Property Trustee shall not be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be fully protected in
relying on, such instructions.
(d) Every Preferred Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Preferred Security or any portion thereof, whether pursuant to this Article_V or
Article_IV or otherwise, shall be authenticated and delivered in the form of,
and shall be, a Global Preferred Security, unless such Global Preferred Security
is registered in the name of a Person other than the Clearing Agency for such
Global Preferred Security or a nominee thereof.
(e) The Clearing Agency or its nominee, as the registered owner of 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 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
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Clearing Agency or its nominee. Neither the Property Trustee, the Securities
Registrar nor the Depositor shall have any liability in respect of any transfers
effected by the Clearing Agency.
(f) The rights of owners of beneficial interests in a Global Preferred
Security shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such owners and the
Clearing Agency.
Section 5.5. Registration of Transfer and Exchange Generally; Certain
Transfers and Exchanges; Preferred Securities Certificates.
(a) The Property Trustee shall keep or cause to be kept at its
Corporate Trust Office a register or registers for the purpose of registering
Preferred Securities Certificates and transfers and exchanges of Preferred
Securities Certificates in which the registrar and transfer agent with respect
to the Preferred Securities (the "Securities 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,
the Depositor shall execute and authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Preferred Securities of
the same series of any authorized denominations of like tenor and aggregate
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 securities are so surrendered for exchange,
the Property Trustee shall execute and authenticate and deliver the Preferred
Securities that the Holder making the exchange is entitled to receive.
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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.
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 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
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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 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
issued 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
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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 at Four Albany Street, New York, NY 10006, Attention:
Corporate Trust and Agency Group - Corporate Market Services, as 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 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 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
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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.
At each Time of Delivery, the Depositor shall acquire and retain
beneficial and record ownership of the Common Securities except (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 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 Issuer Trustees shall give all such notices and communications specified
herein to be given to the Clearing Agency, and shall have no obligations to the
Owners.
Section 5.13. Rights of Holders.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section_2.9, and
the 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
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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 fully paid and nonassessable by the Issuer
Trust. 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,
(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
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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 at least 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
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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 specified in Section_5.1(a)
or_5.1(b) of the Indenture, 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 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
at least a Majority in Liquidation Amount of the
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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 such 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 Trustees 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 be
taxable as a corporation 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 Trust 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 at least 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 to be taxable as a
corporation 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 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.
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(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% 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 at least 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 at least 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 $25 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
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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 at least 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 provided for in this Trust Agreement, or for the purpose of any other
action, the Administrators or the Property Trustee 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.
(b) The fact and date of the execution by any Person of any
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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.
(g) A Holder may institute a legal proceeding directly against the
Depositor under the Guarantee Agreement to enforce its rights under the
Guarantee Agreement without first instituting a legal proceeding against the
Guarantee Trustee (as defined in the Guarantee Agreement), the Issuer Trust, any
Issuer Trustee, any
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Administrator or any other person.
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, 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 with trust powers,
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.
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(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).
(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
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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. 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 existing at law or in equity, are
agreed by the Depositor and the Holders to replace his or such other duties and
liabilities of the Issuer Trustees and Administrators.
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(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
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(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this 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;
(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 at least 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;
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(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.
(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.
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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 reregistration 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
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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 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.
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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 their 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 omission performed or omitted by such Indemnified Person in
good
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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 negligence or willful
misconduct with respect to such acts or omissions.
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
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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. 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.
(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.
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
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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. Any co-trustee or separate
trustee appointed pursuant to this Section 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.
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.
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:
(a) 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.
(b) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by the
Property Trustee 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
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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.
(c) 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.
(d) 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.
(e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
(f) 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 Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of Section_8.11.
(b) Subject to the immediately preceding paragraph, 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 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
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the successor 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
Trustee.
(c) The Property Trustee or the Delaware Trustee may be removed at any
time by Act of the Holders of at least 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.
(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 Trustee or Trustees, and such successor Issuer
Trustee shall comply with the applicable requirements of Section_8.11. If no
successor 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 Trustee.
(e) The Property Trustee shall give notice of each resignation and each
removal of a Relevant Trustee and each appointment of a successor 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 Administrators or Delaware Trustee, as
the case may be, set forth in Section 8.7).
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Section 8.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee, the
retiring Relevant Trustee and each such successor Trustee with respect to the
Trust Securities shall execute, acknowledge and deliver an instrument wherein
each successor 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 Trustee all the rights, powers, trusts and duties
of the retiring 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 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 Trustee such Relevant Trustee shall duly assign, transfer and deliver
to such successor Trustee all Trust Property, all proceeds thereof and money
held by such Relevant Trustee hereunder with respect to the Trust Securities and
the Trust.
(b) Upon request of any such successor Trustee, the Issuer Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in the first or second preceding paragraph, as the case may be.
(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.
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 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, 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
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or Issuer Trust.
If and when the Property Trustee shall be or become a creditor of the
Depositor (or any other obligor upon 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 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,
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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, 1999, 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
(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
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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 annul the Issuer Trust.
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 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
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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. Each Administrator
shall sign an agreement agreeing to comply with the terms of this Trust
Agreement. 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 _________, 2029 (the "Expiration Date"), following the distribution of the
Trust Property in accordance with_Section_9.4.
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Section 9.2. Early Termination.
The first to occur of any of the following events is an "Early
Termination Event":
(a) the occurrence of the appointment of a receiver or other similar
official in any liquidation, insolvency or similar proceeding with respect to
the Depositor or all or substantially all of its property, or a court or other
governmental agency shall enter a decree or order and such decree or order shall
remain unstayed and undischarged for a period of 60_days, unless the Depositor
shall transfer the Common Securities as provided by Section_5.11, in which case
this provision shall refer instead to any such successor Holder of the Common
Securities;
(b) the written direction to the Property Trustee from the Holder of
the Common Securities at any time to dissolve the Issuer Trust and 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. Dissolution.
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.
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(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.
(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
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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 dissolved 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 dissolution 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.
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. At the request of the Holders of the Common Securities, and with
the consent of the Holders of at
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least 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 Preferred Securities or (ii)_substitutes
for the Preferred Securities other securities having substantially the same
terms as the Preferred Securities (the "Successor Preferred Securities") so long
as the Successor Preferred Securities have the same priority as the Preferred
Securities with respect to distributions and payments upon liquidation,
redemption and otherwise, (b)_a trustee of such successor entity possessing the
same powers and 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 Preferred 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 Preferred 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
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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
taxable as a corporation 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 death or incapacity of any
person having an interest, beneficial or otherwise, in Trust Securities shall
not operate to terminate this Trust Agreement, nor entitle the legal
representatives or heirs of such person or any 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 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
necessary to ensure that the Issuer Trust will not be 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_10.2(c) hereof, any
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<PAGE>
provision of this Trust Agreement may be amended by the Property Trustee and the
Holders of a Majority in Liquidation Amount of the Common Securities with
(i)_the consent of Holders of at least 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 be taxable as a corporation 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.
(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 be taxable as a corporation 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.
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<PAGE>
(h) Any amendments to this Trust Agreement 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.
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.
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 Sections_4.2(d)), 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.
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.
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(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 Mason-Dixon Bancshares, Inc.,
45 West Main Street, Westminster, MD 21158, Attention: Office of the Secretary,
facsimile no.: (410) 857-3410 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),
1011 Centre Road, Suite 200, Trust Department, Wilmington, Delaware 19801,
Attention: Lisa Wilkins, and (iii)_with respect to the Administrators, to them
at the address above for notices to the Depositor, marked "Attention: Office 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 dissolved 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
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<PAGE>
(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 Issuer Trustee 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
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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, 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.
(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.
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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.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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<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.
MASON-DIXON BANCSHARES, 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:
___________________________
___________________________
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<PAGE>
EXHIBIT A
[INSERT CERTIFICATE OF TRUST FILED WITH DELAWARE SECRETARY OF STATE]
<PAGE>
EXHIBIT B
[INSERT FORM OF CERTIFICATE DEPOSITARY AGREEMENT]
<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
Mason-Dixon Capital Trust II
____% Common Securities
(liquidation amount $__ per Common Security)
Mason-Dixon Capital Trust II, a statutory business trust formed under
the laws of the State of Delaware (the "Issuer Trust"), hereby certifies that
Mason-Dixon Bancshares, Inc. (the "Holder") is the registered owner of (_____)
common securities of the Issuer Trust representing undivided beneficial
interests in the assets of the Issuer Trust and has designated the Mason-Dixon
Capital Trust II_____% Common Securities (liquidation amount $__ 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 ________,
1998, as the same may be amended from time to time (the "Trust Agreement") among
Mason-Dixon Bancshares, 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 or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Terms used but not defined herein have the meanings set forth in the
Trust Agreement.
<PAGE>
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this ___ day of ______________, ____.
MASON-DIXON CAPITAL TRUST II
By:_____________________________
Name:
Administrator
COUNTERSIGNED AND REGISTERED:
BANKERS TRUST COMPANY,
as Securities Registrar
By: _________________________________
Name:
Signatory Officer
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<PAGE>
EXHIBIT D
[IF THE PREFERRED SECURITIES CERTIFICATE IS TO BE A GLOBAL PREFERRED
SECURITIES CERTIFICATE, INSERT - This Preferred Securities Certificate is a
Global Preferred Securities 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 Securities Certificate is
exchangeable for Preferred Securities 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 Securities Certificate is presented by an
authorized representative of The Depository Trust Company, a New York
Corporation ("DTC"), to Mason-Dixon Capital Trust_II or its agent for
registration of transfer, exchange or payment, and any Preferred Securities
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.]
<PAGE>
CERTIFICATE NUMBER NUMBER OF PREFERRED SECURITIES
P-__
CUSIP NO. ________________________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
MASON-DIXON CAPITAL TRUST II
____% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $__ PER PREFERRED SECURITY)
Mason-Dixon Capital Trust II, a statutory business trust formed under
the laws of the State of Delaware (the "Issuer Trust"), hereby certifies that
_______________ (the "Holder") is the registered owner of (_____) preferred
securities of the Issuer Trust representing a preferred undivided beneficial
interest in the assets of the Issuer Trust and has designated the Mason-Dixon
Capital Trust_II ____% Preferred Securities (liquidation amount $__ per
Preferred Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and 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
_______ __, 1998, as the same may be amended from time to time (the "Trust
Agreement"), among Mason-Dixon Bancshares, 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 Mason-Dixon Bancshares,
Inc., a Maryland corporation, and Bankers Trust Company, as guarantee trustee,
dated as of _______ __, 1998 (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.
<PAGE>
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this _______ day of ____________, 19__.
MASON-DIXON CAPITAL TRUST_II
By:___________________________
Name:
Administrator
COUNTERSIGNED AND REGISTERED:
BANKERS TRUST COMPANY,
as Securities Registrar
By:___________________________
Name:
Authorized Signatory
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<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Securities Certificate to:
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax
identification number)
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
agent to transfer this Preferred Securities 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 Securities
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.
<PAGE>
GUARANTEE AGREEMENT
Between
MASON-DIXON BANCSHARES, INC.
(as Guarantor)
and
BANKERS TRUST COMPANY
(as Guarantee Trustee)
dated as of
_____ __, 1998
<PAGE>
MASON-DIXON CAPITAL TRUST II
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>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C> <C> <C> <C>
ARTICLE I. DEFINITIONS
Section 1.1. Definitions...................................................................1
ARTICLE II. TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application..............................................5
Section 2.2. List of Holders...............................................................5
Section 2.3. Reports by the Guarantee Trustee..............................................5
Section 2.4. Periodic Reports to 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 2.8. Conflicting Interests.........................................................6
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE
TRUSTEE
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
Section 4.1. Guarantee Trustee; Eligibility................................................10
Section 4.2. Appointment, Removal and Resignation
of the Guarantee Trustee......................................................10
ARTICLE V. GUARANTEE
Section 5.1. Guarantee.....................................................................11
Section 5.2. Waiver of Notice and Demand...................................................11
Section 5.3. Obligations Not Affected......................................................12
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
Section 6.1. Subordination.................................................................13
Section 6.2. Pari Passu Guarantees.........................................................13
<PAGE>
ARTICLE VII TERMINATION
Section 7.1 Termination...................................................................14
ARTICLE VIII. MISCELLANEOUS
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
</TABLE>
<PAGE>
GUARANTEE AGREEMENT
-------------------
This GUARANTEE AGREEMENT, dated as of _______ __, 1998 is executed and
delivered by MASON-DIXON BANCSHARES, INC., a Maryland corporation (the
"Guarantor"), having its principal office at 45 West Main Street, Westminster,
MD 21158, and BANKERS TRUST COMPANY, a New York banking corporation, as trustee
(the "Guarantee Trustee"), for the benefit of the Holders (as defined herein)
from time to time of the Preferred Securities (as defined herein) of Mason-Dixon
Capital Trust II, a Delaware statutory business trust (the "Issuer Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of _______ __, 1998, among Mason-Dixon Bancshares,
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 $_________ aggregate Liquidation
Amount (as defined herein) of its ____% Preferred Securities, Liquidation Amount
$25 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 June 30, 2028 (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 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 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.
<PAGE>
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.
"Additional Amount" has 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.
"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 _______ __, 1998 and payable quarterly in arrears on March 31,
June 30, September 30, and December 31 of each year, commencing _______ __, 1998
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.
"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 accrued and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer Trust shall have funds on hand
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 on hand available therefor at such time,
and (c) upon a voluntary or involuntary
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<PAGE>
termination, winding-up or liquidation of the Issuer Trust, unless Junior
Subordinated Debentures are distributed to the Holders, the lesser of (i) the
aggregate of the Liquidation Amount and all accumulated and unpaid Distributions
to the date of payment to the extent the Issuer Trust shall have funds on hand
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 (in either case, the "Liquidation Distribution").
"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 first paragraph 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 _______
__, 1998, between Mason-Dixon Bancshares, 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 first paragraph
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 dissolution 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.
- 3 -
<PAGE>
"Liquidation Amount" means the stated amount of $__ per Preferred
Security.
"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.
"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.
- 4 -
<PAGE>
"Responsible Officer" means, when used with respect to the Guarantee
Trustee, 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 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.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
_______ __, 1998, executed by Mason-Dixon Bancshares, Inc., as Depositor,
Bankers Trust (Delaware), as Delaware Trustee, and Bankers Trust Company, as
Property Trustee.
"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 under such Act 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
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<PAGE>
(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. Reports by the Guarantee Trustee.
Within 60 days of January 31 of each year commencing January 31, 1999,
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 shall
also 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.
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
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<PAGE>
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 a Responsible Officer charged with the administration of
this Guarantee Agreement shall have received written notice of such Event of
Default.
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 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.
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<PAGE>
(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 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 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.
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<PAGE>
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 advice or written 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;
(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;
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<PAGE>
(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, its directors,
officers, employees and agents for, and to hold them harmless against, any loss,
liability or expense incurred without negligence, willful misconduct or bad
faith on the part of the Guarantee Trustee, its directors, officers, employees
and agents, arising out of or in connection with the acceptance or
administration of this Guarantee Agreement, including the 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. 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.
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<PAGE>
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 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 the immediately preceding paragraph, 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 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.
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<PAGE>
(c) The Guarantee Trustee may be removed for cause at any time by Act
(within the meaning of Section 6.8 of the Trust Agreement) 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.
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<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) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor (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; (b) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (c) the
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<PAGE>
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 (g), 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
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<PAGE>
the obligations of the Guarantor hereunder. The obligations of the Guarantor
hereunder do not constitute Senior Indebtedness of the Guarantor.
Section 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall
rank pari passu with the obligations of the Guarantor under the Amended and
Restated Guarantee Agreement between the Guarantor and the Guarantee Trustee,
dated as of July 16, 1997, relating to the $20,000,000 aggregate liquidation
amount of $2.5175 preferred securities issued by Mason- Dixon Capital Trust,
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.
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<PAGE>
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.
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:
Mason-Dixon Bancshares, Inc.
45 West Main Street
Westminster, MD 21158
Facsimile No.: (410) 857-3410
Attention: Office of the Secretary
(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:
Mason-Dixon Capital Trust II
Mason-Dixon Bancshares, Inc.
45 West Main Street
Westminster, MD 21158
Facsimile No.: (410) 857-3410
Attention: Office of the Secretary
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
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<PAGE>
(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.
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; and
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<PAGE>
(g) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
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 NEW YORK 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]
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<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
MASON-DIXON BANCSHARES, INC.,
as Guarantor
By:____________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Guarantee Trustee
and not in its individual capacity
By:___________________________
Name:
Title:
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EXHIBIT 5.1
April 3, 1998
Mason-Dixon Bancshares, Inc.
45 W. Main Street
Westminster, Maryland 21157
Re: Mason-Dixon Capital Trust II
Preferred Securities Offering
Ladies and Gentlemen:
We have acted as counsel to Mason-Dixon Bancshares, Inc. (the
"Company"), a multi-bank holding company in connection with the preparation and
filing by Mason-Dixon and Mason- Dixon Capital Trust II (the "Trust") of a
registration statement (the "Registration Statement") on Form S-3 under the
Securities Act of 1933, as amended (the "Act"), with respect to the offer and
sale of certain of the Trust's Preferred Securities (liquidation amount $25 per
Preferred Security (the "Preferred Securities")) and certain of the Company's
Junior Subordinated Debentures (the "Debentures") and the related Guarantee
Agreement by and between Mason-Dixon and Bankers Trust Company, as trustee (the
"Guarantee"). In connection therewith, you have requested our opinion as to
certain matters referred to below.
In our capacity as such counsel, we have familiarized ourselves with
the actions taken by Mason-Dixon in connection with the registration of the
Debentures and the Guarantee. We have examined the originals or certified copies
of such other documents, including the Registration Statement and the amendments
thereto, as we have deemed relevant and necessary as a basis for the opinions
hereinafter expressed. In such examination, we have assumed the genuineness of
all signatures on original documents and the authenticity of all documents
submitted to us as conformed or photostatic copies, and the authenticity of the
originals of such latter documents.
Based upon and subject to the foregoing, we are of the opinion that:
1. Mason-Dixon is a corporation which has been duly formed and is
validly subsisting under the laws of the State of Maryland. Mason-Dixon has full
power and authority to issue the Debentures and enter into the Guarantee.
<PAGE>
Mason-Dixon Bancshares, Inc.
April 3 1998
Page 2
2. When issued (with respect to the Debentures), or executed and
delivered (with respect to the Guarantee), as set forth in the Registration
Statement, the Debentures and the Guarantee will be valid and binding
obligations of Mason-Dixon.
The foregoing opinion is limited to the laws of the State of Maryland
and the United States of America and we do not express any opinion herein
concerning any other law. We assume no obligation to supplement this opinion if
any applicable law changes after the date hereof or if we become aware of any
fact that might change the opinion expressed herein after the date hereof. The
opinion may be relied upon exclusively by you and not by any other person
without our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our Firm therein. In giving
this opinion, we do not admit that we are within the category of persons whose
consent is required by Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
<PAGE>
EXHIBIT 5.2
April 2, 1998
Mason-Dixon Capital Trust II
c/o Mason-Dixon Bancshares, Inc.
45 West Main Street
Westminster, MD 21157
Re: Mason-Dixon Capital Trust II
Ladies and Gentlemen:
We have acted as special Delaware counsel for Mason-Dixon
Bancshares, Inc., a Maryland corporation (the "Company") and Mason-Dixon Capital
Trust II, a Delaware business trust (the "Trust") in connection with the matters
set forth herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, as filed with the
office of the Secretary of State of the State of Delaware (the "Secretary of
State") on February 20, 1998;
(b) The Trust Agreement of the Trust, dated as of February 20,
1998, among the Company and the trustees named therein;
(c) The Registration Statement (the "Registration Statement")
on Form S-3, including a preliminary prospectus with respect to the Trust (the
"Prospectus"), relating to the Preferred Securities of the Trust representing
preferred undivided beneficial interests in the assets of the Trust (each, a
"Preferred Security" and collectively, the "Preferred Securities"), to be filed
by the Company and the Trust with the Securities and Exchange Commission on or
about April 3, 1998;
(d) A form of Amended and Restated Trust Agreement of the
Trust, to be entered into between the Company, the trustees of the Trust named
therein, and the holders, from time to time, of the undivided beneficial
interests in the assets of the Trust (including Exhibits C and D thereto) (the
"Trust Agreement"), attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated April
2, 1998, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise
defined are used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a) through (e) above.
In particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (e) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the
Trust Agreement will constitute the entire agreement among the parties thereto
with respect to the subject matter thereof, including with respect to the
creation, operation and termination of the applicable Trust, and that the Trust
Agreement and the Certificate of Trust will be in full force and effect and will
not be amended, (ii) except to the extent provided in paragraph 1 below, the due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its organization or formation, (iii) the legal capacity
of natural persons who are parties to the documents examined by us, (iv) that
each of the parties to the documents examined by us has the power and authority
to execute and deliver, and to perform its obligations under, such documents,
(v) the due authorization, execution and delivery by all parties thereto of all
documents examined by us, (vi) the receipt by each Person to whom a Preferred
Security is to be issued by the Trust (collectively, the "Preferred Security
Holders") of a Preferred Security Certificate for such Preferred Security and
the payment for such Preferred Security, in accordance with the Trust Agreement
and the Registration Statement, and (vii) that the Preferred Securities are
authenticated, issued and sold to the Preferred Security Holders in accordance
with the Trust Agreement and the Registration Statement. We have not
participated in the preparation of the Registration Statement or the Prospectus
and assume no responsibility for their contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Business Trust Act.
2. The Preferred Securities of the Trust will represent valid
and, subject to the qualifications set forth in paragraph 3 below, fully paid
and nonassessable beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Validity of Securities" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger PA
<PAGE>
April 3, 1998
Mason-Dixon Bancshares, Inc.
45 W. Main Street
Westminster, Maryland 21157
Re: Mason-Dixon Bancshares, Inc.
Mason-Dixon Capital Trust, II
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Mason-Dixon Bancshares, Inc.
("Mason-Dixon"), a Maryland corporation, in connection with the registration
statement of Mason-Dixon and Mason-Dixon Capital Trust, II (the "Trust") on Form
S-3, as amended (the "Registration Statement"), of which a prospectus
(the"Prospectus") is a part, filed by Mason-Dixon and the Trust with the United
States Securities and Exchange Commission under the Securities Act of 1933, as
amended. This opinion is furnished pursuant to the requirements of Item
601(b)(8) of Regulation S-K.
In connection with the opinion set forth below, we have
examined the Registration Statement and certain other documents that we have
deemed necessary to examine in order to issue the opinion set forth below. In
rendering our opinion, we have assumed that each of the documents referenced
above (a) has been duly authorized, executed, and delivered; (b) is authentic,
if an original, or accurate, if a copy; and (c) has not been amended after
execution thereof subsequent to our review.
We express no opinions except as set forth below and our
opinion is based solely upon the facts as set forth in the Registration
Statement. Accordingly, we express no opinion as to tax matters that may arise
if, for example, the facts are not as set forth in the Prospectus.
Our opinion is also based on the representations of
Mason-Dixon described in the Prospectus and the current provisions of the
Internal Revenue Code of 1986, as amended, applicable Treasury Regulations
promulgated thereunder, and rulings, procedures and other pronouncements
published by the United States
<PAGE>
Mason-Dixon Bancshares, Inc.
April 3, 1998
Page 2
Internal Revenue Service. Such laws, regulations, rulings and pronouncements,
and judicial and administrative interpretations thereof, are subject to change
at any time, and any such change may adversely affect the continuing validity of
the opinion set forth below.
Based on the foregoing, the statements of law or legal
conclusions and opinions set forth in the Prospectus under the caption "Certain
Federal Income Tax Consequences," subject to the assumption and conditions
described therein, constitute our opinion.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. We also consent to the use of our name in the
Prospectus under the caption "Certain Federal Income Tax Consequences".
The foregoing opinion is limited to the federal income tax
matters addressed herein, and no other opinions are rendered with respect to
other federal tax matters or to any issues arising under the tax laws of any
state, locality, or foreign country. We undertake no obligation to update the
opinions expressed herein after the date of this letter.
Very truly yours,
GORDON, FEINBLATT, ROTHMAN,
HOFFBERGER & HOLLANDER, LLC
By: ________________________
Member
C69821.624
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
Board of Directors
Mason-Dixon Bancshares, Inc.
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of our report dated January 17, 1998,
relating to the consolidated financial statements of Mason-Dixon Bancshares,
Inc. and Subsidiaries incorporated by reference in their Annual Report on Form
10-K for the year ended December 31, 1997, and to the reference to our Firm
under the capiton "Experts" in the Prospectus.
/s/ Stegman & Company
Baltimore, Maryland
April 1, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
Board of Directors
Mason-Dixon Bancshares, Inc.
We consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 17, 1998, relating to the
consolidated financial statements of the Rose Shanis Companies and subsidiaries
incorporated by reference in Mason-Dixon Bancshares, Inc.'s Current Report on
Form 8K filed on April __, 1998, and to the reference to our Firm under the
caption "Experts" in the Prospectus.
Sincerely,
GRABUSH, NEWMAN & CO., P.A.
/s/ Grabush, Newman & Co., P.A.
Baltimore, Maryland
April 3, 1998
EXHIBIT 24.1
POWER OF ATTORNEY
Each of the undersigned, whose signature appears below, constitutes and
appoints each of Thomas K. Ferguson and Mark A. Keidel as his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all Registration Statements of Mason- Dixon
Bancshares, Inc., and all amendments thereto, relating to or in connection with
the registration by the Company of the securities of the Mason-Dixon Capital
Trust II and the guarantee by the Company thereof, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing necessary or advisable to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or their substitutes,
may lawfully do or cause to be done by virtue thereof. This power of attorney
may be executed in counterparts.
/s/ David S. Babylon, Jr. March 11, 1998
- -------------------------
David S. Babylon, Jr.
/s/ Henry S. Baker, Jr. March 11, 1998
- -------------------------
Henry S. Baker, Jr.
/s/ Miriam F. Beck March 11, 1998
- -------------------------
Miriam F. Beck
- ------------------------- March __, 1998
Donald H. Campbell
/s/ William B. Dulany March 11, 1998
- -------------------------
William B. Dulany
/s/ Neal Hoffman March 11, 1998
- -------------------------
R. Neal Hoffman
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
- ------------------------- March __, 1998
S. Ray Hollinger
- ------------------------- March __, 1998
Edwin W. Shauck
- ------------------------- March __, 1998
James C. Snyder
/s/ Stevenson B. Yingling March 11, 1998
- -------------------------
Stevenson B. Yingling
/s/ Thomas K. Ferguson March 11, 1998
- -------------------------
Thomas K. Ferguson
/s/ J William Middelton March 11, 1998
- -------------------------
J. William Middelton
<PAGE>
EXHIBIT 25.1
- -----------------------------------------------------------------------------
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) ___________
------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
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 U.S. national bank) Identification no.)
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)
---------------------------------
MASON-DIXON BANCSHARES, INC. MASON-DIXON CAPITAL TRUST II
(Exact name of Registrant as specified in its charter) (Exact name of Registrant as specified in its charter)
MARYLAND 52-1764929 DELAWARE 51-6507171
(State or other jurisdiction of (I.R.S. employer (State or other jurisdiction of (I.R.S. employer
Incorporation or organization) Identification no.) incorporation or organization) Identification no.)
45 WEST MAIN STREET c/o MASON-DIXON BANCSHARES, INC.
WESTMINSTER, MD 21157 45 WEST MAIN STREET
(Address, including zip code WESTMINSTER, MD 21157
of principal executive offices) (Address, including zip code of
principal executive offices)
$______ Preferred Securities of Mason-Dixon Capital Trust II
Junior Subordinated Debentures of Mason-Dixon Bancshares, Inc.
Guarantee of Mason-Dixon Bancshares, Inc. of certain obligations
under the Preferred Securities
(Title of the indenture securities)
</TABLE>
<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>
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, 1997. Copy
attached.
Exhibit 8- Not Applicable.
Exhibit 9- Not Applicable.
-3-
<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 April, 1998.
BANKERS TRUST COMPANY
By: _______________________________
Jason Krasilovsky
Assistant Treasurer
-4-
<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 April, 1998.
BANKERS TRUST COMPANY
By: Jason Krasilovsky
-----------------
Jason Krasilovsky
Assistant Treasurer
-5-
<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>
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>
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>
BY-LAWS
NOVEMBER 18, 1997
Bankers Trust Company
New York
<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.
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>
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
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 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>
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, 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.
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>
I, _____________________________________, Assistant Secretary 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.
-------------------------------------
ASSISTANT SECRETARY
DATED: ____________________________________
<PAGE>
Legal Title of Bank: Bankers Trust Company Call Date: 12/31/97
ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D
CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006
11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for December 31, 1997
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.
Schedule RC--Balance Sheet
---------------
| C400 |
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
ASSETS | / / / / / / / / / / / / / / / / |
1. Cash and balances due from depository institutions (from Schedule RC-A):
| / / / / / / / / / / / / / / / / / / |
a. Noninterest-bearing balances and currency and coin (1)
............................... | 0081 2,121,000
|1.a.
b. Interest-bearing balances (2)
..........................................................................
| 0071 4,770,000 |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
4,015,000|2.b.
3. Federal funds sold and securities purchased under agreements to
resell................. | 1350
28,927,000|3.
4. Loans and lease financing receivables:
|/ / / / / / / / / / / / / / / / / /
|
a. Loans and leases, net of unearned income (from Schedule RC-C)
RCFD 2122 17,692,000 | / / / / / / / / / / / / / / / / / / |4.a.
b. LESS: Allowance for loan and lease
losses.................................... ..RCFD 3123 659,000 | / / / /
/ / / / / / / / / / / / / / |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
17,033,000|4.d.
5. Trading Assets (from schedule RC-D)
.......................................................... | 3545
45,488,000 |5.
6. Premises and fixed assets (including capitalized leases)
............................................ | 2145
766,000 |6.
7. Other real estate owned (from Schedule RC-M)
....................................................... | 2150
188,000 |7.
<PAGE>
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) | 2130 58,000
| 8.
9. Customers' liability to this bank on acceptances outstanding
.................................. | 2155
633,000 |9.
10. Intangible assets (from Schedule RC-M)
................................................................. | 2143
83,000 |10.
11. Other assets (from Schedule RC-F)
..........................................................................
| 2160 5,957,000 |11.
12. Total assets (sum of items 1 through 11)
................................................................. | 2170
110,039,000|12.
-----------
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Legal Title of Bank: Bankers Trust Company
Call Date: 12/31/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street
Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006
12
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
Schedule RC--Continued
___________________________________
Dollar
- --------------------------------------------------------------------------------
Amounts in Thousands | / / / / / / / / Bil
- --------------------------------------------------------------------------------
Mil Thou __ __|
- -----------------------
LIABILITIES
| / / / / / / / / / / / / / / / / / / / / / / / /
|
13. Deposits:
| | / / / / / / / / / / / / / / / / / / / / / / / |
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part I) | RCON 2200
24,608,000 |13.a.
(1) Noninterest-bearing(1) ............................RCON 6631
2,856,000......... | / / / / / / / / / / / / / / / / / / / / / / /
|13.a.(1)
(2) Interest-bearing .............. .....RCON 6636
21,752,000....... | / / / / / / / / / / / / / / / / / / / / / / /
|13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E | / / / / / / / / / / / / / / / / / / / /
/ / / |
part II)
| RCFN 2200 20,529,000
|13.b.
(1) Noninterest-bearing .................................RCFN 6631
2,122,000 | / / / / / / / / / / / / / / / / / / / / / / /
|13.b.(1)
(2) Interest-bearing ...................RCFN 6636
18,407,000 | / / / / / / / / / / / / / / / / / / / /
/ / / |13.b.(2)
14. Federal funds purchased and securities sold under agreements to
repurchase | RCFD 2800
13,777,000 |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 24,968,000 |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
5,810,000 |16.a.
b. With a remaining maturity of more than one year through three
years............................ | A547
4,702,000 |16.b.
c. With a remaining maturity of more than three
years.................................................... | A548
1,750,000 | 16.c
17. Not Applicable. | / / / / /
/ / / / / / / / / / / / / / / / / / / / |17.
18. Bank's liability on acceptances executed and outstanding
............................................ | RCFD 2920
633,000 |18.
<PAGE>
19. Subordinated notes and debentures
(2).................................................... | RCFD
3200 1,307,000 |19.
20. Other liabilities (from Schedule RC-G)
......................................................... | RCFD 2930
5,961,000 |20.
21. Total liabilities (sum of items 13 through 20)
.............................................. | RCFD 2948
104,045,000 |21.
22. Not Applicable
| / / / / / / / / / / / / / / / / / / /
/ / / / |
| / / / / / / / / / / / / / / / / / / /
/ / / / / / |22.
EQUITY CAPITAL
| / / / / / / / / / / / / / / / / / / / / / / /
|
23. Perpetual preferred stock and related surplus
.............................................................. | RCFD 3838
1,000,000 |23.
24. Common stock
................................................................................
| RCFD 3230 1,352,000 |24.
25. Surplus (exclude all surplus related to preferred stock)
................................................ | RCFD 3839
540,000 |25.
26. a. Undivided profits and capital reserves
......................................................... | RCFD 3632
3,526,000 |26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities ................... | RCFD 8434
(45,000) |26.b.
27. Cumulative foreign currency translation adjustments
............................................. | RCFD 3284
(379,000) |27.
28. Total equity capital (sum of items 23 through 27)
................................................ | RCFD 3210
5,994,000 |28.
29. Total liabilities and equity capital (sum of items 21 and
28)........................................ | RCFD 3300
110,039,000 |29
|_________________________________
|
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed for the
bank by independent external Number auditors as of any date during 1996
....................................................................|RCFD 6724
N/A | M.1
- -----------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <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 chartering public accounting firm which submits a report
on the bank authority)
2 = Independent audit of the bank's parent holding company 5
= Review of 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 external submits
a report on the consolidated holding company auditors
(but not on the bank separately) 7
= Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8
= No external audit work accordance with generally accepted auditing
standards by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ----------------------
(1) Including total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
<PAGE>
