<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-3/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
<TABLE>
<C> <C>
STERLING BANCSHARES CAPITAL TRUST I STERLING BANCSHARES, INC.
(Exact Name of Registrant as Specified in Its (Exact Name of Co-Registrant as Specified in Its
Charter) Charter)
DELAWARE TEXAS
(State or Other Jurisdiction of Incorporation or (State or Other Jurisdiction of Incorporation or
Organization) Organization)
76-0536778 74-2175590
(I.R.S. Employer Identification Number) (I.R.S. Employer Identification Number)
</TABLE>
---------------------
15000 NORTHWEST FREEWAY
HOUSTON, TEXAS 77040
(713) 466-8300
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's and Co-Registrant's Principal Executive Offices)
MICHAEL A. ROY
SECRETARY
STERLING BANCSHARES, INC.
15000 NORTHWEST FREEWAY
HOUSTON, TEXAS 77040
(713) 466-8300
(Name, Address, Including Zip Code and Telephone Number, Including Area Code, of
Agent For Service)
---------------------
Copies to:
<TABLE>
<C> <C>
G. MICHAEL O'LEARY, JR., ESQ. VINCENT J. PISANO, ESQ.
ANDREWS & KURTH L.L.P. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
600 TRAVIS, SUITE 4200 919 THIRD AVENUE
HOUSTON, TEXAS 77002 NEW YORK, NEW YORK 10022
(713) 220-4200 (212) 735-3000
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If the only securities being registered on this form are to be 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 of 1933, 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 of 1933, 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. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================================
PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SECURITY(2) OFFERING PRICE(2) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Preferred Securities of Sterling
Bancshares Capital Trust I.................... 1,150,000 $25.00 $28,750,000 $8,712
Junior Subordinated Debentures of Sterling
Bancshares, Inc............................... (3) -- -- --
Guarantee of Sterling Bancshares, Inc. with
respect to Trust Preferred Securities......... (4) -- -- --
==========================================================================================================================
</TABLE>
(1) There are being registered hereunder 1,150,000 (including those subject to
an over-allotment option granted to the Underwriters) % Cumulative Trust
Preferred Securities at an aggregate initial offering price not to exceed
$28,750,000.
(2) Estimated solely for the purpose of determining the registration fee.
(3) The Junior Subordinated Debentures will be purchased by Sterling Bancshares
Capital Trust I with the proceeds from the sale of the Trust Preferred
Securities. Such securities may later be distributed for no additional
consideration to the holders of the Trust Preferred Securities of Sterling
Bancshares Capital Trust I upon its dissolution and the distribution of its
assets.
(4) This Registration Statement also covers the Junior Subordinated Debentures
of Sterling Bancshares, Inc., the rights of holders of Junior Subordinated
Debentures of Sterling Bancshares, Inc. under the Indenture, and the rights
of holders of the Trust Preferred Securities under the Trust Agreement and
the Guarantee entered into by Sterling Bancshares, Inc. No separate
consideration is payable for the Guarantee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED MAY 28, 1997
1,000,000 TRUST PREFERRED SECURITIES
STERLING BANCSHARES CAPITAL TRUST I
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
[STERLING BANCSHARES, INC. LOGO]
------------------------
The % Cumulative Trust Preferred Securities (the "Trust Preferred
Securities") offered hereby (the "Offering") will represent undivided beneficial
interests in Sterling Bancshares Capital Trust I, a trust formed under the laws
of the State of Delaware (the "Trust"). Sterling Bancshares, Inc., a Texas
corporation (the "Company" or "Sterling"), will be the owner of all of the
beneficial interests represented by common securities of the Trust (the "Common
Securities," and together with the Trust Preferred Securities, the "Trust
Securities"). Bankers Trust Company is the Property Trustee of the Trust. The
Trust exists for the exclusive purposes of issuing the Trust Securities and
investing the proceeds thereof in the % Junior Subordinated Deferrable
Interest Debentures (the "Junior Subordinated Debentures"), to be issued by the
Company, and certain other limited activities as described herein. The Junior
Subordinated Debentures are scheduled to mature on , 2027, which
date may be shortened (such date, as it may be shortened, the "Stated Maturity
Date") to a date not earlier than , 2002 if certain conditions are
met (including the Company having received prior regulatory approval to do so if
then required under applicable capital guidelines or policies). The Trust
Preferred Securities will have a preference over the Common Securities under
certain circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise. See "Description of Trust Preferred
Securities -- Subordination of Common Securities."
(continued on next page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN INVESTMENT
IN THE TRUST PREFERRED SECURITIES.
------------------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE COMPANY
OR ANY OTHER GOVERNMENTAL AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===========================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC COMMISSION(1) TRUST(2)(3)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Trust Preferred Security........ $25.00 (2) $25.00
- ---------------------------------------------------------------------------------------------------------------------------
Total(4)............................ $25,000,000 (2) $25,000,000
===========================================================================================================================
</TABLE>
(1) The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities, including certain liabilities under the Securities Act.
See "Underwriting."
(2) In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will be invested in the Junior Subordinated Debentures, the
Company, as issuer of the Junior Subordinated Debentures, has agreed to pay
the Underwriters, as compensation, $ per Trust Preferred Security
(or $ in the aggregate). No commissions are payable by the Trust.
See "Underwriting."
(3) Expenses of the Offering are payable by the Company and are estimated to be
$ .
(4) The Trust has granted the Underwriters a 30-day option to purchase up to
150,000 additional Trust Preferred Securities on the same terms and
conditions set forth above solely to cover over-allotments, if any. If this
option is exercised in full, the total Price to Public will be $28,750,000
and Proceeds to Trust will be $28,750,000. See "Underwriting."
------------------------
The Trust Preferred Securities are offered by the Underwriters, subject to
prior sale, when, as and if issued to and accepted by the Underwriters and
subject to approval of certain legal matters by counsel for the Underwriters and
to certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the Trust Preferred Securities will be made through
the facilities of the Depository Trust Company ("DTC") in New York, New York on
or about , 1997 against payment therefor in immediately available
funds.
LEGG MASON WOOD WALKER STIFEL, NICOLAUS & COMPANY
INCORPORATED INCORPORATED
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE> 3
(continued from the previous page)
The Trust Preferred Securities will be represented by one or more global
certificates in fully registered form, deposited with a custodian for and
registered in the name of a nominee of DTC. Beneficial interests in such Trust
Preferred Securities will be shown on, and transfers thereof will be effected
through, records maintained by DTC and its participants. Except as described
herein, Trust Preferred Securities in certificate form will not be issued in
exchange for global certificates. See "Description of Trust Preferred
Securities -- Depositary Procedures."
Application has been made to approve the Trust Preferred Securities for
quotation on the Nasdaq National Market. Although the Underwriters have
indicated an intention to make a market in the Trust Preferred Securities, the
Underwriters are not obligated to make a market in the Trust Preferred
Securities, and any market making may be discontinued at any time at the sole
discretion of the Underwriters. There can be no assurance that a market will
develop for the Trust Preferred Securities. See "Risk Factors -- Absence of
Existing Public Market" and "Underwriting."
Holders of the Trust Securities will be entitled to receive cumulative cash
distributions arising from the payment of interest on the Junior Subordinated
Debentures, accruing from the date of original issuance and payable quarterly in
arrears on the day of March, June, September and December of each
year, commencing , 1997, at the annual rate of % of the
Liquidation Amount of $25 per Trust Security ("Distributions"). So long as no
Debenture Event of Default (as defined herein) has occurred and is continuing,
the Company will have the right to defer payments of interest on the Junior
Subordinated Debentures at any time and from time to time for a period not
exceeding 20 consecutive quarterly periods with respect to each deferral period
(each, an "Extension Period"), provided that no Extension Period shall end on a
date other than an Interest Payment Date (as defined herein) or extend beyond
the Stated Maturity Date. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Company may elect to begin a new
Extension Period, subject to the requirements set forth herein. If and for so
long as interest payments on the Junior Subordinated Debentures are so deferred,
Distributions on the Trust Securities also will be deferred and the Company will
not be permitted, subject to certain exceptions, to declare or pay any cash
distributions with respect to the Company's capital stock or to make any payment
with respect to debt securities of the Company that rank pari passu with or
junior to the Junior Subordinated Debentures. During an Extension Period,
interest on the Junior Subordinated Debentures will continue to accrue (and the
amount of Distributions to which holders of the Trust Securities are entitled
will continue to accumulate) at the rate of % per annum, compounded
quarterly, and holders of Trust Securities will be required to include such
deferred interest income in their gross income for United States Federal income
tax purposes prior to the receipt of the cash attributable to such income. See
"Description of Junior Subordinated Debentures -- Option to Extend Interest
Payment Date" and "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount."
The Company will, through the Guarantee, the Common Guarantee, the Trust
Agreement, the Junior Subordinated Debentures and the Indenture (each as defined
herein) guarantee all of the Trust's obligations under the Trust Preferred
Securities. See "Relationship Among the Trust Preferred Securities, the Junior
Subordinated Debentures and the Guarantee -- Full and Unconditional Guarantee."
The Guarantee and the Common Securities Guarantee will guarantee payments of
Distributions and payments upon liquidation of the Trust or redemption of the
Trust Securities, but in each case only to the extent that the Trust holds funds
on hand legally available therefor and has failed to make such payments, as
described herein. See "Description of Guarantee." If the Company fails to make a
required payment on the Junior Subordinated Debentures, the Trust will not have
sufficient funds to make the related payments, including Distributions, on the
Trust Securities. The Guarantee and the Common Securities Guarantee will not
cover any such payment when the Trust does not have sufficient funds on hand
legally available therefor. In such event, a holder of Trust Preferred
Securities may institute a legal proceeding directly against the Company to
enforce its rights in respect of such payment. See "Description of Junior
Subordinated Debentures -- Enforcement of Certain Rights by Holders of Trust
Preferred Securities." The obligations of the Company under the Guarantee, the
Common Securities Guarantee and the Junior Subordinated Debentures will be
unsecured and will rank subordinate and junior in right of payment to all Senior
Indebtedness. See "Description of Junior Subordinated
Debentures -- Subordination." At March 31, 1997 the Company had Senior
Indebtedness of approximately $3.6 million, which the Company intends to repay
from a portion of the proceeds of the Offering. See "Risk Factors -- Ranking of
Subordinated Obligations Under the Guarantee and the Junior Subordinated
Debentures; Limitations on Source of Funds" and "Use of Proceeds." In addition,
because the Company is a
2
<PAGE> 4
holding company, the Junior Subordinated Debentures, the Common Securities
Guarantee and the Guarantee effectively will be subordinated to all existing and
future liabilities, including deposits, of the Company's subsidiaries.
The Trust Securities will be subject to mandatory redemption in a Like
Amount (as defined herein): (i) in whole but not in part, on the Stated Maturity
Date upon repayment of the Junior Subordinated Debentures; (ii) in whole but not
in part, at any time prior to , 2002, contemporaneously with the
optional prepayment of the Junior Subordinated Debentures by the Company, upon
the occurrence and continuation of a Special Event (as defined herein); and
(iii) in whole or in part, on or after , 2002, contemporaneously with
the optional prepayment by the Company of all or part of the Junior Subordinated
Debentures, in each case, at a redemption price equal to the aggregate
Liquidation Amount of such Trust Securities, plus accumulated and unpaid
Distributions thereon to the date of redemption (the "Redemption Date"). See
"Description of Trust Preferred Securities -- Redemption."
The Company will have the right at any time to terminate the Trust and,
after satisfaction of liabilities of creditors of the Trust as required by
applicable law, to cause a Like Amount of the Junior Subordinated Debentures to
be distributed to the holders of the Trust Securities in liquidation of the
Trust, subject to the Company having received: (i) an opinion of counsel to the
effect that such distribution will not be a taxable event to holders of the
Trust Preferred Securities; and (ii) the 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, and any other
required regulatory approvals. Unless the Junior Subordinated Debentures are
distributed to the holders of the Trust Securities, in the event of a
liquidation of the Trust as described herein, after satisfaction of liabilities
to creditors of the Trust as required by applicable law, the holders of the
Trust Securities generally will be entitled to receive a Liquidation Amount of
$25 per Trust Security plus accumulated and unpaid Distributions thereon to the
date of payment. See "Description of Trust Preferred Securities -- Liquidation
of the Trust and Distribution of Junior Subordinated Debentures."
------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE TRUST PREFERRED
SECURITIES. SUCH TRANSACTIONS MAY INCLUDE OVER ALLOTMENT, STABILIZING
TRANSACTIONS, THE PURCHASE OF TRUST PREFERRED SECURITIES TO COVER SHORT
POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
3
<PAGE> 5
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
Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material may also be obtained by
mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. If available, such information
also may be accessed through the Commission's electronic data gathering,
analysis and retrieval system ("EDGAR") via electronic means, including the
Commission's home page on the Internet (http://www.sec.gov). The Company's
common stock is quoted on the Nasdaq National Market under the symbol "SBIB".
Such reports, proxy statements and other information concerning the Company also
may be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington D.C. 20006.
No separate financial statements of the Trust have been included herein.
The Company and the Trust do not consider that such financial statements would
be material to holders of the Trust Preferred Securities because the Trust is a
newly-formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than holding as trust assets the Junior Subordinated Debentures, issuing
the Trust Securities and engaging in incidental activities. See "Sterling
Bancshares Capital Trust I," "Description of Trust Preferred Securities,"
"Description of Junior Subordinated Debentures" and "Description of Guarantee."
In addition, the Company does not expect that the Trust will file reports, proxy
statements and other information under the Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated into this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
2. The Company's Current Report on Form 8-K filed on April 3, 1997 and
the amendment thereto on Form 8-K/A filed on April 7, 1997; and
3. The Company's Quarterly Report on Form 10-Q (as amended by Form
10-Q/A) for the quarterly period ended March 31, 1997.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the Trust Preferred Securities offered hereby
shall be deemed to be incorporated by reference into this Prospectus and to be a
part of this Prospectus from the date of filing of such document. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document.
The Company will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits, unless such exhibits are specifically incorporated by reference
in such documents). Requests for such documents should be directed to: Sterling
Bancshares, Inc., 15000 Northwest Freeway, Suite 200, Houston, Texas 77040,
Attention: Corporate Secretary (telephone: (713) 466-8300).
4
<PAGE> 6
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus. As used herein, (i) the
"Indenture" means the Indenture, to be dated as of , 1997, as
amended and supplemented from time to time, between the Company and Bankers
Trust Company, as trustee (the "Debenture Trustee"), relating to the Junior
Subordinated Debentures; (ii) the "Trust Agreement" means the Second Amended and
Restated Declaration of Trust relating to the Trust among the Company, as
Sponsor, Bankers Trust Company, as Property Trustee (the "Property Trustee"),
Bankers Trust (Delaware), as Delaware Trustee (the "Delaware Trustee"), and the
Administrative Trustees named therein (collectively, with the Property Trustee
and Delaware Trustee, the "Issuer Trustees"); (iii) the "Guarantee" means the
Guarantee Agreement relating to the Trust Preferred Securities between the
Company and Bankers Trust Company, as Guarantee Trustee (the "Guarantee
Trustee"); and (iv) the "Common Securities Guarantee" means the Guarantee
Agreement relating to the Common Securities.
STERLING BANCSHARES, INC.
Sterling Bancshares, Inc. is a bank holding company that provides
commercial and retail banking services through the community banking offices of
Sterling Bank, a banking association chartered under the laws of the State of
Texas (the "Bank") and headquartered in Houston, Texas. The Bank has fourteen
community banking offices, all of which are located in the greater Houston
metropolitan area. At March 31, 1997, the Company had total assets of $828.2
million, deposits of $750.4 million and shareholders' equity of $61.5 million.
The Bank provides a wide range of retail and commercial banking services,
including demand, savings and time deposits; commercial, real estate and
consumer loans; merchant credit card services; letters of credit; cash
management services; and drive-in banking services. In addition, the Bank
facilitates sales of brokerage products, mutual funds, and insurance products
through third-party vendors. The primary lending focus of the Bank is on
commercial loans and owner-occupied real estate loans to local businesses with
annual sales ranging from $300,000 to $30 million.
The Bank employs a business strategy that is generally known in the
industry as supercommunity banking. Under this strategy, the Bank provides a
broad line of financial products and services to small and medium-sized
businesses and consumers through full service community banking offices. As a
result of the development of broad banking relationships with their customers
and the convenience and service of the Bank's fourteen full-service banking
offices, lending and investing activities are funded almost entirely by core
deposits, approximately three-fourths of which are demand and savings deposits.
On March 18, 1997, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") to acquire First Houston Bancshares, Inc. ("First
Houston") and its subsidiary, Houston National Bank, in a stock-for-stock merger
(the "Merger"). See "Sterling Bancshares, Inc.," "Recent Developments" and "Pro
Forma Consolidated Financial Statements."
The principal executive office of the Company is located at 15000 Northwest
Freeway, Suite 200, Houston, Texas 77040, and its telephone number is (713)
466-8300.
STERLING BANCSHARES CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law pursuant
to: (i) the Trust Agreement executed by the Company, as Sponsor, Bankers Trust
Company, as Property Trustee, and Bankers Trust (Delaware), as Delaware Trustee,
and the three individual Administrative Trustees named therein; and (ii) the
filing of a certificate of trust with the Delaware Secretary of State. The
Trust's business and affairs are conducted by the Issuer Trustees, the Property
Trustee, the Delaware Trustee, and the three individual Administrative Trustees,
who are officers of the Company. The Trust exists for the exclusive purposes of:
(i) issuing and selling the Trust Securities; (ii) using the proceeds from the
sale of the Trust Securities to acquire the Junior Subordinated Debentures
issued by the Company; and (iii) engaging in only those other
5
<PAGE> 7
activities necessary, advisable or incidental thereto. The Junior Subordinated
Debentures will be the sole assets of the Trust and, accordingly, payments on
the Junior Subordinated Debentures will be the sole revenue of the Trust. All of
the Common Securities will be owned by the Company. The Trust's principal
offices are located at 15000 Northwest Freeway, Suite 200, Houston, Texas 77040.
THE OFFERING
Trust Preferred Securities
Issuer................... Sterling Bancshares Capital Trust I
Securities Offered......... 1,000,000 Trust Preferred Securities. The Trust
Preferred Securities represent undivided beneficial
interests in the Trust's assets, which will consist
solely of the Junior Subordinated Debentures and
payments thereunder.
Distributions.............. The Distributions payable on each Trust Preferred
Security will be fixed at a rate per annum of
% of the Liquidation Amount of $25 per Trust
Preferred Security, will be cumulative, will accrue
from the date of issuance of the Trust Preferred
Securities, and will be payable quarterly in
arrears on the day of March, June,
September and December of each year, commencing on
, 1997 (subject to possible deferral as
described below). The amount of each Distribution
due with respect to the Trust Preferred Securities
will include amounts accrued through the date the
Distribution payment is due. See "Description of
Trust Preferred Securities -- Distributions."
Extension Periods.......... So long as no Debenture Event of Default (as
defined herein) has occurred and is continuing, the
Company will have the right to defer the payment of
interest on the Junior Subordinated Debentures for
a period not exceeding 20 consecutive quarterly
periods. No Extension Period will end on a date
other than an Interest Payment Date or extend
beyond the Stated Maturity Date. During an
Extension Period, Distributions on Trust Preferred
Securities will be deferred. See "Description of
Junior Subordinated Debentures -- Option to Extend
Interest Payment Date" and "Certain Federal Income
Tax Consequences -- Interest Income and Original
Issue Discount."
Maturity................... The Junior Subordinated Debentures will mature on
, 2027, which date may be shortened to
a date not earlier than , 2002 if
certain conditions are met (including 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, and any other required regulatory
approvals).
Ranking.................... The Trust Preferred Securities will rank pari
passu, and payments thereon will be made pro rata,
with the Common Securities, except as described
under "Description of Trust Preferred
Securities -- Subordination of Common Securities."
The Junior Subordinated Debentures will rank pari
passu with all other junior subordinated debentures
(if any) issued by the Company (the "Other
Debentures"), which are issued and sold (if at all)
to other trusts established by the Company (if
any), in each case similar to the Trust ("Other
Trusts"), and will constitute unsecured obligations
of the Company and will rank subordinate and junior
in right of payment to all current and future
6
<PAGE> 8
Senior Indebtedness to the extent and in the manner
set forth in the Indenture. See "Description of
Junior Subordinated Debentures." The Guarantee will
rank pari passu with all other guarantees (if any)
issued by the Company with respect to trust
preferred securities (if any) issued by Other
Trusts ("Other Guarantees") and will constitute an
unsecured obligation of the Company and will rank
subordinate and junior in right of payment to all
Senior Indebtedness to the extent and in the manner
set forth in the Guarantee Agreement. See
"Description of Guarantee." In addition, because
the Company is a holding company, the Junior
Subordinated Debentures and the Guarantee will be
effectively subordinated to all existing and future
liabilities of the Company's subsidiaries,
including the Bank's deposit liabilities. See
"Description of Junior Subordinated
Debentures -- Subordination."
Redemption................. The Trust Securities will be subject to mandatory
redemption in a Like Amount: (i) in whole but not
in part, on the Stated Maturity Date upon repayment
of the Junior Subordinated Debentures; (ii) in
whole but not in part, at any time prior to
, 2002, contemporaneously with the
optional prepayment of the Junior Subordinated
Debentures by the Company upon the occurrence and
continuation of a Special Event (as defined
herein); and (iii) in whole or in part, on or after
, 2002, contemporaneously with the
optional prepayment by the Company of all or part
of the Junior Subordinated Debentures, in each
case, at a redemption price equal to 100% of the
Liquidation Amount of the Trust Securities to be
redeemed, plus the accrued and unpaid Distributions
on the Trust Preferred Securities to be redeemed to
the Redemption Date. See "Description of Trust
Preferred Securities -- Redemption" and
"Description of Junior Subordinated
Debentures -- Prepayment."
Distribution of Junior
Subordinated
Debentures................. The Company has the right at any time to terminate
the Trust and cause the Junior Subordinated
Debentures to be distributed to holders of Trust
Securities in liquidation of the Trust, subject to
the Company having received (i) an opinion of
counsel that such distribution will not be a
taxable event to the holders of the Trust Preferred
Securities and (ii) prior approval of the Federal
Reserve to do so, if then required under applicable
capital guidelines or policies of the Federal
Reserve, and any other required regulatory
approvals. See "Description of Trust Preferred
Securities -- Liquidation of the Trust and
Distribution of Junior Subordinated Debentures."
Use of Proceeds............ All of the proceeds from the sale of the Trust
Securities will be invested by the Trust in the
Junior Subordinated Debentures. The Company intends
to use the net proceeds from the sale of the Junior
Subordinated Debentures to repay outstanding
indebtedness (including accrued interest) of
approximately $3.7 million and for general
corporate purposes, which may include the financing
of future cash acquisitions. Pending the
application of such net proceeds, the Company
intends to invest them in short term securities.
Guarantee.................. The Company has guaranteed the payment of
Distributions and payments on liquidation or
redemption of the Trust Preferred Securities, but
only in each case to the extent of funds held by
the Trust, as described herein. The Company and the
Trust believe that, taken together, the obligations
of the Company under the Guarantee, the Trust
Agreement,
7
<PAGE> 9
the Junior Subordinated Debentures and the
Indenture provide, in the aggregate, a full,
irrevocable and unconditional guaranty, on a
subordinated basis, of all of the obligations of
the Company relating to the Trust Preferred
Securities. The obligations of the Company under
the Guarantee and the Trust Preferred Securities
are subordinate and junior in right of payment to
all current and future Senior Indebtedness of the
Company. If the Trust has insufficient funds to pay
Distributions on the Trust Preferred Securities
(i.e., if the Company has failed to make required
payments under the Junior Subordinated Debentures)
a holder of the Trust Preferred Securities would
have the right to 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 Trust Preferred
Securities," "-- Debenture Events of Default" and
"Description of Guarantee."
Limited Voting Rights...... Holders of Trust Preferred Securities generally
will have limited voting rights relating only to
the modification of the Trust Preferred Securities
and the exercise of the Trust's rights as holder of
Junior Subordinated Debentures. Holders of Trust
Preferred Securities will not be entitled to vote
to appoint, remove or replace, or to increase or
decrease the number of, the Issuer Trustees, which
voting rights are vested exclusively in the holder
of the Common Securities except upon the occurrence
of certain events described this Prospectus.
Absence of Market for the
Trust Preferred
Securities................. The Trust Preferred Securities will be a new issue
of securities for which there currently is no
market. Although the Underwriters have informed the
Trust and the Company that they currently intend to
make a market in the Trust Preferred Securities,
the Underwriters are not obligated to do so, and
any such market making may be discontinued at any
time without notice. Accordingly, there can be no
assurance as to the development or liquidity of any
market for the Trust Preferred Securities. The
Trust and the Company have applied for quotation of
the Trust Preferred Securities on the Nasdaq
National Market. See "Underwriting."
Proposed Nasdaq Trading
Symbol................... "SBIBP."
Risk Factors............... For a discussion of considerations relevant to an
investment in the Trust Preferred Securities which
should be carefully considered by prospective
investors, see "Risk Factors" beginning on page 11
of this Prospectus.
8
<PAGE> 10
SUMMARY CONSOLIDATED FINANCIAL DATA
SUMMARY CONSOLIDATED FINANCIAL DATA OF THE COMPANY
The consolidated financial data below summarizes historical consolidated
financial information of the Company for the periods indicated and should be
read in connection with the financial information included in the Company's 1996
Annual Report on Form 10-K for the year ended December 31, 1996. The data for
the three month periods ended March 31, 1997 and 1996 has been derived from, and
should be read in connection with, the Quarterly Report on Form 10-Q for the
three-month period ended March 31, 1997. See "Available Information" and
"Incorporation of Certain Documents by Reference." In the opinion of management,
all adjustments considered necessary for a fair presentation have been included
in the unaudited interim data. Interim results for the three months ended March
31, 1997 are not necessarily indicative of results which may be expected for
future periods, including the year ending December 31, 1997.
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED
MARCH 31, AT OR FOR THE YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF INCOME:
Interest income........................... $15,005 $12,435 $53,413 $46,734 $39,735 $27,231 $26,136
Interest expense.......................... 4,653 3,968 16,727 14,557 11,140 7,301 8,699
Net interest income....................... 10,352 8,467 36,686 32,177 28,595 19,930 17,437
Provision for credit losses............... 612 513 2,113 919 921 856 808
Non-interest income....................... 1,959 1,925 7,964 7,536 7,135 4,424 3,690
Non-interest expense...................... 7,961 6,323 27,134 25,781 24,458 15,661 13,266
Income before income taxes................ 3,738 3,556 15,403 13,013 10,351 7,837 7,053
Income taxes.............................. 1,233 1,153 4,749 4,147 3,200 2,474 2,274
Net income................................ 2,505 2,403 10,654 8,866 7,151 5,363 4,779
PER SHARE DATA:(1)
Net income per share (fully diluted)...... $0.20 $0.20 $0.86 $0.73 $0.60 $0.45 $0.52
Cash dividends paid per common share...... 0.055 0.048 0.19 0.14 0.12 0.11 0.00
Book value per common share............... 5.12 4.36 4.97 4.22 3.38 3.09 3.58
Tangible book value per share............. 4.99 4.20 4.82 4.03 3.17 2.85 2.93
Weighted average common and common
equivalent shares....................... 12,353 12,216 12,340 12,117 11,883 11,824 9,248
BALANCE SHEET DATA:
Total assets.............................. $828,194 $661,547 $790,073 $647,349 $598,654 $553,196 $380,435
Loans, net of unearned discount........... 511,427 413,789 497,429 392,645 328,560 291,762 205,356
Allowance for credit losses............... 7,001 6,256 6,578 5,907 5,810 5,044 3,373
Investment securities..................... 172,804 159,983 152,253 167,512 191,957 192,919 115,135
Deposits.................................. 750,424 591,277 717,413 574,724 538,335 481,677 337,631
Notes payable and senior debentures....... 3,600 5,200 4,000 5,800 8,050 12,900 2,300
Shareholders' equity...................... 61,484 51,692 59,407 49,691 39,623 35,792 33,077
SELECTED PERFORMANCE RATIOS:
Return on average assets.................. 1.28% 1.49% 1.53% 1.48% 1.26% 1.37% 1.42%
Return on average shareholders' equity.... 16.62 18.95 19.40 19.87 18.76 15.24 20.83
Net interest margin (tax equivalent)...... 6.11 5.98 6.03 6.10 5.72 5.72 5.81
ASSET QUALITY RATIOS:
Non-performing loans to total period-end
loans................................... 0.48% 0.71% 0.55% 0.87% 0.80% 1.04% 0.60%
Period-end non-performing assets to total
assets.................................. 0.55 0.73 0.64 0.80 0.72 1.03 1.30
Period-end allowance for credit losses to
non-performing loans.................... 284.13 212.28 242.56 173.38 221.09 166.91 271.80
Period-end allowance for credit losses to
total loans............................. 1.37 1.51 1.32 1.50 1.77 1.73 1.64
Net charge-offs to average loans.......... 0.15 0.16 0.33 0.23 0.05 0.34 0.18
LIQUIDITY AND CAPITAL RATIOS:
Average loans to average deposits......... 68.99% 69.93% 70.40% 68.69% 61.22% 61.31% 60.87%
Period-end shareholders' equity to total
assets.................................. 7.42 7.81 7.52 7.68 6.62 6.47 8.69
Average shareholders' equity to average
assets.................................. 7.69 7.86 7.89 7.46 6.71 8.99 6.84
Period-end Tier 1 capital to risk weighted
assets(2)............................... 9.97 10.78 10.27 10.82 10.41 9.75 13.13
Period-end total capital to risk weighted
assets(2)............................... 11.37 12.03 11.44 12.07 11.67 10.99 14.38
Period-end Tier 1 leverage ratio (tangible
shareholders' equity to total average
assets)(2).............................. 7.39 7.84 8.03 7.66 6.57 5.96 8.69
</TABLE>
- ---------------
(1) Per share data for all periods and dates have been adjusted retroactively to
give effect to a three-for-two split in the form of a stock dividend to
common shareholders distributed on February 24, 1997.
(2) Calculated in accordance with regulations in effect at December 31, 1996.
9
<PAGE> 11
SUMMARY PRO FORMA CONSOLIDATED FINANCIAL DATA
On March 18, 1997, the Company entered into the Merger Agreement to acquire
First Houston and its subsidiary, Houston National Bank, in a stock-for-stock
merger. The Merger Agreement, which is subject to approval of First Houston's
shareholders and various banking regulatory authorities, provides that the
Company will issue approximately 1.72 million shares of the Company's common
stock to the stockholders of First Houston in exchange for all of the issued and
outstanding shares of stock of First Houston. The final purchase price is
subject to certain closing adjustments. The transaction is expected to be
accounted for as a pooling of interests and is expected to close in the third
quarter of 1997.
The following summary pro forma consolidated financial data combines the
historical consolidated financial statements of the Company and First Houston as
if the Merger had occurred on January 1, 1994 after giving effect to the pro
forma adjustments described in the notes to the pro forma consolidated financial
statements included elsewhere in this Prospectus. See "Pro Forma Consolidated
Financial Statements."
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED AT OR FOR THE YEARS ENDED
MARCH 31, DECEMBER 31,
--------------------- ---------------------------------
1997 1996 1996 1995 1994
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C>
SUMMARY OF INCOME:
Interest income.................................... $ 17,369 $ 14,467 $ 62,171 $ 54,268 $ 44,475
Interest expense................................... 5,448 4,674 19,807 17,271 12,444
Net interest income................................ 11,921 9,793 42,364 36,997 32,031
Provision for credit losses........................ 692 561 2,343 1,149 1,426
Non-interest income................................ 2,110 2,085 8,598 8,068 7,740
Non-interest expense............................... 9,097 7,331 32,354 29,829 27,171
Income before income taxes......................... 4,242 3,986 16,265 14,087 11,174
Income taxes....................................... 1,404 1,282 5,112 4,404 3,472
Net income......................................... 2,838 2,704 11,153 9,683 7,702
PER SHARE DATA:(1)
Net income per share (fully diluted)............... $ 0.20 $ 0.19 $ 0.79 $ 0.70 $ 0.57
Book value per common share........................ 5.05 4.38 4.90 4.24 3.26
Tangible book value per share...................... 4.92 4.23 4.77 4.08 3.08
Weighted average common and common equivalent
shares........................................... 14,077 13,940 14,064 13,841 13,607
BALANCE SHEET DATA:
Total assets....................................... $956,552 $774,289 $922,330 $767,972 $672,616
Loans, net of unearned discount.................... 572,752 462,788 554,325 441,375 372,538
Allowance for credit losses........................ 7,565 6,832 7,053 6,465 6,317
Investment securities.............................. 226,824 211,990 205,465 216,376 214,494
Deposits........................................... 869,318 696,023 840,344 687,125 607,899
Notes payable and senior debentures................ 3,600 5,200 4,000 5,800 8,050
Shareholders' equity............................... 69,353 59,505 67,004 57,280 43,909
SELECTED PERFORMANCE RATIOS:
Return on average assets........................... 1.25% 1.43% 1.37% 1.38% 1.22%
Return on average shareholders' equity............. 16.70 18.50 17.85 19.03 18.00
Net interest margin................................ 5.92 5.76 5.80 5.84 5.63
ASSET QUALITY RATIOS:
Non-performing loans to total period-end loans..... 0.46% 0.83% 0.53% 0.90% 0.73%
Period-end non-performing assets to total assets... 0.51 0.80 0.58 0.74 0.66
Period-end allowance for credit losses to
non-performing loans............................. 289.18 176.81 239.25 163.71 230.72
Period-end allowance for credit losses to total
loans............................................ 1.32 1.48 1.27 1.46 1.70
Net charge-offs to average loans................... 0.13 0.17 0.36 0.25 0.17
LIQUIDITY AND CAPITAL RATIOS:
Average loans to average deposits.................. 66.52% 66.32% 66.76% 65.81% 61.53%
Period-end shareholders' equity to total assets.... 7.25 7.69 7.65 7.46 6.53
Average shareholders' equity to average assets..... 7.47 7.71 7.65 7.25 6.76
Period-end Tier 1 capital to risk weighted
assets(2)........................................ 10.17 10.97 10.48 11.11 10.42
Period-end total capital to risk weighted
assets(2)........................................ 11.51 12.19 11.61 12.33 11.91
Period-end Tier 1 leverage ratio (tangible
shareholders' equity to total average
assets)(2)....................................... 7.22 7.50 7.99 7.88 6.99
</TABLE>
- ---------------
(1) Per share data for all periods and dates have been adjusted retroactively to
give effect to a three-for-two stock split in the form of a stock dividend
to common shareholders distributed on February 24, 1997.
(2) Calculated in accordance with regulations in effect at December 31, 1996.
10
<PAGE> 12
RISK FACTORS
Prospective purchasers of the Trust Preferred Securities should carefully
review the information contained elsewhere in this Prospectus and should
particularly consider the following matters. Information contained in this
Prospectus contains "forward-looking statements" which can be identified by the
use of forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "projected," "contemplates" or "anticipates" or the negative thereof
or other variations thereon or comparable terminology. See, e.g., "Summary --
Sterling Bancshares, Inc." and "Sterling Bancshares, Inc." No assurance can be
given that the future results covered by the forward-looking statements will be
achieved. The following matters constitute cautionary statements identifying
important factors with respect to such forward-looking statements, including
certain risks and uncertainties, that could cause actual results to vary
materially from the future results covered in such forward-looking statements.
Other factors, such as the general state of the economy, could also cause actual
results to vary materially from the future results covered in such
forward-looking statements.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES; LIMITATIONS ON SOURCE OF FUNDS
The obligations of the Company under the Guarantee issued by it for the
benefit of the holders of Trust Preferred Securities, as well as under the
Junior Subordinated Debentures, will be unsecured and will rank subordinate and
junior in right of payment to all Senior Indebtedness to the extent and in the
manner set forth in the Indenture and the Guarantee, respectively. No payment
may be made of the principal of or interest on the Junior Subordinated
Debentures, or in respect of any redemption, retirement, purchase or other
acquisition of any of the Junior Subordinated Debentures, at any time when (i)
there shall have occurred and be continuing a default in any payment in respect
of any Senior Indebtedness, or there has been an acceleration of the maturity
thereof because of a default, or (ii) in the event of the acceleration of the
maturity of the Junior Subordinated Debentures, until payment has been made on
all Senior Indebtedness. At March 31, 1997, the Company had Senior Indebtedness
of approximately $3.6 million outstanding, which the Company intends to repay
from a portion of the proceeds of this Offering. Because the Company is a
holding company, the right of the Company to participate in any distribution of
assets of any subsidiary upon such subsidiary's liquidation or reorganization or
otherwise (and thus the ability of holders of the Trust Preferred Securities to
benefit indirectly from such distribution) is subject to the prior claims of
creditors of that subsidiary (including depositors, in the case of the Bank),
except to the extent that the Company may itself be recognized as a creditor of
that subsidiary. At March 31, 1997, the subsidiaries of the Company had total
liabilities, excluding liabilities owed to the Company, of $766.7 million (or
approximately $887.2 million on a pro forma basis as of such date after giving
effect to the Merger). Accordingly, the Junior Subordinated Debentures
effectively will be subordinated to all existing and future liabilities of the
Company's subsidiaries (including the Company's subsidiaries' deposit
liabilities, which aggregated $750.4 million at March 31, 1997, (or
approximately $869.3 million after giving effect to the Merger)) and holders of
Junior Subordinated Debentures should look only to the assets of the Company for
payments on the Junior Subordinated Debentures. The Guarantee will constitute an
unsecured obligation of the Company and will rank subordinate and junior in
right of payment to all current and future Senior Indebtedness in the same
manner as the Junior Subordinated Debentures. None of the Indenture, the
Guarantee or the Trust Agreement places any limitation on the amount of secured
or unsecured debt, including Senior Indebtedness, that may be incurred by the
Company or any of its subsidiaries. See "Description of Guarantee -- Status of
the Guarantee" and "Description of Junior Subordinated Debentures -- General"
and "-- Subordination."
The ability of the Trust to pay amounts due on the Trust Preferred
Securities is solely dependent upon the Company making payments on the Junior
Subordinated Debentures as and when required.
The Company is a holding company and substantially all of the operating
assets of the Company are owned by the Company's subsidiaries. The Company
relies primarily on dividends from the Bank to pay dividends to its stockholders
and to meet its obligations for payment of its corporate expenses. There are
regulatory limitations on the payment of dividends directly or indirectly to the
Company from the Bank. As of March 31, 1997, under applicable banking statutes
and the Bank's dividend policy, the total capital available for payment of
dividends by the Bank to the Company was approximately $18.0 million (or
approximately
11
<PAGE> 13
$18.9 million on a pro forma basis after giving effect to the Merger). Federal
and state bank regulatory agencies, however, have the power to prohibit any act,
including the payment of dividends, if such act would reduce the Bank's capital
to a point that, in their opinion, would render the Bank undercapitalized and
thus constitute an unsafe or unsound banking practice. In addition to
restrictions on the payment of dividends, the Bank is subject to certain
restrictions imposed by federal law on any extensions of credit to, and certain
other transactions with, the Company and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent the
Company and such other affiliates from borrowing from the Bank unless the loans
are secured by various types of collateral. Further, such secured loans, other
transactions and investments by the Bank are generally limited in amount as to
the Company and as to each of such other affiliates to 10% of the Bank's capital
and surplus and as to the Company and all of such other affiliates to an
aggregate of 20% of the Bank's capital and surplus.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES; MARKET PRICE
CONSEQUENCES
So long as no Debenture Event of Default (as defined herein) has occurred
and is continuing, the Company will have the right under the Indenture to defer
payments of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 20 consecutive quarterly periods with
respect to each Extension Period, provided that no Extension Period shall end on
a date other than an Interest Payment Date or extend beyond the Stated Maturity
Date. As a consequence of any such deferral, quarterly Distributions on the
Trust Securities by the Trust will be deferred (and the amount of Distributions
to which holders of the Trust Securities are entitled will accumulate additional
Distributions thereon at the rate of % per annum, compounded quarterly) from
the relevant payment date for such Distributions during any such Extension
Period. During any Extension Period, the Company generally will be prohibited
from, among other things, declaring or paying dividends on the Company's capital
stock. See "Description of Trust Preferred Securities -- Distributions."
Before the termination of any such Extension Period, the Company may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 20 consecutive quarterly periods, to end
on a date other than an Interest Payment Date or to extend beyond the Stated
Maturity Date. Upon the termination of any Extension Period and the payment of
all interest then accrued and unpaid on the Junior Subordinated Debentures
(together with interest thereon at the annual rate of %, compounded
quarterly, to the extent permitted by applicable law), the Company may elect to
begin a new Extension Period, subject to the above requirements. There is no
limitation on the number of times that the Company may elect to begin an
Extension Period. See "Description of Trust Preferred
Securities -- Distributions" and "Description of Junior Subordinated
Debentures -- Option to Extend Interest Payment Date."
The Company has no current plan to exercise its right to defer payments of
interest on the Junior Subordinated Debentures. However, should the Company
exercise its right to defer payments of interest on the Junior Subordinated
Debentures, each holder of Trust Securities will be required to accrue income
(as original issue discount ("OID")) in respect of the deferred stated interest
allocable to its Trust Securities for United States Federal income tax purposes,
which will be accrued but not distributed to holders of Trust Securities. As a
result, each holder of Trust Securities will recognize income for United States
Federal income tax purposes in advance of the receipt of cash and will not
receive the cash related to such income from the Trust if the holder disposes of
the Trust Securities prior to the record date for the payment of Distributions
thereafter. See "Certain Federal Income Tax Consequences -- Interest Income and
Original Issue Discount" and "-- Sales of Trust Preferred Securities."
Should the Company elect to exercise its right to defer payments of
interest on the Junior Subordinated Debentures in the future, the market price
of the Trust Preferred Securities is likely to be affected. A holder that
disposes of its Trust Preferred Securities during an Extension Period,
therefore, might not receive the same return on its investment as a holder that
continues to hold its Trust Preferred Securities. In addition, the mere
existence of the Company's right to defer payments of interest on the Junior
Subordinated Debentures may cause the market price of the Trust Preferred
Securities to be more volatile than the market prices of other securities that
are not subject to such deferrals.
12
<PAGE> 14
SPECIAL EVENT REDEMPTION
Upon the occurrence and continuation of a Special Event (defined as a Tax
Event, an Investment Company Event or a Regulatory Capital Event in "Description
of Junior Subordinated Debentures -- Prepayment"), whether occurring before or
after , 2002, the Company will have the right to prepay the Junior
Subordinated Debentures in whole (but not in part) at 100% of the principal
amount plus accrued and unpaid interest to the date fixed for redemption within
90 days following the occurrence of such Special Event and, therefore, cause a
mandatory redemption of the Trust Securities at a redemption price equal to the
Liquidation Amount of such Trust Securities plus accrued and unpaid
Distributions thereon. See "Description of Junior Subordinated
Debentures -- Prepayment." The exercise of such right is subject to the Company
having received any required regulatory approval. See "Description of Trust
Preferred Securities -- Redemption."
SHORTENING OF STATED MATURITY OF JUNIOR SUBORDINATED DEBENTURES
The Company will have the right at any time to shorten the maturity of the
Junior Subordinated Debentures to a date not earlier than , 2002 and
thereby cause the Trust Securities to be redeemed on such earlier date. The
exercise of such right is 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, and any other required regulatory approvals.
See "Description of Junior Subordinated Debentures -- Prepayment."
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of President Clinton's Fiscal 1998 Budget
Proposal, the United States Treasury Department proposed legislation that would,
among other things, deny an issuer a deduction for United States Federal income
tax purposes for the payment of interest on instruments with characteristics
similar to the Junior Subordinated Debentures. If the proposed legislation were
enacted in its current form, it is not expected to apply to the Junior
Subordinated Debentures since the proposed effective date for this provision is
the date of first committee action. There can be no assurances, however, that
the proposed legislation, if enacted, or similar legislation enacted after the
date hereof would not adversely affect the tax treatment of the Junior
Subordinated Debentures, resulting in a Tax Event, which may permit the Company,
upon the receipt of any required regulatory approval, to cause a redemption of
the Trust Securities by electing to prepay the Junior Subordinated Debentures.
See "Description of Trust Preferred Securities -- Redemption" and "Description
of Junior Subordinated Debentures -- Prepayment." See also "Certain Federal
Income Tax Consequences -- Proposed Tax Legislation."
POSSIBLE ADVERSE EFFECT ON MARKET PRICES
There can be no assurance as to the market prices for Trust Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Trust Preferred Securities if a termination of the Trust were to
occur. Accordingly, the Trust Preferred Securities or the Junior Subordinated
Debentures may trade at a discount from the price that the investor paid to
purchase the Trust Preferred Securities offered hereby. Because holders of Trust
Preferred Securities may receive Junior Subordinated Debentures in liquidation
of the Trust and because Distributions are otherwise limited to payments on the
Junior Subordinated Debentures, prospective purchasers of Trust 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."
RIGHTS UNDER THE GUARANTEE
The Guarantee will guarantee to the holders of the Trust Preferred
Securities the following payments, to the extent not paid by or on behalf of the
Trust: (i) any accumulated and unpaid Distributions required to be paid on the
Trust Preferred Securities, to the extent that the Trust has funds on hand
legally available therefor
13
<PAGE> 15
at such time; (ii) the redemption price with respect to the Trust Preferred
Securities called for redemption, to the extent that the Trust has funds on hand
legally available therefor at such time; and (iii) upon a voluntary or
involuntary termination, winding up or liquidation of the Trust (unless the
Junior Subordinated Debentures are distributed to holders of the Trust Preferred
Securities), the lesser of: (a) the aggregate of the Liquidation Amount and all
accumulated and unpaid Distributions to the date of payment, to the extent that
the Trust has funds on hand legally available therefor at such time and (b) the
amount of assets of the Trust remaining available for distribution to holders of
the Trust Preferred Securities at such time, after the satisfaction of
liabilities to creditors of the Trust as provided by applicable law.
The holders of a majority in Liquidation Amount of the Trust Preferred
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust power conferred
upon the Guarantee Trustee under the Guarantee. Any holder of the Trust
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 Trust, the Guarantee Trustee or any other person or
entity. If the Company defaults on its obligation to pay amounts payable under
the Junior Subordinated Debentures, the Trust will not have sufficient funds for
the payment of Distributions or amounts payable on redemption of the Trust
Preferred Securities or otherwise, and, in such event, holders of the Trust
Preferred Securities will not be able to rely upon the Guarantee for payment of
such amounts. Instead, in the event a Debenture Event of Default shall have
occurred and be continuing and such event is attributable to the failure of the
Company to pay the principal of, or interest (including Additional Sums (as
defined below) if any) on, the Junior Subordinated Debentures on the payment
date on which such payment is due and payable, then a holder of Trust Preferred
Securities may institute a legal proceeding directly against the Company for
enforcement of payment to such holder of the aggregate Liquidation Amount of the
Trust Preferred Securities of such holder (a "Direct Action"). Notwithstanding
any payments made to a holder of Trust Preferred Securities by the Company in
connection with a Direct Action, the Company shall remain obligated to pay the
principal and interest (including Additional Sums, if any) on the Junior
Subordinated Debentures, and the Company shall be subrogated to the rights of
the holder of such Trust Preferred Securities with respect to payments on the
Trust Preferred Securities to the extent of any payments made by the Company to
such holder in any Direct Action. Except as described herein, holders of Trust
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debentures or to assert
directly any other rights in respect of the Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Enforcement of Certain Rights
by Holders of Trust Preferred Securities," "-- Debenture Events of Default" and
"Description of Guarantee." The Trust Agreement will provide that each holder of
Trust Preferred Securities by acceptance of the Trust Preferred Securities
agrees to the provisions of the Indenture. Bankers Trust Company will act as
Guarantee Trustee and will hold the Guarantee for the benefit of the holders of
the Trust Preferred Securities. Bankers Trust Company will also act as Property
Trustee and as Debenture Trustee under the Indenture. Bankers Trust (Delaware)
will act as Delaware Trustee under the Trust Agreement.
LIMITED VOTING RIGHTS
Holders of Trust Preferred Securities generally will have voting rights
relating only to the modification of the Trust Preferred Securities and the
exercise of the Trust's rights as holder of Junior Subordinated Debentures.
Holders of Trust Preferred Securities will not be entitled to vote to appoint,
remove or replace, or to increase or decrease the number of, the Issuer
Trustees, which voting rights are vested exclusively in the holder of the Common
Securities, except upon the occurrence of certain events described in this
Prospectus. The Property Trustee, the Administrative Trustees and the Company
may amend the Trust Agreement without the consent of holders of Trust Preferred
Securities to ensure that the Trust will be classified for United States Federal
income tax purposes as a grantor trust. Holders of Trust Preferred Securities
will have no voting rights with respect to any matters submitted to a vote of
the Company's stockholders. See "Description of Trust Preferred
Securities -- Voting Rights; Amendment of the Trust Agreement" and "-- Removal
of Issuer Trustees."
14
<PAGE> 16
TRADING CHARACTERISTICS OF THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debentures are deemed to have been issued with OID) and who
disposes of its Trust Preferred Securities between record dates for payments of
distributions thereon will be required to include accrued and unpaid interest on
the Junior Subordinated Debentures through the date of disposition in income as
ordinary income, and to add such amount to its adjusted tax basis in its share
of the underlying Junior Subordinated Debentures deemed disposed of. To the
extent the selling price is less than the holder's adjusted tax basis (which
will include all accrued and unpaid interest), a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States Federal income tax purposes. See
"Certain Federal Income Tax Considerations -- Interest Income and Original Issue
Discount" and "-- Sales of Trust Preferred Securities."
ABSENCE OF EXISTING PUBLIC MARKET
There is no existing market for the Trust Preferred Securities. Application
has been made to approve the Trust Preferred Securities for quotation on the
Nasdaq National Market under the trading symbol "SBIBP." There can be no
assurance that an active and liquid trading market for the Trust Preferred
Securities will develop or that the Trust Preferred Securities will continue to
be quoted on the Nasdaq National Market. Future trading prices of the Trust
Preferred Securities will depend on many factors including, among other things,
prevailing interest rates, the Company's operating results, and the market for
similar securities. Although the Underwriters have informed the Trust and the
Company that they intend to make a market in the Trust Preferred Securities, the
Underwriters are not obligated to do so and any such market making activity may
be terminated at any time without notice to the holders of the Trust Preferred
Securities.
DEPENDENCE UPON LOCAL ECONOMIC CONDITIONS
The Company's profitability is dependent on the profitability of the Bank.
The Bank derives substantially all of its loans, deposits and other business
from the greater Houston metropolitan area. The banking industry in Texas and
Houston is affected by general economic conditions such as inflation, recession,
unemployment and other factors beyond the Company's control. During the
mid-1980's, severely depressed oil and gas and real estate prices materially and
adversely affected the Texas and Houston economies, causing a severe recession
and significant unemployment in the region. More recently, the Houston and Texas
economies have improved considerably which has been partially attributable to
expansion into non-energy related industries. As Houston has diversified, its
economy has become more susceptible to adverse developments affecting the
national economy. There can be no assurance, however, that the Company will be
able to withstand adverse changes in the Houston economy should they occur, or
that adverse developments in general economic conditions in the national or
local economy will not adversely affect the Company's financial condition or
results of operations. Accordingly, the Company will remain subject to risks
associated with prolonged declines in either the local or national economies.
RELIANCE ON OWNER-OPERATED BUSINESS MARKET
The Bank's business development and marketing strategy is primarily
targeted toward serving the banking and financial services needs of
owner-operated businesses. The owner-operated business market, which the Company
defines as businesses with annual sales between $300,000 and $30 million,
represents a major sector of the Houston economy that has played an important
role in recent years in generating job growth and improving the overall health
of the Houston economy. While the Company believes that this market niche will
continue to play a key role in the future success of the Houston economy, there
can be no assurances that economic conditions affecting this market will
continue to be favorable or that this market will not experience any adverse
developments, which, in time, could adversely affect the Company's financial
condition or results of operations. In addition, no assurance can be given that
the Company's financial condition or results of operations will not be adversary
affected if the Company is unable to maintain or expand its share of the
owner-operated business market or is required, due to changing business and
economic conditions, to serve other market sectors.
15
<PAGE> 17
STERLING BANCSHARES, INC.
GENERAL
Sterling is a bank holding company that provides commercial and retail
banking services through the community banking offices of Sterling Bank, a
banking association chartered under the laws of the State of Texas and
headquartered in Houston, Texas. The Bank has fourteen community banking
offices, all of which are located in the greater Houston metropolitan area. The
Company was incorporated under the laws of the State of Texas in 1980 and became
the parent bank holding company of the Bank in 1981. The Bank was chartered in
Texas in 1974. The Company completed its initial public offering on October 22,
1992. At March 31, 1997, the Company had total assets of $828.2 million,
deposits of $750.4 million and shareholders' equity of $61.5 million.
The Bank provides a wide range of retail and commercial banking services,
including demand, savings and time deposits; commercial, real estate and
consumer loans; merchant credit card services; letters of credit; cash
management services; and drive-in banking services. In addition, the Bank
facilitates sales of brokerage, mutual funds, and insurance products through
third-party vendors. The primary lending focus of the Bank is on commercial
loans and owner-occupied real estate loans to local businesses with annual sales
ranging from $300,000 to $30 million. Typically, borrowers' financing
requirements are between $100,000 and $500,000. The Bank does not seek loans
larger than $2 million per relationship, but will consider larger lending
relationships in cases which involve exceptional levels of credit quality. The
Bank believes that its self-imposed lending limits allow for greater diversity
in the loan portfolio, less competition from large banks and better pricing
opportunities.
The Bank employs a business strategy that is generally known in the
industry as supercommunity banking. Under this strategy, the Bank provides a
broad line of financial products and services to small and medium-sized
businesses and consumers through full service community banking offices. Each
banking office has senior management, with significant lending experience, who
exercise substantial autonomy over credit and pricing decisions, subject to loan
committee approval for larger credits. This decentralized management approach,
coupled with continuity of service by the same staff members, enables the Bank
to develop long-term customer relationships, maintain high quality service and
respond quickly to customer needs. As a result of the development of broad
banking relationships with their customers and the convenience and service of
the Bank's fourteen full-service banking offices, lending and investing
activities are funded almost entirely by core deposits, approximately
three-fourths of which are demand and savings deposits.
The Bank's growth strategy has been concentrated on increasing its
community banking presence in its existing Houston markets, and expanding into
new markets within the greater Houston area in response to the expressed needs
of those markets. The Bank has grown through a combination of internally
generated growth, mergers and acquisitions of additional banking operations, and
the opening of new banking offices.
During 1996, the Bank opened two new community banking offices: one in the
Upper Kirby district of central Houston, and the other in the Galleria area of
Houston. In January 1997, the Bank opened its fourteenth banking office in the
Cypress Station area, north of Houston. The Company intends to pursue selected
acquisitions of existing banking operations where available and consistent with
its supercommunity banking philosophy. To accommodate anticipated growth, the
Company continues to upgrade its data processing and telecommunication systems
in order to provide the Company with the technological capacity necessary to
meet the needs and expectations of its customers and accommodate growth in the
Company's assets and number of offices.
The Company does not presently have plans to open additional banking
offices or to make specific additional acquisitions other than First Houston and
its acquisition of a minority interest in Altair. See "Recent Developments."
The principal executive office of the Company is located at 15000 Northwest
Freeway, Suite 200, Houston, Texas 77040, and its telephone number is (713)
466-8300.
16
<PAGE> 18
RECENT DEVELOPMENTS
PENDING ACQUISITIONS
On March 18, 1997, the Company entered into the Merger Agreement to acquire
First Houston and its subsidiary, Houston National Bank, in a stock-for-stock
merger. At December 31, 1996, First Houston had total assets of approximately
$132 million and total deposits of approximately $123 million. Houston National
Bank operates one banking office in central Houston. The Merger Agreement, which
is subject to approval of First Houston's shareholders and various banking
regulatory authorities, provides that the Company will issue approximately 1.72
million shares of the Company's common stock to the stockholders of First
Houston in exchange for all of the issued and outstanding shares of stock of
First Houston. The final purchase price is subject to certain closing
adjustments. The transaction is expected to be accounted for as a pooling of
interests and is expected to close in the second or third quarter of 1997.
Additional information regarding this transaction is presented in "Summary
Consolidated Financial Data" and "Pro Forma Consolidated Financial Statements."
At the time it entered into the Merger Agreement, the Company also entered into
a letter of intent to acquire a minority interest in Altair Corporation
("Altair"), a company engaged in the developing, marketing and supporting of
financial services software products. A substantial portion of First Houston's
deposits are attributable to deposits from United States bankruptcy trustees
obtained pursuant to a licensing agreement with Altair. The consummation of the
transaction with Altair is subject to the execution of a definitive agreement
and the approval of banking regulatory authorities.
17
<PAGE> 19
USE OF PROCEEDS
The proceeds to the Trust from the offering of the Trust Preferred
Securities will be $25,000,000 (assuming the Underwriters' over-allotment option
is not exercised). All of the proceeds from the sale of Trust Securities will be
invested by the Trust in the Junior Subordinated Debentures. The estimated net
proceeds to the Company (after deducting the estimated underwriting discounts
and commissions and estimated expenses of the Offering) are approximately $
million, of which approximately $3.7 million will be used by the Company to
repay its outstanding indebtedness of approximately $3.6 million plus accrued
interest thereon (which had a LIBOR based interest rate of 7.69% per annum at
March 31, 1997, and is scheduled to mature on July 31, 1999). The balance of the
proceeds will be available to the Company for general corporate purposes (which
could include the financing of one or more future cash acquisitions by the
Company). Although the Company evaluates possible acquisitions from time to
time, as of the date of this Prospectus the Company is not engaged in
negotiations regarding any acquisitions other than the acquisition of First
Houston and a minority interest in Altair. See "Recent Developments." Pending
the application of the net proceeds from this Offering, the net proceeds may be
invested in short-term securities.
The Company expects that Trust Preferred Securities having an aggregate
Liquidation Amount of approximately $20.0 million will be eligible to qualify as
Tier 1 capital under the capital guidelines of the Federal Reserve. Trust
Preferred Securities representing an aggregate Liquidation Amount in excess of
that amount are expected to be treated as Tier 2 capital until all or some of
that excess is eligible to qualify as Tier 1 capital under the capital
guidelines of the Federal Reserve.
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
The following table sets forth the ratios of earnings to combined fixed
charges of the Company on a consolidated basis for the respective periods
indicated.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEARS ENDED DECEMBER 31,
MARCH 31, -----------------------------------------
1997 1996 1995 1994 1993 1992
------------ ------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Ratios of Earnings to Combined Fixed
Charges:
Including interest on deposits....... 1.79x 1.89x 1.89x 1.92x 2.05x 1.80x
Excluding interest on deposits....... 18.28x 18.65x 7.24x 9.58x 15.22x 13.85x
</TABLE>
For purposes of computing the ratios of earnings to combined fixed charges,
earnings represent net income (loss) before extraordinary items and cumulative
effect of changes in accounting principles plus applicable income taxes and
fixed charges. Fixed charges include gross interest expense (other than interest
on deposits in one case and inclusive of such interest in the other) and the
proportion deemed representative of the interest factor of rent expense, net of
income from subleases. The Company's outstanding series of preferred stock do
not require the payment of dividends.
ACCOUNTING TREATMENT
For financial reporting purposes, the Company intends to treat the Trust as
a subsidiary of the Company and, accordingly, the accounts of the Trust would be
included in the consolidated financial statements of the Company. The Company
intends to present the Trust Preferred Securities as a separate line item in the
consolidated balance sheets of the Company, entitled "Company-Obligated
Mandatorily Redeemable Trust Preferred Securities of Subsidiary Trust Holding
Solely Junior Subordinated Debentures of the Company" (or similar nomenclature)
and to include appropriate disclosures about the Trust Preferred Securities, the
Guarantee and the Junior Subordinated Debentures in the notes to the
consolidated financial statements of the Company. For financial reporting
purposes, the Company will record Distributions payable on the Trust Preferred
Securities as a minority interest expense in its consolidated statements of
income.
18
<PAGE> 20
CAPITALIZATION
The following table sets forth the unaudited historical consolidated
capitalization of the Company as of March 31, 1997, the unaudited pro forma
consolidated capitalization of the Company as of March 31, 1997, as if the First
Houston Merger had taken place as of that date, and such historical consolidated
and pro forma capitalization as adjusted in each case to give effect to the
consummation of the Offering (assuming the Underwriters' over-allotment option
is not exercised). The following data should be read in conjunction with the
financial information included in this Prospectus or incorporated herein by
reference. See "Incorporation of Certain Documents by Reference" and "Pro Forma
Consolidated Financial Statements."
<TABLE>
<CAPTION>
PRO FORMA CONSOLIDATED
MARCH 31, 1997 MARCH 31, 1997
------------------- -----------------------
AS AS
ACTUAL ADJUSTED ACTUAL ADJUSTED
------- -------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Long-term debt...................................... $ 3,600 $ -- $ 3,600 $ --
Company-obligated mandatorily redeemable trust
preferred securities of subsidiary trust holding
solely junior subordinated debentures of the
Company(1)........................................ -- 25,000 -- 25,000
Shareholders' equity:
Preferred stock, $1.00 par value
1,000,000 shares authorized, 88,380 issued and
outstanding.................................... 88 88 88 88
Common stock, $1.00 par value, 20,000,000 shares
authorized, 12,004,400 shares issued, actual;
13,728,400 issued, pro forma combined.......... 12,004 12,004 13,728 13,728
Capital surplus................................... 16,243 16,243 23,655 23,655
Retained earnings................................. 33,269 33,269 32,157 32,157
Net unrealized losses on held-to-maturity
investment securities transferred from
available-for-sale............................. (120) (120) (275) (275)
------- ------- ------- -------
Total shareholders' equity................ $61,484 $61,484 $69,353 $69,353
------- ------- ------- -------
Total capitalization...................... $65,084 $86,484 $72,953 $94,353
======= ======= ======= =======
</TABLE>
- ---------------
(1) Reflects the Trust Preferred Securities at their issue price. As described
herein, the sole assets of the Trust, which is a subsidiary of the Company,
will be $25,774,000 aggregate principal amount of Junior Subordinated
Debentures, including the amount attributable to the issuance of the Common
Securities of the Trust, which will mature on , 2027. The
Company will own all of the Common Securities issued by the Trust.
19
<PAGE> 21
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On March 18, 1997, the Company entered into the Merger Agreement to acquire
First Houston and its subsidiary, Houston National Bank, in a stock-for-stock
merger. The Merger Agreement, which is subject to approval of First Houston's
shareholders and various banking regulatory authorities, provides that the
Company will issue approximately 1.72 million shares of the Company's common
stock to the stockholders of First Houston in exchange for all of the issued and
outstanding shares of stock of First Houston. The final purchase price is
subject to certain closing adjustments. The transaction is expected to be
accounted for as a pooling of interests.
The following Pro Forma Consolidated Balance Sheets as of March 31, 1997,
and Consolidated Statements of Income for the year ended December 31, 1996 and
the three months ended March 31, 1997 combine the historical consolidated
financial statements of the Company and First Houston and are presented as if
the Merger had occurred on January 1, 1996 and January 1, 1997, after giving
effect to the pro forma adjustments described in the accompanying notes.
The pro forma consolidated financial statements are not necessarily
indicative of the consolidated financial position or results of future
operations of the combined entity or of the actual results that would have been
achieved had the Merger been consummated as of January 1, 1996.
20
<PAGE> 22
STERLING BANCSHARES, INC. AND SUBSIDIARIES
FIRST HOUSTON BANCSHARES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
STERLING FIRST HOUSTON PRO FORMA
BANCSHARES BANCSHARES CONSOLIDATED
---------- ------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
INTEREST INCOME:
Loans, including fees................................ $42,861 $5,465 $48,326
Investment securities................................ 9,280 2,673 11,953
Federal funds sold................................... 732 620 1,352
Deposits in financial institutions................... 540 -- 540
------- ------ -------
Total interest income........................ 53,413 8,758 62,171
------- ------ -------
INTEREST EXPENSE:
Deposits............................................. 16,024 3,080 19,104
Securities sold under agreements to repurchase....... 318 -- 318
Notes payable........................................ 384 -- 384
Senior debentures.................................... 1 -- 1
------- ------ -------
Total interest expense....................... 16,727 3,080 19,807
------- ------ -------
Net interest income.......................... 36,686 5,678 42,364
Provision for credit losses.......................... 2,113 230 2,343
------- ------ -------
Net interest income after provision for credit
losses............................................ 34,573 5,448 40,021
------- ------ -------
NON-INTEREST INCOME:
Customer service fees................................ 5,141 454 5,595
Net gain (loss) on sale of investment securities..... -- 87 87
Earnings of unconsolidated subsidiary................ 316 -- 316
Other................................................ 2,507 93 2,600
------- ------ -------
Total non-interest income.................... 7,964 634 8,598
------- ------ -------
NON-INTEREST EXPENSE:
Salaries and employee benefits....................... 16,606 2,840 19,446
Depreciation and amortization........................ 2,520 303 2,823
Net occupancy and equipment expense.................. 2,165 267 2,432
(Gains) losses and carrying costs of real estate
acquired by foreclosure........................... 155 -- 155
FDIC assessment...................................... 2 2 4
Technology........................................... 537 321 858
Professional fees.................................... 490 273 763
Other................................................ 4,659 1,214 5,873
------- ------ -------
Total non-interest expense................... 27,134 5,220 32,354
------- ------ -------
Income before income taxes............................. 15,403 862 16,265
Income taxes........................................... 4,749 363 5,112
------- ------ -------
Net income............................................. $10,654 $ 499 $11,153
======= ====== =======
Net Income Per Common Share:
Primary.............................................. $ 0.87 $ 0.29 $ 0.80
======= ====== =======
Fully diluted........................................ $ 0.86 $ 0.29 $ 0.79
======= ====== =======
Weighted Average Common Shares Outstanding
Primary.............................................. 12,251 1,724 13,975
Fully diluted........................................ 12,340 1,724 14,064
</TABLE>
21
<PAGE> 23
STERLING BANCSHARES, INC. AND SUBSIDIARIES
FIRST HOUSTON BANCSHARES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
STERLING FIRST HOUSTON PRO FORMA PRO FORMA
BANCSHARES BANCSHARES ADJUSTMENTS CONSOLIDATED
---------- ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS:
Cash and due from banks........................ $ 55,636 $ 3,395 $ -- $ 59,031
Federal funds sold............................. 30,000 5,362 -- 35,362
Interest-bearing deposits in financial
institutions................................ 25,427 -- -- 25,427
Available-for-sale investment securities....... 4,231 54,020 -- 58,251
Held-to-maturity investment securities......... 168,573 -- -- 168,573
Equity in unconsolidated subsidiary............ 2,266 -- -- 2,266
Loan held for sale............................. 29,795 205 -- 30,000
Loans.......................................... 481,632 61,120 -- 542,752
Allowance for credit losses.................... (7,001) (564) -- (7,565)
Accrued interest receivable.................... 3,028 1,236 -- 4,264
Real estate acquired by foreclosure............ 1,667 37 -- 1,704
Premises and equipment, net.................... 25,023 2,846 -- 27,869
Goodwill....................................... 1,758 -- -- 1,758
Other assets................................... 6,159 701 -- 6,860
-------- -------- ------- --------
Total assets........................... $828,194 $128,358 $ -- $956,552
======== ======== ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Deposits....................................... $750,424 $118,894 $ -- $869,318
Securities sold under agreements to
repurchase.................................. 7,822 -- -- 7,822
Accrued interest payable and other
liabilities................................. 4,864 1,595 -- 6,459
Notes payable.................................. 3,600 -- -- 3,600
-------- -------- ------- --------
Total liabilities...................... 766,710 120,489 -- 887,199
-------- -------- ------- --------
SHAREHOLDERS' EQUITY:
Preferred stock................................ 88 855 (855)(a) 88
Common Stock................................... 12,004 2,098 (374)(a) 13,728
Capital surplus................................ 16,243 6,183 1,229(a) 23,655
Retained earnings.............................. 33,269 (1,112) -- 32,157
Net unrealized losses on held-to-maturity
investment securities transferred from
available-for-sale.......................... (120) (155) -- (275)
-------- -------- ------- --------
Total shareholders' equity............. 61,484 7,869 -- 69,353
-------- -------- ------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..... $828,194 $128,358 $ -- $956,552
======== ======== ======= ========
</TABLE>
- ---------------
(a) Represents the acquisition adjustment which includes the conversion and
elimination of 21,375 shares of $40.00 par value preferred stock and the
elimination 2,098,000 shares of common stock of First Houston, and the
issuance of 1,724,000 shares of the Company's common stock. The excess par
value of the retired shares over the issued shares has been adjusted to
capital surplus.
22
<PAGE> 24
STERLING BANCSHARES, INC. AND SUBSIDIARIES
FIRST HOUSTON BANCSHARES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
STERLING FIRST HOUSTON PRO FORMA
BANCSHARES BANCSHARES CONSOLIDATED
---------- ------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
INTEREST INCOME:
Loans, including fees..................................... $ 11,973 $ 1,575 $ 13,548
Investment securities..................................... 2,617 731 3,348
Federal funds sold........................................ 289 58 347
Deposits in financial institutions........................ 126 -- 126
-------- -------- --------
Total interest income............................. 15,005 2,364 17,369
-------- -------- --------
INTEREST EXPENSE:
Deposits.................................................. 4,499 795 5,294
Securities sold under agreements to repurchase............ 61 -- 61
Notes payable............................................. 93 -- 93
-------- -------- --------
Total interest expense............................ 4,653 795 5,448
-------- -------- --------
Net interest income............................... 10,352 1,569 11,921
Provision for credit losses................................. 612 80 692
-------- -------- --------
Net interest income after provision for credit losses....... 9,740 1,489 11,229
-------- -------- --------
NON-INTEREST INCOME:
Customer service fees..................................... 1,332 119 1,451
Other..................................................... 627 32 659
-------- -------- --------
Total non-interest income......................... 1,959 151 2,110
-------- -------- --------
NON-INTEREST EXPENSE:
Salaries and employee benefits............................ 4,710 479 5,189
Depreciation and amortization............................. 742 92 834
Occupancy and equipment expense, net...................... 724 80 804
Technology................................................ 197 38 235
Professional fees......................................... 100 89 189
Other..................................................... 1,488 358 1,846
-------- -------- --------
Total non-interest expense........................ 7,961 1,136 9,097
-------- -------- --------
Income before income taxes.................................. 3,738 504 4,242
Income taxes................................................ 1,233 171 1,404
-------- -------- --------
Net Income.................................................. $ 2,505 $ 333 $ 2,838
======== ======== ========
Net Income Per Common Share:
Primary................................................... $ 0.20 $ 0.19 $ 0.20
======== ======== ========
Fully diluted............................................. $ 0.20 $ 0.19 $ 0.20
======== ======== ========
Weighted Average Common Shares Outstanding
Primary................................................... 12,333 1,724 14,057
Fully diluted............................................. 12,353 1,724 14,077
</TABLE>
23
<PAGE> 25
STERLING BANCSHARES CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law upon the
filing of a certificate of trust with the Delaware Secretary of State on April
2, 1997. The Trust exists for the exclusive purposes of: (i) issuing and selling
the Trust Securities; (ii) using the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debentures; and (iii) engaging in
only those other activities necessary, advisable or incidental thereto (such as
registering the transfer of the Trust Securities). The Junior Subordinated
Debentures will be the sole assets of the Trust, and, accordingly, payments on
the Junior Subordinated Debentures will be the sole revenues of the Trust. All
of the Common Securities will be owned by the Company. The Common Securities
will rank pari passu, and payments will be made thereon pro rata, with the Trust
Preferred Securities, except that upon the occurrence and continuance of an
event of default under the Trust Agreement resulting from a Debenture Event of
Default, the rights of the Company as holder of the Common Securities to
payments in respect of Distributions and payments upon liquidation, redemption
or otherwise will be subordinated to the rights of the holders of the Trust
Preferred Securities. See "Description of Trust Preferred
Securities -- Subordination of Common Securities." The Company will acquire
Common Securities in a Liquidation Amount equal to at least 3% of the total
capital of the Trust. The Trust has a term of approximately 31 years, but may
terminate earlier as provided in the Trust Agreement. The Trust's business and
affairs are conducted by the Issuer Trustees, each appointed by the Company as
holder of the Common Securities. The Issuer Trustees for the Trust will be
Bankers Trust Company, as the Property Trustee, Bankers Trust (Delaware), as the
Delaware Trustee and three Administrative Trustees who are officers of the
Company. Bankers Trust Company, as Property Trustee, will act as sole indenture
trustee under the Trust Agreement. Bankers Trust Company will also act as
indenture trustee under the Guarantee and the Indenture. See "Description of
Guarantee" and "Description of Junior Subordinated Debentures." The holder of
the Common Securities of the Trust or, if an Event of Default under the Trust
Agreement has occurred and is continuing, the holders of not less than a
majority in Liquidation Amount of the Trust Preferred Securities will be
entitled to appoint, remove or replace the Property Trustee and the Delaware
Trustee. In no event will the holders of the Trust Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees; such
voting rights will be vested exclusively in the holder of the Common Securities.
The duties and obligations of each Issuer Trustee are governed by the Trust
Agreement. The Company, as issuer of the Junior Subordinated Debentures, will
pay all fees, expenses, debts and obligations (other than the payment of
principal, interest and premium, if any, on the Trust Securities) related to the
Trust and the offering of the Trust Preferred Securities and will pay, directly
or indirectly, all ongoing costs, expenses and liabilities (other than the
payment of principal and interest on the Trust Securities) of the Trust. The
principal executive office of the Trust is c/o Sterling Bancshares, Inc., 15000
Northwest Freeway, Suite 200, Houston, Texas 77040.
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DESCRIPTION OF TRUST PREFERRED SECURITIES
The Trust Preferred Securities will represent beneficial interests in the
Trust and the holders thereof will be entitled to a preference over the Common
Securities in certain circumstances with respect to Distributions and amounts
payable on redemption of the Trust Securities or liquidation of the Trust. See
"-- Subordination of Common Securities." The Trust Agreement will be qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
This summary of certain provisions of the Trust Preferred Securities, the Common
Securities and the Trust Agreement does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Trust Agreement, including the definitions therein of certain terms and
the Trust Indenture Act. The form of the Trust Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
GENERAL
Pursuant to the terms of the Trust Agreement, the Issuer Trustees, on
behalf of the Trust, will issue the Trust Securities. All of the Common
Securities will be owned by the Company. The Trust Preferred Securities will
represent preferred undivided beneficial interests in the assets of the Trust.
The Trust 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 Trust Agreement does not permit the
issuance by the Trust of any securities other than the Trust Securities or the
incurrence of any indebtedness by the Trust. Legal title to the Junior
Subordinated Debentures will be held by the Property Trustee in trust for the
benefit of the holders of the Trust Securities. The Guarantee will not guarantee
payment of Distributions or amounts payable on redemption of the Trust Preferred
Securities or liquidation of the Trust when the Trust does not have funds on
hand legally available for such payments. See "Description of Guarantee."
DISTRIBUTIONS
Payment of Distributions. Distributions on the Trust Securities will be
cumulative, will accumulate from , 1997 and will be payable
quarterly in arrears on the day of March, June, September and December of
each year, commencing , 1997, at the annual rate of % of the
stated Liquidation Amount of $25 to the holders of the Trust Securities on the
relevant record date. The relevant record date will be the close of business on
the day of the month preceding the month in which the relevant Distribution
Date occurs. The amount of Distributions payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months and, for any period of
less than a full calendar month, the number of days elapsed in such month. In
the event that any date on which Distributions are payable on the Trust
Securities is not a Business Day, payment of the Distribution payable on such
date will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect to any such delay), except that if such
next succeeding Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date (each date on which
Distributions are payable in accordance with the foregoing, a "Distribution
Date"). A "Business Day" shall mean any day other than a Saturday or a Sunday,
or a day on which banking institutions in New York, New York or Houston, Texas
are authorized or required by law or executive order to remain closed.
Extension Period. So long as no Debenture Event of Default has occurred and
is continuing, the Company will have the right under the Indenture to elect to
defer the payment of interest on the Junior Subordinated Debentures at any time
or from time to time for a period not exceeding 20 consecutive quarterly periods
with respect to each Extension Period, provided that no Extension Period shall
end on a date other than an Interest Payment Date or extend beyond the Stated
Maturity Date. Upon any such election, Distributions on the Trust Securities
will be deferred by the Trust during such Extension Period. Distributions to
which holders of the Trust Securities are entitled during any such Extension
Period will accumulate additional Distributions thereon at the rate per annum of
% thereof, compounded quarterly from the relevant Distribution Date. The term
"Distributions," as used herein, shall include any such additional
Distributions.
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Prior to the termination of any such Extension Period, the Company may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 20 consecutive quarterly periods, to end
on a date other than an Interest Payment Date or to extend beyond the Stated
Maturity Date. Upon the termination of any such Extension Period and the payment
of all amounts then due on any Interest Payment Date, the Company may elect to
begin a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period, except at the end thereof.
The Company must give the Property Trustee, the Administrative Trustees and the
Debenture Trustee notice of its election of any such Extension Period (or an
extension thereof) at least five Business Days prior to the earlier of: (i) the
date the Distributions on the Trust Preferred Securities would have been payable
except for the election to begin such Extension Period or (ii) the date the
Administrative Trustees are required to give notice to any securities exchange
or automated inter-dealer quotation system or to holders of such Trust Preferred
Securities of the record date or the date such Distributions are payable, but in
any event not less than five Business Days prior to such record date. There is
no limitation on the number of times that the Company may elect to begin an
Extension Period. See "Description of Junior Subordinated Debentures -- Option
to Extend Interest Payment Date" and "Certain Federal Income Tax
Consequences -- 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, (other
than (a) dividends or distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, common stock of the Company, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
as a result of a reclassification of any class or series of the Company's
capital stock solely into another class or series of the Company's capital
stock, (d) the purchase of fractional shares of the Company's capital stock
resulting from such a reclassification or pursuant to the conversion or exchange
provisions of such capital stock or any security convertible or exchangeable
into shares of the Company's capital stock and (e) purchases of common stock
related to the issuance of common stock or rights under any of the Company's
benefit plans for its directors, officers or employees or any of the Company's
dividend reinvestment plans); or (ii) make any payment of principal of, premium,
if any, or interest on or repay, repurchase or redeem any debt securities of the
Company (including Other Debentures) that rank pari passu with or junior in
right of payment to the Junior Subordinated Debentures; or (iii) make any
guarantee payments (other than payments under the Guarantee) with respect to any
guarantee by the Company of the debt securities of any subsidiary of the Company
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the Junior Subordinated Debentures. The Company has no
current intention to exercise its option to defer payments of interest on the
Junior Subordinated Debentures.
Source of Distributions. The revenue of the Trust available for
distribution to holders of the Trust Securities will be limited to payments on
the Junior Subordinated Debentures in which the Trust will invest the proceeds
from the issuance and sale of the Trust Securities. See "Description of Junior
Subordinated Debentures -- General." If the Company does not make interest
payments on the Junior Subordinated Debentures, the Property Trustee will not
have funds available to pay Distributions on the Trust Securities. The payment
of Distributions (if and to the extent the Trust has funds on hand legally
available for the payment of such Distributions) will be guaranteed by the
Company on a limited basis as set forth herein under "Description of Guarantee."
REDEMPTION
Mandatory Redemption. Upon the repayment or prepayment at any time, in
whole or in part, of the Junior Subordinated Debentures (other than following
the distribution of the Junior Subordinated Debentures to the holders of the
Trust Securities), the proceeds from such repayment or prepayment shall be
applied by the Property Trustee to redeem a Like Amount (as defined below) of
the Trust Securities, upon not less than 30 nor more than 60 days' notice of a
date of redemption (the "Redemption Date"), at a redemption price equal to 100%
of the Liquidation Amount of the Trust Securities to be redeemed together with
accrued and
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unpaid Distributions thereon to the Redemption Date, if any. See "Description of
Junior Subordinated Debentures -- Redemption." If less than all of the Junior
Subordinated Debentures are to be prepaid on a Redemption Date, then the
proceeds of such prepayment shall be allocated pro rata to the Trust Securities.
Optional Redemption. The Company will have the right to prepay the Junior
Subordinated Debentures on or after , 2002, in whole at any time or
in part from time to time at a prepayment price equal to the accrued and unpaid
interest on the Junior Subordinated Debentures so prepaid to the date fixed for
redemption, plus 100% of the principal amount thereof, in each case subject to
receipt of prior approval by the Federal Reserve, if then required under
applicable capital guidelines or policies of the Federal Reserve, and any other
required regulatory approvals. See "Description of Junior Subordinated
Debentures -- Prepayment."
If a Special Event shall occur and be continuing, the Company will have the
right to prepay the Junior Subordinated Debentures in whole (but not in part)
and thereby cause a mandatory redemption of the Trust Securities in whole (but
not in part) within 90 days following the occurrence of such Special Event, in
each case subject to receipt of prior approval by the Federal Reserve, if then
required under applicable capital guidelines or policies of the Federal Reserve,
and any other required regulatory approvals. In the event a Special Event has
occurred and is continuing and the Company does not elect to prepay the Junior
Subordinated Debentures and thereby cause a mandatory redemption of the Trust
Securities or to liquidate the Trust and cause the Junior Subordinated
Debentures to be distributed to holders of the Trust Securities in liquidation
of the Trust as described below, such Trust Securities will remain outstanding
and Additional Sums (as defined below) may be payable on the Junior Subordinated
Debentures.
Definitions.
"Additional Sums" means the additional amounts as may be necessary to be
paid by the Company with respect to the Junior Subordinated Debentures in order
that the amount of Distributions then due and payable by the Trust on the
outstanding Trust Securities of the Trust shall not be reduced as a result of
any additional taxes, duties and other governmental charges to which the Trust
has become subject as a result of a Tax Event.
An "Investment Company Event" means the receipt by the Company of an
opinion of counsel experienced in such matters to the effect that, as a result
of any change in law or regulation or a change in interpretation or application
of law or regulation by any legislative body, court, governmental agency or
regulatory authority, the Trust is or will be considered an "investment company"
that is required to be registered under the Investment Company Act, which change
becomes effective on or after the original issuance of the Trust Preferred
Securities.
"Like Amount" means: (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to that portion
of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Trust Preferred Securities based upon the relative
Liquidation Amounts of such classes and the proceeds of which will be used to
pay the redemption price of such Trust Securities and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of the Trust
Securities in connection with a dissolution or upon the liquidation of the
Trust, Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the holder to whom such Junior
Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
A "Regulatory Capital Event" means that the Company shall have received an
opinion of independent bank regulatory counsel experienced in such matters to
the effect that, as a result of (i) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any rules, guidelines or policies of the Federal Reserve or
(ii) any official administrative pronouncement or judicial decision interpreting
or applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after date of the original
issuance of the Trust Preferred Securities, the Trust Preferred Securities do
not constitute, or within 90 days of the date
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thereof, will not constitute, Tier I Capital (or its then equivalent); provided,
however, that the distribution of the Junior Subordinated Debentures in
connection with the termination of the Trust by the Company shall not in and of
itself constitute a Regulatory Capital Event.
A "Special Event" means a Tax Event, an Investment Company Event or a
Regulatory Capital Event, as the case may be.
A "Tax Event" means the receipt by the Company and the Trust of an opinion
of counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the original issuance of
the Trust Preferred Securities, there is more than an insubstantial risk that
(i) the Trust is, or will be within 90 days of the date of such opinion, subject
to United States federal income tax with respect to income received or accrued
on the Junior Subordinated Debentures, (ii) interest payable by the Company on
the Junior Subordinated Debentures is not, or within 90 days of the date of such
opinion will not be, deductible by the Company, in whole or in part, for United
States federal income tax purposes or (iii) the Trust is, or will be within 90
days of the date of such opinion, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
The Company will have the right at any time to elect to terminate the Trust
and, after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities in liquidation of the Trust. Such right is
subject to: (i) the Administrative Trustees having received an opinion of
counsel to the effect that such distribution will not be a taxable event to the
holders of the Trust Preferred Securities; and (ii) the Company having received
any regulatory approval required in connection with such termination and
distribution.
The Trust shall automatically terminate upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Company; (ii)
the distribution of a Like Amount of the Junior Subordinated Debentures to the
holders of the Trust Securities, if the Company, as Sponsor, has given written
direction to the Property Trustee to terminate the Trust (which direction is
optional and, except as described above, wholly within the discretion of the
Company, as Sponsor); (iii) redemption of all of the Trust Securities as
described under "-- Redemption;" (iv) expiration of the term of the Trust; and
(v) the entry of an order for the dissolution of the Trust by a court of
competent jurisdiction.
If a termination occurs as described in clause (i), (ii), (iv), or (v)
above, the Trust shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of the Trust as provided by applicable law, to the
holders of the Trust Securities a Like Amount of the Junior Subordinated
Debentures, unless such distribution is determined by the Property Trustee not
to be practicable, in which event such holders will be entitled to receive out
of the assets of the Trust legally available for distribution to holders, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, an amount equal to the aggregate of the Liquidation Amount plus accumulated
and unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Trust has insufficient assets on hand legally available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Trust Securities shall be paid on a pro rata basis,
except that if a Debenture Event of Default has occurred and is continuing, the
Trust Preferred Securities shall have a priority over the Common Securities. See
"-- Subordination of Common Securities." If the Company elects not to prepay the
Junior Subordinated Debentures prior to maturity in accordance with their terms
and either elects not to or is unable to liquidate the Trust and distribute the
Junior Subordinated Debentures to holders of the Trust Securities, the Trust
Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures on the Stated Maturity Date.
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If the Company elects to liquidate the Trust and thereby causes the Junior
Subordinated Debentures to be distributed to holders of the Trust Securities in
liquidation of the Trust, the Company shall continue to have the right to
shorten the maturity of such Junior Subordinated Debentures, subject to certain
conditions. See "Description of Junior Subordinated Debentures -- General."
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Trust Securities, (i) the Trust
Securities will no longer be deemed to be outstanding, (ii) DTC or its nominee
will receive, in respect of each registered global certificate, if any,
representing Trust Preferred Securities and held by it, a registered global
certificate or certificates representing the Junior Subordinated Debentures to
be delivered upon such distribution and (iii) any certificates representing
Trust Securities not held by DTC or its nominee will be deemed to represent
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of such Trust Securities, and bearing accrued and unpaid
interest in an amount equal to the accumulated and unpaid Distributions on such
Trust Securities until such certificates are presented to the Administrative
Trustees or their agent for cancellation, whereupon the Company will issue to
such holder, and the Debenture Trustee will authenticate, a certificate
representing such Junior Subordinated Debentures.
There can be no assurance as to the market prices for the Trust Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Trust Securities if a dissolution and liquidation of the Trust
were to occur. Accordingly, the Trust Preferred Securities that an investor may
purchase, or the Junior Subordinated Debentures that the investor may receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
that the investor paid to purchase the Trust Preferred Securities offered
hereby.
REDEMPTION PROCEDURES
If applicable, Trust Securities shall be redeemed at the redemption price
with the proceeds from the contemporaneous repayment or prepayment of the Junior
Subordinated Debentures. Any redemption of Trust Securities shall be made and
the redemption price shall be payable on the Redemption Date only to the extent
that the Trust has funds legally available for the payment of such redemption
price. See "-- Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the Trust
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are legally available, with respect to the Trust Preferred
Securities held by DTC or its nominees, the Property Trustee will deposit or
cause the Paying Agent (as defined under "-- Payment and Paying Agent" below) to
deposit irrevocably with DTC funds sufficient to pay the redemption price and
will give DTC or its nominees irrevocable instructions and authority to pay the
redemption price to the holders of such Trust Preferred Securities. See
"-- Depositary Procedures." If such Trust Preferred Securities are no longer in
book-entry form, the Property Trustee, to the extent funds are legally
available, will irrevocably deposit with the Paying Agent for such Trust
Preferred Securities funds sufficient to pay the aggregate redemption price and
will give such Paying Agent irrevocable instructions and authority to pay the
redemption price to the holders thereof upon surrender of their certificates
evidencing such Trust Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date shall be payable to the
holders of such Trust Preferred Securities on the relevant record dates for the
related Distribution Dates. If notice of redemption shall have been given and
funds deposited as required, then upon the date of such deposit, all rights of
the holders of the Trust Preferred Securities called for redemption will cease,
except the right of the holders of such Trust Preferred Securities to receive
the redemption price, but without interest on such redemption price, and such
Trust Preferred Securities will cease to be outstanding. In the event that any
Redemption Date of Trust Preferred Securities is not a Business Day, then the
redemption price payable on such date will be paid on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such next succeeding Business Day falls in the
next calendar year, such payment shall be made on the immediately preceding
Business Day. In the event that payment of the redemption price is improperly
withheld or refused and not paid either by the Trust or by the Company pursuant
to the Guarantee as described under "Description of Guarantee," (i)
Distributions on Trust Securities will continue to accumulate at the then
applicable rate, from the Redemption Date originally established by the Trust to
the date such redemption
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price is actually paid and (ii) the actual payment date will be the Redemption
Date for purposes of calculating the redemption price.
Subject to applicable law (including, without limitation, United States
Federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Trust Preferred Securities by tender, in
the open market or by private agreement.
Payment of the redemption price on the Trust Preferred Securities to
holders of Trust Preferred Securities shall be made on the Redemption Date.
If less than all of the Trust Securities issued by the Trust are to be
redeemed on a Redemption Date, then the aggregate redemption price for such
Trust Securities to be redeemed shall be allocated pro rata to the Trust
Preferred Securities and Common Securities based upon the relative Liquidation
Amounts of such classes. The particular Trust Preferred Securities to be
redeemed shall be selected by the Property Trustee from the outstanding Trust
Preferred Securities not previously called for redemption, by such method as the
Property Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $25 or an integral multiple
thereof) of the Liquidation Amount of Trust Preferred Securities. The Property
Trustee shall promptly notify the security registrar in writing of the Trust
Preferred Securities selected for redemption and, in the case of any Trust
Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of the Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of Trust
Preferred Securities shall relate to the portion of the aggregate Liquidation
Amount of Trust Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days prior to the Redemption Date to each holder of Trust Preferred
Securities at its registered address. Unless the Company defaults in payment of
the redemption price on, or in the repayment of, the Junior Subordinated
Debentures, on and after the Redemption Date, Distributions will cease to accrue
on the Trust Securities called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the redemption price of, the Trust
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of the Trust Securities; provided, however, that if on any Distribution
Date or Redemption Date a Debenture Event of Default shall have occurred and be
continuing, no payment of any Distribution on, or the redemption price of, any
of the Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of the Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all of
the outstanding Trust 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, 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 the redemption price of,
the Trust Preferred Securities then due and payable.
In the case of any Event of Default under the Trust Agreement relating to a
Debenture Event of Default, the Company as holder of the Common Securities will
be deemed to have waived any right to act with respect to such Event of Default
until the effect of such Event of Default shall have been cured, waived or
otherwise eliminated. Until any such Event of Default has been so cured, waived
or otherwise eliminated, the Property Trustee shall act solely on behalf of the
holders of the Trust Preferred Securities and not on behalf of the Company as
holder of the Common Securities, and only the holders of the Trust Preferred
Securities will have the right to direct the Property Trustee to act on their
behalf.
EVENTS OF DEFAULT; NOTICE
Any one of the following events that has occurred and is continuing
constitutes an "Event of Default" under the Trust Agreement (an "Event of
Default") with respect to the Trust Preferred Securities (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by
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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 for 30 days by the Trust in the payment of any
Distribution when it becomes due (subject to the deferral of any due date
in the case of an Extension Period) and payable; or
(iii) default by the Trust in the payment of the Liquidation Amount of
any Trust Security when it becomes due, whether at maturity, upon
redemption by declaration of acceleration or maturity or otherwise; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a default or breach in the performance of a covenant or
warranty which is addressed in clause (ii) or (iii) above), and
continuation of such default or breach, for 90 days after written notice to
the defaulting Issuer Trustee or Trustees by the holders of at least 25% in
aggregate Liquidation Amount of the outstanding Trust Preferred Securities;
or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Trust Preferred
Securities, the Administrative Trustees and the Company, as Sponsor, unless such
Event of Default shall have been cured or waived. The Company, as Sponsor, and
the Administrative Trustees are required to file annually with the Property
Trustee a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Trust
Preferred Securities shall have a preference over the Common Securities as
described under "-- Liquidation of the Trust and Distribution of Junior
Subordinated Debentures" and "-- Subordination of Common Securities." Upon a
Debenture Event of Default, unless the principal of all the Junior Subordinated
Debentures has already become due and payable, either the Property Trustee or
the holders of not less than 25% in aggregate principal amount of the Junior
Subordinated Debentures then outstanding may declare all of the Junior
Subordinated Debentures to be due and payable immediately by giving notice in
writing to the Company (and to the Property Trustee, if notice is given by
holders of the Junior Subordinated Debentures). If the Property Trustee or the
holders of the Junior Subordinated Debentures fails to declare the principal of
all of the Junior Subordinated Debentures due and payable upon a Debenture Event
of Default, the holders of at least 25% in Liquidation Amount of the Trust
Preferred Securities then outstanding shall have the right to declare the Junior
Subordinated Debentures immediately due and payable. In either event, payment of
principal and interest on the Junior Subordinated Debentures shall remain
subordinated to the extent provided in the Indenture. In addition, holders of
the Trust Preferred Securities have the right in certain circumstances to bring
a Direct Action. See "Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Trust Preferred
Securities."
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Trust Preferred
Securities. In no event will the holders of the Trust Preferred Securities have
the right to vote to appoint, remove or replace the Administrative Trustees,
which voting rights are vested exclusively in the Company as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Trust Agreement.
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MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be the successor of such Issuer Trustee under the
Trust Agreement, provided such Person shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other Person,
except as described below or as otherwise described under "-- Liquidation of the
Trust and Distribution of Junior Subordinated Debentures." The Trust may, at the
request of the Company, as Sponsor, with the consent of the Administrative
Trustees but without the consent of the holders of the Trust Preferred
Securities, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to a trust organized as such under the laws of any
State; provided, that: (i) such successor entity either (a) expressly assumes
all of the obligations of the Trust with respect to the Trust Securities or (b)
substitutes for the Trust Securities other securities having substantially the
same terms as the Trust Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Trust Securities rank in priority with
respect to distributions and payments upon liquidation, redemption and
otherwise; (ii) the Company expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee with
respect to the Junior Subordinated Debentures; (iii) the Successor Securities
are listed or approved for quotation, or any Successor Securities will be listed
or approved for quotation upon notification of issuance, on any national
securities exchange or other organization on which the Trust Preferred
Securities are then listed or quoted, if any; (iv) if the Trust Preferred
Securities (including any Successor Securities) are rated by any nationally
recognized statistical rating organization prior to such transaction, such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not cause the Trust Preferred Securities (including any Successor
Securities) or, if the Junior Subordinated Debentures are so rated, the Junior
Subordinated Debentures, to be downgraded by any such nationally recognized
statistical rating organization within 120 days after such transaction; (v) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the holders
of the Trust Securities (including any Successor Securities) in any material
respect; (vi) such successor entity has a purpose identical to that of the
Trust; (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Company has received an opinion from
independent counsel to the Trust experienced in such matters to the effect that
(a) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Trust Securities (including any Successor Securities) in any
material respect (other than any dilution of such holders' interests in the new
entity) and (b) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor such successor entity will
be required to register as an investment company under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and (viii) the Company
or any permitted successor or assignee owns all of the common securities of such
successor entity and guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
holders of 100% in Liquidation Amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety to, any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity not
to be classified as a grantor trust for United States Federal income tax
purposes.
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VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "-- Mergers, Consolidations,
Amalgamations or Replacements of the Trust" and "Description of
Guarantee -- Amendments and Assignment" and as otherwise required by law and the
Trust Agreement, the holders of the Trust Preferred Securities will have no
voting rights.
The Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities: (i) to cure any ambiguity, correct or
supplement any provisions in the Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under the Trust Agreement, which shall not be inconsistent
with the other provisions of the Trust Agreement; or (ii) to modify, eliminate
or add to any provisions of the Trust Agreement to such extent as shall be
necessary to ensure that the Trust will be classified for United States Federal
income tax purposes as a grantor trust at all times that any Trust Securities
are outstanding or to ensure that the Trust will not be required to register as
an "investment company" under the Investment Company Act; provided, however,
that such action shall not adversely affect in any material respect the
interests of the holders of any class of the Trust Securities. Any amendments of
the Trust Agreement pursuant to the foregoing shall become effective when notice
thereof is given to the holders of the Trust Securities. The Trust Agreement may
be amended by the Issuer Trustees and the Company: (i) with the consent of
holders representing a majority (based upon Liquidation Amount) of the
outstanding Trust Securities; and (ii) upon receipt by the Issuer Trustees of an
opinion of counsel experienced in such matters to the effect that such amendment
or the exercise of any power granted to the Issuer Trustees in accordance with
such amendment will not affect the Trust's status as a grantor trust for United
States Federal income tax purposes or the Trust's exemption from status as an
"investment company" under the Investment Company Act, provided that, without
the consent of each holder of Trust Securities, the Trust Agreement may not be
amended to: (i) change the amount or timing of any Distribution on the Trust
Securities or reduce the amount payable on redemption thereof or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date; or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Issuer Trustees shall not: (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Property Trustee with respect to the
Junior Subordinated Debentures; (ii) waive certain past defaults under the
Indenture; (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Junior Subordinated
Debentures; or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in Liquidation Amount of all outstanding Trust Preferred Securities;
provided, however, that where a consent of the Property Trustee under the
Indenture would require the consent of each holder of Junior Subordinated
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior approval of each holder of the Trust Preferred
Securities. The Issuer Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of the Trust Preferred
Securities except by subsequent vote of such holders. The Property Trustee shall
notify each holder of Trust Preferred Securities of any notice of default with
respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of such holders of the Trust Preferred Securities, prior to
taking any of the foregoing actions, the Issuer Trustees shall obtain an opinion
of counsel experienced in such matters to the effect that the Trust will not be
taxed as an association taxable as a corporation for United States Federal
income tax purposes on account of such action.
Any required approval of holders of Trust Preferred Securities may be given
at a meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of Trust 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 holder of record of Trust Preferred Securities in the manner set forth
in the Trust Agreement.
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No vote or consent of the holders of Trust Preferred Securities will be
required for the Trust to redeem and cancel the Trust Preferred Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of the Trust Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Trust Preferred Securities that are owned by the Company, the Trustees or any
affiliate of the Company or any Trustee, shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
DEPOSITARY PROCEDURES
DTC has advised the Trust and the Company that DTC is a limited-purpose
trust company organized under the laws of the State of New York, as a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers
(including the Underwriters), banks, trust companies, clearing corporations and
certain other organizations. Indirect access to DTC's system is also available
to other entities such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly (collectively, the "Indirect Participants"). Persons who are not
Participants may beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The ownership interest
and transfer of ownership interest of each actual purchaser of each security
held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
DTC has also advised the Trust and the Company that, pursuant to procedures
established by it, (i) upon deposit of the Global Trust Preferred Securities,
DTC will credit the accounts of Participants designated by the Underwriters with
portions of the Liquidation Amount of the Global Trust Preferred Securities and
(ii) ownership of such interests in the Global Trust Preferred Securities will
be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Trust Preferred Securities).
Investors in the Global Trust Preferred Securities may hold their interests
therein directly through DTC if they are Participants, or indirectly through
organizations that are Participants. All interests in the Global Trust Preferred
Securities will be subject to the procedures and requirements of DTC. The laws
of some states require that certain persons take physical delivery in
certificated form of securities that they own. Consequently, the ability to
transfer beneficial interests in the Global Trust Preferred Securities to such
persons will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants and certain
banks, the ability of a person having beneficial interests in the Global Trust
Preferred Securities to pledge such interests to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interests, may be affected by the lack of a physical certificate evidencing such
interests. For certain other restrictions on the transferability of the Trust
Preferred Securities, see "-- Exchange of Book-Entry Trust Preferred Securities
for Certificated Trust Preferred Securities" and "-- Exchange of Certificated
Trust Preferred Securities for Book-Entry Trust Preferred Securities."
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL TRUST
PREFERRED SECURITIES WILL NOT HAVE TRUST PREFERRED SECURITIES REGISTERED IN
THEIR NAME, WILL NOT RECEIVE PHYSICAL DELIVERY OF TRUST PREFERRED SECURITIES IN
CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR HOLDERS
THEREOF UNDER THE TRUST AGREEMENT FOR ANY PURPOSE.
Payments in respect of the Global Trust Preferred Securities registered in
the name of DTC or its nominee will be payable by the Property Trustee to DTC in
its capacity as the registered holder under the Trust Agreement. Under the terms
of the Trust Agreement, the Property Trustee will treat the persons in whose
names the Trust Preferred Securities, including the Global Trust Preferred
Securities, are registered as
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the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Property Trustee nor
any agent thereof has or will have any responsibility or liability for (i) any
aspect of DTC's records or any Participant's or Indirect Participant's records
relating to or payments made on account of beneficial ownership interests in the
Global Trust Preferred Securities, or for maintaining, supervising or reviewing
any of DTC's records or any Participant's or Indirect Participant's records
relating to the beneficial ownership interests in the Global Trust Preferred
Securities or (ii) any other matter relating to the actions and practices of DTC
or any of its Participants or Indirect Participants. DTC has advised the Trust
and the Company that its current practice, upon receipt of any payment in
respect of securities such as the Trust Preferred Securities, is to credit the
accounts of the relevant Participants with the payment on the payment date, in
amounts proportionate to their respective holdings in Liquidation Amount of
beneficial interests in the relevant security as shown on the records of DTC
unless DTC has reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of Trust Preferred Securities will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility of
DTC, the Property Trustee, the Trust or the Company. None of the Trust, the
Company or the Property Trustee will be liable for any delay by DTC or any of
its Participants in identifying the beneficial owners of the Trust Preferred
Securities, and the Trust or the Company and the Property Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
Secondary market trading activity in interests in the Global Trust
Preferred Securities will settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its participants. Transfers between
Participants in DTC will be effected in accordance with DTC's procedures, and
will settle in same-day funds.
DTC has advised the Trust and the Company that it will take any action
permitted to be taken by a holder of Trust Preferred Securities (including,
without limitation, the presentation of Trust Preferred Securities for exchange
as described below) only at the direction of one or more Participants to whose
account with DTC interests in the Global Trust Preferred Securities are credited
and only in respect of such portion of the Liquidation Amount of the Trust
Preferred Securities as to which such Participant or Participants has or have
given such direction. However, if there is an Event of Default under the Trust
Agreement, DTC reserves the right to exchange the Global Trust Preferred
Securities for Trust Preferred Securities in certificated form and to distribute
such Trust Preferred Securities to its Participants.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Trust and the Company believe to be
reliable, but neither the Trust nor the Company takes responsibility for the
accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the Global Trust Preferred Securities among Participants in DTC,
it is under no obligation to perform or to continue to perform such procedures,
and such procedures may be discontinued at any time. None of the Trust, the
Company or the Property Trustee will have any responsibility for the performance
by DTC or its Participants or Indirect Participants of its obligations under the
rules and procedures governing its operations.
EXCHANGE OF BOOK-ENTRY TRUST PREFERRED SECURITIES FOR CERTIFICATED TRUST
PREFERRED SECURITIES
A Global Trust Preferred Security is exchangeable for Trust Preferred
Securities in registered certificated form if: (i) DTC (x) notifies the Trust
that it is unwilling or unable to continue as Depositary for the Global Trust
Preferred Security and the Trust thereupon fails to appoint a successor
Depositary within 90 days or (y) has ceased to be a clearing agency registered
under the Exchange Act; (ii) the Company in its sole discretion elects to cause
the issuance of the Trust Preferred Securities in certificated form; or (iii)
there shall have occurred and be continuing an Event of Default or any event
which after notice or lapse of time or both would be an Event of Default under
the Trust Agreement. In addition, beneficial interests in a Global Trust
Preferred Security may be exchanged by or on behalf of DTC for certificated
Trust Preferred Securities upon request by DTC, but only upon at least 20 days'
prior written notice given to the Property Trustee in accordance with DTC's
customary procedures. In all cases, certificated Trust Preferred Securities
delivered in
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exchange for any Global Trust Preferred Security or beneficial interests therein
will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the Depositary (in accordance with its customary
procedures).
PAYMENT AND PAYING AGENCY
Payments in respect of the Trust Preferred Securities held in global form
shall be made to the Depositary, which shall credit the relevant accounts at the
Depositary on the applicable Distribution Dates or in respect of the Trust
Preferred Securities that are not held by the Depositary. Such payments shall be
made by check mailed to the address of the holder entitled thereto as such
address shall appear on the register. The paying agent (the "Paying Agent")
shall initially be the Property Trustee and any co-paying agent chosen by the
Property Trustee and acceptable to the Administrative Trustees and the Company.
The Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Property Trustee, the Administrative Trustees and the
Company. In the event that the Property Trustee shall no longer be the Paying
Agent, the Trust shall appoint a successor (which shall be a bank or trust
company acceptable to the Administrative Trustees and the Company) to act as
Paying Agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the Trust
Preferred Securities.
Registration of transfers of the Trust Preferred Securities will be
effected without charge by or on behalf of the Trust, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The Trust will not be required to register or cause to be
registered the transfer of the Trust Preferred Securities after they have been
called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, during the existence of an Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Agreement at the request of any holder of Trust
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no Event of Default has
occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the Trust
Agreement or is unsure of the application of any provision of the Trust
Agreement, and the matter is not one on which holders of the Trust Preferred
Securities or the Common Securities are entitled under the Trust Agreement to
vote, then the Property Trustee shall take such action as is directed by the
Company and, if not so directed, shall take such action as it deems advisable
and in the best interests of the holders of the Trust Securities and will have
no liability except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that: (i) the Trust will not
be deemed to be an "investment company" required to be registered under the
Investment Company Act; (ii) the Trust will be classified as a grantor trust for
United States Federal income tax purposes; and (iii) the Junior Subordinated
Debentures will be treated as indebtedness of the Company for United States
Federal income tax purposes. In this connection, the Company and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law or the Trust Agreement, that the Administrative Trustees
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights to
subscribe for additional Trust Securities.
The Trust may not borrow money, issue debt, execute mortgages or pledge any
of its assets.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under an Indenture, as
supplemented from time to time (as so supplemented, the "Indenture"), between
the Company and Bankers Trust (Delaware), as trustee (the "Debenture Trustee").
The Indenture will be qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). This summary of certain terms and
provisions of the Junior Subordinated Debentures and the Indenture does not
purport to be complete, and where reference is made to particular provisions of
the Indenture, such provisions, including the definitions of certain terms, some
of which are not otherwise defined herein, are qualified in their entirety by
reference to all of the provisions of the Indenture and those terms made a part
of the Indenture by the Trust Indenture Act.
GENERAL
Concurrently with the issuance of the Trust Preferred Securities, the Trust
will invest the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in Junior Subordinated Debentures issued by
the Company. The Junior Subordinated Debentures will be issued as unsecured debt
under the Indenture.
The Junior Subordinated Debentures will bear interest from ,
1997 at the annual rate of % of the principal amount thereof, payable
quarterly in arrears on the day of March, June, September and December of
each year (each, an "Interest Payment Date"), commencing on , 1997,
to the Person in whose name each Junior Subordinated Debenture is registered,
subject to certain exceptions, at the close of business on the day of the
month preceding the month in which the relevant Interest Payment Date falls (the
"record date"). It is anticipated that, until the liquidation, if any, of the
Trust, each Junior Subordinated Debenture will be held in the name of the
Property Trustee in trust for the benefit of the holders of the Trust
Securities. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months and, for any period less
than a full calendar month, the number of days elapsed in such month. In the
event that any Interest Payment Date is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that if such next succeeding Business Day falls in the next
succeeding calendar year, then such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of % thereof, compounded quarterly.
The term "interest," as used herein, shall include quarterly interest payments,
interest on quarterly interest payments not paid on the applicable Interest
Payment Date and Additional Sums, as applicable.
An aggregate of $25,774,000 principal amount of Junior Subordinated
Debentures will be issued (assuming the Underwriters' over-allotment option is
not exercised). The Junior Subordinated Debentures will be issued in
denominations of $25 and integral multiples thereof. The Junior Subordinated
Debentures will mature on , 2027 (such date, as it may be shortened
as provided for in the next two sentences of this paragraph, the "Stated
Maturity Date"). Such date may be shortened once at any time by the Company to
any date which must be (i) an Interest Payment Date, (ii) an anniversary date of
the date of issuance of the Junior Subordinated Debentures, and (iii) not
earlier than , 2002, 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, and any other required regulatory
approvals. If the Company elects to shorten the Stated Maturity Date of the
Junior Subordinated Debentures, it shall give notice to the Indenture Trustee,
and the Indenture Trustee shall give notice of such earlier Stated Maturity Date
to the holders of the Junior Subordinated Debentures no less than 90 days prior
to the effectiveness thereof.
The Junior Subordinated Debentures will rank pari passu with all Other
Debentures and will be unsecured and will rank subordinate and junior in right
of payment to all Senior Indebtedness to the extent and in the manner set forth
in the Indenture. See "-- Subordination."
The Company is a holding company and substantially all of the operating
assets of the Company are owned by the Company's Subsidiaries. The Company is a
legal entity separate and distinct from its
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Subsidiaries. Holders of Junior Subordinated Debentures should look only to the
Company for payments on the Junior Subordinated Debentures. The principal
sources of the Company's income are dividends, interest and fees from its
Subsidiaries. The Company relies primarily on dividends from the Bank to meet
its obligations for payment of principal and interest on its outstanding debt
obligations and corporate expenses. There are regulatory limitations on the
payment of dividends directly or indirectly to the Company from the Bank. As of
March 31, 1997, under applicable regulations, the total capital available for
payment of dividends by the Bank to the Company was approximately $18.0 million.
Banking regulatory authorities, however, have the power to prohibit the payment
of dividends, if such payment would reduce bank capital to a point that, in the
opinion of such regulatory authorities, would render the Bank undercapitalized
and thus constitute an unsafe or unsound banking practice. In addition, the Bank
is subject to certain restrictions imposed by Federal law on any extensions of
credit to, and certain other transactions with, the Company and certain other
affiliates, and on investments in stock or other securities thereof. Such
restrictions prevent the Company and such other affiliates from borrowing from
the Bank unless the loans are secured by various types of collateral. Further,
such secured loans, other transactions and investments by the Bank are generally
limited in amount as to the Company and as to each of such other affiliates to
10% of the Bank's capital and surplus and as to the Company and all of such
other affiliates to an aggregate of 20% of the Bank's capital and surplus.
Because the Company is a holding company, the right of the Company to
participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Trust Preferred Securities to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary
(including depositors, in the case of the Bank), except to the extent the
Company may itself be recognized as a creditor of that subsidiary. At March 31,
1997, the Subsidiaries of the Company had total liabilities (including deposit
liabilities, but excluding liabilities owed to the Company) of $766.7 million.
Accordingly, the Junior Subordinated Debentures will be effectively subordinated
to all existing and future liabilities of the Company's Subsidiaries (including
the Subsidiaries's deposit liabilities) and all liabilities of any future
subsidiaries of the Company. The Indenture does not limit the incurrence or
issuance of other secured or unsecured debt of the Company or any subsidiary,
including Senior Indebtedness. See "-- Subordination."
FORM, REGISTRATION AND TRANSFER
If the Junior Subordinated Debentures are distributed to the holders of the
Trust Securities, the Junior Subordinated Debentures may be represented by one
or more global certificates registered in the name of Cede & Co. as the nominee
of DTC. The depositary arrangements for such Junior Subordinated Debentures are
expected to be substantially similar to those in effect for the Trust Preferred
Securities. For a description of DTC and the terms of the depositary
arrangements relating to payments, transfers, voting rights, redemptions and
other notices and other matters, see "Description of Trust Preferred
Securities -- Depositary Procedures."
PAYMENT AND PAYING AGENTS
Payment of principal of and interest on Junior Subordinated Debentures will
be made at the office of the Debenture Trustee in New York, New York or at the
office of such Paying Agent or Paying Agents as the Company may designate from
time to time, except that at the option of the Company payment of any interest
may be made, except in the case of Junior Subordinated Debentures in global
form, (i) by check mailed to the address of the holder as such address shall
appear in the register for Junior Subordinated Debentures or (ii) by transfer to
an account maintained by the Person entitled thereto as specified in such
register, provided that proper transfer instructions have been received by the
relevant record date. Payment of any interest on any Junior Subordinated
Debenture will be made to the Person in whose name such Junior Subordinated
Debenture is registered at the close of business on the record date for such
interest, except in the case of defaulted interest. The Company may at any time
designate additional Paying Agents or rescind the designation of any Paying
Agent; however the Company will at all times be required to maintain a Paying
Agent in each place of payment for the Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any Paying Agent for the
payment of the principal of or interest on any Junior Subordinated Debenture and
remaining unclaimed for two years after such
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principal 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.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no Debenture Event of Default has occurred and is continuing,
the Company will have the right under the Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time and from time to time
for a period not exceeding 20 consecutive quarterly periods with respect to each
Extension Period, provided that no Extension Period shall end on a date other
than an Interest Payment Date or extend beyond the Stated Maturity Date. At the
end of such Extension Period, the Company must pay all interest then accrued and
unpaid (together with interest thereon at the annual rate of %, compounded
quarterly, to the extent permitted by applicable law ("Compounded Interest")).
During an Extension Period, interest will continue to accrue and holders of
Junior Subordinated Debentures (or holders of the Trust Securities while Trust
Securities are outstanding) will be required to accrue such deferred interest
income for United States Federal income tax purposes prior to the receipt of
cash attributable to such income. See "Certain Federal Income Tax
Consequences -- 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, (other
than (a) dividends or distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, common stock of the Company, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
as a result of a reclassification of any class or series of the Company's
capital stock solely into another class or series of the Company's capital
stock, (d) the purchase of fractional shares of the Company's capital stock
resulting from such a reclassification or pursuant to the conversion or exchange
provisions of such capital stock or any security convertible or exchangeable
into shares of the Company's capital stock, and (e) purchases of common stock
related to the issuance of common stock or rights under any of the Company's
benefit plans for its directors, officers or employees or any of the Company's
dividend reinvestment plans); (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company (including any Other Debentures) that rank pari passu with or junior in
right of payment to the Junior Subordinated Debentures; or (iii) make any
guarantee payments (other than payments under the Guarantee) with respect to any
guarantee by the Company of the debt securities of any subsidiary of the Company
(including any Other Guarantees) if such guarantee ranks pari passu with or
junior in right of payment to the Junior Subordinated Debentures.
Prior to the termination of any such Extension Period, the Company may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 20 consecutive quarterly periods, end on a
date other than an Interest Payment Date or extend beyond the Stated Maturity
Date. Upon the termination of any such Extension Period and the payment of all
amounts then due, the Company may elect to begin a new Extension Period, subject
to the above requirements. No interest shall be due and payable during an
Extension Period, except at the end thereof. The Company must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of its
election of any Extension Period (or an extension thereof) at least five
Business Days prior to the earlier of (i) the date the Distributions on the
Trust Securities would have been payable except for the election to begin or
extend such Extension Period or (ii) the date the Administrative Trustees are
required to give notice to any securities exchange or to holders of Trust
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 Debenture Trustee shall give the holders of the Junior Subordinated
Debentures notice of the Company's election of any Extension Period at least
five Business Days prior to such record date. There is no limitation on the
number of times that the Company may elect to begin an Extension Period.
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ADDITIONAL SUMS
If the Trust is required to pay additional taxes, duties or other
governmental charges as a result of a Tax Event, the Company will pay as
additional amounts on the Junior Subordinated Debentures the Additional Sums.
PREPAYMENT
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, and any other required regulatory approvals, the Junior
Subordinated Debentures are prepayable prior to maturity at the option of the
Company (i) on or after , 2002, in whole at any time or in part from time
to time, or (ii) at any time in whole (but not in part), upon the occurrence and
during the continuance of a Special Event, in each case at a prepayment price
equal to plus 100% of the principal amount thereof, the Junior Subordinated
Debentures to be prepaid, plus the accrued and unpaid interest thereon
(including Compounded Interest and Additional Sums, if any) to the date fixed
for prepayment.
Notice of any prepayment will be mailed at least 30 days but not more than
60 days before the prepayment date to each holder of Junior Subordinated
Debentures to be prepaid at such holder's registered address. Unless the Company
defaults in payments of the prepayment price, on and after the prepayment date
interest ceases to accrue on such Junior Subordinated Debentures or portions
thereof called for prepayment.
The Junior Subordinated Debentures will not be subject to any sinking fund.
DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Trust Preferred
Securities -- Liquidation of the Trust and Distribution of Junior Subordinated
Debentures," under certain circumstances involving the termination of the Trust,
the Junior Subordinated Debentures may be distributed to the holders of the
Trust Securities in liquidation of the Trust after satisfaction of liabilities
to creditors of the Trust as provided by applicable law. If distributed to
holders of the Trust Preferred Securities in liquidation, the Junior
Subordinated Debentures will initially be issued in the form of one or more
global securities and the Depositary, or any successor depositary for the Trust
Preferred Securities, will act as depositary for the Junior Subordinated
Debentures. If the Junior Subordinated Debentures are distributed to the holders
of Trust Preferred Securities upon the liquidation of the Trust, the Company
will use its best efforts to list the Junior Subordinated Debentures on the
Nasdaq National Market or such other stock exchanges or automated quotation
system, if any, on which the Trust Preferred Securities are then listed or
quoted. There can be no assurance as to the market price of any Junior
Subordinated Debentures that may be distributed to the holders of the Trust
Preferred Securities.
CERTAIN COVENANTS OF THE COMPANY
If at any time (1) there shall have occurred any event of which the Company
has actual knowledge that (a) is, or with the giving of notice or the lapse of
time, or both, would be, a Debenture Event of Default and (b) in respect of
which the Company shall not have taken reasonable steps to cure, (2) the Company
shall be in default with respect to its payment obligations under the Guarantee
or (3) the Company shall have given notice of its election of an Extension
Period as provided in the Indenture and shall not have rescinded such notice,
and such Extension Period, or any extension thereof, shall be continuing, the
Company will not: (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Company's capital stock (other than (a) dividends or distributions in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
common stock of the Company, (b) any declaration of a dividend in connection
with the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) as a result of a reclassification of any class or
series of the Company's capital stock solely into another class or series of the
Company's capital stock, (d) the purchase of fractional shares of the Company's
capital stock resulting from such a reclassification or pursuant to the
conversion or exchange provisions of such capital stock or any security
convertible or exchangeable into shares of the Company's
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capital stock, and (e) purchases of common stock related to the issuance of
common stock or rights under any of the Company's benefit plans for its
directors, officers or employees or any of the Company's dividend reinvestment
plans); (ii) make any payment of principal, interest or premium, if any, on or
repay or repurchase or redeem any debt securities of the Company (including
Other Debentures) that rank pari passu with or junior in right of payment to the
Junior Subordinated Debentures; or (iii) make any guarantee payments (other than
payments under the Guarantee) with respect to any guarantee by the Company of
the debt securities of any subsidiary of the Company (including under Other
Guarantees) if such guarantee ranks pari passu or junior in right of payment to
the Junior Subordinated Debentures.
So long as the Trust Securities remain outstanding, the Company also will
covenant: (i) to maintain 100% direct or indirect ownership of the Common
Securities, provided, however, that any permitted successor of the Company under
the Indenture may succeed to the Company's ownership of such Common Securities;
(ii) not to voluntarily terminate, windup or liquidate the Trust except with the
prior approval of the Federal Reserve, if required under applicable capital
guidelines or policies of the Federal Reserve, and any other required regulatory
approvals; (iii) to use its reasonable efforts to cause the Trust (a) to remain
a business trust, except in connection with the distribution of Junior
Subordinated Debentures to the holders of Trust Securities in liquidation of the
Trust, the redemption of all the Trust Securities, or certain mergers or
consolidations, each as permitted by the Trust Agreement, and (b) to otherwise
continue to be classified as a grantor trust for United States Federal income
tax purposes; and (iv) to use its reasonable efforts to cause each holder of
Trust Securities to be treated as owning an undivided beneficial interest in the
Junior Subordinated Debentures.
MODIFICATION OF INDENTURE
From time to time the Company and the Debenture Trustee may, without the
consent of the holders of Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interest of the holders of Junior
Subordinated Debentures) and qualifying, or maintaining the qualification of,
the Indenture under the Trust Indenture Act. The Indenture contains provisions
permitting the Company and the Debenture Trustee, with the consent of the
holders of a majority in principal amount of Junior Subordinated Debentures, to
modify the Indenture in a manner affecting the rights of the holders of Junior
Subordinated Debentures; provided that no such modification may, without the
consent of the holders of each outstanding Junior Subordinated Debenture so
affected, (i) change the Stated Maturity Date, or reduce the principal amount of
the Junior Subordinated Debentures or reduce the amount payable on redemption
thereof or reduce the rate or extend the time of payment of interest thereon
except pursuant to the Company's right under the Indenture to defer the payment
of interest as provided therein (see "-- Option to Extend Interest Payment
Date") or make the principal of, or interest or premium on, the Junior
Subordinated Debentures payable in any coin or currency other than that provided
in the Junior Subordinated Debentures, or impair or affect the right of any
holder of Junior Subordinated Debentures to institute suit for the payment
thereof, or (ii) reduce the percentage of principal amount of Junior
Subordinated Debentures, the holders of which are required to consent to any
such modification of the Indenture.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures constitutes a
"Debenture Event of Default" (whatever the reason for such Debenture Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) failure for 30 days to pay any interest (including Compounded
Interest and Additional Sums, if any) on the Junior Subordinated Debentures
or any Other Debentures, when due (subject to the deferral of any due date
in the case of an Extension Period); or
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(ii) failure to pay any principal or premium, if any, on the Junior
Subordinated Debentures or any Other Debentures when due whether at
maturity, upon prepayment or redemption, by declaration of acceleration of
maturity or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants and warranties contained in the 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 Junior
Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have, subject to certain exceptions, the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee. The Debenture Trustee or the holders of not
less than 25% in aggregate outstanding principal amount of the Junior
Subordinated Debentures may declare the principal due and payable immediately
upon a Debenture Event of Default. The holders of a majority in aggregate
outstanding principal amount of the Junior Subordinated Debentures may annul
such declaration and waive the default if the default (other than the
non-payment of the principal of the Junior Subordinated Debentures which has
become due solely by such acceleration) has been cured and a sum sufficient to
pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders of
all the Junior Subordinated Debentures, waive any past default or Debenture
Event of Default, except a default in the payment of principal of (or premium,
if any) or interest on any of the Junior Subordinated Debenture (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Debenture Trustee) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Junior Subordinated Debenture affected.
The Indenture requires the annual filing by the Company with the Debenture
Trustee of a certificate as to the absence of certain defaults under the
Indenture.
The Indenture provides that the Debenture Trustee may withhold notice of a
Debenture Event of Default from the holders of the Junior Subordinated
Debentures if the Debenture Trustee considers it in the interest of such holders
to do so.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If a Debenture Event of Default shall have occurred and be continuing and
shall be attributable to the failure of the Company to pay the principal of, or
interest (including Compounded Interest and Additional Sums, if any) on the
Junior Subordinated Debentures on the due date, a holder of Trust Preferred
Securities may institute a Direct Action. The Company may not amend the
Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of the holders of all of the Trust Preferred Securities.
Notwithstanding any payments made to a holder of Trust Preferred Securities by
the Company in connection with a Direct Action, the Company shall remain
obligated to pay the principal of and interest (including Compounded Interest
and Additional Sums, if any) on the Junior Subordinated Debentures, and the
Company shall be subrogated to the rights of the holder of such Trust Preferred
Securities with respect to payments on the Trust Preferred Securities to the
extent of any payments made by the Company to such holder in any Direct Action.
The holders of the Trust Preferred Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the Junior Subordinated Debentures unless there
shall have been an Event of Default under the Trust Agreement. See "Description
of Trust Preferred Securities -- Events of Default; Notice."
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CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or sell, convey, transfer or lease its properties as an
entirety or substantially as an entirety to any other Person, unless: (i) the
Company is the surviving Person or the successor Person is organized under the
laws of the United States or any State or the District of Columbia, and such
successor Person expressly assumes the Company's obligations on the Junior
Subordinated Debentures; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time or
both, would become a Debenture Event of Default, shall have occurred and be
continuing; and (iii) certain other conditions as prescribed in the Indenture
are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Company that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at maturity or called for prepayment within one year, and 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, including principal (and premium, if any) and interest
due or to become due to the prepayment date or the Stated Maturity Date, as the
case may be, then the Indenture will cease to be of further effect (except as to
the Company's obligations to pay all other sums due pursuant to the Indenture
and to provide the officers' certificates and opinions of counsel described
therein), and the Company will be deemed to have satisfied and discharged the
Indenture.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinated and junior in
right of payment to all Senior Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding-up or reorganization, whether voluntary or
involuntary or in insolvency, bankruptcy receivership or other proceedings of
the Company, all Senior Indebtedness must be paid in full before the holders of
Junior Subordinated Debentures will be entitled to receive or retain any payment
in respect thereof.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of such
Senior Indebtedness before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect of the Junior Subordinated
Debentures.
No payments on account of principal or interest, if any, in respect of the
Junior Subordinated Debentures may be made if there shall have occurred and be
continuing a default in any payment with respect to any Senior Indebtedness, or
an event of default with respect to any Senior Indebtedness resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default.
"Indebtedness" shall mean (i) every obligation of the Company for money
borrowed; (ii) every obligation of the Company evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses; (iii) every
reimbursement obligation of the Company with respect to letters of credit,
banker's acceptances or similar facilities issued for the account of the
Company; (iv) every obligation of the Company issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business); (v) every
capital lease obligation of the Company; (vi) all indebtedness of the Company
whether incurred on or prior to the date of the Indenture or thereafter
incurred,
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for claims in respect of derivative products, including interest rate, foreign
exchange rate and commodity forward contracts, options and swaps and similar
arrangements; and (vii) every obligation of the type referred to in clauses (i)
through (vii) 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
for, directly or indirectly, as obligor or otherwise.
"Senior Indebtedness" means the principal of and interest, if any
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Indebtedness
of the Company whether incurred on or prior to the date of the Indenture or
thereafter incurred, unless in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that such obligations
are not superior in right of payment to the Junior Subordinated Debentures or to
other Indebtedness which is pari passu with, or subordinated to, the Junior
Subordinated Debentures; provided, however, that Senior Indebtedness shall not
be deemed to include (i) any 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, (ii)
any Indebtedness of the Company to any of its subsidiaries, (iii) Indebtedness
to any employee of the Company, and (iv) any other debt securities issued
pursuant to the Indenture.
The Company is a holding company and almost all of the operating assets of
the Company are owned by the Company's Subsidiaries. The Company relies
primarily on dividends from the Bank to meet its obligations for payment of
principal and interest on its outstanding debt obligations and corporate
expenses. The Company is a legal entity separate and distinct from the Bank.
Holders of Junior Subordinated Debentures should look only to the Company for
payments on the Junior Subordinated Debentures. There are regulatory limitations
on the payment of dividends directly or indirectly to the Company from the Bank.
See "-- General." In addition, the Bank is subject to certain restrictions
imposed by Federal law on any extensions of credit to, and certain other
transactions with, the Company and certain other affiliates, and on investments
in stock or other securities thereof. Such restrictions prevent the Company and
such other affiliates from borrowing from the Bank unless the loans are secured
by various types of collateral. Further, such secured loans, other transactions
and investments by the Bank are generally limited in amount as to the Company
and as to each of such other affiliates to 10% of the Bank's capital and surplus
and as to the Company and all of such other affiliates to an aggregate of 20% of
the Bank's capital and surplus. Accordingly, the Junior Subordinated Debentures
will be effectively subordinated to all existing and future liabilities of the
Company's subsidiaries.
Because the Company is a holding company, the right of the Company to
participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Trust Preferred Securities to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary
(including depositors, in the case of the Bank), except to the extent the
Company may itself be recognized as a creditor of that subsidiary. At March 31,
1997, the Subsidiaries of the Company had total liabilities (including deposit
liabilities, but excluding liabilities owed to the Company) of $766.7 million.
Accordingly, the Junior Subordinated Debentures will be effectively subordinated
to all existing and future liabilities of the Company's Subsidiaries (including
the Bank's deposit liabilities) and all liabilities of any future subsidiaries
of the Company. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Company or any subsidiary, including Senior
Indebtedness.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
Following the Exchange Offer and the qualification of the Indenture under
the Trust Indenture Act, the Debenture Trustee shall have and be subject to all
the duties and responsibilities specified with respect to an
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indenture trustee under the Trust Indenture Act. Subject to such provisions, the
Debenture Trustee is under no obligation to exercise any of the powers vested in
it by the Indenture at the request of any holder of Junior Subordinated
Debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. The Debenture
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Debenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Company concurrently
with the issuance by the Trust of the Trust Preferred Securities for the benefit
of the holders from time to time of the Trust Preferred Securities. Bankers
Trust Company will act as Guarantee Trustee under the Guarantee. The Guarantee
will be qualified under the Trust Indenture Act. This summary of certain
provisions of the Guarantee does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all of the provisions of the
Guarantee, including the definitions therein of certain terms, and the Trust
Indenture Act. The Guarantee Trustee will hold the Guarantee for the benefit of
the holders of the Trust 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 Trust Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert
other than the defense of payment. The following payments with respect to the
Trust Preferred Securities, to the extent not paid by or on behalf of the Trust
(the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Trust Preferred
Securities, to the extent that the Trust has funds on hand legally available
therefor at such time, (ii) the redemption price with respect to the Trust
Preferred Securities called for redemption, to the extent that the Trust has
funds on hand legally available therefor at such time, and (iii) upon a
voluntary or involuntary dissolution, winding-up or liquidation of the Trust
(other than in connection with the distribution of the Junior Subordinated
Debentures to holders of the Trust Preferred Securities or the redemption of all
Trust Preferred Securities), the lesser of (a) the Liquidation Distribution, to
the extent the Trust has funds legally available therefor at the time, and (b)
the amount of assets of the Trust remaining available for distribution to
holders of Trust Preferred Securities after satisfaction of liabilities to
creditors of the Trust as required by applicable law. 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 Trust Preferred Securities or by
causing the Trust to pay such amounts to such holders.
The Guarantee will rank subordinate and junior in right of payment to all
Senior Indebtedness to the extent provided therein. See "-- Status of the
Guarantee." Because the Company is a holding company, the right of the Company
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise is subject to the prior
claims of creditors of that subsidiary, except to the extent the Company may
itself be recognized as a creditor of that subsidiary. Accordingly, the
Company's obligations under the Guarantee effectively will be subordinated to
all existing and future liabilities of the Company's Subsidiaries (including the
Company's Subsidiaries' deposit liabilities), and all liabilities of any future
subsidiaries of the Company. Claimants should look only to the assets of the
Company for payments under the Guarantee. See "Description of Junior
Subordinated Debentures -- General." The Guarantee does not limit the incurrence
or issuance of other secured or unsecured debt of the Company, including Senior
Indebtedness, whether under the Indenture, any other indenture that the Company
may enter into in the future or otherwise.
The Company will, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Indenture, taken together, fully, irrevocably
and unconditionally guarantee all of the Trust's obligations under the Trust
Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of
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the Trust's obligations under the Trust Preferred Securities. See "Relationship
Among the Trust Preferred Securities, the Junior Subordinated Debentures and the
Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Indebtedness
in the same manner as the Junior Subordinated Debentures.
The Guarantee will rank pari passu with all Other Guarantees issued by the
Company after the Issue Date with respect to capital securities (if any) issued
by Other Trusts. 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 Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held for the benefit of the holders of the Trust Preferred
Securities. The Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Trust or upon
distribution to the holders of the Trust Preferred Securities of the Junior
Subordinated Debentures. The Guarantee does not place a limitation on the amount
of additional Senior Indebtedness that may be incurred by the Company.
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, provided,
however, that except with respect to a default in payment of any Guarantee
Payment, the Company shall have received notice of default and shall not have
cured such default within 60 days after receipt of such notice. The holders of
not less than a majority in Liquidation Amount of the Trust Preferred Securities
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee.
Any holder of the Trust Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity.
The Company, as guarantor, will be 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.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Trust Preferred Securities (in which case no vote
will be required), the Guarantee may not be amended without the prior approval
of the holders of a majority of the Liquidation Amount of such outstanding Trust
Preferred Securities. The manner of obtaining any such approval will be as set
forth under "Description of Trust Preferred Securities -- Voting Rights;
Amendment of the Trust Agreement." All guarantees and agreements contained in
the Guarantee Agreement shall bind the successors, assigns, receivers, trustees
and representatives of the Company and shall inure to the benefit of the holders
of the Trust Preferred Securities then outstanding.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the redemption price of the Trust Preferred Securities, upon
full payment of the Liquidation Amount payable upon liquidation of the Trust or
upon distribution of Junior Subordinated Debentures to the holders of the Trust
Preferred Securities. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the Trust Preferred
Securities must restore payment of any sums paid under the Trust Preferred
Securities or the Guarantee.
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<PAGE> 48
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, will undertake to
perform only such duties as are specifically set forth in the Guarantee and, in
case a default with respect to the Guarantee has occurred, must exercise the
same degree of care and skill as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs. Subject to this
provision, the Guarantee Trustee will be under no obligation to exercise any of
the powers vested in it by the Guarantee at the request of any holder of the
Trust Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Trust Preferred
Securities (to the extent the Trust has funds on hand legally available for the
payment of such Distributions) will be irrevocably guaranteed by 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
Indenture, the Trust Agreement and the Guarantee will provide, in the aggregate,
a full, irrevocable and unconditional guarantee of payments of Distributions and
other amounts due on the Trust Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of the Trust's obligations under the Trust Preferred Securities. If and to the
extent that the Company does not make the required payments on the Junior
Subordinated Debentures, the Trust will not have sufficient funds to make the
related payments, including Distributions, on the Trust Preferred Securities.
The Guarantee will not cover any such payment when the Trust does not have
sufficient funds on hand legally available therefor. In such event, the remedy
of a holder of Trust Preferred Securities is to institute a Direct Action. The
obligations of the Company under the Guarantee will be subordinate and junior in
right of payment to all Senior Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Trust Preferred Securities,
primarily because: (i) the aggregate principal amount or prepayment price of the
Junior Subordinated Debentures will be equal to the sum of the Liquidation
Amount or redemption price, as applicable, of the Trust Securities; (ii) the
interest rate and interest and other payment dates on the Junior Subordinated
Debentures will match the Distribution rate and Distribution and other payment
dates for the Trust Securities; (iii) the Company, as Sponsor, shall pay for all
and any costs, expenses and liabilities of the Trust except the Trust's
obligations to holders of Trust Securities under such Trust Securities; and (iv)
the Trust Agreement will provide that the Trust is not authorized to engage in
any activity that is not consistent with the limited purposes thereof.
ENFORCEMENT RIGHTS OF HOLDERS OF TRUST PREFERRED SECURITIES
A holder of any Trust Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, the Trust or
any other person or entity.
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<PAGE> 49
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Trust Agreement. However, in
the event of payment defaults under, or acceleration of, Senior Indebtedness,
the subordination provisions of the Indenture will provide that no payments may
be made in respect of the Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on Junior Subordinated
Debentures would constitute an Event of Default under the Trust Agreement.
LIMITED PURPOSE OF THE TRUST
The Trust Securities will represent beneficial interests in the Trust, and
the Trust exists for the sole purpose of issuing and selling the Trust
Securities, using the proceeds from the sale of the Trust Securities to acquire
the Junior Subordinated Debentures and engaging in only those other activities
necessary, advisable or incidental thereto.
RIGHTS UPON TERMINATION
Unless the Junior Subordinated Debentures are distributed to holders of the
Trust Securities, upon any voluntary or involuntary termination, winding-up or
liquidation of the Trust, after satisfaction of the liabilities of creditors of
the Trust as required by applicable law, the holders of the Trust Securities
will be entitled to receive, out of assets held by the Trust, the Liquidation
Distribution in cash. See "Description of Trust Preferred
Securities -- Liquidation of the Trust and Distribution of Junior Subordinated
Debentures." Upon any voluntary or involuntary liquidation or bankruptcy of the
Company, the Property Trustee, as holder of the Junior Subordinated Debentures,
would be a subordinated creditor of the Company, subordinated in right of
payment to all Senior Indebtedness as set forth in the Indenture, but entitled
to receive payment in full of principal and interest, before any stockholders of
the Company receive payments or distributions.
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<PAGE> 50
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a summary of certain of the material United States Federal
income tax consequences of the purchase, ownership and disposition of Trust
Preferred Securities held as capital assets by a holder who purchases such Trust
Preferred Securities upon initial issuance. It does not deal with special
classes of holders such as banks, thrifts, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, tax-exempt investors, United States Alien Holders (as defined below)
engaged in a U.S. trade or business or persons that will hold the Trust
Preferred Securities as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. This summary also does not address
the tax consequences to persons that have a functional currency other than the
U.S. dollar or the tax consequences to shareholders, partners or beneficiaries
of a holder of Trust Preferred Securities. Further, it does not include any
description of any alternative minimum tax consequences or the tax laws of any
state or local government or of any foreign government that may be applicable to
the Trust Preferred Securities. This summary is based on the Code, Treasury
regulations thereunder and the administrative and judicial interpretations
thereof, as of the date hereof, all of which are subject to change, possibly on
a retroactive basis. In connection with the issuance of the Senior Subordinated
Debentures, Andrews & Kurth L.L.P., special United States Federal income tax
counsel to the Company and the Trust ("Tax Counsel") will render certain
opinions described below. Tax counsel has reviewed this summary and is of the
opinion that, to the extent it constitutes matters of law or purports to
describe provisions of the U.S. Federal income tax laws, it is a correct summary
in all material respects of the matters discussed in this summary.
An opinion of Tax Counsel is not binding on the IRS or the courts. No
rulings have been or are expected to be sought from the IRS with respect to any
of the transactions described herein and no assurance can be given that the IRS
will not take contrary positions. Moreover, no assurance can be given that the
opinions expressed herein will not be challenged by the IRS or, if challenged,
that such a challenge would not be successful.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
The Corporation intends to take the position that the Junior Subordinated
Debentures will be classified for United States Federal income tax purposes as
indebtedness of the Company. The Company, the Trust and the holders of the Trust
Preferred Securities (by acceptance of a beneficial interest in a Trust
Preferred Security) will agree to treat the Junior Subordinated Debentures as
indebtedness of the Company and the Trust Preferred Securities as evidence of a
beneficial ownership interest in the Junior Subordinated Debentures for all
United States Federal income tax purposes. No assurance can be given, however,
that such position will not be challenged by the IRS or, if challenged, that
such a challenge will not be successful. The remainder of this discussion
assumes that the Junior Subordinated Debentures will be classified as
indebtedness of the Company for United States Federal income tax purposes.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Trust Preferred Securities, Tax
Counsel will render its opinion generally to the effect that, under then-current
law and assuming full compliance with the terms of the Trust Agreement and the
Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Trust will be classified for United
States Federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States Federal income tax
purposes, each holder of Trust Preferred Securities generally will be considered
the owner of an undivided interest in the Junior Subordinated Debentures, and
each holder will be required to include in its gross income any interest (or OID
accrued) with respect to its allocable share of those Junior Subordinated
Debentures.
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<PAGE> 51
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations (the "Regulations") applicable
to debt instruments issued on or after August 13, 1996, a "remote" contingency
that stated interest will not be timely paid will be ignored in determining
whether a debt instrument is issued with OID. The Company believes that the
likelihood of its exercising its option to defer payments of interest is
"remote" since exercising that option would, among other things, prevent the
Company from declaring dividends on any class of its equity securities.
Accordingly, the Company intends to take the position that the Junior
Subordinated Debentures will not be considered to be issued with OID and,
accordingly, stated interest on the Junior Subordinated Debentures generally
will be taxable to a holder as ordinary income at the time it is paid or accrued
in accordance with such holder's method of tax accounting.
Under the Regulations, if the Company were to exercise its option to defer
payments of interest, the Junior Subordinated Debentures would at that time be
treated as issued with OID, and all stated interest on the Junior Subordinated
Debentures would thereafter be treated as OID as long as the Junior Subordinated
Debentures remain outstanding. In such event, all of a holder's taxable interest
income with respect to the Junior Subordinated Debentures would thereafter be
accounted for on an economic accrual basis regardless of such holder's method of
tax accounting, and actual distributions of stated interest would not be
reported as taxable income. Consequently, a holder of Trust Preferred Securities
would be required to include in gross income OID even though the Company would
not make actual cash payments during an Extension Period. Moreover, under the
Regulations, if the option to defer the payment of interest was determined not
to be "remote," the Junior Subordinated Debentures would be treated as having
been originally issued with OID. In such event, all of a holder's taxable
interest income with respect to the Junior Subordinated Debentures would be
accounted for on an economic accrual basis regardless of such holder's method of
tax accounting, and actual distributions of stated interest would not be
reported as taxable income.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation described herein.
Because income on the Trust Preferred Securities will constitute interest
or OID, corporate holders of the Trust Preferred Securities will not be entitled
to a dividends-received deduction with respect to any income recognized with
respect to the Trust Preferred Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
The Company will have the right at any time to liquidate the Trust and
cause the Junior Subordinated Debentures to be distributed to the holders of the
Trust Securities. This right is subject to (i) the Administrative Trustees
having received an opinion of counsel to the effect that such distribution will
not cause the holders of Trust Preferred Securities to recognize gain or loss
for federal income tax purposes; and (ii) the Company having received any
required regulatory approval. Such a distribution, for United States Federal
income tax purposes, would be treated as a nontaxable event to each holder, and
each holder would receive an aggregate tax basis in the Junior Subordinated
Debentures equal to such holder's aggregate tax basis in its Trust Preferred
Securities. A holder's holding period in the Junior Subordinated Debentures so
received in liquidation of the Trust would include the period during which the
Trust Preferred Securities were held by such holder.
Under certain circumstances described herein (see "Description of Trust
Preferred Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Trust Securities. Such a redemption would, for United States Federal
income tax purposes, constitute a taxable disposition of the redeemed Trust
Securities, and a holder could recognize gain or loss as if it sold such
redeemed Trust Securities for cash. See "-- Sales of Trust Preferred
Securities."
SALES OF TRUST PREFERRED SECURITIES
A holder that sells Trust Preferred Securities (including a redemption of
the Trust Preferred Securities either on the Stated Maturity Date or upon an
optional redemption of the Junior Subordinated Debentures by
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the Company) will recognize gain or loss equal to the difference between its
adjusted tax basis in the Trust Preferred Securities and the amount realized on
the sale of such Trust Preferred Securities (other than with respect to accrued
and unpaid interest which has not yet been included in income, which will be
treated as ordinary income). A holder's adjusted tax basis in the Trust
Preferred Securities generally will be its initial purchase price increased by
OID (if any) previously includible in such holder's gross income to the date of
disposition and decreased by payments (if any) received on the Trust Preferred
Securities in respect of OID. Such gain or loss generally will be a capital gain
or loss and generally will be a long-term capital gain or loss if the Trust
Preferred Securities have been held for more than one year.
The Trust Preferred Securities may trade at a price that does not
accurately reflect the value of accrued but unpaid interest with respect to the
underlying Junior Subordinated Debentures. A holder who uses the accrual method
of accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debenture are deemed to have been issued with OID) who disposes of
his Trust Preferred Securities between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest on
the Junior Subordinated Debentures through the date of disposition in income as
ordinary income (i.e., interest or, if applicable, OID), and to add such amount
to his adjusted tax basis in his pro rata share of the underlying Junior
Subordinated Debentures deemed disposed of. To the extent the selling price is
less than the holder's adjusted tax basis (which will include all accrued but
unpaid interest) a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States Federal income tax purposes.
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of President Clinton's Fiscal 1998 Budget
Proposal, the United States Treasury Department proposed legislation that would,
among other things, deny an issuer a deduction for United States Federal income
tax purposes for the payment of interest on instruments with characteristics
similar to the Junior Subordinated Debentures. If the proposed legislation were
enacted in its current form, it is not expected to apply to the Junior
Subordinated Debentures since the proposed effective date for this provision is
the date of first committee action. There can be no assurances, however, that
the proposed legislation, if enacted, or similar legislation enacted after the
date hereof would not adversely affect the tax treatment of the Junior
Subordinated Debentures, resulting in a Tax Event. The occurrence of a Tax Event
may result in the redemption of the Junior Subordinated Debentures for cash, in
which event the holders of the Trust Securities would receive cash in redemption
of their Trust Securities. See "Description of Trust Preferred
Securities -- Redemption" and "Description of Junior Subordinated
Debentures -- Redemption."
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States Federal income tax purposes.
A "U.S. Holder" is a holder of Trust Preferred Securities who or which is
(i) a citizen or individual (or is treated as a citizen or individual) of the
United States for Federal income tax purposes, (ii) a corporation or partnership
created or organized 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 Federal income tax purposes without regard to its source or
(iv) a trust over which (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.
Under present United States Federal income tax laws: (i) payments by the
Trust or any of its paying agents to any holder of a Trust Preferred Security
who or which is a United States Alien Holder will not be subject to United
States Federal withholding tax; provided that, (a) the beneficial owner of the
Trust Preferred Security does not actually or constructively own 10 percent 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 Trust Preferred Security is
not a controlled foreign corporation that is related to the Company through
stock ownership, and (c) either (A) the beneficial owner of the Trust Preferred
Security certifies to the Trust or its agent, under
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penalties of perjury, that it is not a United States holder and provides its
name and address or (B) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business (a "Financial Institution"), and holds the Trust Preferred
Security in such capacity, certifies to the Trust or its agent, under penalties
of perjury, that such statement has been received from the beneficial owner by
it or by a Financial Institution between it and the beneficial owner and
furnishes the Trust or its agent with a copy thereof; and (ii) a United States
Alien Holder of a Trust Preferred Security will not be subject to United States
Federal withholding tax on any gain realized upon the sale or other disposition
of a Trust Preferred Security.
As discussed above, changes in legislation affecting the United States
Federal income tax treatment of the Junior Subordinated Debentures are possible,
and could adversely affect the ability of the Company to deduct the interest
payable on the Junior Subordinated Debentures. Moreover, any such legislation
could adversely affect United States Alien Holders by characterizing income
derived from the Junior Subordinated Debentures as dividends, generally subject
to a 30% income tax (on a withholding basis) when paid to a United States Alien
Holder, rather than as interest which, as discussed above, is generally exempt
from income tax in the hands of a United States Alien Holder.
A United States Alien Holder that holds Trust 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 TO HOLDERS
Generally, income on the Trust Preferred Securities will be reported to
holders on Forms 1099, which forms should be mailed to holders of Trust
Preferred Securities by January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Trust Preferred
Securities may be subject to a "backup" withholding tax of 31 percent unless the
holder complies with certain identification requirements. Any withheld amounts
will be allowed as a credit against the holder's United States Federal income
tax, provided the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
TRUST PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS.
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ERISA CONSIDERATIONS
Each of the Company (the obligor with respect to the Junior Subordinated
Debentures held by the Trust), and its affiliates and the Property Trustee may
be considered a "party in interest" (within the meaning of ERISA) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to many Plans that are subject to ERISA and certain employee
benefit-related provisions of the Code. The purchase and/or holding of Trust
Preferred Securities by a Plan with respect to which the Company, the Property
Trustee or any affiliate is a service provider (or otherwise is a party in
interest or a disqualified person) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Trust Preferred
Securities are acquired pursuant to and in accordance with an applicable
exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an
exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment funds), PTCE 90-1 (an exemption for certain
transactions involving insurance company pooled separate accounts), PTCE 95-60
(an exemption for transactions involving certain insurance company general
accounts) or PTCE 96-23 (an exemption for certain transactions determined by an
in-house asset manager). In addition, a Plan fiduciary considering the purchase
of Trust Preferred Securities should be aware that the assets of the Trust may
be considered "plan assets" for ERISA purposes. In such event, the Property
Trustee, as well as any other persons exercising discretion with respect to the
Junior Subordinated Debentures, may become fiduciaries, parties in interest or
disqualified persons with respect to investing Plans. To avoid certain
prohibited transactions under ERISA and the Code that could thereby result, each
investing Plan, by purchasing the Trust Preferred Securities, will be deemed to
have directed the Trust to invest in the Junior Subordinated Debentures and to
have consented to the appointment of the Property Trustee. In this regard, it
should be noted that, in an Event of Default, the Company may not remove the
Property Trustee without the approval of a majority of the holders of the Trust
Preferred Securities.
A Plan fiduciary should consider whether the purchase of Trust Preferred
Securities could result in a delegation of fiduciary authority to the Property
Trustee, and, if so, whether such a delegation of authority is permissible under
the Plan's governing instrument or any investment management agreement with the
Plan. In making such determination, a Plan fiduciary should note that the
Property Trustee is a U.S. bank qualified to be an investment manager (within
the meaning of Section 3(38) of ERISA). Further, prior to an Event of Default
with respect to the Junior Subordinated Debentures, the Property Trustee will
have only limited custodial and ministerial authority with respect to Trust
assets.
THE SALE OF INVESTMENTS TO PLANS IS IN NO RESPECT A REPRESENTATION BY THE
TRUST, THE COMPANY, THE PROPERTY TRUSTEE, THE UNDERWRITERS OR ANY OTHER PERSON
ASSOCIATED WITH THE SALE OF THE TRUST PREFERRED SECURITIES THAT SUCH SECURITIES
MEET ALL RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY PLANS
GENERALLY OR ANY PARTICULAR PLAN, OR THAT SUCH SECURITIES ARE OTHERWISE
APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN. ANY PURCHASER PROPOSING
TO ACQUIRE TRUST PREFERRED SECURITIES WITH ASSETS OF ANY PLAN SHOULD CONSULT
WITH ITS COUNSEL.
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UNDERWRITING
Legg Mason Wood Walker, Incorporated and Stifel, Nicolaus & Company,
Incorporated (the "Underwriters"), have agreed, subject to the terms and
conditions of an underwriting agreement (the "Underwriting Agreement") to be
entered into by the Underwriters, the Company and the Trust that the Company and
the Trust will sell to the Underwriters, and the Underwriters, severally and not
jointly, will purchase from the Trust, the number of Trust Preferred Securities
set forth below opposite their respective names.
<TABLE>
<CAPTION>
NUMBER OF
TRUST PREFERRED
UNDERWRITERS SECURITIES
------------ ---------------
<S> <C>
Legg Mason Wood Walker, Incorporated........................
Stifel, Nicolaus & Company, Incorporated....................
---------
Total............................................. 1,000,000
=========
</TABLE>
The Underwriters have committed to purchase and pay for all such Trust
Preferred Securities if any are purchased. The Underwriting Agreement provides
that, if an Underwriter defaults, the purchase commitments of the non-defaulting
Underwriter may be increased or the Underwriting Agreement terminated.
The Underwriters have advised the Company and the Trust that they propose
to offer the Trust Preferred Securities directly to the public initially at the
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $ per Trust
Preferred Security. The Underwriters may allow and such dealers may reallow a
concession not in excess of $ per Trust Preferred Security to certain other
brokers and dealers. After the public offering, the public offering price,
concession and reallowance, and other selling terms may be changed by the
Underwriters. The Underwriting Agreement provides that the obligation of the
Underwriters to pay for and accept delivery of the Trust Preferred Securities is
subject to certain conditions, including delivery of certain legal opinions by
counsel for the Underwriters.
In view of the fact that the proceeds from the sale of the Trust 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 to the Underwriters for the Underwriters arranging the investment
therein of such proceeds an amount of $ per Trust Preferred Security
for the accounts of the Underwriters. In addition, the Company has agreed to pay
one-half of the expenses incurred by the Underwriters in connection with the
Offering. The Company's portion of such expenses is estimated to be $ .
The Trust has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to an additional 150,000
Trust Preferred Securities at the public offering price set forth on the cover
page hereof less underwriting discounts. The Underwriters may exercise such
option to purchase additional Trust Preferred Securities solely for the purpose
of covering over-allotments, if any, incurred in the sale of the Trust Preferred
Securities.
To the extent that the Underwriters exercise their option to purchase
additional Trust Preferred Securities, the Trust will issue and sell to the
Company additional Common Securities and the Company will issue and sell to the
Trust Junior Subordinated Debentures in an aggregate principal amount equal to
the total aggregate Liquidation Amount of the additional Trust Preferred
Securities being purchased pursuant to the option and the additional Common
Securities.
The Trust Preferred Securities are new securities with no established
trading market. The Company has been advised by each Underwriter that it intends
to make a market in the Trust Preferred Securities, but it is not obligated to
do so and such market making may be interrupted or discontinued without notice.
No assurance can be given about the liquidity of the trading market for the
Trust Preferred Securities.
The Company and the Trust have agreed in the Underwriting Agreement that,
subject to certain conditions, prior to 180 days following the Issue Date,
neither will, directly or indirectly, issue, sell, offer or agree to sell, grant
any option for the sale of, or otherwise dispose of, Trust Preferred Securities,
any securities
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convertible into, exchangeable or exercisable for Trust Preferred Securities or
the Junior Subordinated Debentures or any debt securities substantially similar
to the Junior Subordinated Debentures or any equity security substantially
similar to the Trust Preferred Securities, except with the prior written consent
of Legg Mason Wood Walker, Incorporated, and except for any disposal of the
Junior Subordinated Debentures following a liquidation of the Trust.
The Company and the Trust have agreed to indemnify the Underwriters, their
respective controlling persons and certain other persons against certain
liabilities, including liabilities under the Securities Act, and will contribute
to payments the Underwriters may be required to make in respect thereof.
The Underwriters have advised the Trust that they do not intend to confirm
sales to any account over which they exercise discretionary authority in excess
of 5% of the number of Trust Preferred Securities offered hereby.
In order to facilitate the offering of the Trust Preferred Securities, the
Underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Trust Preferred Securities. Specifically, the
Underwriters may over-allot in connection with the offering, creating a short
position in the Trust Preferred Securities for their own account. In addition,
to cover over-allotments or to stabilize the price of the Trust Preferred
Securities, the Underwriters may bid for, and purchase, the Trust Preferred
Securities in the open market. Any of these activities may stabilize or maintain
the market price of the Trust Preferred Securities above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Andrews &
Kurth L.L.P., Houston, Texas, and for the Underwriters by Skadden, Arps, Slate,
Meagher & Flom LLP. Certain matters of Delaware law relating to the validity of
the Trust Preferred Securities will be passed upon on behalf of the Trust by
Andrews & Kurth L.L.P., special Delaware counsel to the Trust. Certain matters
relating to United States Federal income tax considerations will also be passed
upon for the Company by Andrews & Kurth L.L.P.
EXPERTS
The consolidated financial statements as of December 31, 1996 and 1995 and
for each of the three years in the period ended December 31, 1996 of Sterling
Bancshares, Inc. and subsidiaries appearing in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, and incorporated by reference in
this Prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated by reference herein,
and have been so included and incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
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======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, THE TRUST OR BY THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN AFFAIRS OF THE COMPANY OR THE TRUST
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES
IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information................... 4
Incorporation of Certain Documents by
Reference............................. 4
Summary................................. 5
Summary Consolidated Financial Data..... 9
Risk Factors............................ 11
Sterling Bancshares, Inc. .............. 16
Recent Developments..................... 17
Use of Proceeds......................... 18
Ratios of Earnings to Combined Fixed
Charges............................... 18
Accounting Treatment.................... 18
Capitalization.......................... 19
Pro Forma Consolidated Financial
Statements............................ 20
Sterling Bancshares Capital Trust I..... 24
Description of Trust Preferred
Securities............................ 25
Description of Junior Subordinated
Debentures............................ 37
Description of Guarantee................ 45
Relationship Among the Trust Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee.......... 47
Certain Federal Income Tax
Consequences.......................... 49
ERISA Considerations.................... 53
Underwriting............................ 54
Legal Matters........................... 55
Experts................................. 55
</TABLE>
======================================================
======================================================
1,000,000 TRUST PREFERRED SECURITIES
STERLING BANCSHARES
CAPITAL TRUST I
% CUMULATIVE TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
[STERLING BANCSHARES LOGO]
-------------------------
PROSPECTUS
-------------------------
LEGG MASON WOOD WALKER
INCORPORATED
STIFEL, NICOLAUS & COMPANY
INCORPORATED
, 1997
======================================================
<PAGE> 58
PART II
Information Not Required In Prospectus
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.(1)
Expenses in connection with the issuance and distribution of the securities
being registered are estimated as follows, all of which are to be borne by the
Company:
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee........................................ $ 8,712
NASD Filing Fee............................................. 3,375
Nasdaq Listing Fee.......................................... 6,750
Printing and Engraving Expenses............................. 150,000
Accounting Fees............................................. 60,000
Transfer Agent and Registrar's Fees and Trustees' Fees...... 15,000
Legal Fees and Expenses..................................... 175,000
Miscellaneous............................................... 15,000
--------
Total............................................. 433,837
========
</TABLE>
- ---------------
(1) These amounts are estimated, except for the SEC registration fee, the NASD
filing fee and the Nasdaq listing fee. In addition, the Company has agreed
to pay one-half of the expenses incurred by the underwriters in connection
with the Offering. The Company's portion of such expenses is estimated to be
$100,000.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation of the Company provide that its directors and
officers may be indemnified against any costs and expenses, including counsel
fees, actually and necessarily incurred (or reasonably expected to be incurred)
in connection with the defense of any civil, criminal, administrative or other
claim, action, suit or proceedings (whether by or in the right of the Company or
otherwise) in which he may become involved or with which he may be threatened,
by reason of his being or having been such a director or officer, and against
any payments in settlement of any such claim, action, suit or proceeding or in
satisfaction of any related judgment, fine or penalty, provided that the Board
of Directors of the Company shall, in the exercise of its business judgment,
determine that such indemnification is in the best interest of the Company.
The Company's Bylaws provide for indemnification of directors and officers
to the full extent permitted by law. In the case of a derivative or other action
by or in the right of the Company where a director is found liable, indemnity is
predicated on the determination that indemnification is nevertheless
appropriate, by majority vote of a committee of disinterested directors or by
independent legal counsel.
Under the Texas Business Corporation Act (the "TBCA"), directors, officers,
employees or agents are entitled to indemnification against expenses (including
attorneys' fees) whenever they successfully defend legal proceedings brought
against them by reason of the fact that they hold such a position with the
corporation. In addition, with respect to actions not brought by or in the right
of the corporation, indemnification is permitted under the TBCA for expenses
(including attorneys' fees), judgments, fines, penalties and reasonable
settlement if it is determined that the person seeking indemnification acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the corporation or its shareholders and, with respect
to criminal proceedings, he or she had no reasonable cause to believe that his
or her conduct was unlawful. With respect to actions brought by or in the right
of the corporation, indemnification is permitted under the TBCA for expenses
(including attorneys' fees) and reasonable settlements, if it is determined that
the person seeking indemnification acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation or its shareholders; provided, indemnification is not permitted if
the person is found liable to the corporation, unless the court in which the
action or suit was brought has determined that indemnification is fair and
reasonable in view of all the circumstances of the case.
II-1
<PAGE> 59
Under an insurance policy maintained by the Company, the directors and
officers of the Company are insured within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of certain claims, actions, suits or proceedings, and certain
liabilities which might be imposed as a result of such claims, action, suits or
proceedings, which may be brought against them by reason of being or having been
such directors and officers.
Under the Trust Agreement and the Guarantee, the Company will agree to
indemnify each of the Property Trustee, the Delaware Trustee of the Trust and
the Guarantee Trustee of the Guarantee, respectively, and to hold each Trustee
harmless against, any loss, damage, claims, liability or expense incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of the Trust Agreement or the Guarantee,
as the case may be, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of
its powers or duties under the Trust Agreement or the Guarantee, as the case may
be. In addition under the Trust Agreement, the Company will agree to indemnify
each of the Administrative Trustees who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding
against any expenses, judgments, fines, and amounts paid in settlement of any
such action, suit or proceeding if such Administrative Trustee acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Reference is made to the Amended and Restated Declaration of Trust filed as
Exhibit hereto.
The Company and Sterling Bancshares Capital Trust I have agreed to
indemnify the Underwriter, and the Underwriter has agreed to indemnify Sterling
Bancshares Capital Trust I and the Company against certain civil liabilities,
including liabilities under the Securities Act of 1933, as amended. Reference is
made to the Underwriting Agreement filed as Exhibit 1 hereto.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Reference is made to the Exhibit Index which appears at page II-5 of the
Registration Statement.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities under the Securities Act of
1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against the public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company 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 of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Company hereby undertakes that: (1) For purposes of
determining any liability under the 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 Company 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; and (2)
For the purpose of determining any liability under the 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.
II-2
<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 Houston, State of Texas on May 27, 1997.
STERLING BANCSHARES, INC.
/s/ GEORGE MARTINEZ
--------------------------------------
George Martinez, Chairman and Chief
Financial Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, Sterling
Bancshares Capital Trust I certifies that it has reasonable grounds to believe
that it meets all the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, and the State of Texas on May
27, 1997.
STERLING BANCSHARES CAPITAL
TRUST I
By: /s/ GEORGE MARTINEZ
----------------------------------
George Martinez, Trustee
By: /s/ MARK GILES
----------------------------------
Mark Giles, Trustee
By: /s/ MICHAEL A. ROY
----------------------------------
Michael A. Roy, Trustee
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.
<TABLE>
<CAPTION>
SIGNATURE POSITION DATE
--------- -------- ----
<C> <S> <C>
/s/ GEORGE MARTINEZ Chairman and Chief Financial Officer May 27, 1997
- ----------------------------------------------------- and Director (Principal Executive and
George Martinez Financial Officer)
/s/ GEORGE MARTINEZ Principal Accounting Officer May 27, 1997
- -----------------------------------------------------
George Martinez
/s/ MARK T. GILES Director May 27, 1997
- -----------------------------------------------------
Mark T. Giles
/s/ C. P. BRYAN, JR.* Director May 27, 1997
- -----------------------------------------------------
C. P. Bryan, Jr.
/s/ JOHN H. BUCK* Director May 27, 1997
- -----------------------------------------------------
John H. Buck
/s/ JAMES M. CLEPPER* Director May 27, 1997
- -----------------------------------------------------
James M. Clepper
</TABLE>
II-3
<PAGE> 61
<TABLE>
<CAPTION>
SIGNATURE POSITION DATE
--------- -------- ----
<C> <S> <C>
/s/ WALTER P. GIBBS, JR.* Director May 27, 1997
- -----------------------------------------------------
Walter P. Gibbs, Jr.
/s/ BRUCE J. HARPER* Director May 27, 1997
- -----------------------------------------------------
Bruce J. Harper
/s/ GLENN H. JOHNSON* Director May 27, 1997
- -----------------------------------------------------
Glenn H. Johnson
/s/ JAMES J. KEARNEY* Director May 27, 1997
- -----------------------------------------------------
James J. Kearney
/s/ C. FRANK KURTIN* Director May 27, 1997
- -----------------------------------------------------
C. Frank Kurtin
/s/ RUSSELL I. ORR* Director May 27, 1997
- -----------------------------------------------------
Russell I. Orr
/s/ CHRISTIAN A. RASCH* Director May 27, 1997
- -----------------------------------------------------
Christian A. Rasch
/s/ STEVEN F. RETZLOFF* Director May 27, 1997
- -----------------------------------------------------
Steven F. Retzloff
/s/ RAIMUNDO RIOJAS* Director May 27, 1997
- -----------------------------------------------------
Raimundo Riojas
/s/ CUBA WADLINGTON, JR.* Director May 27, 1997
- -----------------------------------------------------
Cuba Wadlington, Jr.
By: /s/ GEORGE MARTINEZ
- -----------------------------------------------------
George Martinez
Attorney-in-fact
</TABLE>
II-4
<PAGE> 62
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
1+ -- Form of Underwriting Agreement
4.1* -- Form of Indenture, to be dated as of , 1997.
4.2* -- Form of Junior Subordinated Debenture (included as an
exhibit to Exhibit 4.1)
4.3+ -- Certificate of Trust of Sterling Bancshares Capital Trust
I
4.4* -- First Amended and Restated Declaration of Trust of
Sterling Bancshares Capital Trust I dated as of May 14,
1997.
4.5* -- Form of Second Amended and Restated Declaration of Trust
of Sterling Bancshares Capital Trust I to be dated as of
, 1997.
4.6* -- Form of Trust Preferred Security Certificate of Sterling
Bancshares Capital Trust I (included as an exhibit to
Exhibit 4.5)
4.7* -- Form of Trust Preferred Securities Guarantee Agreement to
be issued by the Company
4.8* -- Restated and Amended Articles of Incorporation of the
Company.
4.9+ -- Restated By-laws of the Company (incorporated herein by
reference to Exhibit 4.2 to the Company's Registration
Statement on Form S-8 effective November 25, 1996 (File
No. 333-16719)).
5.1* -- Opinion of Andrews & Kurth, L.L.P. as to the validity of
the issuance of the Trust Preferred Securities to be
issued by Sterling Bancshares Capital Trust I and the
Junior Subordinated Debentures and the Guarantee to be
issued by the Company.
8* -- Opinion of Andrews & Kurth, L.L.P. as to certain federal
income tax matters.
12* -- Computation of ratio of earnings to fixed charges.
23.1* -- Consent of Deloitte & Touche LLP, Independent Auditors.
23.2* -- Consent of Andrews & Kurth L.L.P. (included in their
opinion filed herewith as Exhibit 5.1)
24+ -- Power of Attorney (included on the signature page)
25.1* -- Form T-1 Statement of Eligibility of Bankers Trust
Company and Bankers Trust (Delaware) to act as trustees
under the Indenture, the Declaration of Trust and the
Trust Preferred Securities Guarantee Agreement.
</TABLE>
- ---------------
+ Previously filed.
* Filed herewith.
II-5
<PAGE> 1
EXHIBIT 4.1
================================================================================
STERLING BANCSHARES, INC.
------------------------------
------------------------------
INDENTURE
DATED AS OF MAY , 1997
------------------------------
BANKERS TRUST COMPANY,
AS TRUSTEE
------------------------------
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
================================================================================
<PAGE> 2
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of
*, 1997 between Sterling Bancshares, Inc. and Bankers Trust Company, as
Trustee:
<TABLE>
<CAPTION>
ACT SECTION INDENTURE SECTION
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
310(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
310(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10, 6.11
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
311(a) and (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1, 4.2(a)
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
312(b) and (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
313(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
313(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(c)(1) and (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
314(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
315(a)(c) and (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9
316(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
316(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
316(a) last sentence . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8
</TABLE>
- -------------------------
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE> 3
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . 1
Additional Sums . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . 2
Bankruptcy Law . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . 2
Common Securities Guarantee . . . . . . . . . . . . . . . . . . . . 2
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Compounded Interest . . . . . . . . . . . . . . . . . . . . . . . . 3
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . 3
Deferred Interest . . . . . . . . . . . . . . . . . . . . . . . . . 3
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Dissolution Event . . . . . . . . . . . . . . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Extended Interest Payment Period . . . . . . . . . . . . . . . . . 4
Federal Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Company Event . . . . . . . . . . . . . . . . . . . . . 4
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Non Book-Entry Preferred Securities . . . . . . . . . . . . . . . . 5
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . 5
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 5
Other Debentures . . . . . . . . . . . . . . . . . . . . . . . . . 5
Other Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . 5
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
- -------------------------
* This Table of Contents shall not, for any purpose, be deemed to be a
part of the Indenture.
i
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . 6
Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . 6
Preferred Securities Guarantee . . . . . . . . . . . . . . . . . . 6
Prepayment Price . . . . . . . . . . . . . . . . . . . . . . . . . 6
Principal Office of the Trustee . . . . . . . . . . . . . . . . . . 7
Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 7
Regulatory Capital Event . . . . . . . . . . . . . . . . . . . . . 7
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securityholder . . . . . . . . . . . . . . . . . . . . . . . . . . 7
holder of Securities . . . . . . . . . . . . . . . . . . . . . . . 7
Securities Register . . . . . . . . . . . . . . . . . . . . . . . . 8
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 8
Special Event . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Sterling Bancshares Capital Trust" . . . . . . . . . . . . . . . . 8
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Tax Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . 9
Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . 9
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . 9
SECTION 1.2 Business Day Certificate . . . . . . . . . . . . . . 10
ARTICLE II SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.1 Forms Generally . . . . . . . . . . . . . . . . . . . 10
SECTION 2.2 Execution and Authentication . . . . . . . . . . . . 10
SECTION 2.3 Form and Payment . . . . . . . . . . . . . . . . . . 11
SECTION 2.4 Global Security . . . . . . . . . . . . . . . . . . . 11
SECTION 2.5 Interest . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.6 Transfer and Exchange . . . . . . . . . . . . . . . . 14
SECTION 2.7 Replacement Securities . . . . . . . . . . . . . . . 15
SECTION 2.8 Temporary Securities . . . . . . . . . . . . . . . . 16
SECTION 2.9 Cancellation . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.10 Defaulted Interest . . . . . . . . . . . . . . . . . 17
SECTION 2.11 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . 18
ARTICLE III PARTICULAR COVENANTS OF THE COMPANY . . . . . . . . . . . . 18
SECTION 3.1 Payment of Principal and Interest . . . . . . . . . . 18
SECTION 3.2 Offices for Notices and Payments, etc. . . . . . . . 18
SECTION 3.3 Appointments to Fill Vacancies in Trustee's Office . 19
SECTION 3.4 Provision as to Paying Agent . . . . . . . . . . . . 19
SECTION 3.5 Certificate to Trustee . . . . . . . . . . . . . . . 20
</TABLE>
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SECTION 3.6 Compliance with Consolidation Provisions . . . . . . 21
SECTION 3.7 Limitation on Dividends . . . . . . . . . . . . . . . 21
SECTION 3.8 Covenants as to Sterling Bancshares Capital Trust . . 22
SECTION 3.9 Payment of Expenses . . . . . . . . . . . . . . . . . 22
SECTION 3.10 Payment Upon Resignation or Removal . . . . . . . . . 23
ARTICLE IV SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE . . . . . . . . . . . 23
SECTION 4.1 Securityholders' Lists . . . . . . . . . . . . . . . 23
SECTION 4.2 Preservation and Disclosure of Lists . . . . . . . . 24
SECTION 4.3 Reports by the Company . . . . . . . . . . . . . . . 26
SECTION 4.4 Reports by the Trustee . . . . . . . . . . . . . . . 27
ARTICLE V REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT . . . . . . . . . . . . 27
SECTION 5.1 Events of Default . . . . . . . . . . . . . . . . . . 27
SECTION 5.2 Payment of Securities on Default; Suit Therefor . . . 30
SECTION 5.3 Application of Moneys Collected by Trustee . . . . . 32
SECTION 5.4 Proceedings by Securityholders . . . . . . . . . . . 32
SECTION 5.5 Proceedings by Trustee . . . . . . . . . . . . . . . 33
SECTION 5.6 Remedies Cumulative and Continuing . . . . . . . . . 34
SECTION 5.7 Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders . . . . . . . . . . . . . 34
SECTION 5.8 Notice of Defaults . . . . . . . . . . . . . . . . . 35
SECTION 5.9 Undertaking to Pay Costs . . . . . . . . . . . . . . 35
ARTICLE VI CONCERNING THE TRUSTEE . . . . . . . . . . . . . . . . . . . 36
SECTION 6.1 Duties and Responsibilities of Trustee . . . . . . . 36
SECTION 6.2 Reliance on Documents, Opinions, etc. . . . . . . . . 37
SECTION 6.3 No Responsibility for Recitals, etc. . . . . . . . . 39
SECTION 6.4 Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Securities . . . 39
SECTION 6.5 Moneys to be Held in Trust . . . . . . . . . . . . . 40
SECTION 6.6 Compensation and Expenses of Trustee . . . . . . . . 40
SECTION 6.7 Officers' Certificate as Evidence . . . . . . . . . . 41
SECTION 6.8 Conflicting Interest of Trustee . . . . . . . . . . . 41
SECTION 6.9 Eligibility of Trustee . . . . . . . . . . . . . . . 41
SECTION 6.10 Resignation or Removal of Trustee . . . . . . . . . . 42
SECTION 6.11 Acceptance by Successor Trustee . . . . . . . . . . . 44
SECTION 6.12 Succession by Merger, etc. . . . . . . . . . . . . . 44
SECTION 6.13 Limitation on Rights of Trustee as a Creditor . . . . 45
SECTION 6.14 Authenticating Agents . . . . . . . . . . . . . . . . 45
</TABLE>
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ARTICLE VII CONCERNING THE SECURITYHOLDERS . . . . . . . . . . . . . . . 47
SECTION 7.1 Action by Securityholders . . . . . . . . . . . . . . 47
SECTION 7.2 Proof of Execution by Securityholders . . . . . . . . 47
SECTION 7.3 Who Are Deemed Absolute Owners . . . . . . . . . . . 48
SECTION 7.4 Securities Owned by Company Deemed Not Outstanding . 48
SECTION 7.5 Revocation of Consents; Future Holders Bound . . . . 49
ARTICLE VIII SECURITYHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . 49
SECTION 8.1 Purposes of Meetings . . . . . . . . . . . . . . . . 49
SECTION 8.2 Call of Meetings by Trustee . . . . . . . . . . . . . 50
SECTION 8.3 Call of Meetings by Company or Securityholders . . . 50
SECTION 8.4 Qualifications for Voting . . . . . . . . . . . . . . 50
SECTION 8.5 Regulations . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.6 Voting . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE IX AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.1 Without Consent of Securityholders . . . . . . . . . 52
SECTION 9.2 With Consent of Securityholders . . . . . . . . . . . 53
SECTION 9.3 Compliance with Trust Indenture Act; Effect of
Supplemental Indentures . . . . . . . . . . . . . . . 55
SECTION 9.4 Notation on Securities . . . . . . . . . . . . . . . 55
SECTION 9.5 Evidence of Compliance of Supplemental Indenture
to be Furnished to Trustee . . . . . . . . . . . . . 55
ARTICLE X CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE . . . . . 55
SECTION 10.1 Company May Consolidate, etc., on Certain Terms . . . 55
SECTION 10.2 Successor Corporation to be Substituted for Company . 56
SECTION 10.3 Opinion of Counsel to be Given Trustee . . . . . . . 57
ARTICLE XI SATISFACTION AND DISCHARGE OF INDENTURE . . . . . . . . . . 57
SECTION 11.1 Discharge of Indenture . . . . . . . . . . . . . . . 57
SECTION 11.2 Deposited Moneys and U.S. Government Obligations
to be Held in Trust by Trustee . . . . . . . . . . . 58
SECTION 11.3 Paying Agent to Repay Moneys Held . . . . . . . . . . 58
SECTION 11.4 Return of Unclaimed Moneys . . . . . . . . . . . . . 58
SECTION 11.5 Defeasance Upon Deposit of Moneys or U.S.
Government Obligations . . . . . . . . . . . . . . . 59
ARTICLE XII IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS . . . . . . . . . . . 61
SECTION 12.1 Indenture and Securities Solely Corporate
Obligations . . . . . . . . . . . . . . . . . . . . . 61
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ARTICLE XIII MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . 61
SECTION 13.1 Successors . . . . . . . . . . . . . . . . . . . . . 61
SECTION 13.2 Official Acts by Successor Corporation . . . . . . . 61
SECTION 13.3 Surrender of Company Powers . . . . . . . . . . . . . 61
SECTION 13.4 Addresses for Notices, etc. . . . . . . . . . . . . . 62
SECTION 13.5 Governing Law . . . . . . . . . . . . . . . . . . . . 62
SECTION 13.6 Evidence of Compliance with Conditions Precedent . . 62
SECTION 13.7 Business Days . . . . . . . . . . . . . . . . . . . . 63
SECTION 13.8 Trust Indenture Act to Control . . . . . . . . . . . 63
SECTION 13.9 Table of Contents, Headings, etc. . . . . . . . . . . 63
SECTION 13.10 Execution in Counterparts . . . . . . . . . . . . . . 63
SECTION 13.11 Separability . . . . . . . . . . . . . . . . . . . . 63
SECTION 13.12 Assignment . . . . . . . . . . . . . . . . . . . . . 64
SECTION 13.13 Acknowledgement of Rights . . . . . . . . . . . . . . 64
SECTION 14.1 Special Event Prepayment . . . . . . . . . . . . . . 64
SECTION 14.2 Optional Prepayment by Company . . . . . . . . . . . 65
SECTION 14.3 No Sinking Fund . . . . . . . . . . . . . . . . . . . 66
SECTION 14.4 Notice of Prepayment; Selection of Securities . . . . 66
SECTION 14.5 Payment of Securities Called for Prepayment . . . . . 67
ARTICLE XV SUBORDINATION OF SECURITIES . . . . . . . . . . . . . . . . 68
SECTION 15.1 Agreement to Subordinate . . . . . . . . . . . . . . 68
SECTION 15.2 Default on Senior Indebtedness . . . . . . . . . . . 68
SECTION 15.3 Liquidation; Dissolution; Bankruptcy . . . . . . . . 69
SECTION 15.4 Subrogation . . . . . . . . . . . . . . . . . . . . . 70
SECTION 15.5 Trustee to Effectuate Subordination . . . . . . . . . 71
SECTION 15.6 Notice by the Company . . . . . . . . . . . . . . . . 72
SECTION 15.7 Rights of the Trustee; Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . 73
SECTION 15.8 Subordination May Not Be Impaired . . . . . . . . . . 73
ARTICLE XVI EXTENSION OF INTEREST PAYMENT PERIOD . . . . . . . . . . . . 74
SECTION 16.1 Extension of Interest Payment Period . . . . . . . . 74
SECTION 16.2 Notice of Extension . . . . . . . . . . . . . . . . . 75
ARTICLE XVII CHANGE OF STATED MATURITY DATE . . . . . . . . . . . . . . . 76
SECTION 17.1 Change of Stated Maturity Date . . . . . . . . . . . 76
SECTION 17.2 Notice of Change of Stated Maturity Date . . . . . . 76
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
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<PAGE> 8
THIS INDENTURE, dated as of *, 1997, between Sterling Bancshares,
Inc. a Texas corporation (hereinafter sometimes called the "Company"), and
Bankers Trust Company, a New York banking corporation, as trustee (hereinafter
sometimes called the "Trustee"),
W I T N E S S E T H :
In consideration of the premises, and the purchase of the
Securities (as defined below) by the holders thereof, the Company covenants and
agrees with the Trustee for the equal and proportionate benefit of the
respective holders from time to time of the Securities, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
The terms defined in this Section 1.1 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes
of this Indenture shall have the respective meanings specified in this Section
1.1. All other terms used in this Indenture which are defined in the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), or which are by
reference therein defined in the Securities Act of 1933, as amended (the
"Securities Act"), shall (except as herein otherwise expressly provided or
unless the context otherwise requires) have the meanings assigned to such terms
in said Trust Indenture Act and in said Securities Act as in force at the date
of this Indenture as originally executed. The following terms have the
meanings given to them in the Declaration: (i) Clearing Agency; (ii) Delaware
Trustee; (iii) Property Trustee; (iv) Administrative Trustees; (v) Direct
Action; and (vi) Distributions. All accounting terms used herein and not
expressly defined shall have the meanings assigned to such terms in accordance
with generally accepted accounting principles, and the term "generally accepted
accounting principles" means such accounting principles as are generally
accepted at the time of any computation. The words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other subdivision.
Headings are used for convenience of reference only and do not affect
interpretation. The singular includes the plural and vice versa.
"Additional Sums" shall have the meaning set forth in Section
2.5(c).
<PAGE> 9
"Affiliate" shall have the meaning given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar
Federal or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors of
the Company or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Business Day" shall mean, with respect to any series of
Securities, any day other than a Saturday or a Sunday or a day on which banking
institutions in New York, New York or Houston, Texas are authorized or required
by law or executive order to close.
"Commission" shall mean the Securities and Exchange Commission,
as from time to time constituted, created under the Exchange Act, or if at any
time after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Securities" shall mean undivided beneficial interests in
the assets of the Trust which rank pari passu with Preferred Securities issued
by the Trust; provided, however, that if an Event of Default has occurred and
is continuing, no payments in respect of Distributions on, or payments upon
liquidation, redemption or otherwise with respect to, the Common Securities
shall be made until the holders of the Preferred Securities shall be paid in
full the Distributions and the liquidation, redemption and other payments to
which they are entitled.
"Common Securities Guarantee" shall mean any guarantee that the
Company may enter into with any Person or Persons that operates directly or
indirectly for the benefit of holders of Common Securities of the Trust.
"Common Stock" shall mean the Common Stock, par value $1.0 per
share, of the Company or any other class of stock resulting from changes or
reclassifications of such Common Stock
2
<PAGE> 10
consisting solely of changes in par value, or from par value to no par value,
or from no par value to par value.
"Company" shall mean Sterling Bancshares, Inc., a Texas
corporation, and, subject to the provisions of Article X, shall include its
successors and assigns.
"Company Request" or "Company Order" shall mean a written request
or order signed in the name of the Company by the Chairman, the Chief Executive
Officer, the President, a Vice Chairman, a Vice President, the Comptroller, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Compounded Interest" shall have the meaning set forth in Section
16.1.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
"Declaration" means the Second Amended and Restated Declaration
of Trust of the Trust, dated as of *, 1997, as amended from time to time.
"Default" means any event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulted Interest" shall have the same meaning set forth in
Section 2.10.
"Deferred Interest" shall have the meaning set forth in Section
16.1.
"Definitive Securities" shall mean those securities issued in
fully registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to the Securities, for
which the Company shall determine that such Securities will be issued as a
Global Security, The Depository Trust Company, New York, New York, another
clearing agency, or any successor registered as a clearing agency under the
Exchange Act or other applicable statute or regulation, which, in each case,
shall be designated by the Company pursuant to Section 2.4(d).
"Dissolution Event" means the liquidation of the Trust pursuant
to the Declaration, and the distribution of the Securities held by the Property
Trustee to the holders of the Trust Securities issued by the Trust pro rata in
accordance with the Declaration.
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<PAGE> 11
"Event of Default" shall mean any event specified in Section 5.1,
continued for the period of time, if any, and after the giving of the notice,
if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Extended Interest Payment Period" shall have the meaning set
forth in Section 16.1.
"Federal Reserve" shall mean the Board of Governors of the
Federal Reserve System.
"Global Security" means, with respect to the Securities, a
Security executed by the Company and delivered by the Trustee to the Depositary
or pursuant to the Depositary's instruction, all in accordance with the
Indenture, which shall be registered in the name of the Depositary or its
nominee.
"Indebtedness" shall mean (i) every obligation of the Company for
money borrowed; (ii) every obligation of the Company evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses; (iii)
every reimbursement obligation of the Company with respect to letters of
credit, banker's acceptances or similar facilities issued for the account of
the Company; (iv) every obligation of the Company issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business); (v)
every capital lease obligation of the Company; (vi) all indebtedness of the
Company whether incurred on or prior to the date of the Indenture or thereafter
incurred, for claims in respect of derivative products, including interest
rate, foreign exchange rate and commodity forward contracts, options and swaps
and similar arrangements; and (vii) every obligation of the type referred to in
clauses (i) through (vi) of another Person and all dividends of another Person
the payment of which, in either case, the Company has guaranteed or is
responsible or liable for, directly or indirectly, as obligor or otherwise.
"Indenture" shall mean this instrument as originally executed or,
if amended as herein provided, as so amended.
"Initial Optional Redemption Date" means *, 2002.
"Interest Payment Date" shall have the meaning set forth in
Section 2.5(a).
"Investment Company Event" means the receipt by Sterling
BancShares Capital Trust and the Company of an Opinion of Counsel, rendered by
a law firm experienced in such matters, to
4
<PAGE> 12
the effect that, as a result of change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, Sterling BancShares Capital
Trust is or will be considered an "investment company" that is required to be
registered under the Investment Company Act of 1940, as amended, (1940 Act),
which change becomes effective on or after the date of original issuance of the
Preferred Securities of Sterling BancShares Capital Trust.
"Mortgage" shall mean and include any mortgage, pledge, lien,
security interest, conditional sale or other title retention agreement or other
similar encumbrance.
"Non Book-Entry Preferred Securities" shall have the meaning set
forth in Section 2.4(a)(ii).
"Officers" shall mean any of the Chairman, the Chief Executive
Officer, the President, a Vice President, the Chief Financial Officer, the
Secretary or an Assistant Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed by two
Officers and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who
may be the general counsel of the Company acceptable to the Trustee.
"Other Debentures" means all junior subordinated debentures
issued by the Company from time to time and sold to trusts to be established by
the Company (if any), in each case similar to the Trust.
"Other Guarantees" means all guarantees to be issued by the
Company with respect to preferred securities (if any) and issued to other
trusts to be established by the Company (if any), in each case similar to the
Trust.
The term "outstanding" when used with reference to the
Securities, shall mean, subject to the provisions of Section 7.4, as of any
particular time, all Securities authenticated and delivered by the Trustee or
the Authenticating Agent under this Indenture, except:
(a) Securities theretofore cancelled by the Trustee or the
Authenticating Agent or delivered to the Trustee for
cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall
have been deposited in trust with the
5
<PAGE> 13
Trustee or with any paying agent (other than the Company)
or shall have been set aside and segregated in trust by
the Company (if the Company shall act as its own paying
agent); provided that, if such Securities, or portions
thereof, are to be redeemed prior to maturity thereof,
notice of such redemption shall have been given as in
Article XIV or provision satisfactory to the Trustee shall
have been made for giving such notice; and
(c) Securities in lieu of or in substitution for which other
Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.8 unless proof
satisfactory to the Company and the Trustee is presented
that any such Securities are held by bona fide holders in
due course.
"Person" shall mean any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 2.7 in lieu
of a lost, destroyed or stolen Security shall be deemed to evidence the same
debt as the lost, destroyed or stolen Security.
"Preferred Securities" shall mean undivided beneficial interests
in the assets of the Trust which rank pari passu with the Common Securities
issued by the Trust; provided, however, that if an Event of Default has
occurred and is continuing, no payments in respect of Distributions on, or
payments upon liquidation, redemption or otherwise with respect to, the Common
Securities shall be made until the holders of the Preferred Securities shall be
paid in full the Distributions and the liquidation, redemption and other
payments to which they are entitled.
"Preferred Securities Guarantee" shall mean any guarantee that
the Company may enter into with Bankers Trust Company or other Persons that
operates directly or indirectly for the benefit of holders of Preferred
Securities
"Prepayment Price" when used with respect to any Security to be
prepaid, means an amount in cash equal to 100% of the principal amount of that
Security, plus in each case, accrued and unpaid interest thereon (including
Compounded Interest), if any, and Additional Sums, if any, to the applicable
date of prepayment.
6
<PAGE> 14
"Principal Office of the Trustee", or other similar term, shall
mean the office of the Trustee at which the corporate trust business of the
Trustee shall, at any particular time be principally administered which office
at the date of execution of this Agreement is located at Bankers Trust Company,
Four Albany Street, New York, New York 10006.
"Property Trustee" shall have the same meaning as set forth in
the Declaration.
"Regulatory Capital Event" means that the Company shall have
received an opinion of independent bank regulatory counsel experienced in such
matters to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any rules, guidelines or policies of the
Federal Reserve or any rules, guidelines or policies of any regulatory
authority applicable to the Company or (b) any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the date of original issuance of the
Securities, the Preferred Securities do not constitute, or within 90 days of
the date thereof, will not constitute, Tier I Capital (or its then equivalent);
provided, however, that the distribution of the Securities in connection with a
termination of the Trust by the Company, as sponsor, shall not in and of itself
constitute a Regulatory Capital Event unless such termination shall have
occurred in connection with a Tax Event.
"Responsible Officer" means with respect to the Trustee, any
officer assigned to the Corporate Trust Office, including any managing
director, 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 the Indenture, and
also, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Securities" or "Security" mean, any debt securities or debt
security, as the case may be, authenticated and delivered under this Indenture.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Securityholder", "holder of Securities", or other similar terms,
shall mean any Person in whose name at the time a particular Security is
registered on the register kept by the
7
<PAGE> 15
Company or the Trustee for that purpose in accordance with the terms hereof.
"Securities Register" shall have the meaning specified in Section
2.6.
"Senior Indebtedness" means the principal of and interest, if any
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed for proceeding), on Indebtedness of
the Company, whether incurred on or prior to the date of this Indenture or
thereafter incurred, unless, in the instrument creating or evidencing the same
or pursuant to which the same is outstanding it is provided that such
obligations are not superior in right of payment to the Securities or other
Indebtedness when is pari passu with, or subordinated to the Securities or
other Indebtedness when is pari passu with, or Subordinated to, the Securities,
provided, however, that Senior Indebtedness shall not be deemed to include (a)
any Indebtedness of the Company which, when incurred and without respect to any
election under Section 1111(b) of the Bankruptcy Reform Act of 1978, as
amended, was without recourse to the Company, (b) any Indebtedness of the
Company to any of its Subsidiaries, (c) Indebtedness to any employee of the
Company, and (d) any Securities.
"Special Event" means either an Investment Company Event, a
Regulatory Capital Event or a Tax Event.
"Stated Maturity Date" shall mean *, 2027, or such earlier date
as is selected as the "Stated Maturity Date" in accordance with Article XVII.
"Sterling Bancshares Capital Trust" or the "Trust" shall mean
Sterling Bancshares Capital Trust I, a Delaware business trust created for the
purpose of issuing its undivided beneficial interests in connection with the
issuance of Securities under this Indenture.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned
by such Person, or by one or more of its Subsidiaries, or by such Person and
one or more of its Subsidiaries and (iii) any limited partnership of which such
Person or any of its Subsidiaries is a general partner. For the purposes of
this definition, "voting stock" means shares, interests, participations or
other equivalents in the equity interest (however designated) in such Person
8
<PAGE> 16
having ordinary voting power for the election of a majority of the directors
(or the equivalent) of such Person, other than shares, interests,
participations or other equivalents having such power only by reason of the
occurrence of a contingency.
"Tax Event" shall mean the receipt by the Trust and the Company
of an opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced prospective
change) in, the laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein or as a result of
any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after May __, 1997, there is
more than an insubstantial risk that: (i) the Trust is, or will be within 90
days of the date of such opinion, subject to United States Federal income tax
with respect to income received or accrued on the Securities; (ii) interest
payable by the Company on the Securities is not, or within 90 days of the date
of such opinion, will not be, deductible by the Company, in whole or in part,
for United States Federal income tax purposes; or (iii) the Trust is, or will
be within 90 days of the date of such opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939
as in force at the date of execution of this Indenture, except as provided in
Section 9.3; provided, however, that, in the event the Trust Indenture Act is
amended after such date, "Trust Indenture Act" shall mean, to the extent
required by any such amendment, the Trust Indenture Act as so amended.
"Trust Securities" shall mean the Preferred Securities and the
Common Securities, collectively.
"Trustee" shall mean the Person identified as "Trustee" in the
first paragraph hereof, and, subject to the provisions of Article VI hereof,
shall also include its successors and assigns as Trustee hereunder. The term
"Trustee" as used with respect to a particular series of the Securities shall
mean the trustee with respect to that series.
"Underwriting Agreement" shall mean the Underwriting Agreement
dated , 1997 among the Company, the Trust and the underwriters named
therein.
"U.S. Government Obligations" shall mean securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of
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America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
SECTION 1.2 Business Day Certificate.
On the date of execution and delivery of this Indenture (with
respect to the remainder of calendar year 1997) and thereafter, within 15 days
prior to the end of each calendar year while this Indenture remains in effect
(with respect to the succeeding calendar years), the Company shall deliver to
the Trustee an Officers' Certificate specifying the days on which banking
institutions or trust companies in Houston, Texas are authorized or obligated
by law or executive order to be closed.
ARTICLE II
SECURITIES
SECTION 2.1 Forms Generally.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be issued in
denominations of $25 and integral multiples thereof.
SECTION 2.2 Execution and Authentication.
Two Officers shall sign the Securities for the Company by manual
or facsimile signature. If an Officer whose signature is on a Security no
longer holds that office at the time the Security is authenticated, the
Security shall nevertheless be valid.
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A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Security has been authenticated under this Indenture. The
form of Trustee's certificate of authentication to be borne by the Securities
shall be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a Company Order, authenticate for
original issue up to, and the aggregate principal amount of Securities
outstanding at any time may not exceed, $25,000,000 aggregate principal amount
of the Securities, except as provided in Sections 2.6, 2.7, 2.8 and 14.5.
SECTION 2.3 Form and Payment.
Except as provided in Section 2.4, the Securities shall be issued
in fully registered certificated form without interest coupons. Principal of
and interest on the Securities issued in certificated form will be payable, the
transfer of such Securities will be registrable and such Securities will be
exchangeable for Securities bearing identical terms and provisions at the
office or agency of the Company maintained for such purpose under Section 3.2;
provided, however, that payment of interest with respect to Securities (other
than a Global Security) may be made at the option of the Company (i) by check
mailed to the holder at such address as shall appear in the Security Register
or (ii) by transfer to an account maintained by the Person entitled thereto,
provided that proper transfer instructions have been received in writing by the
relevant record date.
Notwithstanding the foregoing, so long as the holder of any
Securities is the Property Trustee, the payment of the principal of and
interest (including Compounded Interest and Additional Sums, if any) on such
Securities held by the Property Trustee will be made at such place and to such
account as may be designated by the Property Trustee.
SECTION 2.4 Global Security.
(a) In connection with a Dissolution Event,
(i) if any Preferred Securities are held in book-entry
form, the related Definitive Securities shall be presented to the
Trustee (if an arrangement with the Depositary has been maintained) by
the Property Trustee in exchange for one or more Global Securities (as
may be required pursuant to Section 2.6) in an aggregate principal
amount equal to the aggregate principal amount of all outstanding
Securities, to be registered in the name of the Depositary, or its
nominee, and delivered by the Trustee to the Depositary for crediting to
the accounts of its participants pursuant to the instructions of the
Administrative Trustees; the Company
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upon any such presentation shall execute one or more Global Securities
in such aggregate principal amount and deliver the same to the Trustee
for authentication and delivery in accordance with this Indenture; and
payments on the Securities issued as a Global Security will be made to
the Depositary; and
(ii) if any Preferred Securities are held in
certificated form, the related Definitive Securities may be presented to
the Trustee by the Property Trustee and any Capital Security certificate
which represents Preferred Securities other than Preferred Securities in
book-entry form ("Non Book-Entry Preferred Securities") will be deemed
to represent beneficial interests in Securities presented to the Trustee
by the Property Trustee having an aggregate principal amount equal to
the aggregate liquidation amount of the Non Book-Entry Preferred
Securities until such Preferred Security certificates are presented to
the Security Registrar for transfer or reissuance, at which time such
Capital Security certificates will be cancelled and a Security,
registered in the name of the holder of the Preferred Security
certificate or the transferee of the holder of such Capital Security
certificate, as the case may be, with an aggregate principal amount
equal to the aggregate liquidation amount of the Preferred Capital
Security certificate cancelled, will be executed by the Company and
delivered to the Trustee for authentication and delivery in accordance
with this Indenture. Upon the issuance of such Securities, Securities
with an equivalent aggregate principal amount that were presented by the
Property Trustee to the Trustee will be cancelled.
(b) The Global Securities shall represent the aggregate amount
of outstanding Securities from time to time endorsed thereon; provided, that
the aggregate amount of outstanding Securities represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee, in accordance with instructions given by
the Company as required by this Section 2.4.
(c) The Global Securities may be transferred, in whole but not
in part, only to the Depositary, another nominee of the Depositary, or to a
successor Depositary selected or approved by the Company or to a nominee of
such successor Depositary.
(d) If at any time the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary or the Depositary has ceased
to be a clearing agency registered under the Exchange Act, and a successor
Depositary is not appointed by
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the Company within 90 days after the Company receives such notice or becomes
aware of such condition, as the case may be, the Company will execute, and the
Trustee, upon receipt of a Company Order, will authenticate and make available
for delivery the Definitive Securities, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global
Security, in exchange for such Global Security. If there is an Event of
Default, the Depositary shall have the right to exchange the Global Securities
for Definitive Securities. In addition, the Company may at any time determine
that the Securities shall no longer be represented by a Global Security. In
the event of such an Event of Default or such a determination, the Company
shall execute, and subject to Section 2.6, the Trustee, upon receipt of an
Officers' Certificate evidencing such determination by the Company and a
Company Order, will authenticate and make available for delivery the Definitive
Securities, in authorized denominations, and in an aggregate principal amount
equal to the principal amount of the Global Security in exchange for such
Global Security. Upon the exchange of the Global Security for such Definitive
Securities, in authorized denominations, the Global Security shall be cancelled
by the Trustee. Such Definitive Securities issued in exchange for the Global
Security shall be registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Securities to the Depositary for delivery to the
Persons in whose names such Definitive Securities are so registered.
SECTION 2.5 Interest.
(a) Each Security will bear interest at the rate of *% per
annum (the "Coupon Rate") from the most recent date to which interest has been
paid or duly provided for or, if no interest has been paid or duly provided
for, from *, 1997, until the principal thereof becomes due and payable, and at
the Coupon Rate on any overdue principal and (to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment
of interest, compounded quarterly, payable (subject to the provisions of
Article XVI) quarterly in arrears on the ___ day of March, June, September and
December of each year (each, an "Interest Payment Date") commencing on *, 1997,
to the Person in whose name such Security or any predecessor Security is regis-
tered, at the close of business on the regular record date for such interest
installment, which shall be the [fifteenth day of the month immediately
preceding the month in which the relevant Interest Payment Date falls: Subject
to final form of "Description of Junior Debentures" in Prospectus.
(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period less than a full
calendar month, the number of days
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elapsed in such month. In the event that any Interest Payment Date falls on a
day that is not a Business Day, then payment of interest payable on such date
will be made on the next succeeding day which is a Business Day (and without
any interest or other payment in respect of any such delay), except that if
such next succeeding Business Day falls in the next succeeding calendar year,
then such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(c) During such time as the Property Trustee is the holder of
any Securities, the Company shall pay any additional amounts on the Securities
as may be necessary in order that the amount of Distributions then due and
payable by the Trust on the outstanding Trust Securities shall not be reduced
as a result of any additional taxes, duties and other governmental charges to
which the Trust has become subject as a result of a Tax Event ("Additional
Sums"). 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 16.1 or the provisions of the Securities shall not
defer the payment of any Additional Sums that may be due and payable.
SECTION 2.6 Transfer and Exchange.
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 of transfers of Securities. Such register is herein sometimes referred to
as the "Securities Register."
To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee, upon receipt of a Company Order, shall
authenticate Definitive Securities and Global Securities at the Security
Registrar's request. All Definitive Securities and Global Securities issued
upon any registration of transfer or exchange of Definitive Securities or
Global Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Definitive Securities or Global Securities surrendered upon such registration
of transfer or exchange.
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Upon surrender for registration of transfer of any Security at
the office or agency of the Company designated for that purpose the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of the
same series of any authorized denominations, of a like aggregate principal
amount, of the same original same issue date and Stated Maturity Date and
having the same terms.
At the option of the holder, Securities may be exchanged for
other Securities of the same series of any authorized denominations, of a like
aggregate principal amount, of the same original issue date and Stated Maturity
Date and having the same terms, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the holder making the exchange is entitled to
receive.
No service charge shall be made to a holder for any registration
of transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith.
The Company shall not be required to (i) issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption or any
notice of selection of Securities for redemption under Article XIV hereof and
ending at the close of business on the day of such mailing; or (ii) register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.
Prior to due presentment for the registration of a transfer of
any Security, the Trustee, the Company and any agent of the Trustee or the
Company may deem and treat the Person in whose name any Security is registered
as the absolute owner of such Security for the purpose of receiving payment of
principal of and premium, if any, and interest on such Securities, and none of
the Trustee, the Company and any agents of the Trustee or the Company shall be
affected by notice to the contrary.
SECTION 2.7 Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's requirements
for replacements of Securities are met. An indemnity bond must be supplied by
the holder that is sufficient in the judgment of the Trustee
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and the Company to protect the Company, the Trustee, any agent thereof or any
authenticating agent from any loss that any of them may suffer if a Security is
replaced. The Company or the Trustee may charge for its expenses in replacing
a Security.
Every replacement Security is an obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
SECTION 2.8 Temporary Securities.
Pending the preparation of Definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the Definitive Securities in lieu
of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities
may determine, as conclusively evidenced by their execution of such Securities.
If temporary Securities are issued, the Company shall cause
Definitive Securities to be prepared without unreasonable delay. The
Definitive Securities shall be printed, lithographed or engraved, or provided
by any combination thereof, or in any other manner permitted by the rules and
regulations of any applicable securities exchange, all as determined by the
officers executing such Definitive Securities. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at the office
or agency maintained by the Company for such purpose pursuant to Section 3.2
hereof, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities, the Company shall execute, and the Trustee
shall authenticate and make available for delivery, in exchange therefor the
same aggregate principal amount of Definitive Securities of authorized
denominations. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as Definitive
Securities.
SECTION 2.9 Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Trustee and no one else shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall retain or destroy cancelled Securities in accordance
with its normal practices (subject to the record retention requirement of the
Exchange Act) unless the Company directs them to be returned to it. The
Company may not issue new Securities to replace Securities
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that have been redeemed or paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.10 Defaulted Interest.
Any interest on any Security that is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the holder
on the relevant regular record date by virtue of having been such holder; and
such Defaulted Interest shall be paid by the Company, at its election, as
provided in clause (a) or clause (b) below:
(a) The Company may make payment of any Defaulted Interest on
Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each such Security and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a special record date
for the payment of such Defaulted Interest which shall not be more than
15 nor less than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Company of
such special record date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the special record date therefor to be mailed, first class
postage prepaid, to each Securityholder at his or her address as it
appears in the Security Register, not less than 10 days prior to such
special record date. Notice of the proposed payment of such Defaulted
Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names such Securities (or their respective Predecessor Securities) are
registered on such special record date and shall be no longer payable
pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest on
any Securities in any other lawful manner not inconsistent with the
requirements of any securities
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exchange on which such Securities may be listed, and upon such notice as
may be required by such exchange, if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
SECTION 2.11 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Securityholders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.1 Payment of Principal and Interest.
The Company covenants and agrees for the benefit of the holders
of the Securities that it will duly and punctually pay or cause to be paid the
principal of and interest on the Securities at the place, at the respective
times and in the manner provided herein. Except as provided in Section 2.3,
each installment of interest on the Securities may be paid by mailing checks
for such interest payable to the order of the holder of Security entitled
thereto as they appear in the Security Register. The Company further covenants
to pay any and all amounts, including, without limitation, Additional Sums, as
may be required pursuant to Section 2.5(c) and Compounded Interest, as may be
required pursuant to Section 16.1.
SECTION 3.2 Offices for Notices and Payments, etc.
So long as any of the Securities remain outstanding, the Company
will maintain in the Borough of Manhattan, The City of New York, an office or
agency where the Securities may be presented for payment, an office or agency
where the Securities may be presented for registration of transfer and for
exchange as in this Indenture provided and an office or agency where notices
and demands to or upon the Company in respect of the Securities or of this
Indenture may be served. The Company will give to the Trustee written notice
of the location of any such office or agency and of any change of location
thereof. Until otherwise
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designated from time to time by the Company in a notice to the Trustee, any
such office or agency for all of the above purposes shall be the Principal
Office of the Trustee. In case the Company shall fail to maintain any such
office or agency in the Borough of Manhattan, The City of New York, or shall
fail to give such notice of the location or of any change in the location
thereof, presentations and demands may be made and notices may be served at the
Principal Office of the Trustee.
In addition to any such office or agency, the Company may from
time to time designate one or more offices or agencies outside the Borough of
Manhattan, The City of New York, where the Securities may be presented for
payment, registration of transfer and for exchange in the manner provided in
this Indenture, and the Company may from time to time rescind such designation,
as the Company may deem desirable or expedient; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain any such office or agency in the Borough of Manhattan,
The City of New York, for the purposes above mentioned. The Company will give
to the Trustee prompt written notice of any such designation or rescission
thereof.
SECTION 3.3 Appointments to Fill Vacancies in Trustee's Office.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 3.4 Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee with respect to the Securities, it will cause such
paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the
Trustee, subject to the provision of this Section 3.4,
(1) that it will hold all sums held by it as such agent
for the payment of the principal of or interest on
the Securities (whether such sums have been paid to
it by the Company or by any other obligor on the
Securities) in trust for the benefit of the holders
of the Securities; and
(2) that it will give the Trustee notice of any failure
by the Company (or by any other obligor on the
Securities) to make any payment of the principal of
or interest (including Additional
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Sums and Compounded Interest, if any) on the
Securities when the same shall be due and payable.
(b) If the Company shall act as its own paying agent, it will,
on or before each due date of the principal of or interest
on the Securities, set aside, segregate and hold in trust
for the benefit of the holders of the Securities a sum
sufficient to pay such principal or interest so becoming
due and will notify the Trustee of any failure to take
such action and of any failure by the Company (or by any
other obligor under the Securities) to make any payment of
the principal of or interest on the Securities when the
same shall become due and payable.
(c) Anything in this Section 3.4 to the contrary not-
withstanding, the Company may, at any time, for the
purpose of obtaining a satisfaction and discharge with
respect to the Securities hereunder, or for any other
reason, pay or cause to be paid to the Trustee all sums
held in trust for such Securities by the Trustee or any
paying agent hereunder, as required by this Section 3.4,
such sums to be held by the Trustee upon the trusts herein
contained.
(d) Anything in this Section 3.4 to the contrary not-
withstanding, the agreement to hold sums in trust as
provided in this Section 3.4 is subject to Sections 11.3
and 11.4.
SECTION 3.5 Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days
after the end of each fiscal year in each year, commencing with the first
fiscal year ending after the date hereof, so long as Securities are outstanding
hereunder, an Officers' Certificate, one of the signers of which shall be the
principal executive, principal financial or principal accounting officer of the
Company, stating that in the course of the performance by the signers of their
duties as officers of the Company they would normally have knowledge of any
default by the Company in the performance of any covenants contained herein,
stating whether or not they have knowledge of any such default and, if so,
specifying each such default of which the signers have knowledge and the nature
thereof.
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SECTION 3.6 Compliance with Consolidation Provisions.
The Company will not, while any of the Securities remain
outstanding, consolidate with, or merge into, or merge into itself, or sell or
convey all or substantially all of its property to any other Person unless the
provisions of Article X hereof are complied with.
SECTION 3.7 Limitation on Dividends.
The Company will not: (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common and
preferred stock) (other than (a) dividends or distributions in shares of, or
options, warrants or rights to subscribe for or purchase shares of, Common
Stock of the Company, (b) any declaration of a dividend in connection with the
implementation of a stockholder's rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (c) as a result of a reclassification of any class or series
of the Company's capital stock solely into another class or series of the
Company's capital stock, (d) the purchase of fractional shares resulting from
such reclassification or pursuant to the conversion or exchange provisions of
such capital stock or any security convertible or exchangeable into shares of
the Company's capital stock, and (e) purchases of Common Stock related to the
issuance of Common Stock or rights under any of the Company's benefit plans for
its directors, officers or employees or any of the Company's dividend
reinvestment plans); (ii) make any payment of principal, premium, if any, or
interest on or repay or repurchase or redeem any debt securities of the Company
(including Other Debentures) that rank pari passu with or junior in right of
payment to the Securities; or (iii) make any guarantee payments (other than
payments under the Preferred Securities Guarantee) with respect to any
guarantee by the Company of the debt securities of any Subsidiary of the
Company (including Other Guarantees) if such guarantee ranks pari passu or
junior in right of payment to the Securities, if at such time (1) there shall
have occurred any event of which the Company has actual knowledge that (a) is,
or with the giving of notice or the lapse of time, or both, would constitute,
an Event of Default and (b) in respect of which the Company shall not have
taken reasonable steps to cure, (2) if such Securities are held by the Property
Trustee, the Company shall be in default with respect to its payment obliga-
tions under the Preferred Securities Guarantee or (3) the Company shall have
given notice of its election of the exercise of its right to extend the
interest payment period pursuant to Section 16.1 and any such extension shall
be continuing.
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SECTION 3.8 Covenants as to Sterling Bancshares Capital Trust
In the event Securities are issued to the Trust or a trustee of
such trust in connection with the issuance of Trust Securities by the Trust,
for so long as such Trust Securities remain outstanding, the Company: (i) will
maintain 100% direct or indirect ownership of the Common Securities of the
Trust; provided, however, that any successor of the Company, permitted pursuant
to Article X, may succeed to the Company's ownership of such Common Securities;
(ii) [not to voluntarily terminate, wind up or liquidate the Trust except as
prior approval of the Federal Reserve if then so required under applicable
capital guidelines or policies of the Federal Reserve, and except (a) in
connection with a distribution of Junior Subordinated Debentures to the holders
of the Trust Preferred Securities in liquidation of the Trust or (b) in
connection with certain mergers, consolidations, or amalgamations permitted by
the Trust Agreement; (iii)] will use its reasonable efforts to cause the Trust
(a) to remain a business trust, except in connection with a distribution of
Securities to the holders of Trust Securities in liquidation of the Trust, the
redemption of all of the Trust Securities of the Trust or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration of the
Trust, and (b) to otherwise continue to be treated as a grantor trust for
United States Federal income tax purposes; and (iv) to use its reasonable
efforts to cause each holder of the Common Securities to be treated as owning
an undivided beneficial interest in the Securities.
SECTION 3.9 Payment of Expenses.
In connection with the offering, sale and issuance of the
Securities to the Trust and in connection with the sale of the Trust Securities
by the Trust, the Company, in its capacity as borrower with respect to the
Securities, shall:
(a) pay all costs and expenses relating to the offering, sale
and issuance of the Securities, including commissions to the underwriters
payable pursuant to the Underwriting Agreement and compensation of the Trustee
in accordance with the provisions of Section 6.6;
(b) pay all costs and expenses of the Trust (including, but
not limited to, costs and expenses relating to the organization of the Trust,
the offering, sale and issuance of the Trust Securities (including commissions
to the underwriters in connection therewith), the fees and expenses of the
Property Trustee and the Delaware Trustee, the costs and expenses relating to
the operation of the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and
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computing or accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the acquisition,
financing, and disposition of assets of the Trust;
(c) be primarily and fully liable for any indemnification
obligations arising with respect to the Declaration;
(d) pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust; and
(e) pay all other fees, expenses, debts and obligations (other
than in respect of the Trust Securities) related to the Trust.
SECTION 3.10 Payment Upon Resignation or Removal.
Upon termination of this Indenture or the removal or resignation
of the Trustee, unless otherwise stated, the Company shall pay to the Trustee
all amounts accrued and owing to the date of such termination, removal or
resignation. Upon termination of the Declaration or the removal or resignation
of the Delaware Trustee or the Property Trustee, as the case may be, pursuant
to Section 5.7 of the Declaration, the Company shall pay to the Delaware
Trustee or the Property Trustee, as the case may be, all amounts accrued and
owing to the date of such termination, removal or resignation.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.1 Securityholders' Lists.
The Company covenants and agrees that it will furnish or cause to
be furnished to the Trustee:
(a) on a semi-annual basis on each regular record date for the
Securities, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the
Securityholders as of such record date; and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company, of any
such request, a list of similar
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form and content as of a date not more than 15 days prior
to the time such list is furnished,
except that, no such lists need be furnished so long as the
Trustee is in possession thereof by reason of its acting as
Security registrar.
SECTION 4.2 Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names
and addresses of the holders of the Securities (1)
contained in the most recent list furnished to it as
provided in Section 4.1 or (2) received by it in the
capacity of Securities registrar (if so acting) hereunder.
The Trustee may destroy any list furnished to it as
provided in Section 4.1 upon receipt of a new list so fur-
nished.
(b) In case three or more holders of Securities (hereinafter
referred to as "applicants") apply in writing to the
Trustee and furnish to the Trustee reasonable proof that
each such applicant has owned a Security for a period of
at least six months preceding the date of such
application, and such application states that the
applicants desire to communicate with other holders of
Securities or with holders of all Securities with respect
to their rights under this Indenture and is accompanied by
a copy of the form of proxy or other communication which
such applicants propose to transmit, then the Trustee
shall within 5 Business Days after the receipt of such
application, at its election, either:
(1) afford such applicants access to the
information preserved at the time by the
Trustee in accordance with the provisions of
subsection (a) of this Section 4.2, or
(2) inform such applicants as to the approximate
number of holders of all Securities, whose
names and addresses appear in the
information preserved at the time by the
Trustee in accordance with the provisions of
subsection (a) of this Section 4.2, and as
to the approximate cost of mailing to such
Securityholders the form of proxy or other
communication,
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if any, specified in such application.
If the Trustee shall elect not to afford such
applicants access to such information, the Trustee shall,
upon the written request of such applicants, mail to each
Securityholder whose name and address appear in the
information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of this
Section 4.2 a copy of the form of proxy or other
communication which is specified in such request with
reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of mailing, unless
within five days after such tender, the Trustee shall mail
to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best
interests of the holders of Securities of such series or
all Securities, as the case may be, or would be in
violation of applicable law. Such written statement shall
specify the basis of such opinion. If the Commission,
after opportunity for a hearing upon the objections
specified in the written statement so filed, shall enter
an order refusing to sustain any of such objections or if,
after the entry of an order sustaining one or more of such
objections, the Commission shall find, after notice and
opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so
declaring, the Trustee shall mail copies of such material
to all such Securityholders with reasonable promptness
after the entry of such order and the renewal of such
tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their
application.
(c) Each and every holder of Securities, by receiving and
holding the same, agrees with the Company and the Trustee
that neither the Company nor the Trustee nor any paying
agent shall be held accountable by reason of the
disclosure of any such information as to the names and
addresses of the holders of Securities in accordance with
the provisions of subsection (b) of this Section 4.2,
regardless of the source from which such information was
derived, and that the Trustee shall not be held
accountable
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by reason of mailing any material pursuant to a request
made under said subsection (b).
SECTION 4.3 Reports by the Company.
(a) The Company covenants and agrees to file with the Trustee,
within 15 days after the date on which the Company is
required to file the same with the Commission, copies of
the annual reports and of the information, documents and
other reports (or copies of such portions of any of the
foregoing as said Commission may from time to time by
rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section
13 or Section 15(d) of the Exchange Act; or, if the
Company is not required to file information, documents or
reports pursuant to either of such sections, then to file
with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic
information, documents and reports which may be required
pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities
exchange as may be prescribed from time to time in such
rules and regulations.
(b) The Company covenants and agrees to file with the Trustee
and the Commission, in accordance with the rules and
regulations prescribed from time to time by said
Commission, such additional information, documents and
reports with respect to compliance by the Company with the
conditions and covenants provided for in this Indenture as
may be required from time to time by such rules and
regulations.
(c) The Company covenants and agrees to transmit by mail to
all holders of Securities, as the names and addresses of
such holders appear upon the Security Register, within 30
days after the filing thereof with the Trustee, such
summaries of any information, documents and reports
required to be filed by the Company pursuant to
subsections (a) and (b) of this Section 4.3 as may be
required by rules and regulations prescribed from time to
time by the Commission.
(d) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the
Trustee's receipt of such shall not constitute
constructive notice of any information
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contained therein or determinable from information
contained therein, including the Company's compliance with
any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.4 Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such reports
concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided
pursuant thereto. If required by Section 313(a) of the
Trust Indenture Act, the Trustee shall, within sixty days
after each May __ following the date of this Indenture,
commencing May __, 1998, deliver to Securityholders a
brief report, dated as of such May __, which complies with
the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee
with each stock exchange, if any, upon which the
Securities are listed, with the Commission and with the
Company. The Company will promptly notify the Trustee
when the Securities are listed on any stock exchange.
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 Events of Default.
One or more of the following events of default shall constitute
an Event of Default hereunder (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of an administrative or governmental body):
(a) default in the payment of any interest (including
Compounded Interest or Additional Sums, if any) upon any
Security or any Other Debentures when it becomes due and
payable, and continuance of such default for a period of
30 days; provided, however, that a valid extension of an
interest payment period by the Company in accordance with
the terms hereof shall not constitute a default in the
payment of interest for this purpose; or
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(b) default in the payment of all or any part of the principal
on any Security or any Other Debentures as and when the
same shall become due and payable either at maturity, upon
prepayment or redemption, by declaration of acceleration
of maturity or otherwise; or
(c) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a
covenant or warranty a default in whose performance or
whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for
a period of 90 days after there has been given, by regis-
tered or certified mail, to the Company by the Trustee or
to the Company and the Trustee by the holders of at least
25% in aggregate principal amount of the outstanding
Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an
involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of
the Company or for any substantial part of its property,
or ordering the winding-up or liquidation of its affairs
and such decree or order shall remain unstayed and in
effect for a period of 90 consecutive days; or
(e) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, shall consent to the entry of an
order for relief in an involuntary case under any such
law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of the
Company or of any substantial part of its property, or
shall make any general assignment for the benefit of
creditors, or shall fail generally to pay its debts as
they become due.
If an Event of Default with respect to Securities at the time
outstanding occurs and is continuing, then in every such case the Trustee or
the holders of not less than 25% in aggregate principal amount of the
Securities then outstanding may declare
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the principal amount of all Securities to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by the holders of
the outstanding Securities), and upon any such declaration the same shall
become immediately due and payable.
The foregoing provisions, however, are subject to the condition
that if, at any time after the principal of the Securities shall have been so
declared due and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided, (i)
the Company shall pay or shall deposit with the Trustee a sum sufficient to pay
(A) all matured installments of interest (including Compounded Interest and
Additional Sums, if any) upon all the Securities and the principal of any and
all Securities which shall have become due otherwise than by acceleration (with
interest upon such principal and, to the extent that payment of such interest
is enforceable under applicable law, on overdue installments of interest, at
the same rate as the rate of interest specified in the Securities to the date
of such payment or deposit) and (B) such amount as shall be sufficient to cover
compensation due to the Trustee and each predecessor Trustee, their respective
agents, attorneys and counsel, pursuant to Section 6.6, and (ii) any and all
Events of Default under the Indenture, other than the non-payment of the
principal of the Securities which shall have become due solely by such
declaration of acceleration, shall have been cured, waived or otherwise
remedied as provided herein, then, in every such case, the holders of a
majority in aggregate principal amount of the Securities then outstanding, by
written notice to the Company and to the Trustee, may rescind and annul such
declaration and its consequences, but no such waiver or rescission and
annulment shall extend to or shall affect any subsequent default or shall
impair any right consequent thereon; provided, however, that if the Securities
are held by the Property Trustee, such waiver or recision and annulment to such
waiver shall not be effective until the holders of a majority in aggregate
liquidation amount of Trust Securities shall have consented to such waiver or
recision and annulment to such waiver.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such
case the Company, the Trustee and the holders of the Securities shall be
restored respectively to their several positions and rights hereunder, and all
rights, remedies and powers of the Company, the Trustee and the holders of the
Securities shall continue as though no such proceeding had been taken.
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SECTION 5.2 Payment of Securities on Default; Suit Therefor.
The Company covenants that (a) in case default shall be made in
the payment of any installment of interest (including Compounded Interest and
Additional Sums, if any) upon any of the Securities as and when the same shall
become due and payable, and such default shall have continued for a period of
30 days, or (b) in case default shall be made in the payment of the principal
of any of the Securities as and when the same shall have become due and
payable, whether at maturity of the Securities or upon prepayment or redemption
or by declaration or otherwise, then, upon demand of the Trustee, the Company
will pay to the Trustee, for the benefit of the holders of the Securities, the
whole amount that then shall have become due and payable on all such Securities
for principal or interest (including Compounded Interest and Additional Sums,
if any) with interest upon the overdue principal and (to the extent that
payment of such interest is enforceable under applicable law and, if the
Securities are held by the Trust or a trustee of such trust, without dupli-
cation of any other amounts paid by the Trust or a trustee in respect thereof)
upon the overdue installments of interest (including Compounded Interest and
Additional Sums, if any) at the rate borne by the Securities; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including a reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any other amount due to the Trustee pursuant
to Section 6.6.
In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any actions or proceedings at law
or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or any other
obligor on the Securities and collect in the manner provided by law out of the
property of the Company or any other obligor on the Securities, wherever
situated, the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Securities
under Title 11, United States Code, or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Company
or such other obligor, or in the case of any other similar judicial proceedings
relative to the Company or other obligor upon the Securities, or to the
creditors or property of the Company or such other obligor, the Trustee,
irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the
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Trustee shall have made any demand pursuant to the provisions of this Section
5.2, shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Securities and, in
case of any judicial proceedings, to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for amounts due to the Trustee pursuant to
6.6) and of the Securityholders allowed in such judicial proceedings relative
to the Company or any other obligor on the Securities, or to the creditors or
property of the Company or such other obligor, unless prohibited by applicable
law and regulations, to vote on behalf of the holders of the Securities in any
election of a trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency proceedings or person performing
similar functions in comparable proceedings, and to collect and receive any
moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Securityholders to make such payments to the Trustee,
and, in the event that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel, and all other
amounts due to the Trustee pursuant to Section 6.6.
Nothing herein contained shall be construed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the Trustee
without the possession of any of the Securities, or the production thereof on
any trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Securities.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party) the Trustee shall be held to represent all
the holders of the Securities, and it shall not be necessary to make any
holders of the Securities parties to any such proceedings.
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SECTION 5.3 Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee shall be applied in the
following order, at the date or dates fixed by the Trustee for the distribution
of such moneys, upon presentation of the Securities in respect of which moneys
have been collected, and stamping thereon the payment, if only partially paid,
and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection
applicable to the Securities and all other amounts due to the Trustee under
Section 6.6;
Second: To the payment of all Senior Indebtedness of the Company
if and to the extent required by Article XV;
Third: In case the principal of the outstanding Securities in
respect of which moneys have been collected shall not have become due and be
unpaid, to the payment of the amounts then due and unpaid upon Securities for
principal of and interest (including Compounded Interest and Additional Sums,
if any) on the Securities, in respect of which or for the benefit of which
money has been collected, ratably, without preference of priority of any kind,
according to the amounts due on such Securities for principal and interest,
respectively; and
Fourth: To the Company.
SECTION 5.4 Proceedings by Securityholders.
No holder of any Security shall have any right by virtue of or by
availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance thereof with
respect to the Securities specifying such Event of Default, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Securities then outstanding shall have made written
request upon the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity shall have
failed to institute any such action, suit or proceeding, it being understood
and intended, and being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Trustee, that no one or more
holders of Securities shall have any right in any
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manner whatever by virtue of or by availing of any provision of this Indenture
to affect, disturb or prejudice the rights of any other holder of Securities,
or to obtain or seek to obtain priority over or preference to any other such
holder, or to enforce any right under this Indenture, except in the manner
herein provided and for the equal, ratable and common benefit of all holders of
Securities.
Notwithstanding any other provisions in this Indenture, however,
the right of any holder of any Security to receive payment of the principal of
and interest (including Compounded Interest and Additional Sums, if any) on
such Security, on or after the same shall have become due and payable, or to
institute suit for the enforcement of any such payment, shall not be impaired
or affected without the consent of such holder and by accepting a Security
hereunder it is expressly understood, intended and covenanted by the taker and
holder of every Security with every other such taker and holder and the
Trustee, that no one or more holders of Securities shall have any right in any
manner whatsoever by virtue or by availing of any provision of this Indenture
to affect, disturb or prejudice the rights of the holders of any other
Securities, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
holders of Securities. For the protection and enforcement of the provisions of
this Section, each and every Securityholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
The Company and the Trustee acknowledge that pursuant to the
Declaration, the holders of Preferred Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to commence a
Direct Action with respect to any Event of Default under this Indenture and the
Securities.
SECTION 5.5 Proceedings by Trustee.
In case an Event of Default occurs with respect to Securities and
is continuing, the Trustee may in its discretion proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either by suit in equity or by action at law or by proceeding
in bankruptcy or otherwise, whether for the specific enforcement of any
covenant or agreement contained in this Indenture or in aid of the exercise of
any power granted in this Indenture, or to enforce any other legal or equitable
right vested in the Trustee by this Indenture or by law.
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SECTION 5.6 Remedies Cumulative and Continuing.
All powers and remedies given by this Article V to the Trustee or
to the Securityholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other powers and remedies available to the
Trustee or the holders of the Securities, by judicial proceedings or otherwise,
to enforce the performance or observance of the covenants and agreements
contained in this Indenture or otherwise established with respect to the
Securities, and no delay or omission of the Trustee or of any holder of any of
the Securities to exercise any right or power accruing upon any Event of
Default occurring and continuing as aforesaid shall impair any such right or
power, or shall be construed to be a waiver of any such default or an
acquiescence therein; and, subject to the provisions of Section 5.4, every
power and remedy given by this Article V or by law to the Trustee or to the
Securityholders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Securityholders.
SECTION 5.7 Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders.
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; provided,
however, that (subject to the provisions of Section 6.1) the Trustee shall have
the right to decline to follow any such direction if the Trustee shall
determine that the action so directed would be unjustly prejudicial to the
holders not taking part in such direction or if the Trustee being advised by
counsel determines that the action or proceeding so directed may not lawfully
be taken or if the Trustee in good faith by its board of directors or trustees,
executive committee, or a trust committee of directors or trustees and/or
Responsible Officers shall determine that the action or proceedings so directed
would involve the Trustee in personal liability. Prior to any declaration
accelerating the maturity of the Securities, the holders of a majority in
aggregate principal amount of the Securities at the time outstanding may on
behalf of the holders of all of the Securities waive any past default or Event
of Default and its consequences except a default (a) in the payment of
principal of or interest (including Compounded Interest and Additional Sums, if
any) on any of the Securities or (b) in respect of covenants or provisions
hereof which cannot be modified or amended without the consent of the holder of
each Security affected; provided, however, that if the Securities are held by
the Property Trustee, such waiver or modification to such waiver shall not be
effective until the holders of a majority in aggregate liquidation amount of
Trust Securities shall have consented to such waiver or modification to such
waiver; provided
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further, that if the consent of the holder of each outstanding Security is
required, such waiver shall not be effective until each holder of the Trust
Securities shall have consented to such waiver. Upon any such waiver, the
default covered thereby shall be deemed to be cured for all purposes of this
Indenture and the Company, the Trustee and the holders of the Securities shall
be restored to their former positions and rights hereunder, respectively; but
no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by this Section 5.7, said default or Event
of Default shall for all purposes of the Securities and this Indenture be
deemed to have been cured and to be not continuing.
SECTION 5.8 Notice of Defaults.
(a) The Trustee shall, within 90 days after the occurrence of a
default with respect to the Securities known to a Responsible Officer of the
Trustee, mail to all Securityholders, as the names and addresses of such
holders appear upon the Security Register, notice of all defaults actually
known to a Responsible Officer of the Trustee, unless such defaults shall have
been cured before the giving of such notice (the term "defaults" for the
purpose of this Section 5.8 being hereby defined to be the events specified in
clauses (a), (b), (c), (d) and (e) of Section 5.1, not including periods of
grace, if any, provided for therein, and irrespective of the giving of written
notice specified in clause (c) of Section 5.1); and provided that, except in
the case of default in the payment of the principal of or interest (including
Compounded Interest or Additional Sums, if any) on any of the Securities, the
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Securityholders; and
provided further, that in the case of any default of the character specified in
Section 5.1(c), no such notice to Securityholders shall be given until at least
60 days after the occurrence thereof, but shall be given within 90 days after
such occurrence.
(b) Within five Business Days after the occurrence of any Event
of Default actually known to a Responsible Officer of the Trustee, the Trustee
shall transmit notice of such Event of Default to all Securityholders, unless
such Event of Default shall have been cured or waived.
SECTION 5.9 Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture,
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or in any suit against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees and expenses, against
any party litigant in such suit, having due regard to the merits and good faith
of the claims or defenses made by such party litigant; but the provisions of
this Section 5.9 shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Securityholder, or group of Securityholders, holding in
the aggregate more than 10% in aggregate principal amount of the Securities
outstanding, or to any suit instituted by any Securityholder for the
enforcement of the payment of the principal of or interest (including
Compounded Interest and Additional Sums, if any) on any Security against the
Company on or after the same shall have become due and payable.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of Trustee.
With respect to the holders of the Securities issued hereunder,
the Trustee, prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge and after the curing or
waiving of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default has occurred (which has not been cured
or waived), the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default which may
have occurred,
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable
except for the performance of such duties and
obligations as are specifically set forth in this
Indenture, and
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no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(2) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of
the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee
and conforming to the requirements of this
Indenture; but, in the case of any such
certificates or opinions which by any provision
hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they
conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible
Officers, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in
accordance with the direction of the Securityholders
pursuant to Section 5.7, relating to the time, method and
place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing
that the repayment of such funds or liability is not reasonably assured to it
under the terms of this Indenture or adequate indemnity against such risk is
not reasonably assured to it.
SECTION 6.2 Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.1:
(a) the 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, consent, order, bond, note,
debenture or other paper
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or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein may be sufficiently evidenced by an
Officers' Certificate (unless other evidence in respect
thereof be herein specifically prescribed); and any Board
Resolution may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant
Secretary of the Company;
(c) the Trustee may consult with counsel of its selection and
any advice or Opinion of Counsel shall be full and
complete authorization and protection in respect of any
action taken or suffered omitted by it hereunder in good
faith and in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at
the request, order or direction of any of the
Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered
to the Trustee reasonable and sufficient security or
indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers
conferred upon it by this Indenture; nothing contained
herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default of
which a Responsible Officer of the Trustee has actual
knowledge (that has not been cured or waived), to exercise
such of the rights and powers vested in it by this
Indenture, and to use the same degree of care and skill in
their exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond,
debenture, coupon or other paper or document, unless
requested in writing to do so by the holders of a majority
in aggregate principal
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amount of the outstanding Securities; provided, however,
that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of
this Indenture, the Trustee may require reasonable
indemnity against such expense or liability as a condition
to so proceeding; 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 (including any Authenticating
Agent) or attorneys, and the Trustee shall not be
responsible for any misconduct or negligence on the part
of any such agent or attorney appointed by it with due
care.
(h) the Trustee shall not be charged with knowledge of any
Default or Event of Default with respect to the Securities
unless (1) such default is a default under Section 5.1(a)
and 5.1(b) of the Indenture, (2) a Responsible Officer
shall have actual knowledge of such Default or Event of
Default or (3) written notice of such Default or Event of
Default shall have been given to the Trustee by the
Company or any other obligor on the Securities or by any
holder of the Securities.
SECTION 6.3 No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in
the certificate of authentication of the Trustee or the Authenticating Agent)
shall be taken as the statements of the Company, and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the same.
The Trustee and the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Securities. The Trustee
and the Authenticating Agent shall not be accountable for the use or
application by the Company of any Securities or the proceeds of any Securities
authenticated and delivered by the Trustee or the Authenticating Agent in
conformity with the provisions of this Indenture.
SECTION 6.4 Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Securities.
The Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any Security registrar, in its individual or any other
capacity, may become the owner or pledgee
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of Securities with the same rights it would have if it were not Trustee,
Authenticating Agent, paying agent, transfer agent or Security registrar.
SECTION 6.5 Moneys to be Held in Trust.
Subject to the provisions of Section 11.4, all moneys received by
the Trustee or any paying agent shall, until used or applied as herein
provided, be held in trust for the purpose for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Trustee and any paying agent shall be under no liability for interest on
any money received by it hereunder except as otherwise agreed in writing with
the Company. So long as no Event of Default shall have occurred and be
continuing, all interest allowed on any such moneys shall be paid from time to
time upon the written order of the Company, signed by the Chairman of the Board
of Directors, the President or a Vice President or the Treasurer or an Assis-
tant Treasurer of the Company.
SECTION 6.6 Compensation and Expenses of Trustee.
The Company, as issuer of Securities under this Indenture,
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, such compensation as shall be agreed to in writing
between the Company and the Trustee (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust), and the Company will pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Indenture (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify each of the Trustee or any predecessor
Trustee (and its officers, agents, directors and employees) for, and to hold it
harmless against, any and all loss, damage, claim, liability or expense
including taxes (other than taxes based on the income of the Trustee) incurred
without negligence or bad faith on the part of the Trustee and arising out of
or in connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim of liability in
the premises. The obligations of the Company under this Section 6.6 to
compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien prior to
that of the Securities upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the holders of
particular Securities.
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When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.1(d) or Section
5.1(e), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the resignation or
removal of the Trustee and the defeasance or other termination of this
Indenture.
SECTION 6.7 Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.1 and 6.2, whenever in
the administration of the provisions of this Indenture the Trustee shall deem
it necessary or desirable that a matter be proved or established prior to
taking or omitting any action hereunder, such matter (unless other evidence in
respect thereof is herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to
the Trustee, and such certificate, in the absence of negligence or bad faith on
the part of the Trustee, shall be full warrant to the Trustee for any action
taken or omitted by it under the provisions of this Indenture upon the faith
thereof.
SECTION 6.8 Conflicting Interest of Trustee.
If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee
and the Company shall in all respects comply with the provisions of Section
310(b) of the Trust Indenture Act.
SECTION 6.9 Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation
organized and doing business under the laws of the United States of America or
any state or territory thereof or of the District of Columbia, or a corporation
or other Person permitted to act as trustee by the Commission authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000) and subject to
supervision or examination by Federal, state, territorial, or District of
Columbia authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 6.9
the combined capital and surplus of such corporation shall be deemed to be its
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combined capital and surplus as set forth in its most recent report of
condition so published.
The Company may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Company, serve as
Trustee.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.9, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
SECTION 6.10 Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice
of such resignation to the Company and by mailing notice
thereof to the holders of the Securities at their
addresses as they shall appear on the Security register.
Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee or trustees by
written instrument, in duplicate, one copy of which in-
strument shall be delivered to the resigning Trustee and
one copy to the successor trustee. If no successor
trustee shall have been so appointed and have accepted
appointment within 60 days after the mailing of such
notice of resignation to the affected Securityholders, the
resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee,
or any Securityholder who has been a bona fide holder of a
Security for at least six months may, subject to the
provisions of Section 5.9, on behalf of himself and all
others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the
provisions of Section 6.8 after written request
therefor by the Company or by any Securityholder
who has been a bona fide holder of a Security or
Securities for at least six months, or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.9
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and shall fail to resign after written request
therefor by the Company or by any such
Securityholder, or
(3) the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge
or control of the Trustee or of its property or
affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, the Company may remove the Trustee
and appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered
to the Trustee so removed and one copy to the successor
trustee, or, subject to the provisions of Section 5.9, any
Securityholder who has been a bona fide holder of a
Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and
the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal amount of
the Securities at the time outstanding may at any time
remove the Trustee and nominate a successor trustee, which
shall be deemed appointed as successor trustee unless
within 10 days after such nomination the Company objects
thereto, or if no successor trustee shall have been so
appointed and shall have accepted appointment within 30
days after such removal, in which case the Trustee so
removed or any Securityholder, upon the terms and
conditions and otherwise as in subsection (a) of this
Section 6.10 provided, may petition any court of competent
jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions
of this Section 6.10 shall become effective upon
acceptance of appointment by the successor trustee as
provided in Section 6.11.
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(e) The Company shall pay the Trustee all amounts owed to such
Trustee pursuant to this Indenture upon the resignation or
removal of the Trustee.
SECTION 6.11 Acceptance by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10 shall
execute, acknowledge and deliver to the Company and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as trustee herein; but,
nevertheless, on the written request of the Company or of the successor
trustee, the trustee ceasing to act shall, upon payment of any amounts then due
it pursuant to the provisions of Section 6.6, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the trustee
so ceasing to act and shall duly assign, transfer and deliver to such successor
trustee all property and money held by such retiring trustee thereunder. Upon
request of any such successor trustee, the Company shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming
to such successor trustee all such rights and powers. Any trustee ceasing to
act shall, nevertheless, retain a lien upon all property or funds held or
collected by such trustee to secure any amounts then due it pursuant to the
provisions of Section 6.6.
No successor trustee shall accept appointment as provided in this
Section 6.11 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 6.8 and eligible under the
provisions of Section 6.9.
Upon acceptance of appointment by a successor trustee as provided
in this Section 6.11, the Company shall mail notice of the succession of such
trustee hereunder to the holders of Securities at their addresses as they shall
appear on the Security register. If the Company fails to mail such notice
within 10 days after the acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of
the Company. No Trustee shall have any liability for any actions taken or
omitted to be taken by any successor trustee.
SECTION 6.12 Succession by Merger, etc.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to
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which the Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder without the execution or filing of any paper
or any further act on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall succeed
to the trusts created by this Indenture any Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor trustee, and deliver such
Securities so authenticated; and in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authen-
ticate such Securities either in the name of any predecessor hereunder or in
the name of the successor trustee; and in all such cases such certificates
shall have the full force which the Securities or this Indenture elsewhere
provides that the certificate of the Trustee shall have; provided, however,
that the right to adopt the certificate of authentication of any predecessor
Trustee or authenticate Securities in the name of any predecessor Trustee shall
apply only to its successor or successors by merger, conversion or
consolidation.
SECTION 6.13 Limitation on Rights of Trustee as a Creditor.
The Trustee shall comply with Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship described in Section 311(b)
of the Trust Indenture Act. A Trustee who has resigned or been removed shall
be subject to Section 311(a) of the Trust Indenture Act to the extent included
therein.
SECTION 6.14 Authenticating Agents.
There may be one or more Authenticating Agents appointed by the
Trustee upon the request of the Company with power to act on its behalf and
subject to its direction in the authentication and delivery of Securities
issued upon exchange or transfer thereof as fully to all intents and purposes
as though any such Authenticating Agent had been expressly authorized to
authenticate and deliver Securities; provided, that the Trustee shall have no
liability to the Company for any acts or omissions of the Authenticating Agent
with respect to the authentication and delivery of Securities. Any such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States or of any state or territory
thereof or of the District of Columbia authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of at least
$5,000,000 and being subject to supervision or examination by Federal, state,
territorial or District of Columbia authority. If such corporation publishes
reports of condition at least annually pursuant to law or the requirements of
such authority,
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then for the purposes of this Section 6.14 the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the provi-
sions of this Section, it shall resign immediately in the manner and with the
effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of such Authenticating
Agent hereunder, if such successor corporation is otherwise eligible under this
Section 6.14 without the execution or filing of any paper or any further act on
the part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at
any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time any Authenticating Agent shall cease to be eligible under this
Section 6.14, the Trustee may, and upon the request of the Company shall,
promptly appoint a successor Authenticating Agent eligible under this Section
6.14, shall give written notice of such appointment to the Company and shall
mail notice of such appointment to all Securityholders as the names and
addresses of such holders appear on the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as Authenticating Agent
herein.
The Company, as borrower, agrees to pay to any Authenticating
Agent from time to time reasonable compensation for its services. Any
Authenticating Agent shall have no responsibility or liability for any action
taken by it as such in accordance with the directions of the Trustee.
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ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a
specified percentage in aggregate principal amount of the Securities may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action), the fact that at
the time of taking any such action the holders of such specified percentage
have joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Securityholders in person or by
agent or proxy appointed in writing, or (b) by the record of such holders of
Securities voting in favor thereof at any meeting of such Securityholders duly
called and held in accordance with the provisions of Article VIII, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of such Securityholders.
If the Company shall solicit from the Securityholders any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for the determination of
Securityholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Securityholders of record at the
close of business on the record date shall be deemed to be Securityholders for
the purposes of determining whether Securityholders of the requisite proportion
of outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the outstanding Securities shall be computed as of
the record date; provided, however, that no such authorization, agreement or
consent by such Securityholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six months after the record date.
SECTION 7.2 Proof of Execution by Securityholders.
Subject to the provisions of Section 6.1, 6.2 and 8.5, proof of
the execution of any instrument by a Security- holder or his agent or proxy
shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee. The ownership of Securities shall be proved by
the Security
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Register or by a certificate of the Security registrar. The Trustee may
require such additional proof of any matter referred to in this Section as it
shall deem necessary.
The record of any Securityholders' meeting shall be proved in the
manner provided in Section 8.6.
SECTION 7.3 Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any
Security, the Company, the Trustee, any Authenticating Agent, any paying agent,
any transfer agent and any Security registrar may deem the person in whose name
such Security shall be registered upon the Security Register to be, and may
treat him as, the absolute owner of such Security (whether or not such Security
shall be overdue) for the purpose of receiving payment of or on account of the
principal of and (subject to Section 2.5) interest on such Security and for all
other purposes; and neither the Company nor the Trustee nor any Authenticating
Agent nor any paying agent nor any transfer agent nor any Security registrar
shall be affected by any notice to the contrary. All such payments so made to
any holder for the time being or upon his order shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
SECTION 7.4 Securities Owned by Company Deemed Not Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or any
other obligor on the Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any other obligor on the Securities shall be disregarded and
deemed not to be outstanding for the purpose of any such determination;
provided that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent or waiver, only Securities
which a Responsible Officer of the Trustee actually knows are so owned shall be
so disregarded. Securities so owned which have been pledged in good faith may
be regarded as outstanding for the purposes of this Section 7.4 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Securities and that the pledgee is not the Company or any such other
obligor or Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any such other obligor.
In the case of a dispute as to such right, any decision by the Trustee taken
upon the advice of counsel shall be full protection to the Trustee.
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SECTION 7.5 Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.1, of the taking of any action by the holders
of the percentage in aggregate principal amount of the Securities specified in
this Indenture in connection with such action, any holder of a Security (or any
Security issued in whole or in part in exchange or substitution therefor),
subject to Section 7.1, the serial number of which is shown by the evidence to
be included in the group of Securities the holders of which have consented to
such action may, by filing written notice with the Trustee at its principal
office and upon proof of holding as provided in Section 7.2, revoke such action
so far as concerns such Security (or so far as concerns the principal amount
represented by any exchanged or substituted Security). Except as aforesaid any
such action taken by the holder of any Security shall be conclusive and binding
upon such holder and upon all future holders and owners of such Security, and
of any Security issued in exchange or substitution therefor, irrespective of
whether or not any notation in regard thereto is made upon such Security or any
Security issued in exchange or substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.1 Purposes of Meetings.
A meeting of Securityholders may be called at any time and from
time to time pursuant to the provisions of this Article VIII for any of the
following purposes:
(a) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to consent to the
waiving of any default hereunder and its consequences, or
to take any other action authorized to be taken by
Securityholders pursuant to any of the provisions of
Article V;
(b) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section
9.2; or
(d) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal
amount of such Securities under
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any other provision of this Indenture or under applicable
law.
SECTION 8.2 Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders to
take any action specified in Section 8.1, to be held at such time and at such
place in the Borough of Manhattan, The City of New York, as the Trustee shall
determine. Notice of every meeting of the Securityholders, setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be mailed to holders of Securities at their
addresses as they shall appear on the Securities Register. Such notice shall
be mailed not less than 20 nor more than 180 days prior to the date fixed for
the meeting.
SECTION 8.3 Call of Meetings by Company or Securityholders.
In case at any time the Company, pursuant to a resolution of the
Board of Directors, or the holders of at least 10% in aggregate principal
amount of the Securities then outstanding, shall have requested the Trustee to
call a meeting of Securityholders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or such Securityholders may determine
the time and the place in said Borough of Manhattan for such meeting and may
call such meeting to take any action authorized in Section 8.1, by mailing
notice thereof as provided in Section 8.2.
SECTION 8.4 Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a Person
shall (a) be a holder of one or more Securities or (b) a Person appointed by an
instrument in writing as proxy by a holder of one or more Securities. The only
Persons who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 8.5 Regulations.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Securities and
of the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates
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and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 8.3, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall
in like manner appoint a temporary chairman. A permanent chairman and a perma-
nent secretary of the meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 8.4, at any meeting each
holder of Securities or proxy therefor shall be entitled to one vote for each
$25 principal amount of Securities held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Security challenged as not outstanding and ruled by the chairman of the meeting
to be not outstanding. The chairman of the meeting shall have no right to vote
other than by virtue of Securities held by him or instruments in writing as
aforesaid duly designating him as the person to vote on behalf of other
Securityholders. Any meeting of Securityholders duly called pursuant to the
provisions of Section 8.2 or 8.3 may be adjourned from time to time by a
majority of those present, and the meeting may be held as so adjourned without
further notice.
SECTION 8.6 Voting.
The vote upon any resolution submitted to any meeting of holders
of Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
mailed as provided in Section 8.2. The record shall show the serial numbers of
the Securities voting in favor of or against any resolution. The record shall
be signed and verified by the affidavits of the permanent chairman and
secretary of the meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.
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Any record so signed and verified shall be conclusive evidence of
the matters therein stated.
ARTICLE IX
AMENDMENTS
SECTION 9.1 Without Consent of Securityholders.
The Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time amend the Indenture, without the
consent of the Securityholders, for one or more of the following purposes:
(a) to evidence the succession of another Person to the
Company, or successive successions, and the assumption by
the successor Person of the covenants, agreements and
obligations of the Company pursuant to Article X hereof;
(b) to add to the covenants of the Company such further
covenants, restrictions or conditions for the protection
of the Securityholders as the Board of Directors and the
Trustee shall consider to be for the protection of the
Securityholders, and to make the occurrence, or the
occurrence and continuance, of a default in any of such
additional covenants, restrictions or conditions a default
or an Event of Default permitting the enforcement of all
or any of the remedies provided in this Indenture as
herein set forth; provided, however, that in respect of
any such additional covenant, restriction or condition
such amendment may provide for a particular period of
grace after default (which period may be shorter or longer
than that allowed in the case of other defaults) or may
provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such
default;
(c) to provide for the issuance under this Indenture of
Securities in coupon form (including Securities
registrable as to principal only) and to provide for
exchangeability of such Securities with the Securities
issued hereunder in fully registered form and to make all
appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental
indenture which may be defective or
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inconsistent with any other provision contained herein or
in any supplemental indenture, or to make such other
provisions in regard to matters or questions arising under
this Indenture; provided that any such action shall not
materially adversely affect the interests of the holders
of the Securities;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the
Securities;
(f) to make provision for transfer procedures, certification,
book-entry provisions and all other matters required
pursuant to Section 2.6 or otherwise necessary, desirable
or appropriate in connection with the issuance of
Securities to holders of Preferred Securities in the event
of a distribution of Securities by the Trust following a
Dissolution Event;
(g) to qualify or maintain qualification of this Indenture
under the Trust Indenture Act; and
(h) to make any change that does not adversely affect the
rights of any Securityholder in any material respect.
The Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture to effect such amendment, to make any
further appropriate agreements and stipulations which may be therein contained
and to accept the conveyance, transfer and assignment of any property
thereunder, but the Trustee shall not be obligated to, but may in its discre-
tion, enter into any such supplemental indenture which affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise.
Any amendment to the Indenture authorized by the provisions of
this Section 9.1 may be executed by the Company and the Trustee without the
consent of the holders of any of the Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.2.
SECTION 9.2 With Consent of Securityholders.
With the consent (evidenced as provided in Section 7.1) of the
holders of a majority in aggregate principal amount of the Securities at the
time outstanding, the Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time amend the Indenture for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the
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rights of the holders of the Securities; provided, however, that no such
amendment shall, without the consent of the holders of each Security then
outstanding and affected thereby (i) change the Stated Maturity Date of any
Security (except as expressly_permitted by Article XVII), or reduce the rate or
extend the time of payment of interest thereon (except as contemplated by
Article XVI), or reduce the principal amount thereof, or reduce any amount
payable on redemption thereof, or make the principal of, or interest or premium
thereon payable in any coin or currency other than U.S. dollars, or impair or
affect the right of any Securityholder to institute suit for payment thereof,
or (ii) reduce the aforesaid percentage of Securities the holders of which are
required to consent to any such amendment to the Indenture, provided, however,
that if the Securities are held by the Trust, such amendment shall not be
effective until the holders of a majority in liquidation amount of Trust
Securities shall have consented to such amendment; provided, further, that if
the consent of the holder of each outstanding Security is required, such
amendment shall not be effective until each holder of the Trust Securities
shall have consented to such amendment.
Upon the request of the Company accompanied by a copy of a
resolution of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture affecting
such amendment, and upon the filing with the Trustee of evidence of the consent
of Securityholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice, prepared
by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders as their names and addresses
appear upon the Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders
under this Section 9.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof.
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SECTION 9.3 Compliance with Trust Indenture Act; Effect of
Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions of
this Article IX shall comply with the Trust Indenture Act. Upon the execution
of any supplemental indenture pursuant to the provisions of this Article IX,
this Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Securities shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.4 Notation on Securities.
Securities authenticated and delivered after the execution of any
supplemental indenture affecting such series pursuant to the provisions of this
Article IX may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee
shall so determine, new Securities so modified as to conform, in the opinion of
the Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by
the Company, authenticated by the Trustee or the Authenticating Agent and
delivered in exchange for the Securities then outstanding.
SECTION 9.5 Evidence of Compliance of Supplemental Indenture to
be Furnished to Trustee.
The Trustee, subject to the provisions of Sections 6.1 and 6.2,
may receive, in addition to the document required by Section 13.6, an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article IX.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.1 Company May Consolidate, etc., on Certain Terms.
Nothing contained in this Indenture or in any of the Securities
shall prevent any consolidation or merger of the Company with or into any other
Person (whether or not affiliated
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with the Company, as the case may be), or successive consolidations or mergers
in which the Company or its successor or successors, as the case may be, shall
be a party or parties, or shall prevent any sale, conveyance, transfer or lease
of the property of the Company, or its successor or successors as the case may
be, as an entirety, or substantially as an entirety, to any other Person
(whether or not affiliated with the Company, or its successor or successors, as
the case may be) authorized to acquire and operate the same; provided, that (a)
the Company is the surviving Person, or the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to which such sale,
conveyance, transfer or lease of property is made is a Person organized and
existing under the laws of the United States or any State thereof or the
District of Columbia, and (b) upon any such consolidation, merger, sale,
conveyance, transfer or lease, the due and punctual payment of the principal of
and interest on the Securities according to their tenor and the due and
punctual performance and observance of all the covenants and conditions of this
Indenture to be kept or performed by the Company shall be expressly assumed, by
supplemental indenture (which shall conform to the provisions of the Trust
Indenture Act) satisfactory in form to the Trustee executed and delivered to
the Trustee by the Person formed by such consolidation, or into which the
Company shall have been merged, or by the Person which shall have acquired such
property, as the case may be, and (c) after giving effect to such
consolidation, merger, sale, conveyance, transfer or lease, no Default or Event
of Default shall have occurred and be continuing.
SECTION 10.2 Successor Corporation to be Substituted for
Company.
In case of any such consolidation, merger, conveyance or transfer
and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to
the Trustee, of the obligation of due and punctual payment of the principal of
and interest on all of the Securities and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed or observed by the Company, such successor Person shall succeed to
and be substituted for the Company, with the same effect as if it had been
named herein as the party of the first part, and the Company thereupon shall be
relieved of any further liability or obligation hereunder or upon the
Securities. Such successor Person thereupon may cause to be signed, and may
issue either in its own name or in the name of Sterling Bancshares Capital
Trust, any or all of the Securities issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Trustee or the
Authenticating Agent; and, upon the order of such successor Person instead of
the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee or the Authenticating Agent
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shall authenticate and deliver any Securities which previously shall have been
signed and delivered by the officers of the Company to the Trustee or the
Authenticating Agent for authentication, and any Securities which such
successor Person thereafter shall cause to be signed and delivered to the
Trustee or the Authenticating Agent for that purpose. All the Securities so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Indentures had been issued at
the date of the execution hereof.
SECTION 10.3 Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.1 and 6.2,
may receive an Opinion of Counsel as conclusive evidence that any
consolidation, merger, sale, conveyance, transfer or lease, and any assumption,
permitted or required by the terms of this Article X complies with the
provisions of this Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.1 Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for
cancellation all Securities theretofore authenticated (other than any
Securities which shall have been destroyed, lost or stolen and which shall have
been replaced as provided in Section 2.7) and not theretofore cancelled, or (b)
all the Securities not theretofore cancelled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in trust, funds
sufficient to pay on the Stated Maturity Date or upon prepayment all of the
Securities (other than any Securities which shall have been destroyed, lost or
stolen and which shall have been replaced as provided in Section 2.7) not
theretofore cancelled or delivered to the Trustee for cancellation, including
principal (and premium, if any) and interest (including Compounded Interest and
Additional Sums, if any) due or to become due to the Stated Maturity Date or
redemption date, as the case may be, but excluding, however, the amount of any
moneys for the payment of principal of or interest (including Compounded
Interest and Additional Sums, if any) on the Securities (1) theretofore repaid
to the Company in accordance with the provisions of Section 11.4, or (2) paid
to any State or to the District of Columbia pursuant to its unclaimed property
or similar laws, and if in either case the Company shall
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also pay or cause to be paid all other sums payable hereunder by the Company,
then this Indenture shall cease to be of further effect except for the
provisions of Sections 2.2, 2.6, 2.7, 3.1, 3.2, 3.4, 6.6, 6.10 and 11.4 hereof,
which shall survive until such Securities shall mature and be paid.
Thereafter, Sections 6.6, 6.10 and 11.4 shall survive, and the Trustee, on
demand of the Company accompanied by any Officers' Certificate and an Opinion
of Counsel and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture; the
Company, however, hereby agrees to reimburse the Trustee for any costs or
expenses thereafter reasonably and properly incurred by the Trustee in connec-
tion with this Indenture or the Securities.
SECTION 11.2 Deposited Moneys and U.S. Government Obligations to
be Held in Trust by Trustee.
Subject to the provisions of Section 11.4, all moneys and U.S.
Government Obligations deposited with the Trustee pursuant to Sections 11.1 or
11.5 shall be held in trust and applied by it to the payment, either directly
or through any paying agent (including the Company if acting as its own paying
agent), to the holders of the particular Securities for the payment of which
such moneys or U.S. Government Obligations have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 11.5 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the holders of outstanding Securities.
SECTION 11.3 Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys
then held by any paying agent of the Securities (other than the Trustee) shall,
upon written demand of the Company, be repaid to it or paid to the Trustee, and
thereupon such paying agent shall be released from all further liability with
respect to such moneys.
SECTION 11.4 Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying
agent for payment of the principal of or interest on Securities and not applied
but remaining unclaimed by the holders of Securities for two years after the
date upon which the principal of or interest (including Compounded Interest and
Additional Sums, if any) on such Securities, as the case may be, shall have
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become due and payable, shall be repaid to the Company by the Trustee or such
paying agent on written demand; the holder of any of the Securities shall
thereafter look only to the Company for any payment which such holder may be
entitled to collect and all liability of the Trustee or such paying agent with
respect to such moneys shall thereupon cease.
SECTION 11.5 Defeasance Upon Deposit of Moneys or U.S.
Government Obligations.
The Company shall be deemed to have been Discharged (as defined
below) from its obligations with respect to the Securities on the 91st day
after the applicable conditions set forth below have been satisfied:
(1) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee or the Defeasance Agent (as
defined below) as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the
benefit of the holders of the Securities (i) money in an
amount, or (ii) U.S. Government Obligations which through
the payment of interest and principal in respect thereof
in accordance with their terms will provide, not later
than one day before the due date of any payment, money in
an amount, or (iii) a combination of (i) and (ii),
sufficient, in the opinion (with respect to (ii) and
(iii)) of a nationally recognized firm of independent
public accountants expressed in a written certification
thereof delivered to the Trustee and the Defeasance Agent,
if any, to pay and discharge each installment of principal
of and interest on the outstanding Securities on the dates
such installments of principal or interest due;
(2) if the Securities are then listed on any national
securities exchange, the Company shall have delivered to
the Trustee and the Defeasance Agent, if any, an Opinion
of Counsel to the effect that the exercise of the option
under this Section 11.5 would not cause such Securities to
be delisted from such exchange;
(3) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the
date of such deposit; and
(4) the Company shall have delivered to the Trustee and the
Defeasance Agent, if any, an Opinion of Counsel to the
effect that holders of the Securities will not recognize
income, gain or loss for
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United States Federal income tax purposes as a result of
the exercise of the option under this Section 11.5 and
will be subject to United States Federal income tax on the
same amount and in the same manner and at the same times
as would have been the case if such option had not been
exercised, and such opinion shall be based on a statute so
providing or be accompanied by a private letter ruling to
that effect received from the United States Internal
Revenue Service or a revenue ruling pertaining to a
comparable form of transaction to that effect published by
the United States Internal Revenue Service.
"Discharged" means that the Company shall be deemed to have paid
and discharged the entire indebtedness represented by, and obligations under,
the Securities and to have satisfied all the obligations under this Indenture
relating to the Securities (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), except (A) the rights
of holders of Securities to receive, from the trust fund described in clause
(1) above, payment of the principal of and the interest and premium, if any, on
the Securities when such payments are due; (B) the Company's obligations with
respect to the Securities under Sections 2.6, 2.7, 5.2 and 11.4; and (C) the
rights, powers, trusts, duties and immunities of the Trustee hereunder.
"Defeasance Agent" means another financial institution which is
eligible to act as Trustee hereunder and which assumes all of the obligations
of the Trustee necessary to enable the Trustee to act hereunder. In the event
such a Defeasance Agent is appointed pursuant to this Section, the following
conditions shall apply:
(1) The Trustee shall have approval rights over the document
appointing such Defeasance Agent and the document setting
forth such Defeasance Agent's rights and responsibilities;
(2) The Defeasance Agent shall provide verification to the
Trustee acknowledging receipt of sufficient money and/or
U. S. Government Obligations to meet the applicable
conditions set forth in this Section 11.5.
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ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.1 Indenture and Securities Solely Corporate
Obligations.
No recourse for the payment of the principal of or interest on
any Security, or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in this Indenture, or in any Security, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor Person to the Company, either directly or through
the Company or any successor Person to the Company, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment
or penalty or otherwise; it being expressly understood that all such liability
is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the
Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1 Successors.
All the covenants, stipulations, promises and agreements in this
Indenture contained by the Company shall bind its successors and assigns
whether so expressed or not.
SECTION 13.2 Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee or officer of any corporation that shall at
the time be the lawful sole successor of the Company.
SECTION 13.3 Surrender of Company Powers.
The Company by instrument in writing executed by authority of 2/3
(two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company, and thereupon such power
so surrendered shall
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terminate both as to the Company, as the case may be, and as to any successor
Person.
SECTION 13.4 Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the holders of
Securities on the Company may be given or served by being deposited postage
prepaid by first class mail, registered or certified mail, overnight courier
service or conformed telecopy addressed (until another address is filed by the
Company with the Trustee for the purpose) to the Company at 15000 Northwest
Freeway, Suite 200, Houston, Texas 77040, Attention: Vice President, Secretary
and Chief Financial Officer. Any notice, direction, request or demand by any
Securityholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made in writing at the office of
the Trustee, Bankers Trust Company, Four Albany Street, New York, New York
10006, Attention: Corporate Trust Administration Department (unless another
address is provided by the Trustee to the Company for such purpose). Any
notice or communication to a Securityholder shall be mailed by first class mail
to his or her address shown on the register kept by the Security Registrar.
SECTION 13.5 Governing Law.
THIS INDENTURE AND EACH SECURITY SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
SECTION 13.6 Evidence of Compliance with Conditions Precedent.
Upon any application or demand by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that in the
opinion of the signers all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture (except certificates delivered pursuant
to Section 3.5) shall include (1) a statement that the Person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or
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investigation upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion of such
Person, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
SECTION 13.7 Business Days.
In any case where the date of payment of principal of (or
premium, if any) or interest on the Securities will not be a Business Day, the
payment of such principal of (or premium, if any) or interest on the Securities
need not be made on such date but may be made on the next succeeding Business
Day, with the same force and effect as if made on the date of payment and no
interest shall accrue for the period from and after such date, except that if
such next succeeding Business Day falls in the next succeeding calendar year,
then such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
SECTION 13.8 Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 13.9 Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles
and sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
SECTION 13.10 Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 13.11 Separability.
In case any one or more of the provisions contained in this
Indenture or in the Securities shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
the Securities, but this Indenture and the Securities shall be construed as if
such
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invalid or illegal or unenforceable provision had never been contained herein
or therein.
SECTION 13.12 Assignment.
The Company will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly owned Subsidiary of the Company, provided that, in the event of any such
assignment, the Company will remain liable for all such obligations. Subject
to the foregoing, the Indenture is binding upon and inures to the benefit of
the parties thereto and their respective successors and assigns. This
Indenture may not otherwise be assigned by the parties thereto.
SECTION 13.13 Acknowledgement of Rights.
The Company acknowledges that, with respect to any Securities
held by Sterling Bancshares Capital Trust or a trustee of such Trust, if the
Property Trustee of such Trust fails to enforce its rights under this Indenture
as the holder of the Securities held as the assets of Sterling Bancshares
Capital Trust, any holder of Trust Preferred Securities may institute legal
proceedings directly against the Company to enforce such Property Trustee's
rights under this Indenture without first instituting any legal proceedings
against such Property Trustee or any other person or entity. Notwithstanding
the foregoing, if an Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay principal of or
interest on the Securities when due, the Company acknowledges that a holder of
Trust [Preferred] Securities may directly institute a proceeding for
enforcement of payment to such holder of the principal of or interest on the
Securities having a principal amount equal to the aggregate liquidation amount
of the Trust [Preferred] Securities of such holder on or after the respective
due date specified in the Securities.
ARTICLE XIV
PREPAYMENT OF SECURITIES
SECTION 14.1 Special Event Prepayment.
If, prior to the Initial Optional Prepayment Date, a Special
Event has occurred and is continuing, then notwithstanding Section 14.2(a) but
subject to Section 14.2(c), the Company shall have the right, at any time
within 90 days following the occurrence of such Special Event, upon (i) not
less than 45 days prior written notice to the Trustee and (ii) not less than 30
days nor more than 60 days prior written notice to the Securityholders, to
prepay the Securities, in whole (but not in part), at
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the Prepayment Price. The Prepayment Price shall be paid prior to 12:00 noon,
New York City time, on the date of such prepayment or such earlier time as the
Company determines, provided that the Company shall deposit with the Trustee an
amount sufficient to pay the Prepayment Price by 10:00 a.m., New York City
time, on the date such Prepayment Price is to be paid.
SECTION 14.2 Optional Prepayment by Company.
(a) Subject to the provisions of this Article XIV, the Company
shall have the right to prepay the Securities, in whole or in part, from time
to time, on or after the Initial Optional Prepayment Date, at the Prepayment
Price.
If the Securities are only partially prepaid pursuant to this
Section 14.2, the Securities to be prepaid shall be selected on a pro rata
basis not more than 60 days prior to the date fixed for prepayment from the
outstanding Securities not previously called for prepayment, provided, however,
that any such proration may be made on the basis of the aggregate principal
amount of Securities held by each Securityholder and may be made by making such
adjustments as the Company deems fair and appropriate in order that only
Securities in denominations of $25 or integral multiples thereof shall be
prepaid. The Prepayment Price shall be paid prior to 12:00 noon, New York
time, on the date of such prepayment or at such earlier time as the Company
determines, provided further that the Company shall deposit with the Trustee an
amount sufficient to pay the Prepayment Price by 10:00 a.m., New York City
time, on the date such Prepayment Price is to be paid.
(b) Notwithstanding the first sentence of Section 14.2, upon
the entry of an order for dissolution of the Trust by a court of competent
jurisdiction, the Securities thereafter will be subject to prepayment, in whole
only, but not in part, at the option of the Company, on or after the Intitial
Optional Prepayment Date, at the Prepayment Price, and otherwise in accordance
with this Article XIV.
(c) Any prepayment of Securities pursuant to Section 14.1 or
Section 14.2 shall be subject to the Company obtaining the prior approval of
the Federal Reserve, if such approval is then required under applicable capital
guidelines or policies of the Federal Reserve, and any other required
regulatory approvals.
(d) If a prepayment of some but not all of the Securities
would result in the Preferred Securities ceasing to be quoted on the Nasdaq
National Market or any successor thereto or result in a delisting of the
Preferred Securities from any national securities exchange on which the
Preferred Securities are then listed.
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SECTION 14.3 No Sinking Fund.
The Securities are not entitled to the benefit of any sinking
fund.
SECTION 14.4 Notice of Prepayment; Selection of Securities.
In case the Company shall desire to exercise the right to prepay
all, or, as the case may be, any part of the Securities in accordance with
their terms, it shall fix a date for prepayment and shall mail a notice of such
prepayment at least 30 and not more than 60 days prior to the date fixed for
prepayment to the holders of Securities to be so prepaid as a whole or in part
at their last addresses as the same appear on the Security Register. Such
mailing shall be by first class mail. The notice if mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the holder receives such notice. In any case, failure to give such
notice by mail or any defect in the notice to the holder of any Security
designated for prepayment as a whole or in part shall not affect the validity
of the proceedings for the prepayment of any other Security.
Each such notice of prepayment shall specify the CUSIP number of
the Securities to be prepaid, the date fixed for prepayment, the prepayment
price at which the Securities are to be prepaid (or the method by which such
prepayment price is to be calculated), the place or places of payment that
payment will be made upon presentation and surrender of the Securities, that
interest accrued to the date fixed for prepayment will be paid as specified in
said notice, and that on and after said date interest thereon or on the
portions thereof to be prepaid will cease to accrue. If less than all the
Securities are to be prepaid, the notice of prepayment shall specify the
numbers of the Securities to be prepaid. In case any Security is to be prepaid
in part only, the notice of prepayment shall state the portion of the principal
amount thereof to be redeemed and shall state that on and after the date fixed
for prepayment, upon surrender of such Security, a new Security or Securities
in principal amount equal to the portion thereof that has not been prepaid will
be issued.
By 10:00 a.m. New York time on the prepayment date specified in
the notice of prepayment given as provided in this Section, the Company will
deposit with the Trustee or with one or more paying agents an amount of money
sufficient to prepay on the prepayment date all the Securities so called for
prepayment at the appropriate Prepayment Price, together with accrued interest
to the date fixed for prepayment.
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The Company will give the Trustee notice not less than 45 days
prior to the prepayment date as to the aggregate principal amount of Securities
to be prepaid and the Trustee shall select, in such manner as in its sole
discretion it shall deem appropriate and fair, the Securities or portions
thereof (in integral multiples of $25, except as otherwise set forth in the
applicable form of Security) to be prepaid.
SECTION 14.5 Payment of Securities Called for Prepayment.
If notice of prepayment has been given as provided in Section
14.4, the Securities or portions of Securities with respect to which such
notice has been given shall become due and payable on the date and at the place
or places stated in such notice at the applicable Prepayment Price, together
with interest accrued to the date fixed for prepayment (subject to the rights
of holders of Securities at the close of business on a regular record date in
respect of an Interest Payment Date occurring on or prior to the prepayment
date), and on and after said date (unless the Company shall default in the
payment of such Securities at the Prepayment Price, together with interest
accrued to said date) interest (including Compounded Interest and Additional
Sums, if any) on the Securities or portions of Securities so called for
prepayment shall cease to accrue. On presentation and surrender of such
Securities at a place of payment specified in said notice, the said Securities
or the specified portions thereof shall be paid and prepaid by the Company at
the applicable Prepayment Price, together with interest (including Compounded
Interest and Additional Sums, if any) accrued thereon to the date fixed for
prepayment (subject to the rights of holders of Securities on the close of
business on a regular record date in respect of an Interest Payment Date
occurring on or prior to the prepayment date).
Upon presentation of any Security prepaid in part only, the
Company shall execute and the Trustee shall authenticate and make available for
delivery to the holder thereof, at the expense of the Company, a new Security
or Securities of authorized denominations, in principal amount equal to the
portion of the Security so presented that has not been prepaid.
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ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.1 Agreement to Subordinate.
The Company covenants and agrees, and each holder of Securities
issued hereunder likewise covenants and agrees, that the Securities shall be
issued subject to the provisions of this Article XV; and each holder of a
Security, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
The payment by the Company of the principal of and interest
(including Compounded Interest and Additional Sums, if any) on all Securities
issued hereunder shall, to the extent and in the manner hereinafter set forth,
be subordinated and junior in right of payment to all Senior Indebtedness,
whether outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the occurrence of
any Default or Event of Default hereunder.
SECTION 15.2 Default on Senior Indebtedness.
In the event and during the continuation of any default by the
Company in the payment of principal, interest or any other payment due on any
Senior Indebtedness, or in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then, in either case,
no payment shall be made by the Company with respect to the principal
(including redemption payments) of or interest on the Securities.
In the event of the acceleration of the maturity of the
Securities, then no payment shall be made by the Company with respect to the
principal (including redemption payments) of or interest on the Securities
until the holders of all Senior Indebtedness outstanding at the time of such
acceleration shall receive payment in full of such Senior Indebtedness
(including any amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited by the
preceding paragraphs of this Section 15.2, such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing within 90 days of
such
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payment of the amounts then due and owing on such Senior Indebtedness, and only
the amounts specified in such notice to the Trustee shall be paid to the
holders of such Senior Indebtedness.
SECTION 15.3 Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all holders of Senior Indebtedness of the
Company shall first be paid in full, or payment thereof provided for in money
in accordance with its terms, before any payment is made by the Company on
account of the principal or interest (including Compounded Interest and Addi-
tional Sums, if any) on the Securities; and upon any such dissolution or
winding-up or liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, which the Securityholders or the Trustee would be
entitled to receive from the Company, except for the provisions of this Article
XV, shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Securityholders or by the Trustee under the Indenture if received by
them or it, directly to the holders of Senior Indebtedness of the Company (pro
rata to such holders on the basis of the respective amounts of Senior
Indebtedness held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all such Senior Indebtedness in full, in money or money's
worth, after giving effect to any concurrent payment or distribution to or for
the holders of such Senior Indebtedness, before any payment or distribution is
made to the Securityholders or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character prohibited by
the foregoing, whether in cash, property or securities, shall be received by
the Trustee before all Senior Indebtedness is paid in full, or provision is
made for such payment in money in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of and shall be paid over
or delivered to the holders of such Senior Indebtedness or their representative
or representatives, or to the trustee or trustees under any indenture pursuant
to which any instruments evidencing such Senior Indebtedness may have been
issued, as their respective interests may appear, as calculated by the Company,
for application to the payment of all Senior
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Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full in money in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the benefit of the holders
of such Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article XV with respect to the Securities to the payment of Senior Indebtedness
that may at the time be outstanding, provided that (i) such Senior Indebtedness
is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company into, another Person or the liquidation or
dissolution of the Company following the sale, conveyance, transfer or lease of
its property as an entirety, or substantially as an entirety, to another Person
upon the terms and conditions provided for in Article X of this Indenture shall
not be deemed a dissolution, winding-up, liquidation or reorganization for the
purposes of this Section 15.3 if such other Person shall, as a part of such
consolidation, merger, sale, conveyance, transfer or lease, comply with the
conditions stated in Article X of this Indenture. Nothing in Section 15.2 or
in this Section 15.3 shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 6.6 of this Indenture.
SECTION 15.4 Subrogation.
Subject to the payment in full of all Senior Indebtedness, the
rights of the Securityholders shall be subrogated to the rights of the holders
of such Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company, as the case may be, applicable to such
Senior Indebtedness until the principal of and interest on the Securities shall
be paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of such Senior Indebtedness of any cash, property
or securities to which the Securityholders or the Trustee would be entitled
except for the provisions of this Article XV, and no payment over pursuant to
the provisions of this Article XV to or for the benefit of the holders of such
Senior Indebtedness by Securityholders or the Trustee, shall, as between the
Company, its creditors other than holders of Senior Indebtedness of the
Company, and the holders of the Securities, be deemed to be a payment by the
Company to or on account of such Senior Indebtedness. It is understood that
the provisions of this Article XV are and are intended solely for the
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purposes of defining the relative rights of the holders of the Securities, on
the one hand, and the holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article XV or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the holders of the Securities, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Securities
the principal of and interest (including Compounded Interest and Additional
Sums, if any) on the Securities as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the holders of the Securities and creditors of the Company,
as the case may be, other than the holders of Senior Indebtedness of the
Company, as the case may be, nor shall anything herein or therein prevent the
Trustee or the holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under the Indenture, subject to the
rights, if any, under this Article XV of the holders of such Senior
Indebtedness in respect of cash, property or securities of the Company, as the
case may be, received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article XV, the Trustee, subject to the provisions of
Article VI of this Indenture, and the Securityholders shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Securityholders,
for the purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, as the case may be, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article XV.
SECTION 15.5 Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance thereof
authorizes and directs the Trustee on such Securityholder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article XV and appoints the Trustee such Securityholder's
attorney-in-fact for any and all such purposes.
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SECTION 15.6 Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article XV. Notwithstanding the
provisions of this Article XV or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article XV, unless
and until a Responsible Officer of the Trustee shall have received written
notice thereof from the Company or a holder or holders of Senior Indebtedness
or from any trustee therefor; and before the receipt of any such written
notice, the Trustee, subject to the provisions of Article VI of this Indenture,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section 15.6 at least two Business Days prior to the date upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal of or interest (including
Compounded Interest and Additional Sums, if any) on any Security), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to
the purposes for which they were received, and shall not be affected by any
notice to the contrary that may be received by it within two Business Days
prior to such date.
The Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company (or a trustee on behalf of such holder), as the
case may be, to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee on behalf of any such holder or holders. In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of such Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article XV, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Article XV, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
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Upon any payment or distribution of assets of the Company
referred to in this Article XV, the Trustee and the Securityholders shall be
entitled to conclusively rely upon any order or decree entered by any court of
competent jurisdiction in which such insolvency, bankruptcy, receivership,
liquidation, reorganization, dissolution, winding up or similar case or
proceeding is pending, or a certificate of the trustee in bankruptcy,
liquidating trustee, custodian, receiver, assignee for the benefit of
creditors, agent or other person making such payment or distribution, delivered
to the Trustee or to the Securityholders, for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the holders of
Senior Indebtedness and other indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article XV.
SECTION 15.7 Rights of the Trustee; Holders of Senior
Indebtedness.
The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article XV in respect of any Senior Indebtedness
at any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XV, and
no implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of such
Senior Indebtedness and, subject to the provisions of Article VI of this
Indenture, the Trustee shall not be liable to any holder of such Senior
Indebtedness if it shall pay over or deliver to Securityholders, the Company or
any other Person money or assets to which any holder of such Senior
Indebtedness shall be entitled by virtue of this Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.6.
SECTION 15.8 Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall
at any time in any way be prejudiced or impaired by any act or failure to act
on the part of the Company, as the case may be, or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company,
as the
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case may be, with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or otherwise
be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV or
the obligations hereunder of the holders of the Securities to the holders of
such Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any manner
such Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any
manner for the collection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company, as the case may be, and
any other Person.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.1 Extension of Interest Payment Period.
So long as no Event of Default has occurred and is continuing,
the Company shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding 20 consecutive
quarterly periods, including the first such quarterly period during such
extension period (the "Extended Interest Payment Period"), during which
Extended Interest Payment Period no interest shall be due and payable; provided
that no Extended Interest Payment Period shall end on a date other than an
Interest Payment Date or extend beyond the Stated Maturity Date. To the extent
permitted by applicable law, interest, the payment of which has been deferred
because of the extension of the interest payment period pursuant to this
Section 16.1, will bear interest thereon at the Coupon Rate compounded
quarterly for each quarterly period of the Extended Interest Payment Period
("Compounded Interest"). At the end of the Extended Interest Payment Period,
the Company shall pay all interest accrued and unpaid on the Securities,
including any Additional Sums and Compounded Interest (together, "Deferred
Interest") that shall be payable to the holders of the Securities in whose
names the Securities are registered in the Security
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Register on the first record date preceding the end of the Extended Interest
Payment Period. Before the termination of any Extended Interest Payment
Period, the Company may further defer payments of interest by further extending
such period, provided that such period, together with all such previous and
further extensions within such Extended Interest Payment Period, shall not
exceed 20 consecutive quarterly periods, including the first such quarterly
period during such Extended Interest Payment Period, end on a date other than
an Interest Payment Date or extend beyond the Stated Maturity Date. Upon the
termination of any Extended Interest Payment Period and the payment of all
Deferred Interest then due, the Company may commence a new Extended Interest
Payment Period, subject to the foregoing requirements. No interest shall be
due and payable during an Extended Interest Payment Period, except at the end
thereof, but the Company may prepay at any time all or any portion of the
interest accrued during an Extended Interest Payment Period.
SECTION 16.2 Notice of Extension.
(a) If the Property Trustee is the only registered holder of the
Securities at the time the Company selects an Extended Interest Payment Period,
the Company shall give written notice to the Administrative Trustees, the
Property Trustee and the Trustee of its selection of such Extended Interest
Payment Period five Business Days before the earlier of (i) the next succeeding
date on which Distributions on the Trust Securities issued by the Trust are
payable, and (ii) the date the Trust is required to give notice of the record
date, or the date such Distributions are payable, to any national securities
exchange or to holders of the Preferred Securities issued by the Trust, but in
any event at least five Business Days before such record date.
(b) If the Property Trustee is not the only holder of the
Securities at the time the Company selects an Extended Interest Payment Period,
the Company shall give the holders of the Securities and the Trustee written
notice of its selection of such Extended Interest Payment Period at least 10
Business Days before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Company is required to give notice of the record or
payment date of such interest payment to any national securities exchange.
(c) The quarterly period in which any notice is given pursuant
to paragraphs (a) or (b) of this Section 16.2 shall be counted as one of the 20
quarterly periods permitted in the maximum Extended Interest Payment Period
permitted under Section 16.1.
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ARTICLE XVII
CHANGE OF STATED MATURITY DATE
SECTION 17.1 Change of Stated Maturity Date.
So long as no Event of Default has occurred and is continuing and
subject to Section 17.2(c), the Company shall have the right, at any time, but
only once, during the term of the Securities, to reduce the term of the
Securities by selecting a date, not earlier than the Initial Optional
Prepayment Date, as the new "Stated Maturity Date" for the purposes of this
Indenture and the Securities; provided that such new "Stated Maturity Date" is
an Interest Payment Date and is also on an anniversary of the date of original
issuance of the Securities pursuant to the Indenture and provided further that
such new "Stated Maturity Date" shall not be later than _______, 2027 or be
earlier than any date that has occurred.
SECTION 17.2 Notice of Change of Stated Maturity Date.
(a) If the Property Trustee is the only registered holder of the
Securities at the time the Company designates a new "Stated Maturity Date"
pursuant to Section 17.1, the Company shall give written notice to the
Administrative Trustees, the Property Trustee and the Trustee of its selection
of such new "Stated Maturity Date" five Business Days before the earlier of (i)
the next succeeding date on which Distributions on the Trust Securities issued
by the Trust are payable, and (ii) the date the Trust is required to give
notice of the record date, or the date such Distributions are payable, to any
national securities exchange or to holders of the Preferred Securities issued
by the Trust, but in any event at least five Business Days before such record
date.
(b) If the Property Trustee is not the only holder of the
Securities at the time the Company selects a new "Stated Maturity Date"
pursuant to Section 17.1, the Company shall give the holders of the Securities
and the Trustee written notice of its selection of such new "Stated Maturity
Date" at least 10 Business Days before the earlier of (i) the next succeeding
Interest Payment Date, or (ii) the date the Company is required to give notice
of the record or payment date of such interest payment to any national
securities exchange.
(c) It is a condition precedent to the exercise of the Company's
right under Section 17.1 that the Company shall have obtained the approval of
the Federal Reserve for such exercise, if such approval is then required for
such exercise under applicable laws, regulations, capital guidelines or
policies of the Federal Reserve, and any other regulatory approval required for
such exercise.
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(d) Any selection of a new "Stated Maturity Date" shall have
no effect under this Indenture unless and until the Company and the Trustee
have given the written notices required by Section 17.2(a) or (b). If all such
notices have been given in accordance with Section 17.2 or (b), then the new
"Stated Maturity Date" selected in accordance with Section 17.1 shall become
the Stated Maturity Date for the Securities with effect from the date specified
in such notices.
Bankers Trust Company hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
77
<PAGE> 85
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed by their respective officers thereunto duly authorized, as
of the day and year first above written.
STERLING BANCSHARES, INC.
By
----------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Trustee
By
----------------------------
Name:
Title:
78
<PAGE> 86
EXHIBIT A
(FORM OF FACE OF SECURITY)
No. __________ Principal Amount: $______
CUSIP No. _______________
[IF THE SECURITY IS A GLOBAL SECURITY, INSERT: 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 NO TRANSFER OF THIS SECURITY (OTHER THAN A
TRANSFER OF THIS SECURITY 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) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
STERLING BANCSHARES, INC.
*% SERIES A JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE *, 2027
Sterling Bancshares, Inc., a Texas corporation (the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
______________________________ or registered assigns, the principal sum of
$___________ Dollars on *, 2027 (subject to no earlier date having been
designated in accordance with Article XVII of the Indenture, the "Stated
Maturity Date"), unless previously prepaid or redeemed, and to pay interest on
the outstanding principal amount hereof from *, 1997, or from the most recent
interest payment date (each such date, an "Interest Payment Date") to which
interest has been paid or duly provided for, quarterly (subject to deferral as
set forth herein) in arrears on the ___ day of March, June, September and
December of each year, commencing *, 1997, at the rate of *% per annum until
the principal hereof shall have
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<PAGE> 87
become due and payable, and on any overdue principal and (without duplication
and to the extent that payment of such interest is enforceable under applicable
law) on any overdue installment of interest at the same rate per annum
compounded quarterly. The amount of interest payable on any Interest Payment
Date shall be computed on the basis of a 360-day year of twelve 30-day months
and, for any period less than a full calendar month, the number of days elapsed
in such month. In the event that any date on which the principal of, or
interest on this Security is payable is not a Business Day, then the payment
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that if such next succeeding Business Day falls in the next calendar
year, then such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
Pursuant to the Indenture, in certain circumstances the Company will be
required to pay Additional Sums and Compounded Interest (each as defined in the
Indenture) with respect to this Security.
The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities, as defined in said Indenture) is registered at the close of
business on the regular record date for such interest installment, which shall
be at the close of business on the 15th day of the month preceding the month in
which the relevant interest payment date falls. Any such interest installment
not punctually paid or duly provided for shall forthwith cease to be payable to
the holders on such regular record date and may be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a special record date to be fixed by the Trustee for the
payment of such defaulted interest, notice whereof shall be given to the
holders of Securities not less than 10 days prior to such special record date,
or may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture.
The principal of and interest (including Compounded Interest and
Additional Sums, if any) on this Security shall be payable at the office or
agency of the Trustee maintained for that purpose in any coin or currency of
the United States of America that at the time of payment is legal tender for
payment of public and private debts; provided, however, that, payment of
interest may be made at the option of the Company by (i) check mailed to the
holder at such address as shall appear in the Security Register or (ii) by
transfer to an account maintained by the Person entitled thereto, provided that
proper written transfer instructions have been received by the relevant record
date. Notwithstanding the
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<PAGE> 88
foregoing, so long as the Holder of this Security is the Property Trustee, the
payment of the principal of and interest (including Compounded Interest and
Additional Sums, if any, on this Security will be made at such place and to
such account as may be designated by the Property Trustee.
So long as no Event of Default has occurred and is continuing,
the Company shall have the right, at any time, but only once, during the term
of the Securities, to reduce the term of the Securities by selecting a date,
not earlier than the Initial Optional Prepayment Date, as the new "Stated
Maturity Date"; provided that such new "Stated Maturity Date" is an Interest
Payment Date and is also on an anniversary of the date of original issuance of
the Secuities pursuant to the Indenture and provided further that such new
"Stated Maturity Date" shall not be later than ______, 2007 or be earlier than
any date that has occurred.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each holder
of this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his or her behalf to
take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee his or
her attorney-in-fact for any and all such purposes. Each holder hereof, by his
or her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder
of Senior Indebtedness, whether now outstanding or hereafter incurred, and
waives reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
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<PAGE> 89
The provisions of this Security are continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed and sealed.
Dated: ____________, 1997
STERLING BANCSHARES, INC.
By:
--------------------------------
Name:
Title:
Attest:
By:
-------------------------
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
BANKERS TRUST COMPANY,
as Trustee
By
---------------------------
Authorized Officer
A-4
<PAGE> 90
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of May __,
1997 (the "Indenture"), duly executed and delivered between the Company and
Bankers Trust Company, as Trustee (the "Trustee"), to which Indenture reference
is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Securities.
Upon the occurrence and continuation of a Special Event, as
defined in the Indenture, prior to *, 2002 (the "Initial Optional Prepayment
Date"), the Company shall have the right, at any time within 90 days following
the occurrence of such Special Event, to prepay this Security in whole (but not
in part) at the Prepayment Price. "Prepayment Price" shall mean an amount in
cash equal to 100% of the principal amount thereof plus accrued and unpaid
interest on the Security to be so prepaid (including Compounded Interest and
Additional Sums, if any) to the date of such prepayment.
In addition, subject to the Company having received the prior
approval of the Federal Reserve, if then required under applicable guidelines
or policies of the Federal Reserve, and any other required regulatory
approvals, the Company shall have the right to prepay this Security, in whole
or in part, at any time on or after the Initial Optional Prepayment Date at the
Prepayment Price.
The Prepayment Price shall be paid prior to 12:00 noon, New York
City time, on the date of such prepayment or at such earlier time as the
Company determines, provided, that the Company shall deposit with the Trustee
an amount sufficient to pay the applicable Prepayment Price by 10:00 a.m., New
York City time, on the date such Prepayment Price is to be paid. Any
prepayment pursuant to this paragraph will be made upon not less than 30 days
or more than 60 days notice. If the Securities are only partially prepaid by
the Company pursuant to an Optional Prepayment, the particular Securities to be
prepaid shall be selected on a pro rata basis not more than 60 days prior to
the date fixed for prepayment from the outstanding Securities not previously
called for prepayment, provided, however, that any such proration may be made
on the basis of the aggregate principal amount of Securities held by each
Securityholder thereof and may be made by making such adjustments as the
Company deems fair and appropriate in order that only Securities in
denominations of $25 or integral multiples thereof shall be prepaid.
In the event of prepayment of this Security in part only, a new
Security or Securities for the portion hereof that has not
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<PAGE> 91
been prepaid will be issued in the name of the holder hereof upon the
cancellation hereof.
Notwithstanding the foregoing, any prepayment of Securities by
the Company shall be subject to the prior approval of the Board of Governors of
the Federal Reserve System (the "Federal Reserve"), if such approval is then
required under applicable capital guidelines or policies of the Federal
Reserve, and the receipt of any other required regulatory approvals.
In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the Securities at the time outstanding, as defined in the Indenture,
to execute supplemental indentures for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of modifying in any manner the rights of the holders of the Securities;
provided, however, that no such supplemental indenture shall, without the
consent of each holder of Securities then outstanding and affected thereby, (i)
change the Stated Maturity Date of any Securities (except as expressly
permitted in accordance with Article XVII of the Indenture), or reduce the
principal amount thereof, or reduce any amount payable on redemption thereof,
or reduce the rate or extend the time of payment of interest thereon (subject
to Article XVI of the Indenture), or make the principal of, or interest on, the
Securities payable in any coin or currency other than U.S. dollars, or impair
or affect the right of any holder of Securities to institute suit for the
payment thereof, or (ii) reduce the aforesaid principal amount of Securities,
the holders of which are required to consent to any such supplemental
indenture. The Indenture also contains provisions permitting the holders of a
majority in aggregate principal amount of the Securities at the time out-
standing affected thereby, on behalf of all of the holders of the Securities,
to waive any past default in the performance of any of the covenants contained
in the Indenture, or established pursuant to the Indenture, and its
consequences, except a default in the payment of the principal of or interest
on any of the Securities or a default in respect of any covenant or provision
under which the Indenture cannot be modified or amended without the consent of
each holder of Securities then outstanding. Any such consent or waiver by the
holder of this Security (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future holders and owners
of this Security and of any Security issued in exchange herefor or in place
hereof, irrespective of whether or not any notation of such consent or waiver
is made upon this Security.
A-6
<PAGE> 92
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest (including Compounded Interest and Additional Sums, if any) on this
Security at the time and place and at the rate and in the money herein pre-
scribed.
So long as no Event of Default shall have occurred and be
continuing, the Company shall have the right, at any time and from time to time
during the term of the Securities, to defer payments of interest by extending
the interest payment period of such Securities for a period not exceeding 20
consecutive quarterly periods, including the first such quarterly period during
such extension period, and not extending beyond the Stated Maturity Date of the
Securities (an "Extended Interest Payment Period") or ending on a date other
than an Interest Payment Date, at the end of which period the Company shall pay
all interest then accrued and unpaid (together with interest thereon at the
rate specified for the Securities to the extent that payment of such interest
is enforceable under applicable law). Before the termination of any such
Extended Interest Payment Period, the Company may further defer payments of
interest by further extending such Extended Interest Payment Period, provided
that such Extended Interest Payment Period, together with all such previous and
further extensions within such Extended Interest Payment Period, (i) shall not
exceed 20 consecutive quarterly periods, including the first quarterly period
during such Extended Interest Payment Period, (ii) shall not end on any date
other than an Interest Payment Date, and (iii) shall not extend beyond the
Stated Maturity Date of the Securities. Upon the termination of any such
Extended Interest Payment Period and the payment of all accrued and unpaid
interest and any additional amounts then due, the Company may commence a new
Extended Interest Payment Period, subject to the foregoing requirements.
The Company has agreed that it will not: (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock) (other than (a) dividends or distributions
in shares of, or options, warrants or rights to subscribe for or purchase
shares of, Common Stock of the Company, (b) any declaration of a dividend in
connection with the implementation of a stockholder's rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) as a result of a
reclassification of any class or series of the Company's capital stock solely
into another class or series of the Company's capital stock, (d) the purchase
of fractional shares resulting from such a reclassification of the Company's
capital stock, and (e) purchases of Common Stock related to the issuance of
Common Stock or rights under any of the Company's benefit plans for its
directors, officers or employees or any of the Company's
A-7
<PAGE> 93
dividend reinvestment plans); (ii) make any payment of principal, interest on
or repay or prepay or repurchase or redeem any debt securities of the Company
that rank pari passu with or junior in right of payment to the Securities; or
(iii) make any guarantee payments with respect to any guarantee (other than
payments under the Preferred Securities Guarantee) by the Company of the debt
securities of any Subsidiary of the Company if such guarantee ranks pari passu
or junior in right of payment to the Securities, if at such time (1) there
shall have occurred any event of which the Company has actual knowledge that
(a) is or, with the giving of notice or the lapse of time, or both, would be,
an Event of Default and (b) in respect of which the Company shall not have
taken reasonable steps to cure, (2) the Company shall be in default with
respect to its payment obligations under the Preferred Securities Guarantee or
(3) the Company shall have given notice of its election of the exercise of its
right to extend the interest payment period and any such extension shall be
continuing.
Subject to (i) the prior approval of the Federal Reserve, if such
approval is then required under applicable capital guidelines or policies of
the Federal Reserve and the receipt of any other required regulatory approval,
and (ii) the receipt by the Company of an opinion of counsel to the effect that
such distribution will not be a taxable event to holders of Preferred
Securities, the Company will have the right at any time to liquidate the Trust
and cause the Securities to be distributed to the holders of the Trust
Securities in liquidation of the Trust.
The Securities are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof. As provided
in the Indenture and subject to the transfer restrictions limitations as may be
contained herein and therein from time to time, this Security is transferable
by the holder hereof on the Security Register of the Company, upon surrender of
this Security for registration of transfer at the office or agency of the
Company in the City and State of New York accompanied by a written instrument
or instruments of transfer in form satisfactory to the Company or the Trustee
duly executed by the holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Securities of authorized denominations and for
the same aggregate principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for any such
registration of transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this
Security, the Company, the Trustee, any authenticating agent, any paying agent,
any transfer agent and the registrar may deem and treat the holder hereof as
the absolute owner hereof (whether or not this Security shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the
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<PAGE> 94
Security Registrar) for the purpose of receiving payment of or on account of
the principal hereof and (subject to the Indenture) interest due hereon and for
all other purposes, and neither the Company nor the Trustee nor any
authenticating agent nor any paying agent nor any transfer agent nor any
registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, or
interest on this Security, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor Person, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAW PROVISIONS THEREOF.
A-9
<PAGE> 1
EXHIBIT 4.4
- --------------------------------------------------------------------------------
FIRST AMENDED AND RESTATED DECLARATION OF TRUST
Sterling Bancshares Capital Trust I
Dated as of May 14, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
<TABLE>
<S> <C> <C>
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.5 Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.6 Powers of the Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.7 Filing of Certificate of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.8 Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.9 Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.10 Declaration Binding on Holders
of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.1 Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.2 Delaware Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.3 Execution of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.4 Not Responsible for Recitals
or Sufficiency of Declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS . . . . . . . . . . . . . . . . . 10
SECTION 4.1 Exculpation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.2 Fiduciary Duty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.3 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.4 Outside Businesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS . . . . . . . . . . . . . . . . . . 17
SECTION 5.1 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.2 Termination of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.4 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.5 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.6 Partial Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
<PAGE> 3
DECLARATION OF TRUST
OF
STERLING BANCSHARES CAPITAL TRUST I
MAY 14, 1997
DECLARATION OF TRUST ("Declaration") dated and effective as of
May 14, 1997 by the Trustees (as defined herein), the Sponsor (as defined
herein), and by the holders, from time to time, of undivided beneficial
interests in the Trust to be issued pursuant to this Declaration.
RECITALS:
WHEREAS, the Trustees and the Sponsor desire to establish a
trust (the "Trust") pursuant to the Business Trust Act (as defined herein) for
the sole purpose of (i) issuing and selling certain securities representing
undivided beneficial interests in the assets of the Trust (ii) holding certain
Debentures of the Debenture Issuer (each as defined herein) and (iii) engaging
in only those other activities necessary, advisable or incidental thereto; and
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and
that this Declaration constitutes the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the
<PAGE> 4
respective meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration of Trust as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and Sections
are to Articles and Sections of this Declaration unless
otherwise specified;
(e) a reference to the singular includes the plural and vice
versa;
(f) a reference to any Person shall include its successors and
assigns;
(g) a reference to any agreement or instrument shall mean such
agreement or instrument as supplemented, modified, amended and
restated and in effect from time to time; and
(h) a reference to any statute, law, rule or regulation, shall
include any amendments thereto and any successor, statute,
law, rule or regulation.
"Administrative Trustees" means any Trustee other than the
Delaware Trustee and Property Trustee.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York or in Houston, Texas are authorized or
required by any applicable law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Sections 3801 et seg., as it may be amended from
time to time, or any successor legislation.
2
<PAGE> 5
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security representing an undivided
beneficial interest in the assets of the Trust with such terms as may be set
out in any amendment to this Declaration.
"Company Indemnified Person" means (a) any Administrative
Trustee; (b) any Affiliate of any Administrative Trustee; (c) any officers,
directors, shareholders, members, partners, employees, representatives or
agents of any Administrative Trustee; or (d) any employee or agent of the Trust
or its Affiliates.
"Covered Person" means any officer, director, shareholder,
partner, member, representative, employee or agent of the Trust or the Trust's
Affiliates.
"Debenture Issuer" means Sterling Bancshares, in its capacity
as the issuer of the Debentures under the Indenture.
"Debentures" means the Junior Subordinated Deferrable Interest
Debentures to be issued by the Debenture Issuer pursuant to the Indenture and
acquired by the Trust.
"Debenture Trustee" means the original trustee under the
Indenture until a successor is appointed thereunder, and thereafter means any
such successor trustee.
"Delaware Trustee" has the meaning set forth in Section 3.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 4.3(b).
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
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"Indenture" means the indenture to be entered into between
Sterling Bancshares and the Debenture Trustee pursuant to which the Debentures
are to be issued.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security" means a security representing an
undivided interest in the assets of the Trust with such terms as may be set out
in any amendment to this Declaration.
"Property Trustee" has the meaning set forth in Section 3.1.
"Securities" means collectively the Common Securities and the
Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Sponsor" means Sterling Bancshares in its capacity as sponsor
of the Trust.
"Sterling Bancshares" means Sterling Bancshares, Inc., a Texas
corporation or any successor entity in a merger.
"Trust" means Sterling Bancshares Capital Trust I, a trust
formed under the laws of the State of Delaware.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and reference herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
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ARTICLE II
ORGANIZATION
SECTION 2.1 Name
The Trust created by this Declaration is named "Sterling
Bancshares Capital Trust I". The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Administrative
Trustees.
SECTION 2.2 Office
The address of the principal office of the Trust is Sterling
Bancshares Capital Trust I, c/o Sterling Bancshares, Inc., 15000 Northwest
Freeway, Suite 200, Houston, Texas 77040, Attention: Michael Roy,
Administrative Trustee. On 10 Business Days' advance written notice to the
holders of Securities, the Administrative Trustees may designate another
principal office.
SECTION 2.3 Purpose
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities, (b) purchase and hold certain Debentures of the
Debenture Issuer and (c) engage in only those other activities necessary,
advisable or incidental thereto. The Trust shall not borrow money, issue debt
or reinvest proceeds derived from investments, pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would cause
the Trust not to be classified for United States Federal income tax purposes as
a grantor Trust.
SECTION 2.4 Authority
Subject to the limitations provided in this Declaration, the
Administrative Trustees shall have exclusive and complete authority to carry
out the purposes of the Trust. An action taken by the Administrative Trustees
in accordance with their powers shall constitute the act of and serve to bind
the Trust. In dealing with the Administrative Trustees acting on behalf of the
Trust, no person shall be required to inquire into the authority of the
Administrative Trustees to bind the Trust. Persons dealing with the Trust are
entitled to
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rely conclusively on the power and authority of the Administrative Trustees as
set forth in this Declaration.
SECTION 2.5 Title to Property of the Trust
Legal title to all assets of the Trust shall be vested in the
Trust.
SECTION 2.6 Powers of the Trustees
The Administrative Trustees shall have the exclusive power and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more
than one series of Common Securities, and, provided further, that there shall
be no beneficial interests in the Trust other than the Securities;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) prepare a prospectus (the
"Prospectus") in preliminary and final form prepared by the Sponsor,
in relation to the offering and sale of Preferred Securities and to
execute and file with the Commission a registration statement,
including all exhibits required therein and any amendments thereto
(the "Registration Statement"), for the offering and sale of Preferred
Securities;
(ii) execute and file any documents prepared
by the Sponsor, or take any acts as determined by the Sponsor to be
necessary in order to qualify or register the offering and sale of all
or part of the Preferred Securities in any State in which the Sponsor
has determined to qualify or register such Preferred Securities for
sale;
(iii) execute and file an application,
prepared by the Sponsor, to permit the Preferred Securities to trade or be
quoted in or on the Nasdaq National Market, or take any acts as determined by
the
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<PAGE> 9
Sponsor to be necessary in order to permit the Preferred Securities to be
quoted on the Nasdaq National Market;
(iv) execute and deliver letters,
documents, or instruments with The Depository Trust Company relating to the
Preferred Securities;
(v) execute and file with the Commission
a registration statement on Form 8-A, including any and all amendments thereto,
prepared by the Sponsor, relating to the registration of the Preferred
Securities under Section 12(b) and (g) of the Exchange Act; and
(vi) execute and enter into subscription
agreements, underwriting agreements and other related agreements
providing for the sale of the Common Securities and the Preferred
Securities;
(c) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors, advisors,
and consultants and provide for reasonable compensation for such services;
(d) to incur expenses that are necessary or incidental to
carry out any of the purposes of this Declaration, which expenses shall be paid
for by the Sponsor in all respects; and
(e) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust
On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust in
the form attached hereto as Exhibit A with the Secretary of State of the State
of Delaware.
SECTION 2.8 Duration of Trust
The Trust, absent termination pursuant to the provisions of
Section 5.2, shall continue to exist until 5:00 p.m. Houston, Texas time on the
thirty-first (31st) anniversary of the date of this Agreement.
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SECTION 2.9 Responsibilities of the Sponsor
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare the Prospectus and Registration Statement for
filing by the Trust with the Commission, including any amendments thereto;
(b) to prepare for filing by the Trust an application to
permit the Preferred Securities to trade or be quoted in or on the Nasdaq
National Market and to do any and all such acts, other than actions which must
be taken by the Trust, and advise the Trust of actions it must take, and
prepare for execution and filing any documents to be executed and filed by the
Trust, as the Sponsor deems necessary or advisable in order to obtain such
quotation on the Nasdaq National Market;
(c) to determine the States in which to take appropriate
action to qualify or register for offer and sale all or part of the Preferred
Securities and to do any and all such acts, other than actions which must be
taken by the Trust, and advise the Trust of actions it must take, and prepare
for execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A, including any amendments thereto, relating
to the registration of the Preferred Securities under Section 12(b) or (g) of
the Exchange Act; and
(e) to negotiate the terms of subscription agreements,
underwriting agreements and other related agreements providing for the sale of
the Common Securities and Preferred Securities.
SECTION 2.10 Declaration Binding on Holders of Securi
ties
Every Person by virtue of having become a holder of a Security
or any interest therein in accor-
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dance with the terms of this Declaration, shall
be deemed to have expressly assented and agreed to the terms of, and shall be
bound by, this Declaration.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees
The number of Trustees initially shall be five (5), and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor. The Sponsor is
entitled to appoint or remove without cause any Trustee at any time; provided,
however that the number of Trustees shall in no event be less than two (2);
provided further that (1) one Trustee, in the case of a natural person, shall
be a person who is a resident of the State of Delaware or which, if not a
natural person, is an entity which has its principal place of business in the
State of Delaware (the "Delaware Trustee") and (2) there shall be at least one
Administrative Trustee who is an officer of the Sponsor.
Except as expressly set forth in this Declaration, (i) if
there are more than two Administrative Trustees, any power of such
Administrative Trustees may be exercised by, or with the consent of, a majority
of such Administrative Trustees, (ii) if there are two Administrative Trustees,
any power of such Administrative Trustees shall be exercised by both
Administrative Trustees and (iii) if there is only one Administrative Trustee,
all powers of the Administrative Trustees shall be exercised by such
Administrative Trustee.
The initial Administrative Trustee(s) shall be:
George Martinez
Mark T. Giles
Michael A. Roy
The initial Delaware Trustee shall be:
Bankers Trust (Delaware)
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Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint another trustee (the "Property Trustee")
meeting the requirements of the Trust Indenture Act of 1939, as amended, by the
execution of an amendment to this Declaration executed by the Administrative
Trustees, the Sponsor, the Property Trustee and the Delaware Trustee.
SECTION 3.2 Delaware Trustee.
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the
Administrative Trustees described in this Declaration. The Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Business Trust Act. Notwithstanding
anything herein to the contrary, the Delaware Trustee shall not be liable for
the acts or omissions to act of the Trust or of the Administrative Trustees
except such acts as the Delaware Trustee is expressly obligated or authorized
to undertake under the Business Trust Act and except for the negligence or
willful misconduct of the Delaware Trustee.
SECTION 3.3 Execution of Documents.
(a) Unless otherwise determined by the Administrative
Trustees, and except as otherwise required by the Business Trust Act, any
Administrative Trustee is authorized to execute on behalf of the Trust any
documents which the Administrative Trustees have the power and authority to
cause the Trust to execute pursuant to Section 2.6; and
(b) an Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Administrative Trustees have power and authority to cause the Trust to execute
pursuant to Section 2.6.
SECTION 3.4 Not Responsible for Recitals
or Sufficiency of Declaration.
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The recitals contained in this Declaration shall be taken as
the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration.
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, cost, damage or claim, liability or expenses incurred by reason of any
act or omission performed or omitted by such Indemnified Person in good faith
on behalf of the Trust and in a manner such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Declaration or by law, except that an Indemnified Person shall
be liable for any such loss, cost, damage, claim, liability or expense incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which distributions to holders of Securities might properly be
paid.
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SECTION 4.2 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, such Indemnified Person acting
under this Declaration shall not be liable to the Trust or to any other Covered
Person for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity,
are agreed by the parties hereto to replace such other duties and liabilities
of such Indemnified Person.
(b) Unless otherwise expressly provided here
in:
(i) whenever a conflict of interest exists or arises
between Covered Persons; or
(ii) whenever this Declaration or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or provides
terms that are, fair and reasonable to the Trust or any holder
of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
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(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires, including
its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting
the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Declaration or by applicable law.
SECTION 4.3 Indemnification.
(a) (i) The Sponsor shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such Company Indemnified Person in connection with such
action, suit or proceeding if such Indemnified Person acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the Company Indemnified Person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party to, or
is threatened to be made a
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party to, any threatened, pending or completed action or suit by or in the
right of the Trust to procure a judgment in its favor by reason of the fact
that he is or was a Company Indemnified Person, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if such Company Indemnified Person
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Trust, except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such Company Indemnified Person shall have been adjudged to be liable to
the Trust, unless and only to the extent that the Court of Chancery of Delaware
or the court in which such action or suit was brought shall deter- mine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 4.3(a), or in defense of any claim,
issue or matter therein, such Indemnified Person shall be indemnified, to the
full extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 4.3(a) (unless ordered by a court) shall be made by the Sponsor
only as authorized by the Sponsor in the specific case upon a determination
that indemnification of the Company Indemnified Person is proper in the
circumstances because he has met the applicable standard of conduct set forth
in paragraphs (i) and (ii). Such determination shall be made (1) by the
Administrative Trustees by a majority vote of a quorum consisting of such
Administrative Trustees who were not parties to such action, suit or
proceeding, (2) if such a quorum is not obtainable, or, even if obtainable, if
a quorum of disinterested Administrative Trustees so di-
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rects, by independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 4.3(a) shall be paid by the Sponsor in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of such Company Indemnified Person to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Sponsor as authorized in this Section 4.3(a). Notwithstanding the foregoing,
no advance shall be made by the Sponsor if a determination is reasonably and
promptly made (i) by the Administrative Trustees by a majority vote of a quorum
of disinterested Administrative Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Administrative
Trustees so directs, by independent legal counsel in a written opinion or (iii)
by the Common Security Holder of the Trust, that, based upon the facts known to
the Administrative Trustees, counsel or the Common Security Holder at the time
such determination is made, such Company Indemnified Person acted in bad faith
or in a manner that such person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any criminal proceeding, that
such Company Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in instances where
the Administrative Trustees, independent legal counsel or Common Security
Holder reasonably determine that such person deliberately breached his duty to
the Trust or the Common Security or Preferred Security Holders.
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section 4.3(a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, or disinterested directors of the Sponsor or Preferred Security
Holders of the Trust or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office. All rights to
indemnification under this Section 4.3(a) shall be deemed to be provided by a
contract
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between the Sponsor and each Company Indemnified Person who serves in such
capacity at any time while this Section 4.3(a) is in effect. Any repeal or
modification of this Section 4.3(a) shall not affect any rights or obligations
then existing.
(vii) The Sponsor or the Trust may purchase and maintain
liability insurance on behalf of any person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the Sponsor
would have the power to indemnify him against such liability under the
provisions of this Section 4.3(a).
(viii) For purposes of this Section 4.3(a), references to
"the Trust" shall include, in addition to the resulting or surviving entity,
any constituent entity (including any constituent of a constituent) absorbed in
a consolidation or merger, so that any person who is or was a director,
trustee, officer or employee of such constituent entity, or is or was serving
at the request of such constituent entity as a director, trustee, officer,
employee or agent of another entity, shall stand in the same position under the
provisions of this Section 4.3(a) with respect to the resulting or surviving
entity as he would have with respect to such constituent entity if its separate
existence had continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 4.3(a) shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a Company Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(b) The Sponsor agrees to indemnify (i) the Delaware Trustee,
(ii) any Affiliate of the Delaware Trustee, and (iii) any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Delaware Trustee (each of the Persons in (i)
through (iii) being referred to as a "Fiduciary Indemnified Person") for, and
to hold each Fiduciary Indemnified Person harmless against, any loss,
liability, cost, charge or expense incurred without negligence or bad faith on
its part, arising out of or in
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connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligation to indemnify as set forth in this Section
4.3(b) shall survive the termination of this Declaration or the resignation or
removal of the Delaware Trustee.
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware Trustee may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the
business of the Trust, and the Trust and the holders of Securities shall have
no rights by virtue of this Declaration in and to such independent ventures or
the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed
wrongful or improper. None of the Covered Persons, the Sponsor and the
Delaware Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor and the Delaware Trustee shall have the right to take for its own
account (individually or as a partner or fiduciary) or to recommend to others
any such particular investment or other opportunity. Any Covered Person and
the Delaware Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary, trustee or agent for, or may act on any committee or body of
holders of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a writ-
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ten instrument executed by all of the Administrative Trustees and the Sponsor.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further force or
effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution
or its equivalent with respect to the Sponsor or the
revocation of the Sponsor's charter or of the Trust's
certificate of trust;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor or the Trust;
(iv) before the issuance of any Securities, with the
consent of all of the Administrative Trustees and the Sponsor;
and
(v) upon the end of the term of the
Trust as specified in Section 2.8.
(b) As soon as is practicable after the occurrence of an
event referred to in Section 5.2(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
SECTION 5.3 Governing Law.
THIS DECLARATION AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT
REGARD TO ITS PRINCIPLES OF CONFLICT OF LAWS. THE SPONSOR AND EACH OF THE
ADMINISTRATIVE TRUSTEES, HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE FEDERAL AND DELAWARE STATE COURTS IN CONNECTION WITH ANY
SUIT, ACTION OR PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS
CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL
JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE
SPONSOR AND EACH ADMINISTRATIVE TRUSTEE IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY
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EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 5.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 5.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether or not so expressed.
SECTION 5.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 5.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the undersigned have caused this
Declaration to be executed as of the day and year first above written.
/s/ GEORGE MARTINEZ
--------------------------------------
Name: George Martinez
As Administrative Trustee
/s/ MARK GILES
--------------------------------------
Name: Mark Giles
As Administrative Trustee
/s/ MICHAEL A. ROY
--------------------------------------
Name: Michael A. Roy
As Administrative Trustee
BANKERS TRUST (DELAWARE),
as Delaware Trustee
By: /s/ M. LISA WILKINS
------------------------------
Name: M. Lisa Wilkins
Title: Assistant Secretary
STERLING BANCSHARES, INC.
as Sponsor
By: /s/ GEORGE MARTINEZ
------------------------------
Name: George Martinez
Title: Chief Executive Officer
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CERTIFICATE OF TRUST
OF
STERLING BANCSHARES CAPITAL TRUST I
This Certificate of Trust is being executed as of April 2,
1997 for the purposes of organizing a business trust pursuant to the Delaware
Business Trust Act, 12 Del. C. Sections 3801 et seq. (the "Act").
The undersigned hereby certifies as follows:
1. Name. The name of the business trust is "Sterling
Bancshares Capital Trust I" (the "Trust").
2. Delaware Trustee. The name and business address of the
Delaware resident trustee of the Trust meeting the requirements of Section 3807
of the Act are as follows:
Bankers Trust (Delaware)
1001 Jefferson Street
Suite 550
Wilmington, Delaware 19801
3. Effective. This Certificate of Trust shall be effective
immediately upon filing in the Office of the Secretary of State of the State of
Delaware.
22
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EXHIBIT 4.5
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SECOND AMENDED AND RESTATED DECLARATION
OF TRUST
STERLING BANCSHARES CAPITAL TRUST I
Dated as of May __, 1997
================================================================================
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TABLE OF CONTENTS
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.3 Reports by the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.4 Periodic Reports to Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.5 Evidence of Compliance with Conditions
Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III
ORGANIZATION
SECTION 3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.5 Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.6 Powers and Duties of the Administrative
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.7 Prohibition of Actions by the Trust and
the Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.8 Powers and Duties of the Property
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.9 Certain Duties and Responsibilities of
the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.10 Certain Rights of Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.12 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.13 Not Responsible for Recitals or Issuance
of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.2 Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.3 Right to Proceed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of
Co-Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.2 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.3 Property Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware Trustee Generally . . . . . 39
SECTION 5.5 Administrative Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.6 Delaware Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.7 Appointment, Removal and Resignation of Trustees . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.8 Vacancies among Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.9 Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.10 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.11 Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.12 Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.2 Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.3 Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.4 Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.5 Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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SECTION 7.6 Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.7 Outstanding Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.8 Preferred Securities in Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.9 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.10 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.11 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.2 Transfer Procedures and Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.3 Deemed Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 9.4 Book-Entry Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 9.5 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.6 Appointment of Successor Clearing
Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 10.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 10.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 10.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.5 Outside Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.2 Certain Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.3 Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
</TABLE>
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 12.2 Meetings of the Holders; Action by
Written Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEEAND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of
Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 13.2 Representations and Warranties of
Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 14.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 14.3 Intention of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 14.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 14.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 14.6 Partial Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 14.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ANNEX I TERMS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A2-4
EXHIBIT B SPECIMEN OF DEBENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C UNDERWRITING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
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CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
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310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(c), 5.3(d)
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4; 3.6(j)
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(a)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(e)
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8(e); 3.8(h)
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8(i); 7.5
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</TABLE>
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
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SECOND AMENDED AND RESTATED
DECLARATION OF TRUST
OF
STERLING BANCSHARES CAPITAL TRUST I
May __, 1997
SECOND AMENDED AND RESTATED DECLARATION OF TRUST
("Declaration") dated and effective as of o, 1997, by the Trustees (as defined
herein), the Sponsor (as defined herein) and by the holders, from time to time,
of undivided beneficial interests in the Trust to be issued pursuant to this
Declaration;
RECITALS:
WHEREAS, the Trustees (other than the Property Trustee (as
defined herein)) and the Sponsor established Sterling Bancshares Capital Trust
I (the "Trust"), a trust formed under the Delaware Business Trust Act pursuant
to a Declaration of Trust dated as of April 4, 1997 as amended and restated by
a First Amended and Restated Declaration of Trust dated May 14, 1997 (the
"Original Declaration"), and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on April 4, 1997, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Debentures of the Debenture Issuer (each as hereinafter defined), and
engaging in only those other activities necessary, advisable or incidental
thereto; and
WHEREAS, as of the date hereof, no interests in the Trust have
been issued; and
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the
Original Declaration;
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a statutory business trust under the Business Trust
Act and that this Declaration constitute the governing instrument of such
business trust, the Trustees declare that all assets contributed to the Trust
will be held in trust
<PAGE> 8
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
2
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and
Sections and Annexes and Exhibits are to Articles and Sections of and
Annexes and Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Declaration unless otherwise defined in
this Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Administrative Trustee" has the meaning set forth in Section
5.1(b).
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent or Registrar.
"Authorized Officer" of a Person means any other Person that
is authorized to legally bind such former Person.
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"Book-Entry Interest" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday
or a day on which banking institutions in New York, New York or Houston, Texas
are authorized or required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time, or any successor legislation.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Preferred Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Time" means the "Closing Time" under the Underwriting
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission as from time to time constituted, or if any time after the execution
of this Declaration such Commission is not existing and performing the duties
now assigned to it under applicable Federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in Section
7.1(a).
4
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"Common Securities Guarantee" means the guarantee agreement
dated as of o, 1997 of the Sponsor in respect of the Common Securities.
"Company Indemnified Person" means (a) any Administrative
Trustee; (b) any Affiliate of any Administrative Trustee; (c) any officers,
directors, shareholders, members, partners, employees, representatives or
agents of any Administrative Trustee; or (d) any officer, employee or agent of
the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Property
Trustee at which the corporate trust business of the Property Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Agreement is located at Bankers Trust Company, Four Albany
Street, New York, New York 10006, Attention: Corporate Trust and Agency Groups.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the
Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Sterling Bancshares, Inc., a Texas
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer
of the Debentures under the Indenture.
"Debenture Trustee" means Bankers Trust Company, a New York
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Debentures" means the ___% Junior Subordinated Deferrable
Interest Debentures due ________, 2027 of the Debenture Issuer issued pursuant
to the Indenture.
"Default" means an event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
5
<PAGE> 12
"Definitive Preferred Securities" shall have the meaning set
forth in Section 7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.1.
"Direct Action" shall have the meaning set forth in Section
3.8(e).
"Distribution" means a distribution payable to Holders in
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event
of Default (as defined in the Indenture) that has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Preferred Security" has the meaning set forth in
Section 7.3(a).
"Holder" means a Person in whose name a Security is
registered, such Person being a beneficial owner within the meaning of the
Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
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<PAGE> 13
"Indenture" means the Indenture dated as of May __, 1997,
among the Debenture Issuer and the Debenture Trustee, as amended from time to
time.
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"List of Holders" has the meaning set forth in Section 2.2(a).
"Majority in liquidation amount" means, with respect to the
Trust Securities, except as provided in the terms of the Preferred Securities
or by the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting
together as a single class or, as the context may require, Holders of
outstanding Preferred Securities or Holders of outstanding Common Securities
voting separately as a class, who are the record owners of more than 50% of the
aggregate liquidation amount of all outstanding Securities of the relevant
class.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman, the Chief Executive Officer, the President,
a Vice President, the Chief Financial Officer, the Secretary or an Assistant
Secretary of such Person. Any Officers' Certificate delivered by the Trust
shall be signed by at least one Administrative Trustee. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate
has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement or summary of the nature and scope
of the examination or investigation undertaken by each officer in
rendering the Certificate;
7
<PAGE> 14
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who
may be the general counsel of the Sponsor.
"Paying Agent" has the meaning specified in Section 7.4.
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security Beneficial Owner" means, with respect to a
Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Preferred Securities" means, undivided beneficial interests
in the assets of the Trust that rank pari passu with the Common Securities
issued by the Trust.
"Preferred Securities Guarantee" means the guarantee agreement
dated as of May , 1997 of the sponsor in respect of the Preferred Securities.
"Property Trustee" has the meaning set forth in Section 5.3(a).
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"Property Trustee Account" has the meaning set forth in
Section 3.8(c)(i).
"Prospectus" has the meaning set forth in Section 3.6(b)(i).
"Quorum" means a majority of the Administrative Trustees or,
if there are only two Administrative Trustees, both of them[, or, if there is
only a single Administrative Trustee, such Administrative Trustee].
"Registrar" has the meaning set forth in Section 7.4.
"Registration Statement" has the meaning set forth in
Section 3.6(b)(i).
"Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means with respect to the Trustee, any
officer assigned to the Corporate Trust Office, including any managing
director, 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 Declaration 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.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act,
or any successor rule or regulation.
"Securities" or "Trust Securities" means the Common Securities
and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
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"Securities Guarantees" means the Common Securities Guarantee
and the Preferred Securities Guarantee.
"Special Event" has the meaning set forth in Section 4(c) of
Annex I hereto.
"Sponsor" means Sterling Bancshares, Inc., a Texas
corporation, or any successor entity resulting from any merger, consolidation,
amalgamation or other business combination, in its capacity as sponsor of the
Trust.
"Successor Delaware Trustee" has the meaning set forth in
Section 5.7(b)(ii).
"Successor Entity" has the meaning set forth in Section
3.15(b)(i).
"Successor Property Trustee" has the meaning set forth in
Section 3.8(f)(ii).
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"10% in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Preferred Securities or by
the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting
together as a single class or, as the context may require, Holders of
outstanding Preferred Securities or Holders of outstanding Common Securities
voting separately as a class, who are the record owners of 10% or more of the
aggregate liquidation amount of all outstanding Securities of the relevant
class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
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"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue as a trustee in
accordance with the terms of this Declaration, and all other Persons who may
from time to time be duly appointed, qualified and serving as trustees in
accordance with the provisions hereof, and references herein to a Trustee or
the Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"Underwriting Agreement" means the Underwriting Agreement for
the initial offering and sale of Preferred Securities in the form of Exhibit C
to this Declaration.
"Unrestricted Global Preferred Security" has the meaning set
forth in Section 9.2(b).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of
the Trust Indenture Act that are required to be part of this Declaration in
order for this Declaration to be qualified under the Trust Indenture Act and
shall, to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee
which is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Sections
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control and to such extent such provision shall be deemed appropriately
modified or amended.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
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SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Administrative Trustees
on behalf of the Trust shall provide (or cause to be provided) the Property
Trustee, unless the Property Trustee is Registrar for the Securities, (i) not
later than 14 days after each record date for payment of Distributions, a list,
in such form as the Property Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of such record date, provided
that neither the Sponsor nor the Administrative Trustees on behalf of the Trust
shall be obligated to provide such List of Holders at any time that the List of
Holders does not differ from the most recent List of Holders given to the
Property Trustee by or on behalf of the Sponsor and the Administrative Trustees
on behalf of the Trust, and (ii) at any other time, not later than 30 days
after receipt by the Trust of a written request for a List of Holders as of a
date no more than 14 days before such List of Holders is given to the Property
Trustee. The Property Trustee shall preserve, in as current a form as is
reasonably practicable, all information contained in Lists of Holders given to
it or which it receives in the capacity as Paying Agent (if acting in such
capacity), provided that the Property Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations
under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after * 15 of each year, commencing * 15, 1997,
the Property Trustee shall provide to the Holders of the Preferred Securities
such reports as are required by Section 313 of the Trust Indenture Act, if
any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Property Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide to the Property Trustee such
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documents, reports and information as are required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) of the Trust Indenture Act may be given in the form of
an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Preferred Securities may, by vote, on behalf of the Holders of all of the
Preferred Securities, waive any past Event of Default in respect of the
Preferred Securities and its consequences, provided that, if the underlying
Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in aggregate principal amount of the holders of the
Debentures (a "Super Majority") to be waived under the Indenture, the
Event of Default under the Declaration may only be waived by the vote
of the Holders of at least the proportion in aggregate liquidation
amount of the Preferred Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such
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Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded
from this Declaration and the Securities, as permitted by the Trust Indenture
Act. Upon such waiver, any such default shall cease to exist, and any Event of
Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or an Event of Default
with respect to the Preferred Securities or impair any right consequent
thereon. Any waiver by the Holders of the Preferred Securities of an Event of
Default with respect to the Preferred Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of any such Event
of Default with respect to the Common Securities for all purposes of this
Declaration without any further act, vote, or consent of the Holders of the
Common Securities.
(b) The Holders of a Majority in liquidation amount of
the Common Securities may, by vote, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration shall also
not be waivable except to the extent so provided below in this section
2.6(b); or
(ii) requires the consent or vote of a Super Majority to
be waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under the Declaration as
provided below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in aggregate liquidation amount of the Common
Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding;
provided further, the Holders of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and their conse-
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quences if all Events of Default with respect to the Preferred Securities have
been cured, waived or otherwise eliminated, and until such Events of Default
have been so cured, waived or otherwise eliminated, the Property Trustee will
be deemed to be acting solely on behalf of the Holders of the Preferred
Securities and only the Holders of the Preferred Securities will have the right
to direct the Property Trustee in accordance with the terms of the Securities.
The foregoing provisions of this Section 2.6(b) shall be in lieu of Sections
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such Sections
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b),
upon such waiver, any such default shall cease to exist and any Event of
Default with respect to the Common Securities arising therefrom shall be deemed
to have been cured for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture
by the Property Trustee, at the direction of the Holders of the Preferred
Securities, constitutes a waiver of the corresponding Event of Default under
this Declaration. The foregoing provisions of this Section 2.6(c) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after
the occurrence of a default actually known to a Responsible Officer, transmit
by mail, first class postage prepaid, to the Holders, notices of all defaults
with respect to the Securities actually known to a Responsible Officer, unless
such defaults have been cured before the giving of such notice (the term
"default(s)" for the purposes of this Section 2.7(a) and Section 2.7(b) being
hereby defined to be an Event of Default as defined in the Indenture, not
including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein); provided that, except for a default in
the payment of
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principal of or interest (including Compounded Interest and Additional Sums (as
such terms are defined in the Indenture), if any, on any of the Debentures, the
Property Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer in good faith determines that the withholding of such
notice is in the interests of the Holders.
(b) The Property Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 5.1(a) (other than the
payment of Compounded Interest and Additional Sums) and 5.1(b) of the
Indenture; or
(ii) any default as to which the Property Trustee shall
have received written notice or of which a Responsible Officer charged
with the administration of the Declaration shall have actual
knowledge.
(c) Within five Business Days after the occurrence of
any Event of Default actually known to the Property Trustee, the Property
Trustee shall transmit notice of such Event of Default to the Holders of the
Preferred Securities, the Administrative Trustees and the Sponsor, unless such
Event of Default shall have been cured or waived. The Sponsor and the
Administrative Trustees shall file annually with the Property Trustee a
certificate as to whether or not they are in compliance with all the conditions
and covenants applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Sterling Bancshares Capital Trust I" as
such name may be modified from time to time by the Administrative Trustees
following written notice to the Delaware Trustee, the Property Trustee and the
Holders. The Trust's activities may be conducted under the name of the Trust
or any other name deemed advisable by the Administrative Trustees.
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SECTION 3.2 Office.
The address of the principal office of the Trust is c/o
Sterling Bancshares, Inc., 15000 Northwest Freeway, Suite 200, Houston, Texas
77040. On 10 Business Days' advance written notice to the Delaware Trustee,
the Property Trustee and the Holders of Securities, the Administrative Trustees
may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities, (b) use the proceeds from the sale of the Securities
to acquire the Debentures, and (c) except as otherwise limited herein, to
engage in only those other activities necessary, advisable or incidental
thereto. The Trust shall not borrow money, issue debt or reinvest proceeds
derived from investments, mortgage or pledge any of its assets, or otherwise
undertake (or permit to be undertaken) any activity that would cause the Trust
not to be classified for United States Federal income tax purposes as a grantor
trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to
the specific duties of the Property Trustee, the Administrative Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Administrative Trustees in accordance with their powers
shall constitute the act of and serve to bind the Trust and an action taken by
the Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no Person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Property Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the
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Trust shall be vested in the Trust. The Holders shall not have legal title to
any part of the assets of the Trust, but shall have an undivided beneficial
interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have the exclusive power,
duty and authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with
this Declaration; provided, however, that except as contemplated in Section
7.1(a), (i) the Trust may issue no more than one series of Preferred Securities
and no more than one series of Common Securities, (ii) there shall be no
interests in the Trust other than the Securities, and (iii) the issuance of
Securities shall be limited to a simultaneous issuance of both Preferred
Securities and Common Securities at the Closing Time;
(b) in connection with the issue and sale of the
Preferred Securities at the direction of the Sponsor, to:
(i) prepare and execute, if necessary, a prospectus
(the "Prospectus") in preliminary and final form prepared by the
Sponsor, in relation to the offering and sale of Preferred Securities
and to execute and file with the Commission a registration statement
(the "Registration Statement"), including any amendments thereto, for
the offering and sale of Preferred Securities;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be necessary
or appropriate in order to qualify or register all or part of the
Preferred Securities for offer and sale in any State in which the
Sponsor has determined to qualify or register such Preferred
Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to permit the Preferred Securities to trade or be quoted or
listed in or on the Nasdaq Stock Market's National Market or any other
securities exchange or quotation system;
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(iv) execute and deliver letters, documents, or
instruments with DTC and other Clearing Agencies relating to the
Preferred Securities;
(v) execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared by
the Sponsor, relating to the registration of the Preferred Securities
under Section 12(b) or (g) of the Exchange Act; and
(vi) execute and enter into the Underwriting Agreement
providing for the sale of the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the
sale of the Preferred Securities and the Common Securities; provided, however,
that the Administrative Trustees shall cause legal title to the Debentures to
be held of record in the name of the Property Trustee for the benefit of the
Holders;
(d) to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all
actions to be taken hereunder that require a record date be established,
including and with respect to, for the purposes of Section 316(c) of the Trust
Indenture Act, Distributions, voting rights, redemptions and exchanges, and to
issue relevant notices to the Holders of Preferred Securities and Holders of
Common Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may
be required of the Administrative Trustees pursuant to the terms of the
Securities;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or demands of or
against the Trust ("Legal Action"), unless pursuant to Section 3.8(e), the
Property Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and manag-
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ers, contractors, advisors, and consultants and pay reasonable compensation for
such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by Section
314(a)(4) of the Trust Indenture Act to the Property Trustee, which certificate
may be executed by any Administrative Trustee;
(k) to incur expenses that are necessary or incidental
to carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as,
Registrar for the Securities or to appoint a Paying Agent for the Securities as
provided in Section 7.4 except for such time as such power to appoint a Paying
Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property
Trustee and to Holders of any notice received from the Debenture Issuer of its
election to defer payments of interest on the Debentures by extending the
interest payment period under the Indenture;
(n) to take all action that may be necessary or
appropriate for the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory business trust
under the laws of the State of Delaware and of each other jurisdiction in which
such existence is necessary to protect the limited liability of the Holders or
to enable the Trust to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this
Declaration or with applicable law, that the Administrative Trustees determine
in their discretion to be necessary or desirable in carrying out the activities
of the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the Investment
Company Act;
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(ii) causing the Trust to be classified for United
States Federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure
that the Debentures will be treated as indebtedness of the Debenture
Issuer for United States Federal income tax purposes;
(p) to take all action necessary to cause all
applicable tax returns and tax information reports that are required
to be filed with respect to the Trust to be duly prepared and filed by
the Administrative Trustees, on behalf of the Trust; and
(q) to execute all documents or instruments, perform
all duties and powers, and do all things for and on behalf of the
Trust in all matters necessary or incidental to the foregoing.
The Administrative Trustees must exercise the powers set forth
in this Section 3.6 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Administrative Trustees
shall not take any action that is inconsistent with the purposes and functions
of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall
have none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Administrative Trustees pursuant
to this Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including
the Property Trustee and the Delaware Trustee) shall not, engage in any
activity other than as required or authorized by this Declaration. The Trust
shall not:
(i) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such pro-
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ceeds to Holders pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust
purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures;
(v) possess any power or otherwise act in such a way as
to vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the Trust other
than the Securities;
(vii) other than as provided in this Declaration or Annex
I, (A) direct the time, method and place of conducting any proceeding
with respect to any remedy available to the Debenture Trustee, or
exercising any trust or power conferred upon the Debenture Trustee
with respect to the Debentures, (B) waive any past default that is
waivable under the Indenture, or (C) exercise any right to rescind or
annul any declaration that the principal of all the Debentures shall
be due and payable; or
(viii) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be
required unless the Trust shall have received an opinion of
independent tax counsel experienced in such matters to the effect that
such amendment, modification or termination will not cause more than
an insubstantial risk that for United States Federal income tax
purposes the Trust will not be classified as a grantor trust.
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SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by
and held of record in the name of the Property Trustee in trust for the benefit
of the Holders. The right, title and interest of the Property Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.7. Such vesting and
cessation of title shall be effective whether or not conveyancing documents
with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right,
title and interest in the Debentures to the Administrative Trustees or to the
Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Trustee Account") in the name of
and under the exclusive control of the Property Trustee on behalf of
the Holders and, upon the receipt of payments of funds made in respect
of the Debentures held by the Property Trustee, deposit such funds
into the Property Trustee Account and make payments or cause the
Paying Agent to make payments to the Holders from the Property Trustee
Account in accordance with Section 6.1. Funds in the Property Trustee
Account shall be held uninvested until disbursed in accordance with
this Declaration. The Property Trustee Account shall be an account
that is maintained with a banking institution the rating on whose
long-term unsecured indebtedness by a "nationally recognized
statistical rating organization", as that term is defined for purposes
of Rule 436(g)(2) under the Securities Act, is at least investment
grade;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Trust
Securities to the extent the Debentures are redeemed or mature; and
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(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as shall be
necessary or appropriate to effect the distribution of the Debentures
to Holders upon the occurrence of certain events.
(d) The Property Trustee shall take all actions and
perform such duties as may be specifically required of the Property Trustee
pursuant to the terms of the Securities.
(e) Subject to Section 3.9(a), the Property Trustee
shall take any Legal Action which arises out of or in connection with an Event
of Default of which a Responsible Officer has actual knowledge or the Property
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act and if the Property Trustee shall have failed to take such Legal Action,
the Holders of the Preferred Securities may take such Legal Action, to the same
extent as if such Holders of Preferred Securities held an aggregate principal
amount of Debentures equal to the aggregate liquidation amount of such
Preferred Securities, without first proceeding against the Property Trustee or
the Trust; provided however, that if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay the principal of or interest (including Compounded Interest and
Additional Sums, if any) on the Debentures on the date such principal or
interest (including Compounded Interest and Additional Sums, if any) is
otherwise payable (or in the case of redemption, on the redemption date), then
a Holder of Preferred Securities may directly institute a proceeding for
enforcement of payment to such Holder of the principal of or interest
(including Compounded Interest and Additional Sums, if any) on the Debentures
having a principal amount equal to the aggregate liquidation amount of the
Preferred Securities of such Holder (a "Direct Action") on or after the
respective due date specified in the Debentures. In connection with such
Direct Action, the rights of the Holders of the Common Securities will be
subrogated to the rights of such Holder of Preferred Securities to the extent
of any payment made by the Debenture Issuer to such Holder of Preferred
Securities in such Direct Action. Except as provided in the preceding
sentences of this Section 3.8(e), the Holders of Preferred Securities will not
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be able to exercise directly any other remedy available to the holders of the
Debentures.
(f) The Property Trustee shall not resign as a Trustee
unless either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders pursuant to the
terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and
has accepted that appointment in accordance with Section 5.7 (a
"Successor Property Trustee").
(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of Default actually known to a Responsible
Officer occurs and is continuing, the Property Trustee shall, for the benefit
of Holders, enforce its rights as holder of the Debentures subject to the
rights of the Holders pursuant to the terms of such Securities.
(h) The Property Trustee shall be authorized to
undertake any actions set forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying
Agent, the Property Trustee may authorize one or more Persons to act as
additional Paying Agents and to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all Securities and
any such Paying Agent shall comply with Section 317(b) of the Trust Indenture
Act. Any such additional Paying Agent may be removed by the Property Trustee
at any time the Property Trustee remains as Paying Agent and a successor Paying
Agent or additional Paying Agents may be (but are not required to be) appointed
at any time by the Property Trustee while the Property Trustee is so acting as
Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee
shall have none of the duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 3.6.
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Notwithstanding anything expressed or implied to the contrary
in this Declaration or any Annex or Exhibit hereto, (i) the Property Trustee
must exercise the powers set forth in this Section 3.8 in a manner that is
consistent with the purposes and functions of the Trust set out in Section 3.3,
and (ii) the Property Trustee shall not take any action that is inconsistent
with the purposes and functions of the Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Declaration and in the Securities and no implied covenants shall
be read into this Declaration against the Property Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
2.6) of which a Responsible Officer has actual knowledge, the Property Trustee
shall exercise such of the rights and powers vested in it by this Declaration,
and use the same degree of care and skill in their exercise, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(b) No provision of this Declaration shall be construed
to relieve the Property Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Declaration and in the Securities and the Property
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration and in the Securities, and no implied covenants or
obligations
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shall be read into this Declaration against the Property
Trustee; and
(B) in the absence of bad faith on the part of
the Property Trustee, the Property Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming to
the requirements of this Declaration; provided, however, that
in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to
the Property Trustee, the Property Trustee shall be under a
duty to examine the same to determine whether or not they
conform to the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to
it;
(v) the Property Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the
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Debentures and the Property Trustee Account shall be to deal with such
property in a similar manner as the Property Trustee deals with
similar property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee under this
Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or
liability for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
in writing with the Sponsor. Money held by the Property Trustee need
not be segregated from other funds held by it except in relation to
the Property Trustee Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Sponsor with their respective duties under this Declaration, nor shall
the Property Trustee be liable for any default or misconduct of the
Administrative Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and
shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
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(ii) any direction or act of the Sponsor or the
Administrative Trustees contemplated by this Declaration may be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration,
the Property Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Sponsor or the Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to
any recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or
other experts of its selection and the advice or opinion of such
counsel and experts with respect to legal matters or advice within the
scope of such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion, such counsel may be counsel to the Sponsor or any
of its Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Property Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this
Declaration at the request or direction of any Holder, unless such
Holder shall have provided to the Property Trustee security and
indemnity, reasonably satisfactory to the Property Trustee, against
the costs, expenses (including reasonable attorneys' fees and expenses
and the expenses of the Property Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advanc-
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es as may be requested by the Property Trustee provided, that, nothing
contained in this Section 3.10(a)(vi) shall be taken to relieve the
Property Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may determine in its sole discretion to be
appropriate;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or its
agents hereunder shall bind the Trust and the Holders, and the
signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Property
Trustee to so act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be conclusively
evidenced by the Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration
the Property Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Property Trustee (i) may request instructions
from the Holders which instructions may only be given by the Holders
of the same proportion in liquidation amount of the Securities as
would be entitled to direct the Property Trustee under the terms of
the Securities in respect of such remedy, right or action,
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(ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in or accordance with
such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration; and
(xii) the Property Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Declaration.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Property Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the Property
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Administrative Trustees or the Property Trustee
described in this Declaration. Except as set forth in Section 5.2, the
Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Business Trust Act. In the
event the Delaware Trustee shall at any time be required to take any action or
perform any duty hereunder, the Delaware Trustee shall be entitled to the
benefits of Section 3.9(b)(ii)-(viii) and Section 3.10.
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SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Administrative Trustees,
and except as otherwise required by the Business Trust Act, a majority of the
Administrative Trustees or, if there are only two, any Administrative Trustee
or, if there is only one, such Administrative Trustee is authorized to execute
on behalf of the Trust any documents that the Administrative Trustees have the
power and authority to execute pursuant to Section 3.6; provided that the
Registration Statement referred to in Section 3.6(b)(i), including any
amendments thereto, shall be signed by all of the Administrative Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall continue in existence until 5:00 p.m., Houston,
Texas time on the thirty-first (31st) anniversary of the effective date of this
Declaration.
SECTION 3.15 Mergers.
(a) The Trust may not merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to any Person, except as
described in Sections 3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with
the consent of the Administrative Trustees or, if there are more than two, a
majority of the Administrative Trustees and without the consent of the Holders,
the Delaware Trustee or the
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Property Trustee, merge with or into, consolidate, amalgamate, or be replaced
by, or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to, a trust organized as such under the laws of
any State; provided that:
(i) such successor entity (the "Successor Entity")
either: (A) expressly assumes all of the obligations of
the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms as the
Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Securities rank with
respect to Distributions and payments upon liquidation,
redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties as the
Property Trustee as the holder of the Debentures;
(iii) the Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on
any national securities exchange or with another organization on which
the Preferred Securities are then listed or quoted;
(iv) if the Preferred Securities (including any
Successor Securities) are rated by any nationally recognized
statistical rating organization prior to such transaction, such
merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not cause the Preferred Securities (including any
Successor Securities), or if the Debentures are so rated, the
Debentures, to be downgraded by any nationally recognized statistical
rating organization within 270 days after such transaction;
(v) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect
the rights, preferences and privileges of the Holders (including the
holders of any Successor Securities) in any
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material respect (other than with respect to any dilution of such
Holders' interests in the new entity);
(vi) such Successor Entity has a purpose identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received
an opinion of an independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders
(including the holders of any Successor Securities) in any
material respect (other than with respect to any dilution of
the Holders' interest in the new entity); and
(B) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease,
neither the Trust nor the Successor Entity will be required to
register as an Investment Company;
(viii) the Sponsor or any permitted successor or assignee owns
all of the common securities of such Successor Entity and guarantees
the obligations of such Successor Entity under the Successor
Securities at least to the extent provided by the Preferred Securities
Guarantee and the Common Securities Guarantee; and
(ix) there shall have been furnished to the Property
Trustee an Officer's Certificate and an Opinion of Counsel, each to
the effect that all conditions precedent in this Declaration to such
transaction have been satisfied.
(c) Notwithstanding Section 3.15(b), the Trust shall
not, except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to, any other Person or permit any other Person to
consolidate, amalgamate, merge with or into, or replace it if such consolida-
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tion, amalgamation, merger, replacement, conveyance, transfer or lease would
cause the Trust or the Successor Entity not to be classified as a grantor trust
for United States Federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
At the Closing Time, the Sponsor will purchase all of the
Common Securities then issued by the Trust, in an amount equal to at least 3%
of the total capital of the Trust, at the same time as the Preferred Securities
are issued and sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare the Prospectus and Registration
Statement for filing by the Trust with the Commission, including any amendments
thereto;
(b) to determine the States in which to take
appropriate action to qualify or register for sale all or part of the Preferred
Securities and to do any and all such acts, other than actions which must be
taken by the Trust, and advise the Trust of actions it must take, and prepare
for execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) if deemed necessary or advisable by the Sponsor, to
prepare for filing by the Trust an application to permit the Preferred
Securities to trade or be quoted on or included in the Nasdaq National Market
or any other automated quotation system or listed on any national securities
exchange;
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A, including any
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amendments thereto, relating to the registration of the Preferred Securities
under Section 12(b) or (g) of the Exchange Act; and
(e) to negotiate the terms of the Underwriting
Agreement providing for the sale of the Preferred Securities.
SECTION 4.3 Right to Proceed.
The Sponsor acknowledges the rights of the Holders of
Preferred Securities, in the event that a failure of the Trust to pay
Distributions on the Preferred Securities is attributable to the failure of the
Company to pay interest or principal on the Debentures, to institute a
proceeding directly against the Debenture Issuer for enforcement of its payment
obligations on the Debentures.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities or pursuant to written consent;
provided, however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a natural
person, shall be a person who is a resident of the State of Delaware or that,
if not a natural person, is an entity which has its principal place of business
in the State of Delaware (the "Delaware Trustee"); (2) there shall be at least
one Trustee who is an officer of the Sponsor (an "Administrative Trustee"); and
(3) one Trustee shall be the Property Trustee for
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so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements. Notwithstanding the above, unless an Event
of Default shall have occurred and be continuing, at any time or times, for the
purpose of meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust's property may at the time be
located, the Holders of a Majority in liquidation amount of the Common
Securities acting as a class at a meeting of the Holders of the Common
Securities or pursuant to written consent, and the Administrative Trustees
shall have power to appoint one or more Persons either to act as a co-trustee,
jointly with the Property Trustee, of all or any part of the Trust's property,
or to act as separate trustee of any such property, in either case with such
powers as may be provided in the instrument of appointment, and to vest in such
Person or Persons in such capacity any property, title, right or power deemed
necessary or desirable, subject to the provisions of this Declaration. In case
an Event of Default has occurred and is continuing, the Property Trustee alone
shall have power to make any such appointment of a co-trustee.
Whenever in this Declaration it is provided that the Holders
of a specified percentage in aggregate liquidation amount of the Common
Securities may take any action (including the making of any demand or request,
the giving of any notice, consent or waiver or the taking of any other action),
the fact that at the time of taking any such action the holders of such
specified percentage have joined therein may be evidenced (a) by any instrument
or any number of instruments of similar tenor executed by such Holders in
person or by agent or proxy appointed in writing, or (b) by the record of such
holders of Securities voting in favor thereof at any meeting of such Holders
duly called and held in accordance with the provisions of Article VIII, or (c)
by a combination of such instrument or instruments and any such record of such
a meeting of such Holders.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, the Delaware Trustee
shall be:
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(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise meets the
requirements of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the
"Property Trustee") which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by
Federal, state, territorial or District of Columbia authority. If
such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or examining
authority referred to above, then for the purposes of this Section
5.3(a)(ii), the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Property Trustee shall cease to
be eligible to so act under Section 5.3(a), the Property Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.7(c).
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(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the Common Securities (as
if it were the obligor referred to in Section 310(b) of the Trust Indenture
Act) shall in all respects comply with the provisions of Section 310(b) of the
Trust Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed
to be specifically described in this Declaration for purposes of clause (i) of
the first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
Bankers Trust Company
Four Albany Street
New York, New York 10006
Attention: Corporate Trustee
Administration Department
SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware
Trustee Generally.
Each Administrative Trustee and the Delaware Trustee (unless
the Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Administrative Trustees.
The initial Administrative Trustees shall be:
George Martinez
Mark T. Giles
Michael A. Roy
(a) Except as expressly set forth in this Declaration
and except if a meeting of the Administrative Trustees is called with respect
to any matter over which the Administrative Trustees have power to act, any
power of the Administrative Trustees may be exercised by, or with the consent
of, any one such Administrative Trustee.
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(b) Unless otherwise determined by the Administrative
Trustees, and except as otherwise required by the Business Trust Act or
applicable law, any Administrative Trustee is authorized to execute on behalf
of the Trust any documents which the Administrative Trustees have the power and
authority to cause the Trust to execute pursuant to Section 3.6, provided,
that, the registration statement referred to in Section 3.6, including any
amendments thereto, shall be signed by all of the Administrative Trustees; and
(c) An Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Administrative Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6 Delaware Trustee.
The initial Delaware Trustee shall be:
Bankers Trust (Delaware)
1001 Jefferson Street, 5th Floor
Wilmington, Delaware 19801
Attention: Corporate Trustee
Administration Department
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.7(b) and to Section 6(b) of
Annex I hereto, Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and
be continuing after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common
Securities; and
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(iii) if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, with respect to the
Property Trustee or the Delaware Trustee, by vote of Holders of a
Majority in liquidation amount of the Preferred Securities voting as a
class at a meeting of Holders of the Preferred Securities.
(b) (i) The Trustee that acts as Property Trustee shall not
be removed in accordance with Section 5.7(a) until a Successor Property Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Property Trustee and delivered to the Administrative
Trustees and the Sponsor.
(ii) The Trustee that acts as Delaware Trustee shall not
be removed in accordance with Section 5.7(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office
until his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect
upon such delivery or upon such later date as is specified therein; provided,
however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property Trustee; or
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(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the Holders; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities or, if an
Event of Default shall have occurred and be continuing after the issuance of
the Securities, the Holders of the Preferred Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor
Delaware Trustee shall have been appointed and accepted appointment as provided
in this Section 5.7 within 60 days after delivery of an instrument of
resignation or removal, the Property Trustee or Delaware Trustee resigning or
being removed, as applicable, may petition any court of competent jurisdiction
for appointment of a Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor Property Trustee or
Successor Delaware Trustee, as the case may be.
(g) At the time of resignation or removal of the
Property Trustee or the Delaware Trustee, the Debenture Issuer shall pay to
such Trustee any amounts that may be owed to such Trustee pursuant to Section
10.4.
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SECTION 5.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Administrative
Trustees or, if there are more than two, a majority of the Administrative
Trustees shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance with Section
5.7.
SECTION 5.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to dissolve, terminate or annul the Trust. Whenever
a vacancy in the number of Administrative Trustees shall occur, until such
vacancy is filled by the appointment of an Administrative Trustee in accordance
with Section 5.7, the Administrative Trustees in office, regardless of their
number, shall have all the powers granted to the Administrative Trustees and
shall discharge all the duties imposed upon the Administrative Trustees by this
Declaration.
SECTION 5.10 Meetings.
If there is more than one Administrative Trustee, meetings of
the Administrative Trustees shall be held from time to time upon the call of
any Administrative Trustee. Regular meetings of the Administrative Trustees
may be held at a time and place fixed by resolution of the Administrative
Trustees. Notice of any in-person meetings of the Administrative Trustees
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
such meeting. Notice of any telephonic meetings of the Administrative Trustees
or any committee thereof shall be hand delivered or otherwise delivered in
writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement
of the time, place and anticipated purposes of the meeting. The presence
(whether in person or by telephone) of an Administrative Trustee at a meeting
shall constitute a waiver of notice
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of such meeting except where an Administrative Trustee attends a meeting for
the express purpose of objecting to the transaction of any activity on the
ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Administrative
Trustees may be taken at a meeting by vote of a majority of the Administrative
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that a Quorum is present, or without a meeting
by the unanimous written consent of the Administrative Trustees. In the event
there is only one Administrative Trustee, any and all action of such
Administrative Trustee shall be evidenced by a written consent of such
Administrative Trustee.
SECTION 5.11 Delegation of Power.
(a) Any Administrative Trustee may, by power of
attorney consistent with applicable law, delegate to any other natural person
over the age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to
delegate from time to time to such of their number or to officers of the Trust
the doing of such things and the execution of such instruments either in the
name of the Trust or the names of the Administrative Trustees or otherwise as
the Administrative Trustees may deem expedient, to the extent such delegation
is not prohibited by applicable law or contrary to the provisions of the Trust,
as set forth herein.
SECTION 5.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee or the Delaware
Trustee or any Administrative Trustee that is not a natural person, as the case
may be, may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Property Trustee or the Delaware Trustee, as the case may be, shall be a party,
or any corporation succeeding to all or substantially all the corporate trust
business of the Property Trustee or the
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Delaware Trustee, as the case may be, shall be the successor of the Property
Trustee or the Delaware Trustee, as the case may be, hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions in accordance with the
applicable terms of the relevant Holder's Securities. If and to the extent
that the Debenture Issuer makes a payment of interest (including Compounded
Interest and Additional Sums) or principal on the Debentures held by the
Property Trustee or any other payments with respect to the Debentures held by
the Property Trustee (the amount of any such payment being a "Payment Amount"),
the Property Trustee shall and is directed, to the extent funds are available
for that purpose, to make a distribution (a "Distribution") of the Payment
Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Administrative Trustees shall on behalf of the
Trust issue one class of Preferred Securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Annex I (the "Preferred Securities") and one class of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Common Securities"). The Trust
shall issue no securities or other interests in the assets of the Trust other
than the Preferred Securities and the Common Securities.
(b) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the
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capital of the Trust and shall not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(d) Every Person, by virtue of having become a Holder
or a Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
SECTION 7.2 Execution and Authentication.
(a) The Securities shall be signed on behalf of the
Trust by an Administrative Trustee by manual or facsimile signature. In case
any Administrative Trustee of the Trust who shall have signed any of the
Securities shall cease to be such Administrative Trustee before the Securities
so signed shall be delivered by the Trust, such Securities nevertheless may be
delivered as though the person who signed such Securities had not ceased to be
such Administrative Trustee; and any Securities may be signed on behalf of the
Trust by such persons who, at the actual date of execution of such Security,
shall be the Administrative Trustees of the Trust, although at the date of the
execution and delivery of the Declaration any such person was not such a
Administrative Trustee.
(b) One Administrative Trustee shall sign the Preferred
Securities for the Trust by manual or facsimile signature. Unless otherwise
determined by the Trust, such signature shall, in the case of Common
Securities, be a manual signature.
A Preferred Security shall not be valid until authenticated by
the manual signature of an authorized officer of the Property Trustee. The
signature shall be conclusive evidence that the Preferred Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Preferred Securities for
original issue. The aggregate number of
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Preferred Securities outstanding at any time shall not exceed the number set
forth in the Terms in Annex I hereto except as provided in Section 7.6.
The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Preferred Securities. An
authenticating agent may authenticate Preferred Securities whenever the
Property Trustee may do so. Each reference in this Declaration to
authentication by the Property Trustee includes authentication by such agent.
An authenticating agent has the same rights as the Property Trustee to deal
with the Sponsor or an Affiliate.
SECTION 7.3 Form and Dating.
The Preferred Securities and the Property Trustee's
certificate of authentication shall be substantially in the form of Exhibit A-1
and the Common Securities shall be substantially in the form of Exhibit A-2,
each of which is hereby incorporated in and expressly made a part of this
Declaration. Certificates representing the Securities may be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrative Trustees, as evidenced by their
execution thereof. The Securities may have letters, CUSIP or other numbers,
notations or other marks of identification or designation and such legends or
endorsements required by law, stock exchange rule, agreements to which the
Trust is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Trust). The Trust at the direction
of the Sponsor shall furnish any such legend not contained in Exhibit A-1 to
the Property Trustee in writing. Each Preferred Security shall be dated the
date of its authentication. The terms and provisions of the Securities set
forth in Annex I and the forms of Securities set forth in Exhibits A-1 and A-2
are part of the terms of this Declaration and to the extent applicable, the
Property Trustee and the Sponsor, by their execution and delivery of this
Declaration, expressly agree to such terms and provisions and to be bound
thereby.
(a) Global Securities. Securities shall be issued in
the form of one or more permanent global Securities in definitive, fully
registered form without distribution coupons with the appropriate global
legends set forth in Exhibit A-1 hereto (a
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"Global Preferred Security"), which shall be deposited on behalf of the
purchasers of the Preferred Securities represented thereby with the Property
Trustee, at its New York office, as custodian for the Clearing Agency, and
registered in the name of the Clearing Agency or a nominee of the Clearing
Agency, duly executed by the Trust and authenticated by the Property Trustee as
hereinafter provided. The number of Preferred Securities represented by a
Global Preferred Security may from time to time be increased or decreased by
adjustments made on the records of the Property Trustee and the Clearing Agency
or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall
apply only to the Global Preferred Securities and such other Preferred
Securities in global form as may be authorized by the Trust to be deposited
with or on behalf of the Clearing Agency.
The Trust shall execute and the Property Trustee shall, in
accordance with this Section 7.3, authenticate and make available for delivery
initially one or more Global Preferred Securities that (i) shall be registered
in the name of Cede & Co. or other nominee of such Clearing Agency and (ii)
shall be delivered by the Trustee to such Clearing Agency or pursuant to such
Clearing Agency's written instructions or held by the Property Trustee as
custodian for the Clearing Agency.
Members of, or participants in, the Clearing Agency
("Participants") shall have no rights under this Declaration with respect to
any Global Preferred Security held on their behalf by the Clearing Agency or by
the Property Trustee as the custodian of the Clearing Agency or under such
Global Preferred Security, and the Clearing Agency may be treated by the Trust,
the Property Trustee and any agent of the Trust or the Property Trustee as the
absolute owner of such Global Preferred Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust, the
Property Trustee or any agent of the Trust or the Property Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Clearing Agency or impair, as between the Clearing Agency and its
Participants, the operation of customary practices of such Clearing Agency
governing the exercise of the rights of a holder of a beneficial interest in
any Global Preferred Security.
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(c) Definitive Preferred Securities. Except as
provided in Section 7.9 or 9.2(d)(i), owners of beneficial interests in a
Global Preferred Security will not be entitled to receive physical delivery of
certificated Preferred Securities ("Definitive Preferred Securities").
(d) Authorized Denominations. The Preferred Securities
are issuable only in denominations having a liquidation preference of $25 and
any integral multiple thereof.
SECTION 7.4 Registrar and Paying Agent
The Trust shall maintain in the Borough of Manhattan, The City
of New York, (i) an office or agency where Preferred Securities may be
presented for registration of transfer ("Registrar") and (ii) an office or
agency where Preferred Securities may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Preferred Securities and
of their transfer. The Trust may appoint the Registrar and the Paying Agent
and may appoint one or more co-registrars and one or more additional paying
agents in such other locations as it shall determine. The term "Registrar"
includes any additional registrar and the term "Paying Agent" includes any
additional paying agent. The Trust may change any Paying Agent, Registrar or
co-registrar without prior notice to any Holder. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees. The Trust shall notify the Property Trustee of the
name and address of any Agent not a party to this Declaration. If the Trust
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Property Trustee shall act as such. The Trust or any of its Affiliates may act
as Paying Agent or Registrar. The Trust shall act as Paying Agent and
Registrar and Exchange Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar
and Paying Agent for the Preferred Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property
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Trustee all money held by the Paying Agent for the payment of liquidation
amounts or Distributions, and will notify the Property Trustee if there are
insufficient funds for such purpose. While any such insufficiency continues,
the Property Trustee may require a Paying Agent to pay all money held by it to
the Property Trustee. The Trust at any time may require a Paying Agent to pay
all money held by it to the Property Trustee and to account for any money
disbursed by it. Upon payment over to the Property Trustee, the Paying Agent
(if other than the Trust or an Affiliate of the Trust) shall have no further
liability for the money. If the Trust or the Sponsor or an Affiliate of the
Trust or the Sponsor acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent.
SECTION 7.6 Replacement Securities.
If a Holder claims that a Security owned by it has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Preferred Securities to the
Property Trustee, the Trust shall issue and the Property Trustee shall, upon
written order of the Trust, authenticate a replacement Security if the Property
Trustee's and the Trust's requirements, as the case may be, are met. An
indemnity bond must be provided by the Holder which, in the judgment of the
Property Trustee, is sufficient to protect the Trustees, the Sponsor, the Trust
or any authenticating agent from any loss which any of them may suffer if a
Security is replaced. The Trust may charge such Holder for its expenses in
replacing a Security.
Every replacement Security is an additional beneficial
interest in the Trust.
SECTION 7.7 Outstanding Preferred Securities.
The Preferred Securities outstanding at any time are all the
Preferred Securities authenticated by the Property Trustee except for those
cancelled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.
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If a Preferred Security is replaced, paid or purchased
pursuant to Section 7.6 hereof, it ceases to be outstanding unless the Property
Trustee receives proof satisfactory to it that the replaced, paid or purchased
Preferred Security is held by a bona fide purchaser.
If Preferred Securities are considered paid in accordance with
the terms of this Declaration, they cease to be outstanding and Distributions
on them shall cease to accumulate.
A Preferred Security does not cease to be outstanding because
any of the Trust, the Sponsor or an Affiliate of the Sponsor holds the
Security.
SECTION 7.8 Preferred Securities in Treasury.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Preferred
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be
fully protected in relying on any such direction, waiver or consent, only
Securities which a Responsible Officer of the Property Trustee actually knows
are so owned shall be so disregarded.
SECTION 7.9 Temporary Securities.
(a) Until Definitive Securities are ready for delivery,
the Trust may prepare and, in the case of the Preferred Securities, the
Property Trustee upon written request of the Trust signed by any two
Administrative Trustees shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of Definitive Securities but may
have variations that the Trust considers appropriate for temporary Securities.
Without unreasonable delay, the Trust shall prepare and, in the case of the
Preferred Securities, the Property Trustee upon written request of the Trust
signed by any two Administrative Trustees shall authenticate Definitive
Securities in exchange for temporary Securities.
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(b) A Global Preferred Security deposited with the
Clearing Agency or with the Property Trustee as custodian for the Clearing
Agency pursuant to Section 7.3 shall be transferred to the beneficial owners
thereof in the form of certificated Preferred Securities only if such transfer
complies with Section 9.2 and (i) the Clearing Agency notifies the Sponsor that
it is unwilling or unable to continue as Clearing Agency for such Global
Preferred Security or if at any time such Clearing Agency ceases to be a
"clearing agency" registered under the Exchange Act and a clearing agency is
not appointed by the Sponsor within 90 days of such notice, (ii) a Default or
an Event of Default has occurred and is continuing or (iii) the Trust at its
sole discretion elects to cause the issuance of certificated Preferred
Securities.
(c) Any Global Preferred Security that is transferable
to the beneficial owners thereof in the form of certificated Preferred
Securities pursuant to this Section 7.9 shall be surrendered by the Clearing
Agency to the Property Trustee located in the Borough of Manhattan, The City of
New York, to be so transferred, in whole or from time to time in part, without
charge, and the Property Trustee shall authenticate and make available for
delivery, upon such transfer of each portion of such Global Preferred Security,
an equal aggregate liquidation amount of Securities of authorized denominations
in the form of certificated Preferred Securities. Any portion of a Global
Preferred Security transferred pursuant to this Section shall be registered in
such names as the Clearing Agency shall direct. Any Preferred Security in the
form of certificated Preferred Securities delivered in exchange for an interest
in the Restricted Global Preferred Security shall, except as otherwise provided
by Sections 7.3 and 9.1, bear the Restricted Securities Legend set forth in
Exhibit A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the
Holder of a Global Preferred Security may grant proxies and otherwise authorize
any Person, including Participants and Persons that may hold interests through
Participants, to take any action which such Holder is entitled to take under
this Declaration or the Securities.
(e) In the event of the occurrence of any of the events
specified in Section 7.9(b), the Trust will promptly make
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available to the Property Trustee a reasonable supply of certificated Preferred
Securities in fully registered form without distribution coupons.
SECTION 7.10 Cancellation.
The Trust any time may deliver Preferred Securities to the
Property Trustee for cancellation. The Registrar and Paying Agent shall
forward to the Property Trustee any Preferred Securities surrendered to them
for registration of transfer, redemption or payment. The Property Trustee
shall promptly cancel all Preferred Securities, surrendered for registration of
transfer, redemption, exchange, payment, replacement or cancellation and shall
dispose of cancelled Preferred Securities in accordance with its customary
procedures unless the Trust otherwise directs. The Trust may not issue new
Preferred Securities to replace Preferred Securities that it has paid or that
have been delivered to the Property Trustee for cancellation or that any Holder
has exchanged.
SECTION 7.11 CUSIP Numbers.
The Trust in issuing the Preferred Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Property Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders of
Preferred Securities; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Preferred Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Preferred Securities, and any such redemption shall not be affected by any
defect in or omission of such numbers. The Sponsor will promptly notify the
Property Trustee of any change in the CUSIP numbers.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall automatically terminate:
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(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor; or the
revocation of the Sponsor's charter and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the
Debentures to the Holders, provided that, the Property Trustee has
received written notice from the Sponsor directing the Property
Trustee to terminate the Trust (which direction is optional, and
except as otherwise expressly provided below, within the discretion of
the Sponsor) and provided, further, that such direction and such
distribution is conditioned on (a) the prior approval of the Federal
Reserve Board if such approval is then required under applicable
capital guidelines or policies of the Federal Reserve Board and the
receipt of any other required regulatory approval, and (b) the
Administrative Trustees' receipt of an opinion of an independent tax
counsel experienced in such matters, which opinion may rely on
published rulings of the Internal Revenue Service, to the effect that
the Holders will not recognize any gain or loss for United States
Federal income tax purposes as a result of the dissolution of the
Trust and the distribution of Debentures;
(iv) upon the entry of a decree of judicial dissolution
of the Trust by a court of competent jurisdiction;
(v) when all of the Securities shall have been called
for redemption and the amounts necessary for redemption thereof shall
have been paid to the Holders in accordance with the terms of the
Securities; or
(vi) the expiration of the term of the Trust provided
in Section 3.14.
(b) As soon as is practicable after the occurrence of
an event referred to in Section 8.1(a), the Administrative Trustees shall file
a certificate of cancellation with the Secretary of State of the State of
Delaware.
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(c) The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities
may only be transferred, in whole or in part, in accordance with the terms and
conditions set forth in this Declaration. Any transfer or purported transfer
of any Security not made in accordance with this Declaration shall be null and
void.
(c) For so long as the Trust Securities remain
outstanding, the Sponsor will covenant: (i) to directly or indirectly maintain
100% direct or indirect ownership of the Common Securities of the Trust,
provided that any permitted successor of the Sponsor under the Indenture may
succeed to the Sponsor's ownership of such Common Securities, (ii) to use its
reasonable efforts to cause the Trust (a) to remain a business trust, except in
connection with the distribution of Debentures to the Holders of Trust
Securities in liquidation of the Trust, the redemption of all of the Trust
Securities, or certain mergers, consolidations or amalgamations, each as
permitted by this Declaration, and (b) to otherwise continue to be classified
as a grantor trust for United States Federal income tax purposes; and (iii) to
use its reasonable efforts to cause each holder of the Common Securities to be
treated as owning an undivided beneficial interest in the Debentures.
(d) The Administrative Trustees shall provide for the
registration of Preferred Securities, and the transfer thereof, which will be
effected without charge but only upon payment (with such indemnity as the
Administrative Trustees may require) in respect of any tax or other
governmental charges that
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may be imposed in relation to it. Upon surrender for registration of transfer
of any Preferred Securities, the Administrative Trustees shall cause one or
more new Preferred Securities to be issued in the name of the designated
transferee or transferees. Every Preferred Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Administrative Trustees duly executed by
the Holder or such Holder's attorney duly authorized in writing. Each
Preferred Security surrendered for registration of transfer shall be canceled
by the Property Trustee. A transferee of a Preferred Security shall be
entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Preferred Security. By acceptance of
a Preferred Security, each transferee shall be deemed to have agreed to be
bound by this Declaration.
SECTION 9.2 Transfer Procedures and Restrictions
(a) Transfer and Exchange of Definitive Preferred
Securities. When Definitive Preferred Securities are presented to the
Registrar or co-Registrar:
(x) to register the transfer of such Definitive Preferred
Securities; or
(y) to exchange such Definitive Preferred Securities which
became mutilated, destroyed, defaced, stolen or lost, for an equal
number of Definitive Preferred Securities,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Preferred Securities surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to the Trust and
the Registrar or co-registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing;
(b) Restrictions on Transfer of a Definitive Preferred
Security for a Beneficial Interest in a Global Preferred Security. A
Definitive Preferred Security may not be exchanged for a beneficial interest in
a Global Preferred Security except upon satisfaction of the requirements set
forth below. Upon
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receipt by the Property Trustee of a Definitive Preferred Security, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Property Trustee, together with written instructions
directing the Property Trustee to make, or to direct the Clearing Agency to
make, an adjustment on its books and records with respect to the appropriate
Global Preferred Security to reflect an increase in the number of the Preferred
Securities represented by such Global Preferred Security, then the Property
Trustee shall cancel such Definitive Preferred Security and cause, or direct
the Clearing Agency to cause, the aggregate number of Preferred Securities
represented by the appropriate Global Preferred Security to be increased
accordingly. If no Global Preferred Securities are then outstanding, the Trust
shall issue and the Property Trustee shall authenticate, upon written order of
any Administrative Trustee, an appropriate number of Preferred Securities in
global form.
(c) Transfer and Exchange of Global Preferred
Securities. Subject to Section 9.2(d), the transfer and exchange of Global
Preferred Securities or beneficial interests therein shall be effected through
the Clearing Agency, in accordance with this Declaration (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Clearing Agency therefor.
(d) Transfer of a Beneficial Interest in a Global
Preferred Security for a Definitive Preferred Security.
(i) Any Person having a beneficial interest in a Global
Preferred Security may upon request, but only upon 20 days prior
notice to the Property Trustee, and only if accompanied by the
information specified below, exchange such beneficial interest for a
Definitive Preferred Security representing the same number of
Preferred Securities. Upon receipt by the Property Trustee from the
Clearing Agency or its nominee on behalf of any Person having a
beneficial interest in a Global Preferred Security of written
instructions or such other form of instructions as is customary for
the Clearing Agency or the Person designated by the Clearing Agency as
having such a beneficial interest in a Restricted Preferred Security
and a certification from the transferor (in a form substantially
similar to that attached hereto as
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the form of "Assignment" in Exhibit A-1) upon which the Property
Trustee may conclusively rely (unless such institutions contain a
manifest error, are not believed to be genuine or to have been
presented by the proper party) which may be submitted by facsimile,
then the Property Trustee will cause the aggregate number of Preferred
Securities represented by Global Preferred Securities to be reduced on
its books and records and, following such reduction, the Trust will
execute and the Property Trustee, upon written receipt of a written
order of the Trust signed by one Administrative Trustee, will
authenticate and make available for delivery to the transferee a
Definitive Preferred Security.
(ii) Definitive Preferred Securities issued in exchange
for a beneficial interest in a Global Preferred Security pursuant to
this Section 9.2(d) shall be registered in such names and in such
authorized denominations as the Clearing Agency, pursuant to
instructions from its Clearing Agency Participants or otherwise, shall
instruct the Property Trustee in writing. The Property Trustee shall
deliver such Preferred Securities to the Persons in whose names such
Preferred Securities are so registered in accordance with such
instructions of the Clearing Agency.
(e) Restrictions on Transfer and Exchange of Global
Preferred Securities. Notwithstanding any other provisions of this Declaration
(other than the provisions set forth in subsection (f) of this Section 9.2), a
Global Preferred Security may not be transferred as a whole except by the
Clearing Agency to a nominee of the Clearing Agency or another nominee of the
Clearing Agency or by the Clearing Agency or any such nominee to a successor
Clearing Agency or a nominee of such successor Clearing Agency.
(f) Authentication of Definitive Preferred Securities.
If at any time:
(i) there occurs a Default or an Event of Default which
is continuing, or
(ii) the Trust, in its sole discretion, notifies the
Property Trustee in writing that it elects to cause the
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issuance of Definitive Preferred Securities under this Declaration,
then the Trust will execute, and the Property Trustee, upon receipt of
a written order of the Trust signed by one Administrative Trustee
requesting the authentication and delivery of Definitive Preferred
Securities to the Persons designated by the Trust, will authenticate
and make available for delivery Definitive Preferred Securities, equal
in number to the number of Preferred Securities represented by the
Global Preferred Securities, in exchange for such Global Preferred
Securities.
(g) Cancellation or Adjustment of Global Preferred
Security. At such time as all beneficial interests in a Global Preferred
Security have either been exchanged for Definitive Preferred Securities to the
extent permitted by this Declaration or redeemed, repurchased or canceled in
accordance with the terms of this Declaration, such Global Preferred Security
shall be canceled by the Property Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Preferred Security is
exchanged for Definitive Preferred Securities, Preferred Securities represented
by such Global Preferred Security shall be reduced and an adjustment shall be
made on the books and records of the Clearing Agency and the Registrar to
reflect such reduction.
(h) Obligations with Respect to Transfers and Exchanges
of Preferred Securities.
(i) To permit registrations of transfers, the Trust
shall execute and the Property Trustee shall authenticate Definitive
Preferred Securities and Global Preferred Securities at the
Registrar's or co-registrar's request in accordance with the terms of
this Declaration.
(ii) Registrations of transfers will be effected without
charge, but only upon payment (with such indemnity as the Trust or the
Sponsor may require) in respect of any tax or other governmental
charge that may be imposed in relation to it.
(iii) The Registrar or co-registrar shall not be required
to register the transfer of or exchange of (a) Preferred Securities
during a period beginning at the opening of business 15 days before
the day of mailing of a notice of
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redemption or any notice of selection of Preferred Securities for
redemption and ending at the close of business on the day of such
mailing; or (b) any Preferred Security so selected for redemption in
whole or in part, except the unredeemed portion of any Preferred
Security being redeemed in part.
(iv) Prior to the due presentation for registration of
transfer of any Preferred Security, the Trust, the Property Trustee,
the Paying Agent, the Registrar or any co-registrar may deem and treat
the Person in whose name a Preferred Security is registered as the
absolute owner of such Preferred Security for the purpose of receiving
Distributions on such Preferred Security and for all other purposes
whatsoever, and none of the Trust, the Property Trustee, the Paying
Agent, the Registrar or any co-registrar shall be affected by notice
to the contrary.
(v) All Preferred Securities issued upon any
registration of transfer pursuant to the terms of this Declaration
shall evidence the same security and shall be entitled to the same
benefits under this Declaration as the Preferred Securities
surrendered upon such registration of transfer.
(i) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility
or obligation to any beneficial owner of a Global Preferred Security,
a Clearing Agency Participant in the Clearing Agency or other Person
with respect to the accuracy of the records of the Clearing Agency or
its nominee or of any Clearing Agency Participant thereof, with
respect to any ownership interest in the Preferred Securities or with
respect to the delivery to any Clearing Agency Participant, beneficial
owner or other Person (other than the Clearing Agency) of any notice
(including any notice of redemption) or the payment of any amount,
under or with respect to such Preferred Securities. All notices and
communications to be given to the Holders and all payments to be made
to Holders under the Preferred Securities shall be given or made only
to or upon the order of the registered Holders (which shall be the
Clearing Agency or its nominee in the case of a Global Preferred
Security). The rights of beneficial owners
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in any Global Preferred Security shall be exercised only through the
Clearing Agency subject to the applicable rules and procedures of the
Clearing Agency. The Property Trustee may conclusively rely and shall
be fully protected in relying upon information furnished by the
Clearing Agency or any agent thereof with respect to its Clearing
Agency Participants and any beneficial owners.
(ii) The Property Trustee and the Registrar shall have
no obligation or duty to monitor, determine or inquire as to
compliance with any restrictions on transfer imposed under this
Declaration or under applicable law with respect to any transfer of
any interest in any Preferred Security (including any transfers
between or among Clearing Agency Participants or beneficial owners in
any Global Preferred Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms
of this Declaration, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Security
shall be registered on the books and records of the Trust as the sole owner of
such Security for purposes of receiving Distributions and for all other
purposes whatsoever and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such Security on the part of any
Person, whether or not the Trust shall have actual or other notice thereof.
SECTION 9.4 Book-Entry Interests.
Global Preferred Securities shall initially be registered on
the books and records of the Trust in the name of Cede & Co., the nominee of
the Clearing Agency, and no Preferred Security Beneficial Owner will receive a
definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Preferred Securities, except as
provided in Section 7.9 and Section 9.2. Unless and until definitive, fully
registered Preferred Securities certificates
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have been issued to the Preferred Security Beneficial Owners pursuant to
Section 7.9 and Section 9.2:
(a) the provisions of this Section 9.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to
deal with the Clearing Agency for all purposes of this Declaration
(including the payment of Distributions on the Global Preferred
Securities and receiving approvals, votes or consents hereunder) as
the Holder of the Preferred Securities and the sole holder of the
Global Certificates and shall have no obligation to the Preferred
Security Beneficial Owners;
(c) to the extent that the provisions of this Section
9.4 conflict with any other provisions of this Declaration, the
provisions of this Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial
Owners shall be exercised only through the Clearing Agency and shall
be limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants and receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency
Participants. DTC will make book entry transfers among the Clearing
Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, the Trustees shall give
all such notices and communications specified herein to be given to the Holders
of Global Preferred Securities to the Clearing Agency, and shall have no notice
obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the
Administrative Trustees may, in their sole
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discretion, appoint a successor Clearing Agency with respect to such Preferred
Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration,
the Securities Guarantees and the terms of the Securities, the Sponsor shall
not be:
(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders which
shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder any
deficit upon dissolution of the Trust or otherwise.
(b) The Debenture Issuer shall be liable for all of the
debts and obligations of the Trust (other than in respect of the Securities) to
the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust
Act, the Holders shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible
or accountable in damages or otherwise to the Trust or any Covered Person for
any loss, cost, liability, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such Indemnified Person by
this Declaration or by law, except that an Indemnified
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Person shall be liable for any such loss, cost, liability, damage or claim
incurred by reason of such Indemnified Person's gross negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity (other than the duties imposed on the Property Trustee
under the Trust Indenture Act), are agreed by the parties hereto to replace
such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
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the Indemnified Person shall resolve such conflict of interest, take
such action or provide such terms, considering in each case the
relative interest of each party (including its own interest) to such
conflict, agreement, transaction or situation and the benefits and
burdens relating to such interests, any customary or accepted industry
practices, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the
Indemnified Person shall not constitute a breach of this Declaration
or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person
is permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees and
expenses), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit or
proceeding if such Company Indemnified Person acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
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interests of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys' fees
and expenses) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter
as to which such Company Indemnified Person shall have been adjudged
to be liable to the Trust unless and only to the extent that the Court
of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such Person is fairly and reasonably entitled to indemnity for
such expenses which such Court of Chancery or such other court shall
deem proper.
(iii) To the extent that a Company Indemnified Person
shall be successful on the merits or otherwise (including dismissal of
an action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(includ-
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ing attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii)
of this Section 10.4(a) (unless ordered by a court) shall be made by
the Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Administrative Trustees by a
majority vote of a Quorum consisting of such Administrative Trustees
who were not parties to such action, suit or proceeding, (2) if such a
Quorum is not obtainable, or, even if obtainable, if a Quorum of
disinterested Administrative Trustees so directs, by independent legal
counsel in a written opinion, or (3) by the Common Security Holder of
the Trust.
(v) Expenses (including attorneys' fees and expenses)
incurred by a Company Indemnified Person in defending a civil,
criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall
be paid by the Debenture Issuer in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or
on behalf of such Company Indemnified Person to repay such amount if
it shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section
10.4(a). Notwithstanding the foregoing, no advance shall be made by
the Debenture Issuer if a determination is reasonably and promptly
made (i) by the Administrative Trustees by a majority vote of a quorum
of disinterested Administrative Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Administrative Trustees so directs, by independent legal counsel in a
written opinion or (iii) the Common Security Holder of the Trust,
that, based upon the facts known to the Administrative Trustees,
counsel or the Common Security Holder at the time such determination
is made, such Company Indemnified Person acted in bad faith or in a
manner that such person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any
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criminal proceeding, that such Company Indemnified Person believed or
had reasonable cause to believe his conduct was unlawful. In no event
shall any advance be made in instances where the Administrative
Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty
to the Trust or its Common or Preferred Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.4(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Preferred Security Holders of the
Trust or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office. All rights
to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then
existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 10.4(a) with respect to
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the resulting or surviving entity as he would have with respect to
such constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall,
unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the (i)
Property Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the
Property Trustee or the Delaware Trustee, and (iv) any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Property Trustee or the Delaware Trustee (each of the
Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person harmless against,
any and all loss, liability, damage, claim or expense including taxes (other
than taxes based on the income of such Fiduciary Indemnified Person) incurred
without negligence or bad faith on the part of such Fiduciary Indemnified
Person, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending against or investigating any
claim or liability in connection with the exercise or performance of any of the
powers or duties of such Fiduciary Indemnified Person hereunder. The
obligation to indemnify as set forth in this Section 10.4(b) shall survive the
resignation or removal of the Property Trustee or the Delaware Trustee and the
satisfaction and discharge of this Declaration.
[(c) The Issuer Trustee agrees to pay the Property
Trustee and the Delaware Trustee, from time to time, such compensation for all
services rendered by the Property Trustee and the Delaware Trustee hereunder as
may be mutually agreed upon in writing by the Sponsor and the Property Trustee
or the Delaware Trustee, as the case may be, and, except as otherwise expressly
provided herein, to reimburse the Property Trustee and the Delaware Trustee
upon its or their request for all reasonable expenses, disbursements and
advances incurred or made by the
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Property Trustee or the Delaware Trustee, as the case may be, in accordance
with the provisions of this Declaration, except any such expense, disbursement
or advance as may be attributable to its or their negligence or bad faith.]
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders shall
have no rights by virtue of this Declaration in and to such independent
ventures or the income or profits derived therefrom, and the pursuit of any
such venture, even if competitive with the business of the Trust, shall not be
deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee
shall have the right to take for its own account (individually or as a partner
or fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or
other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
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SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The books of account and the records of the
Trust shall be examined by and reported upon as of the end of each Fiscal Year
of the Trust by a firm of independent certified public accountants selected by
the Administrative Trustees.
(b) The Administrative Trustees shall cause to be duly
prepared and delivered to each of the Holders, any annual United States Federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the
Code to deliver any such statement at a later date, the Administrative Trustees
shall endeavor to deliver all such information statements within 30 days after
the end of each Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an annual United
States Federal income tax return, on a Form 1041 or such other form required by
United States Federal income tax law, and any other annual income tax returns
required to be filed by the Administrative Trustees on behalf of the Trust with
any state or local taxing authority.
SECTION 11.3 Banking.
The Trust may maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Property Trustee shall be made
directly to the Property Trustee Account and no other funds of the Trust shall
be deposited in the Property Trustee Account. The sole signatories for such
accounts shall be designated by the Administrative Trustees; provided, however,
that the Property Trustee shall designate the signatories for the Property
Trustee Account.
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SECTION 11.4 Withholding.
The Trust and the Administrative Trustees shall comply with
all withholding requirements under United States Federal, state and local law.
The Trust shall request, and the Holders shall provide to the Trust, such forms
or certificates as are necessary to establish an exemption from withholding
with respect to each Holder, and any representations and forms as shall
reasonably be requested by the Trust to assist it in determining the extent of,
and in fulfilling, its withholding obligations. The Administrative Trustees
shall file required forms with applicable jurisdictions and, unless an
exemption from withholding is properly established by a Holder, shall remit
amounts withheld with respect to the Holder to applicable jurisdictions. To
the extent that the Trust is required to withhold and pay over any amounts to
any authority with respect to Distributions or allocations to any Holder, the
amount withheld shall be deemed to be a Distribution in the amount of the
withholding to the Holder. In the event of any claim of excess withholding,
Holders shall be limited to an action against the applicable jurisdiction. If
the amount required to be withheld was not withheld from actual Distributions
made, the Trust may reduce subsequent Distributions by the amount of such
withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration
(including Section 7 of Annex I hereto) or by any applicable terms of the
Securities, this Declaration may only be amended by a written instrument
approved and executed by:
(i) the Administrative Trustees (or if there are more
than two Administrative Trustees, a majority of the Administrative
Trustees);
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Property Trustee, the
Property Trustee; and
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(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee, the
Delaware Trustee.
(b) No amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers' Certificate
from each of the Trust and the Sponsor that such amendment is
permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Property Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an Opinion of Counsel (who may be counsel
to the Sponsor or the Trust) that such amendment is permitted
by, and conforms to, the terms of this Declaration (including
the terms of the Securities) and that all conditions
precedent, if any, in this Declaration to the execution and
delivery of such amendment have been satisfied,
provided, however, that the Property Trustee shall not be required to sign any
such amendment; and
(iii) to the extent the result of such amendment would be
to:
(A) cause the Trust to fail to continue to be
classified for purposes of United States Federal income
taxation as a grantor trust;
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(B) reduce or otherwise adversely affect the
powers of the Property Trustee in contravention of the Trust
Indenture Act; or
(C) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(c) At such time after the Trust has issued any
Securities that remain outstanding, any amendment that would adversely affect
the rights, privileges or preferences of any Holder may be effected only with
such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders;
(e) Article Four shall not be amended without the
consent of the Holders of a Majority in liquidation amount of the Common
Securities and;
(f) The rights of the holders of the Common Securities
under Article Five to increase or decrease the number of, and appoint and
remove Trustees shall not be amended without the consent of the Holders of a
Majority in liquidation amount of the Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration
may be amended without the consent of the Holders to:
(i) cure any ambiguity, correct or supplement any
provision in this Declaration that may be inconsistent with any other
provision of this Declaration or to make any other provisions with
respect to matters or questions arising under this Declaration which
shall not be inconsistent with the other provisions of the
Declaration; and
(ii) to modify, eliminate or add to any provisions of
the Declaration to such extent as shall be necessary to ensure that
the Trust will be classified for United States Federal income tax
purposes as a grantor trust at all times that any Securities are
outstanding or to ensure that the
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Trust will not be required to register as an Investment Company under
the Investment Company Act.
provided, however, that in the case of clause (i), such action shall not
adversely affect in any material respect the interests of the Holders, and any
amendments of this Declaration shall become effective when notice thereof is
given to the Holders.
SECTION 12.2 Meetings of the Holders; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities
may be called at any time by the Administrative Trustees (or as provided in the
terms of the Securities) to consider and act on any matter on which Holders of
such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange on
which the Preferred Securities are listed or admitted for trading. The
Administrative Trustees shall call a meeting of the Holders of such class if
directed to do so by the Holders of at least 10% in liquidation amount of such
class of Securities. Such direction shall be given by delivering to the
Administrative Trustees one or more notices in writing stating that the signing
Holders wish to call a meeting and indicating the general or specific purpose
for which the meeting is to be called. Any Holders calling a meeting shall
specify in writing the Security Certificates held by the Holders exercising the
right to call a meeting and only those Securities specified shall be counted
for purposes of determining whether the required percentage set forth in the
second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the
terms of the Securities, the following provisions shall apply to meetings of
Holders:
(i) notice of any such meeting shall be given to all
the Holders having a right to vote thereat at least seven days and not
more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders is permitted or required under this
Declaration or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders. Any action
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that may be taken at a meeting of the Holders may be taken without a
meeting if a consent in writing setting forth the action so taken is
signed by the Holders owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to authorize
or take such action at a meeting at which all Holders having a right
to vote thereon were present and voting. Prompt notice of the taking
of action without a meeting shall be given to the Holders entitled to
vote who have not consented in writing. The Administrative Trustees
may specify that any written ballot submitted to the Security Holder
for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Administrative
Trustees;
(ii) each Holder may authorize any Person to act for it
by proxy on all matters in which a Holder is entitled to participate,
including waiving notice of any meeting, or voting or participating at
a meeting. No proxy shall be valid after the expiration of eleven
months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder executing
it. Except as otherwise provided herein, all matters relating to the
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders shall be conducted by
the Administrative Trustees or by such other Person that the
Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration,
the terms of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Preferred Securities are then
listed or trading, otherwise provides, the Administrative Trustees, in
their sole discretion, shall establish all other provisions relating
to meetings of Holders, including notice of the time, place or purpose
of any meeting at which any matter is to be voted on by any Holders,
waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum require-
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ments, voting in person or by proxy or any other matter with respect
to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Property Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a New York banking
corporation, a national banking association or a bank or trust company
organized under the laws of any State of the United States or the District of
Columbia, in any case with trust powers and authority to execute and deliver,
and to carry out and perform its obligations under the terms of, this
Declaration;
(b) The execution, delivery and performance by the
Property Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. This Declaration has
been duly executed and delivered by the Property Trustee and constitutes a
legal, valid and binding obligation of the Property Trustee, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
(c) The execution, delivery and performance of this
Declaration by the Property Trustee does not conflict with or constitute a
breach of the charter or by-laws of the Property Trustee; and
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(d) No consent, approval or authorization of, or
registration with or notice to, any New York, Texas or Delaware State or
Federal banking authority is required for the execution, delivery or
performance by the Property Trustee of this Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Delaware Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is duly organized, validly
existing and in good standing under the laws of the State of Delaware or the
United States, with trust power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the
Delaware Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Delaware Trustee. This Declaration has
been duly executed and delivered by the Delaware Trustee and constitutes a
legal, valid and binding obligation of the Delaware Trustee, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or
registration with or notice to, any Federal banking authority is required for
the execution, delivery or performance by the Delaware Trustee of this
Declaration; and
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person,
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an entity which has its principal place of business in the State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, overnight courier service or
confirmed telecopy, as follows:
(a) if given to the Trust, in care of the
Administrative Trustees at the Trust's mailing address set forth below (or such
other address as the Trust may give notice of to the Property Trustee, the
Delaware Trustee and the Holders):
Sterling Bancshares Capital Trust I
c/o Sterling Bancshares, Inc.
15000 Northwest Freeway, Suite 200,
Houston, Texas 77040
Attention: Michael A. Roy,
Administrative Trustee
Telecopy: (713) 849-5498
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as Delaware Trustee may give
notice of to the Holders):
Bankers Trust (Delaware)
1001 Jefferson Street, 5th Floor
Wilmington, Delaware 19801
Attention: Corporate Trust Department
Telecopy: (302)
(c) if given to the Property Trustee, at the Property
Trustee's mailing address set forth below (or such other address as the
Property Trustee may give notice of to the Holders):
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Bankers Trust Company
Four Albany Street
New York, New York 10006
Attention: Corporate Trustee
Administration Department
Telecopy: (212) 250-6392
(d) if given to the Holder of the Common Securities, at
the mailing address of the Sponsor set forth below (or such other address as
the Holder of the Common Securities may give notice to the Property Trustee and
the Trust):
Sterling Bancshares, Inc.
15000 Northwest Freeway, Suite 200
Houston, Texas 77040
Attention: Michael A. Roy
Telecopy: (713) 849-5498
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
THIS DECLARATION AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
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SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States Federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 14.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
____________________________________________
George Martinez, as Administrative Trustee
____________________________________________
Mark T. Giles, as Administrative Trustee
____________________________________________
Michael A. Roy, as Administrative Trustee
BANKERS TRUST (DELAWARE),
as Delaware Trustee
By:_________________________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Property Trustee
By:_________________________________________
Name:
Title:
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STERLING BANCSHARES, INC.
as Sponsor and Debenture Issuer
By:_________________________________________
Name:
Title:
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ANNEX I
TERMS OF
*% CUMULATIVE TRUST PREFERRED SECURITIES
*% COMMON SECURITIES
Pursuant to Section 7.1 of the Second Amended and Restated
Declaration of Trust, dated as of *, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Securities are set out below (each
capitalized term used but not defined herein has the meaning set forth in the
Declaration or, if not defined in such Declaration, as defined in the
Prospectus referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
(a) Preferred Securities. 1,000,000 ___% Cumulative
Trust Preferred Securities of the Trust with an aggregate liquidation amount
with respect to the assets of the Trust of 25 million dollars ($25,000,000),
which may be increased to an aggregate of ____________ ___% Cumulative Trust
Preferred Securities of the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of _____________ million dollars if an
overallotment option granted to the Underwriters of the Securities pursuant to
an Underwriting Agreement with the Sponsor and the Trust, each as described in
the Prospectus referred to below in Section 2(c) of this Annex I, is exercised
in full, and each with a liquidation amount with respect to the assets of the
Trust of $25 per security, are hereby designated for the purposes of
identification only as Preferred Securities. The certificates evidencing the
Preferred Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the
rules of any exchange or quotation system on or in which the Preferred
Securities are listed, traded or quoted.
(b) Common Securities. * Common Securities of the Trust
with an aggregate liquidation amount with respect to the
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assets of the Trust of $774,000 which may be increased to an aggregate of ____
Common Securities of the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of _____________ million dollars if an
overallotment option granted to the Underwriters of the Securities pursuant to
an Underwriting Agreement with the Sponsor and the Trust, each as described in
the Prospectus referred to below in Section 2(c) of this Annex I, is exercised
in full, and each with a liquidation amount with respect to the assets of the
Trust of $25 per security, are hereby designated for the purposes of
identification only as Common Securities. The certificates evidencing the
Common Securities shall be substantially in the form of Exhibit A-2 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed
at a rate per annum of *% (the "Coupon Rate") of the liquidation amount of $25
per Security (the "Liquidation Amount"), such rate being equivalent to the rate
of interest payable on the Debentures to be held by the Property Trustee.
Distributions in arrears for more than one quarterly period will bear
additional distributions thereon compounded quarterly at the Coupon Rate (to
the extent permitted by applicable law). A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the Property
Trustee and to the extent the Property Trustee has funds on hand legally
available therefor.
(b) Distributions on the Securities will be cumulative,
will accumulate from the most recent date to which Distributions have been paid
or, if no Distributions have been paid, from *, 1997, and will be payable
quarterly in arrears on the ___ day of March, June, September and December of
each year, commencing on *, 1997 (each, a "Distribution Date"), except as
otherwise described below. Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day months and for any period less than a
full calendar month on the basis of the actual number of days elapsed in such
month. As long as no Event of Default has occurred and is continuing under the
Indenture, the Debenture Issuer has the right under the Indenture to
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defer payments of interest by extending the interest payment period at any time
and from time to time on the Debentures for a period not exceeding 20
consecutive quarterly periods, including the first such quarterly period during
such period (each an "Extension Period"), during which Extension Period no
interest shall be due and payable on the Debentures, provided that no Extension
Period shall end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Stated Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred. Despite
such deferral, Distributions will continue to accumulate with additional
Distributions thereon (to the extent permitted by applicable law but not at a
rate greater than the rate at which interest is then accruing on the
Debentures) at the Coupon Rate compounded quarterly during any such Extension
Period. Prior to the termination of any such Extension Period, the Debenture
Issuer may further defer payments of interest by further extending such
Extension Period; provided that such Extension Period, together with all such
previous and further extensions within such Extension Period, may not exceed 20
consecutive quarterly periods, including the first quarterly period during such
Extension Period, or extend beyond the Stated Maturity Date of the Debentures.
Upon the termination of any Extension Period and the payment of all amounts
then due, the Debenture Issuer may commence a new Extension Period, subject to
the above requirements.
(c) Distributions on the Securities will be payable to
the Holders thereof as they appear on the books and records of the Trust on the
close of business on the 15th day of the month preceding the month in which the
relevant Distribution Date occurs, which Distribution Dates correspond to the
interest payment dates on the Debentures. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in respect
of the Preferred Securities will be made as described under the heading
"Description of Preferred Securities -- Form, Denomination, Book-Entry
Procedures and Transfer" in the Prospectus dated *, 1997, of the Debenture
Issuer and the Trust relating to the Securities and the Debentures. The
relevant record dates for the Common Securities shall be the same as the record
dates for the Preferred Securities. Distributions payable on any Securities
that are not punctually paid on any Distribution Date, as a result of the
Debenture Issuer having failed to make a payment under the Debentures, will
cease to be payable to
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the Holder on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered
on the special record date or other specified date determined in accordance
with the Indenture. If any date on which Distributions are payable on the
Securities is not a Business Day, then payment of the Distribution payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay), except
that if such next succeeding Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day with
the same force and effect as if made on such date.
(d) In the event that there is any money or other
property held by or for the Trust that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein) among the Holders.
3. Liquidation Distribution Upon Dissolution.
In the event of any termination of the Trust, or if the
Sponsor otherwise gives notice of its election to liquidate the Trust pursuant
to Section 8.1(a)(iii) of the Declaration, the Trust shall be liquidated by the
Administrative Trustees as expeditiously as the Administrative Trustees
determine to be possible by distributing to the Holders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, a Like
Amount (as defined below) of the Debentures, unless such distribution is
determined by the Property Trustee not to be practicable, in which event such
Holders will be entitled to receive Pro Rata out of the assets of the Trust
legally available for distribution to Holders an amount equal to the aggregate
of the liquidation amount of $25 per Security plus accumulated and unpaid
Distributions thereon to the date of payment, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law (such amount being the
"Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having a Liquidation Amount equal to the principal
amount of Debentures to be paid or prepaid in accordance with their terms and
(ii) with respect to a distribution of Debentures upon the dissolution or
liquidation of the
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Trust, Debentures having a principal amount equal to the Liquidation Amount of
the Securities of the Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets on hand
legally available to pay in full the aggregate Liquidation Distribution, then
the amounts payable directly by the Trust on the Securities shall be paid on a
Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment or prepayment of the Debentures in
whole or in part, at maturity or otherwise (either at the option of the
Debenture Issuer or following a Special Event, as described below), the
proceeds from such repayment or prepayment shall be simultaneously applied by
the Property Trustee (subject to the Property Trustee having received written
notice no later than 45 days prior to such repayment or prepayment) to redeem a
Like Amount of the Securities at a redemption price equal to 100% of the
principal amount of the Securities to be redeemed, plus in each case, the
accrued and unpaid interest thereon (including Compounded Interest, if any, and
Additional Sums, if any) to the applicable date of redemption (the "Prepayment
Price").
(b) In the case of an optional redemption, if fewer than
all the outstanding Securities are to be so redeemed, the Securities to be
redeemed will be determined as described in Section 4(f)(ii) below.
The Debenture Issuer shall have the right (subject to the
conditions in the Indenture) to elect to prepay the Debentures in whole or in
part at any time on or after ___________, 2002 upon not less than 30 days and
not more than 60 days notice, at the Prepayment Price and, simultaneous with
such prepayment, to cause a Like Amount of the Securities to be prepaid by the
Trust at the Prepayment Price on a Pro Rata basis.
(c) If at any time an Investment Company Event, a Tax
Event or a Regulatory Capital Event (each as defined below, and each a "Special
Event") occurs, the Debenture Issuer shall have the right (subject to the
conditions set forth in the Indenture) at any time prior to the ____________
upon not less than 30 nor
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more than 60 days' notice, to prepay the Debentures in whole, but not in part,
within the 90 days following the occurrence of such Special Event (the "90 Day
Period"), and, simultaneous with such redemption, to cause a Like Amount of the
Securities to be redeemed by the Trust at a price equal to 100% of the
liquidation amount of the Securities to be redeemed, plus in each case, the
accumulated and unpaid Distributions thereon (including Compounded Interest, if
any, and Additional Sums, if any) to the date of such redemption (the
"Redemption Price") on a Pro Rata basis.
"Investment Company Event" means the receipt by Sterling
Bancshares Capital Trust and the Company of an Opinion of Counsel, rendered by
a law firm experienced in such matters, to the effect that, as a result of
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority, Sterling Bancshares Capital Trust is or will be considered an
"investment company" that is required to be registered under the 1940 Act,
which change becomes effective on or after the date of original issuance of the
Preferred Securities of Sterling Bancshares Capital Trust.
A "Tax Event" shall occur upon receipt by the Debenture Issuer
and the Trust of an Opinion of Counsel experienced in such matters to the
effect that, as a result of any amendment to, or change (including any
announced prospective change) in, the laws or any regulations thereunder of the
United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is
announced on or after May___, 1997, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days of the date of such opinion,
subject to United States Federal income tax with respect to income received or
accrued on the Debentures, (ii) interest payable by the Debenture Issuer on the
Debentures is not, or within 90 days of the date of such opinion, will not be,
deductible by the Debenture Issuer, in whole or in part, for United States
Federal income tax purposes, or (iii) the Trust is, or will be within 90 days
of the date of such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
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"Regulatory Capital Event" shall mean that the Debenture
Issuer shall have received an opinion of independent bank regulatory counsel
experienced in such matters to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any rules,
guidelines or policies of the Federal Reserve Board or any regulatory authority
applicable to the Debenture Issuer or (b) any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after May ___, 1997, the Preferred Securities do
not constitute, or within 90 days of the date thereof, will not constitute,
Tier 1 Capital (or its then equivalent); provided, however, that the
distribution of the Debentures in connection with the liquidation of the Trust
by the Debenture Issuer shall not in and of itself constitute a Regulatory
Capital Event unless such liquidation shall have occurred in connection with a
Tax Event.
(d) On and from the date fixed by the Administrative Trustees
for any distribution of Debentures and liquidation of the Trust: (i) the
Securities will no longer be deemed to be outstanding, (ii) the Clearing Agency
or its nominee (or any successor Clearing Agency or its nominee), as the Holder
of the Preferred Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such
distribution, and any certificates representing Securities not held by the
Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) will be deemed to represent beneficial interests in a Like Amount of
Debentures until such certificates are presented to the Debenture Issuer or its
agent for transfer or reissue.
(e) The Trust may not redeem fewer than all the
outstanding Securities unless all accumulated and unpaid Distributions have
been paid on all Securities for all quarterly Distribution periods terminating
on or before the date of redemption.
(f) The procedure with respect to redemptions or
distributions of Securities shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Re-
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demption/Distribution Notice") will be given by the Trust by mail to
each Holder to be redeemed or exchanged not fewer than 30 nor more
than 60 days before the date fixed for redemption or exchange thereof
which, in the case of a redemption, will be the date fixed for
redemption of the Debentures. For purposes of the calculation of the
date of redemption or exchange and the dates on which notices are
given pursuant to this Section 4(f)(i), a Redemption/ Distribution
Notice shall be deemed to be given on the day such notice is first
mailed by first-class mail, postage prepaid, to Holders. Each
Redemption/Distribution Notice shall be addressed to the Holders at
the address of each such Holder appearing in the books and records of
the Trust. No defect in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any
other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the particular Securities to be
redeemed shall be selected on a Pro Rata basis (based upon Liquidation
Amounts) not more than 60 days prior to the date fixed for redemption
from the outstanding Preferred Securities not previously called for
redemption; provided, however, that with respect to Holders that would
be required to hold less than 100 but more than zero Securities as a
result of such pro rata redemption, the Trust shall redeem Securities
of each such Holder so that after such redemption such Holder shall
hold either 100 Securities or such Holder no longer holds any
Securities, and in selecting Securities for redemption shall use such
method (including, without limitation, by lot) as the Trust shall deem
fair and appropriate; and provided, further, that any such proration
may be made on the basis of the aggregate Liquidation Amount of
Securities held by each Holder thereof and may be made by making such
adjustments as the Trust deems fair and appropriate in order that only
Securities in denominations of $25 liquidation amount or integral
multiples thereof shall be redeemed. In respect of Preferred
Securities registered in the name of and held of record by the
Clearing Agency or its nominee (or any successor Clearing Agency or
its nominee) or any nominee, the distribution of the proceeds of such
redemption will be made to the Clearing Agency and disbursed
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by such Clearing Agency in accordance with the procedures applied by
such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, (which notice will be irrevocable),
then (A) with respect to Preferred Securities issued in book-entry
form, by 12:00 noon, New York City time, on the redemption date,
provided that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Debentures by 10:00 a.m., New York City time, on the
maturity date or the date of redemption, as the case requires, the
Property Trustee will deposit irrevocably with the Clearing Agency or
its nominee (or successor Clearing Agency or its nominee) funds
sufficient to pay the applicable Redemption Price with respect to such
Preferred Securities and will give the Clearing Agency irrevocable
instructions and authority to pay the Redemption Price to the relevant
Clearing Agency Participants, and (B) with respect to Preferred
Securities issued in certificated form and Common Securities, provided
that the Debenture Issuer has paid the Property Trustee a sufficient
amount of cash in connection with the related prepayment or maturity
of the Debentures, the Property Trustee will pay the relevant
Redemption Price to the Holders by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the
redemption date. If a Redemption/Distribution Notice shall have been
given and funds deposited as required, if applicable, then immediately
prior to the close of business on the date of such deposit, or on the
redemption date, as applicable, Distributions will cease to accumulate
on the Securities so called for redemption and all rights of Holders
so called for redemption will cease, except the right of the Holders
of such Securities to receive the Redemption Price, but without
interest on such Redemption Price, and such Securities shall cease to
be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the
Redemption Date of the Securities will be subject to the rights of
Holders on the close of business on a regular record date in respect
of a Distribution Date occurring on or prior to such Redemption Date.
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Neither the Administrative Trustees nor the Trust shall be
required to register or cause to be registered the transfer of (i) any
Securities beginning on the opening of business 15 days before the day of
mailing of a notice of redemption or any notice of selection of Securities for
redemption or (ii) any Securities selected for redemption except the unredeemed
portion of any Security being redeemed. If any date fixed for redemption of
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such delay) except
that, if such next succeeding Business Day falls in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of any Securities is
improperly withheld or refused and not paid either by the Property Trustee or
by the Sponsor as guarantor pursuant to the relevant Securities Guarantee,
Distributions on such Securities will continue to accumulate from the original
redemption date to the actual date of payment, in which case the actual payment
date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(v) Redemption/Distribution Notices shall be sent by the
Property Trustee on behalf of the Trust to (A) in respect of the
Preferred Securities, the Clearing Agency or its nominee (or any
successor Clearing Agency or its nominee) if the Global Certificates
have been issued or, if Definitive Preferred Security Certificates
have been issued, to the Holder thereof, and (B) in respect of the
Common Securities, to the Holder thereof.
(vi) Subject to the foregoing and applicable law (including,
without limitation, United States Federal securities laws and banking
laws), provided the acquiror is not the Holder of the Common
Securities or the obligor under the Indenture, the Sponsor or any of
its subsidiaries may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or by
private agreement.
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5. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b), 6(b) and 7
and as otherwise required by law and the Declaration, the Holders of the
Preferred Securities will have no voting rights.
(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method or place of
conducting any proceeding for any remedy available to the Debenture Trustee or
executing any trust or power conferred on such Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable under Section
5.7 of the Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the Debentures
or (iv) consent to any amendment, modification or termination of the Indenture
or the Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a majority in liquidation amount
of all outstanding Preferred Securities; provided, however, that where a
consent under the Indenture would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior approval of each Holder of the Preferred Securities.
The Trustees shall not revoke any action previously authorized or approved by a
vote of the Holders of the Preferred Securities except by subsequent vote of
such Holders. The Property Trustee shall notify each Holder of Preferred
Securities of any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Trustees shall
obtain an opinion of counsel experienced in such matters to the effect that the
Trust will not be classified as an association taxable as a corporation for
United States Federal income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and
is continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or interest on the Debentures on the due date (or in
the case of redemption, on the redemption date), then a Holder of Preferred
Securities may directly institute a proceeding for enforcement of payment to
such Holder of the principal of or interest on a Like Amount of Debentures (a
"Direct Action") on or after the respective due
I-11
<PAGE> 101
date specified in the Debentures. In connection with such Direct Action, the
rights of the Common Securities Holder will be subrogated to the rights of such
Holder of Preferred Securities to the extent of any payment made by the
Debenture Issuer to such Holder of Preferred Securities in such Direct Action.
Except as provided in the second preceding sentence, the Holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Debentures.
Any approval or direction of Holders of Preferred Securities
may be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities in the Trust
or pursuant to written consent. The Property Trustees 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 mailed to each Holder of record of Preferred Securities. Each
such notice will include a statement setting forth (i) the date of such meeting
or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities
will be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Preferred Securities that are owned by the Sponsor or any Affiliate of
the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
I-12
<PAGE> 102
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), 6(c), and 7
as otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless an Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by the holder of the Common
Securities. If an Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a Majority in liquidation amount of the outstanding Preferred
Securities. In no event will the holders of the Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Sponsor as the holder of the Common
Securities. No resignation or removal of a Trustee and no appointment of a
successor trustee shall be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the Declaration.
(c) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on such Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable under Section
5.7 of the Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the Debentures
or (iv) consent to any amendment, modification or termination of the Indenture
or the Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in liquidation amount
of all outstanding Common Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee
without the prior approval of each Holder of the Common Securities. The
Trustees shall not revoke any action previously authorized or approved by a
vote of the Holders of the Common Securities except by subsequent vote of such
Holders. The Property Trustee shall notify each Holder of Common Securities of
any notice of default with respect to the Debentures. In addition to obtaining
the foregoing approvals of
I-13
<PAGE> 103
such Holders of the Common Securities prior to taking any of the foregoing
actions, the Trustees shall obtain an opinion of counsel experienced in such
matters to the effect that the Trust will not be classified as an association
taxable as a corporation for United States Federal income tax purposes on
account of such action.
If an Event of Default under the Declaration has occurred and
is continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or interest on the Debentures on the due date (or in
the case of redemption, on the redemption date), then a Holder of Common
Securities may institute a Direct Action for enforcement of payment to such
Holder of the principal of or interest on a Like Amount of Debentures on or
after the respective due date specified in the Debentures. In connection with
Direct Action, the rights of the Common Securities Holder will be subordinated
to the rights of such Holder of Preferred Securities to the extent of any
payment made by the Debenture Issuer to such Holder of Common Securities in
such Direct Action. Except as provided in the second preceding sentence, the
Holders of Common Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Administrative Trustees will cause a notice
of any meeting at which Holders of Common Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Common Securities. Each such
notice will include a statement setting forth (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common
I-14
<PAGE> 104
Securities or to distribute the Debentures in accordance with the Declaration
and the terms of the Securities.
7. Amendments to Declaration and Indenture.
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees without the consent of the
Holders (i) to cure any ambiguity, correct or supplement any provisions in the
Declaration that may be inconsistent with any other provisions, or to make any
other provisions with respect to matters or questions arising under the
Declaration which shall not be inconsistent with the other provisions of the
Declaration or (ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust will
be classified for United States Federal income tax purposes as a grantor trust
at all times that any Securities are outstanding or to ensure that the Trust
will not be required to register as an "Investment Company" under the
Investment Company Act; provided, however, that in the case of clause (i), such
action shall not adversely affect in any material respect the interests of any
Holder, and any amendments of the Declaration shall become effective when
notice thereof is given to the Holders. The Declaration may also be amended by
the Trustees and the Sponsor with (i) the consent of Holders representing a
Majority in liquidation amount of all outstanding Securities, and (ii) receipt
by the Trustees of an Opinion of Counsel to the effect that such amendment or
the exercise of any power granted to the Trustees in accordance with such
amendment will not affect the Trust's status as a grantor trust for United
States Federal income tax purposes or the Trust's exemption from status as an
Investment Company under the Investment Company Act, provided that, without the
consent of each Holder of Trust Securities, the Declaration may not be amended
to (i) change the amount or timing of any Distribution on the Trust Securities
or otherwise adversely affect the amount of any Distribution required to be
made in respect of the Trust Securities as of a specified date or (ii) restrict
the right of a holder of Trust Securities to institute suit for the enforcement
of any such payment on or after such date.
I-15
<PAGE> 105
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder according to the aggregate liquidation amount of the Securities held by
the relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and, only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant Holder relative to
the aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Preferred Securities rank pari passu with the Common
Securities and payment thereon shall be made Pro Rata with the Common
Securities, except that, if an Event of Default under the Declaration occurs
and is continuing, no payments in respect of Distributions on, or payments upon
liquidation, redemption or otherwise with respect to, the Common Securities
shall be made until the Holders of the Preferred Securities shall be paid in
full the Distributions, Redemption Price, Liquidation Distribution and other
payments to which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
I-16
<PAGE> 106
11. No Preemptive Rights.
The Holders shall have no preemptive rights to subscribe for
any additional securities.
12. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee, the Common Securities Guarantee (as may be
appropriate), and the Indenture (including any supplemental indenture) to a
Holder without charge upon written request to the Sponsor at its principal
place of business.
I-17
<PAGE> 107
EXHIBIT A-1
FORM OF ___% CUMULATIVE TRUST PREFERRED SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS GLOBAL SECURITY IS A GLOBAL PREFERRED SECURITY,
INSERT: THIS PREFERRED SECURITY IS A GLOBAL PREFERRED SECURITY WITHIN THE
MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF THE DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF
THE CLEARING AGENCY. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR
ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND
NO TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED
SECURITY AS A WHOLE BY THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY
OR BY A NOMINEE OF THE CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER
NOMINEE OF THE CLEARING AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.]
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC")
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
A1-1
<PAGE> 108
Number of Aggregate Liquidation
Amount: _____________
Preferred
Securities ___________________ CUSIP NO. ___________
Certificate Evidencing ___% Cumulative Trust Preferred Securities
of
Sterling Bancshares Capital Trust I
___% Cumulative Trust Preferred Securities
(liquidation amount $25 per Preferred Security)
Sterling Bancshares Capital Trust I, a statutory business
trust created under the laws of the State of Delaware (the "Trust"), hereby
certifies that ______________ (the "Holder") is the registered owner of
[$_________ in aggregate liquidation amount of Preferred Securities of the
Trust]1 [the aggregate liquidation amount of Preferred Securities of the Trust
specified in Schedule A hereto]2 representing undivided beneficial interests in
the assets of the Trust designated the ___% Cumulative Trust Preferred
Securities (liquidation amount $25 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are transferable on the books and
records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer.
The designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Preferred Securities represented hereby are issued and
shall in all respects be subject to the provisions of the Second Amended and
Restated Declaration of Trust of the Trust dated as of *, 1997, as the same may
be amended from time to time (the "Declaration"), including the designation of
the terms of the Preferred Securities as set forth in Annex I to the
Declaration. Capitalized terms used but not defined herein shall have the
meaning given them in the Declaration. The Sponsor will provide a copy of the
Declara-
__________________________________
1 Insert in Definitive Preferred Securities only.
2 Insert in Global Preferred Securities only.
A1-2
<PAGE> 109
tion, the Preferred Securities Guarantee, the Common Securities Guarantee (as
may be appropriate), and the Indenture (including any supplemental indenture)
to a Holder without charge upon written request to the Trust at its principal
place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Preferred Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States
Federal income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
A1-3
<PAGE> 110
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
Dated:
STERLING BANCSHARES CAPITAL TRUST I
By:________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Declaration.
BANKERS TRUST COMPANY,
as Property Trustee
By:__________________________________
Authorized Officer
A1-4
<PAGE> 111
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed
at a rate per annum of *% (the "Coupon Rate") of the liquidation amount of $25
per Preferred Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for
more than one quarterly period will bear interest thereon compounded quarterly
at the Coupon Rate (to the extent permitted by applicable law). A Distribution
is payable only to the extent that payments are made in respect of the
Debentures held by the Property Trustee and to the extent the Property Trustee
has funds on hand legally available therefor.
Distributions on the Preferred Securities will be cumulative,
will accumulate from the most recent date to which Distributions have been paid
or, if no Distributions have been paid, from *, 1997 and will be payable
quarterly in arrears, on the ___ day of March, June, September and December of
each year, commencing on *, 1997, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months and, for any period less than a full calendar month, the
number of days elapsed in such month. As long as no Event of Default has
occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 20 consecutive calendar quarterly periods, including the
first such quarterly period during such extension period (each an "Extension
Period"), provided that no Extension Period shall end on a date other than an
Interest Payment Date for the Debentures or extend beyond the Stated Maturity
Date of the Debentures. As a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, quarterly Distributions will continue
to accumulate with interest thereon (to the extent permitted by applicable law,
but not at a rate exceeding the rate of interest then accruing on the
Debentures) at the Coupon Rate compounded quarterly during any such Extension
Period. Prior to the termination of any such Extension Period, the Debenture
Issuer may further defer payments of interest by further extending such
Extension Period; provided that such Extension Period, together with all such
previous and further extensions within such Extension Period, may not exceed
A1-5
<PAGE> 112
20 consecutive quarterly periods, including the first quarterly period during
such Extension Period, end on a date other than an Interest Payment Date for
the Debentures or extend beyond the Stated Maturity Date of the Debentures.
Payments of accumulated Distributions will be payable to Holders as they appear
on the books and records of the Trust on the first record date after the end of
the Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
Subject to the prior approval of the Federal Reserve Board if
such approval is then required under applicable law or capital guidelines or
policies of the Federal Reserve Board and the receipt of any other required
regulatory approvals and to certain other conditions set forth in the
Declaration and the Indenture, the Property Trustee may, at the direction of
the Sponsor, at any time liquidate the Trust and cause the Debentures to be
distributed to the holders of the Securities in liquidation of the Trust or,
simultaneously with any redemption of the Debentures, cause a Like Amount of
the Securities to be redeemed by the Trust.
The Preferred Securities shall be redeemable as provided in
the Declaration.
A1-6
<PAGE> 113
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________ agent to transfer
this Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
Signature Guarantee***: ___________________________________
__________________________________
Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities and
Exchange Act of 1934, as amended.
A2-1
<PAGE> 114
Schedule A*
The initial number of Preferred Securities evidenced by the
Certificate to which this Schedule is attached is ______ (having an aggregate
liquidation amount of $_____). The notations in the following table evidence
decreases and increases in the number of Preferred Securities evidenced by such
certificate.
<TABLE>
<CAPTION>
Number of Preferred
Securities Remaining
Decrease in Number of Increase in Number of after such Decrease or Notation by
Preferred Securities Preferred Securities Increase Registrar
__________________________________________________________________________________________________
<S> <C> <C> <C>
</TABLE>
* Append to Global Preferred Securities only.
A2-2
<PAGE> 115
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH STERLING
BANCSHARES, INC. (THE "COMPANY") OR ANY "AFFILIATE" OF THE COMPANY WAS THE
OWNER OF THIS Preferred Security (OR ANY PREDECESSOR OF THIS Preferred
Security) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS
COMMON SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS COMMON SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii)
PURSUANT TO CLAUSE (D), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE REVERSE OF THIS COMMON
A2-3
<PAGE> 116
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH
HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS COMMON
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
A2-4
<PAGE> 117
Certificate Evidencing Common Securities
of
Sterling Bancshares Capital Trust I
*% Common Securities
(liquidation amount $25 per Common Security)
Sterling Bancshares Capital Trust I, a statutory business
trust formed under the laws of the State of Delaware (the "Trust"), hereby
certifies that ______________________ (the "Holder") is the registered owner of
__________ common securities of the Trust representing undivided beneficial
interests in the assets of the Trust designated the *% Common Securities
(liquidation amount $25 per Common Security) (the "Common Securities"). The
Common Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of *, 1997, as the same may be amended from time to time
(the "Declaration"), including the designation of the terms of the Common
Securities as set forth in Annex I to the Declaration. Capitalized terms used
but not defined herein shall have the meaning given them in the Declaration.
The Sponsor will provide a copy of the Declaration, the Common Securities
Guarantee, the Preferred Securities Guarantee (as may be appropriate) and the
Indenture (including any supplemental indenture) to a Holder without charge
upon written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States
Federal income tax purposes, the Debentures as indebted-
A2-5
<PAGE> 118
ness and the Common Securities as evidence of indirect beneficial ownership in
the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this ___ day of __________, 1997.
Sterling Bancshares Capital Trust I
By:________________________________
Name:
Administrative Trustee
A2-6
<PAGE> 119
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at
a rate per annum of *% (the "Coupon Rate") of the liquidation amount of $25 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
quarterly period will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Property Trustee and to the extent the Property Trustee has funds available
therefor.
Distributions on the Common Securities will be cumulative,
will accrue from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from *, 1997 and will be payable quarterly
in arrears, on the ___ day of March, June, September and December of each year,
commencing on *, 1997, except as otherwise described below. Distributions will
be computed on the basis of a 360-day year consisting of twelve 30-day months
and, for any period less than a full calendar month, the number of days elapsed
in such month. As long as no Event of Default has occurred and is continuing
under the Indenture, the Debenture Issuer has the right under the Indenture to
defer payments of interest by extending the interest payment period at any time
and from time to time on the Debentures for a period not exceeding 20
consecutive calendar quarterly periods, including the first such quarterly
period during such extension period (each an "Extension Period"), provided that
no Extension Period shall end on a date other than an Interest Payment Date for
the Debentures or extend beyond the Stated Maturity Date of the Debentures. As
a consequence of such deferral, Distributions will also be deferred. Despite
such deferral, Distributions will continue to accumulate with interest thereon
(to the extent permitted by applicable law, but not at a rate exceeding the
rate of interest then accruing on the Debentures) at the Coupon Rate compounded
quarterly during any such Extension Period. Prior to the termination of any
such Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; provided that such
Extension Period, together with all such previous and further extensions within
such Extension Period, may not exceed 20 consecutive quarterly
A2-7
<PAGE> 120
periods, including the first quarterly period during such Extension Period, or
end on a date other than an Interest Payment Date for the Debentures or extend
beyond the Stated Maturity Date of the Debentures. Payments of accrued
Distributions will be payable to Holders as they appear on the books and
records of the Trust on the first record date after the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
Subject to the prior approval of the Federal Reserve Board if
such approval is then required under applicable law or capital guidelines or
policies of the Federal Reserve Board and the receipt of any other required
regulatory approval and to certain other conditions set forth in the
Declaration and the Indenture, the Property Trustee may, at the direction of
the Sponsor, at any time liquidate the Trust and cause the Debentures to be
distributed to the holders to the Securities in liquidation of the Trust or,
simultaneous with any redemption of the Debentures, cause a Like Amount of the
Securities to be redeemed by the Trust.
Under certain circumstances, the right of the holders of the
Common Securities shall be subordinate to the rights of the holders of the
Preferred Securities (as defined in the Declaration), as provided in the
Declaration.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-8
<PAGE> 121
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 122
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE> 1
EXHIBIT 4.7
====================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
Sterling Bancshares, Inc.
Dated as of _______, 1997
====================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . 6
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . 6
SECTION 2.3 Reports by the Preferred Securities Guarantee
Trustee . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.4 Periodic Reports to Preferred Securities
Guarantee Trustee . . . . . . . . . . . . . . . . 7
SECTION 2.5 Evidence of Compliance with Conditions
Precedent . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . 7
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . 8
SECTION 2.8 Conflicting Interests . . . . . . . . . . . . . . 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Securities
Guarantee Trustee . . . . . . . . . . . . . . . . 8
SECTION 3.2 Certain Rights of Preferred Securities
Guarantee Trustee . . . . . . . . . . . . . . . . 10
SECTION 3.3 Not Responsible for Recitals or Issuance of
Preferred Securities Guarantee . . . . . . . . . 13
ARTICLE IV
PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Preferred Securities Guarantee Trustee;
Eligibility . . . . . . . . . . . . . . . . . . . 13
SECTION 4.2 Appointment, Removal and Resignation of
Preferred Securities Guarantee Trustee . . . . . 14
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.2 Waiver of Notice and Demand . . . . . . . . . . . 15
SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . 15
SECTION 5.4 Rights of Holders . . . . . . . . . . . . . . . . 16
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . . 17
</TABLE>
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SECTION 5.6 Subrogation . . . . . . . . . . . . . . . . . . . 17
SECTION 5.7 Independent Obligations . . . . . . . . . . . . . 17
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions . . . . . . . . . . . 17
SECTION 6.2 Ranking . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation . . . . . . . . . . . . . . . . . . . 19
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . . . 20
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . 20
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . 20
SECTION 9.3 Notices . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9.4 Benefit . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.5 Governing Law . . . . . . . . . . . . . . . . . . 22
</TABLE>
ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of *, 1997, is executed and delivered by STERLING
BANCSHARES, INC., a Texas corporation (the "Guarantor"), and Bankers Trust
Company, a New York banking corporation, as trustee (the "Preferred Securities
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of STERLING
BANCSHARES CAPITAL TRUST I, a Delaware statutory business trust (the "Issuer").
RECITALS:
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of *, 1997, among the trustees of the
Issuer, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof 1,000,000 Preferred Securities, having an aggregate
liquidation amount of $25,000,000 (assuming the Underwriters' over-allotment
option is not exercised), such preferred securities being designated the *%
Preferred Securities (the "Preferred Securities"); and
WHEREAS, as incentive for the Holders to purchase the
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Preferred Securities Guarantee, to pay
to the Holders the Guarantee Payments (as defined below), and the Guarantor
agrees to make certain other payments on the terms and conditions set forth
herein; and
WHEREAS, the Guarantor is executing and delivering a guarantee
agreement (the "Common Securities Guarantee"), with substantially identical
terms to this Preferred Securities Guarantee, for the benefit of the holders of
the Common Securities (as defined herein), except that if an Event of Default
(as defined in the Declaration) has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee are subordinated, to the extent and in the manner set
forth in the Common Securities Guarantee, to the rights of holders of Preferred
Securities to receive Guarantee Payments under this Preferred Securities
Guarantee;
NOW, THEREFORE, in consideration of the purchase by each
Holder, which purchase the Guarantor hereby acknowledges shall benefit the
Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
<PAGE> 5
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Preferred Securities
Guarantee but not defined in the preamble above have
the respective meanings assigned to them in this
Section 1.1;
(b) Terms defined in the Declaration as at the date of
execution of this Preferred Securities Guarantee have
the same meaning when used in this Preferred
Securities Guarantee unless otherwise defined in this
Preferred Securities Guarantee;
(c) a term defined anywhere in this Preferred Securities
Guarantee has the same meaning throughout;
(d) all references to "the Preferred Securities
Guarantee" or "this Preferred Securities Guarantee"
are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(e) all references in this Preferred Securities Guarantee
to Articles and Sections are to Articles and Sections
of this Preferred Securities Guarantee, unless
otherwise specified;
(f) a term defined in the Trust Indenture Act (as defined
below) has the same meaning when used in this
Preferred Securities Guarantee, unless otherwise
defined in this Preferred Securities Guarantee or
unless the context otherwise requires; and
(g) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Business Day" means any day other than a Saturday or a
Sunday, or a day on which banking institutions in The City of New York or
Houston, Texas are authorized or required by law or executive order to close.
2
<PAGE> 6
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Preferred
Securities Guarantee Trustee at which the corporate trust business of the
Preferred Securities Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Agreement is located at Four Albany Street, New York, New York 10006.
"Covered Person" means any Holder of Preferred Securities.
"Debentures" means the series of subordinated debt securities
of the Guarantor designated the *% Junior Subordinated Deferrable Interest
Debentures due *, 2027 held by the Property Trustee (as defined in the
Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Issuer has funds on hand legally
available therefor at such time, (ii) the redemption price, including all
accumulated and unpaid Distributions to the date of redemption (the "Redemption
Price") to the extent the Issuer has funds on hand legally available therefor
at such time, with respect to any Preferred Securities called for redemption by
the Issuer, and (iii) upon a voluntary or involuntary termination and
liquidation of the Issuer (other than in connection with the distribution of
Debentures to the Holders in exchange for Preferred Securities as provided in
the Declaration), the lesser of (a) the aggregate of the liquidation amount and
all accumulated and unpaid Distributions on the Preferred Securities to the
date of payment, to the extent the Issuer has funds on hand legally available
therefor, and (b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer. If an Event of Default
has occurred and is continuing, no Guarantee Payments under the Common
Securities Guarantee with respect to the Common Securities or any guarantee
payment under any Other Common Securities Guarantees shall be made until the
Holders shall be paid in full the Guarantee Payments to which they are entitled
under this Preferred Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities;
3
<PAGE> 7
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 or any Person known
to a Responsible Officer of the Preferred Securities Guarantee Trustee to be an
Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Securities Guarantee
Trustee, any Affiliate of the Preferred Securities Guarantee Trustee, or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Preferred Securities
Guarantee Trustee.
"Indenture" means the Indenture dated as of *, 1997, among the
Guarantor (the "Debenture Issuer") and Bankers Trust Company, as trustee (the
"Indenture Trustee"), pursuant to which the Debentures are to be issued to the
Property Trustee of the Issuer.
"Indenture Event of Default" shall mean any event specified in
Section 5.01 of the Indenture.
"Majority in liquidation amount of the Preferred Securities"
means, except as provided by the Declaration or by the Trust Indenture Act, a
vote by Holder(s) of more than 50% of the aggregate liquidation amount of all
Preferred Securities.
"Officers' Certificate" means, with respect to the Guarantor,
a certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, the Secretary or an
Assistant Secretary of the Guarantor. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Preferred Securities Guarantee (other than pursuant to Section 314(a)(4) of the
Trust Indenture Act) shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in the Officers' Certificate are based;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
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<PAGE> 8
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same
meaning as "Other Guarantees" as defined in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures
issued by the Guarantor from time to time and sold to trusts to be established
by the Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by the
Guarantor with respect to capital securities (if any) similar to the Preferred
Securities issued by other trusts to be established by the Guarantor (if any),
in each case similar to the Issuer.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities Guarantee Trustee" means Bankers Trust
Company, a New York banking corporation, until a Successor Preferred Securities
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Preferred Securities Guarantee and thereafter means each
such Successor Preferred Securities Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
Securities Guarantee Trustee, any officer within the Corporate Trust Office of
the Preferred Securities Guarantee Trustee with direct responsibility for the
administration of this Preferred Securities Guarantee and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Preferred Securities Guarantee Trustee" means a
successor Preferred Securities Guarantee Trustee possessing the qualifications
to act as Preferred Securities Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Trust Securities" means the Common Securities and the
Preferred Securities.
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<PAGE> 9
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions.
(b) If and to the extent that any provision of this
Preferred Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Securities Guarantee
Trustee (unless the Preferred Securities Guarantee Trustee is otherwise the
registrar of the Preferred Securities) with a list, in such form as the
Preferred Securities Guarantee Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of such date, (i) within one
Business Day after January 15 and July 15 of each year, and (ii) at any other
time within 30 days of receipt by the Guarantor of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is
given to the Preferred Securities Guarantee Trustee, provided, that the
Guarantor shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders given
to the Preferred Securities Guarantee Trustee by the Guarantor. The Preferred
Securities Guarantee Trustee may destroy any List of Holders previously given
to it on receipt of a new List of Holders.
(b) The Preferred Securities Guarantee Trustee shall comply with
its obligations under Sections 311(a).
SECTION 2.3 Reports by the Preferred Securities Guarantee Trustee
Within 60 days after May 15 of each year, commencing May 15,
1997, the Preferred Securities Guarantee Trustee shall provide to the Holders
such reports as are required by Section 313 of the Trust Indenture Act, if any,
in the form and in the manner provided by Section 313 of the Trust Indenture
Act. The Preferred Securities Guarantee Trustee shall also comply with the
other requirements of Section 313 of the Trust Indenture Act.
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<PAGE> 10
SECTION 2.4 Periodic Reports to Preferred Securities Guarantee Trustee
The Guarantor shall provide to the Preferred Securities
Guarantee Trustee such documents, reports and information as required by
Section 314 (if any) and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act. Delivery of such reports, information
and documents to the Preferred Securities Guarantee Trustee is for
informational purposes only and the Preferred Securities Guarantee Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Guarantor's compliance with any of its covenants hereunder (as to which the
Preferred Securities Guarantee Trustee is entitled to rely exclusively on
Officers' Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Securities
Guarantee Trustee such evidence of compliance with any conditions precedent, if
any, provided for in this Preferred Securities Guarantee that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of all Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Preferred Securities
Guarantee, but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Securities Guarantee Trustee shall,
within 90 days after the occurrence of a default with respect to this Preferred
Securities Guarantee, mail by first class postage prepaid, to all Holders,
notices of all defaults actually known to a Responsible Officer, unless such
defaults have been cured before the giving of such notice, provided, that,
except in the case of default in the payment of any Guarantee Payment, the
Preferred Securities Guarantee Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee, or a
trust committee of directors and/or
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<PAGE> 11
a Responsible Officer in good faith determines that the withholding of such
notice is in the interests of the Holders.
(b) The Preferred Securities Guarantee Trustee shall not
be deemed to have knowledge of any Event of Default unless the Preferred
Securities Guarantee Trustee shall have received written notice from the
Guarantor, or a Responsible Officer charged with the administration of this
Preferred Securities Guarantee shall have obtained actual knowledge, of such
Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this Preferred Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Securities Guarantee
Trustee
(a) This Preferred Securities Guarantee shall be held by
the Preferred Securities Guarantee Trustee for the benefit of the Holders, and
the Capital Securities Guarantee Trustee shall not transfer this Preferred
Securities Guarantee to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Preferred Securities Guarantee
Trustee on acceptance by such Successor Preferred Securities Guarantee Trustee
of its appointment to act as Successor Preferred Securities Guarantee Trustee.
The right, title and interest of the Preferred Securities Guarantee Trustee
shall automatically vest in any Successor Preferred Securities Guarantee
Trustee, and such vesting and succession of title shall be effective whether or
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Preferred Securities Guarantee Trustee.
(b) If an Event of Default actually known to a
Responsible Officer has occurred and is continuing, the Preferred Securities
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders.
(c) The Preferred Securities Guarantee Trustee, before
the occurrence of any Event of Default and after the curing of all Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Preferred Securities Guarantee, and no
implied covenants shall be
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<PAGE> 12
read into this Preferred Securities Guarantee against the Preferred Securities
Guarantee Trustee. In case an Event of Default has occurred (that has not been
cured or waived pursuant to Section 2.6) and is actually known to a Responsible
Officer, the Preferred Securities Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Preferred Securities Guarantee, and use
the same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Preferred Securities Guarantee
shall be construed to relieve the Preferred Securities Guarantee Trustee from
liability for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(i) prior to the occurrence of any 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 Preferred
Securities Guarantee Trustee shall be determined solely by the
express provisions of this Preferred Securities Guarantee, and
the Preferred Securities Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Preferred Securities
Guarantee, and no implied covenants or obligations shall be
read into this Preferred Securities Guarantee against the Pre-
ferred Securities Guarantee Trustee; and
(B) in the absence of bad faith on the part of
the Preferred Securities Guarantee Trustee, the Preferred
Securities Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished
to the Preferred Securities Guarantee Trustee and conforming
to the requirements of this Preferred Securities Guarantee;
but in the case of any such certificates or opinions that by
any provision hereof are specifically required to be furnished
to the Preferred Securities Guarantee Trustee, the Preferred
Securities Guarantee Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Preferred Securities Guarantee;
(ii) the Preferred Securities Guarantee Trustee shall not
be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Preferred
Securities Guarantee Trustee was negligent in
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<PAGE> 13
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Preferred Securities Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be taken by it
in good faith in accordance with the direction of the Holders of a
Majority in liquidation amount of the Preferred Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Preferred Securities Guarantee Trustee, or exercising
any trust or power conferred upon the Preferred Securities Guarantee
Trustee under this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee
shall require the Preferred Securities Guarantee Trustee to expend or
risk its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of its
rights or powers, if the Preferred Securities Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds
or liability is not reasonably assured to it under the terms of this
Preferred Securities Guarantee or indemnity, reasonably satisfactory
to the Preferred Securities Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Securities Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee may be sufficiently evidenced by
an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Securities Guarantee Trustee shall
deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Preferred
Securities Guarantee Trustee (unless other evidence is herein
specifically pre- scribed) may, in the absence of bad faith on its
part,
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request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Preferred Securities Guarantee Trustee shall have no
duty to see to any recording, filing or registration of any instrument
(or any rerecording, refiling or registration thereof).
(v) The Preferred Securities Guarantee Trustee may consult
with counsel of its selection, and the advice or opinion of such
counsel with respect to legal matters shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the Guarantor or
any of its Affiliates and may include any of its employees. The
Preferred Securities Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this
Preferred Securities Guarantee from any court of competent
jurisdiction.
(vi) The Preferred Securities Guarantee Trustee shall be
under no obligation to exercise any of the rights or powers vested in
it by this Preferred Securities Guarantee at the request or direction
of any Holder, unless such Holder shall have provided to the Preferred
Securities Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Preferred Securities Guarantee Trustee, against
the costs, expenses (including attorneys' fees and expenses and the
expenses of the Preferred Securities Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it
in complying with such request or direction, including such reasonable
advances as may be requested by the Preferred Securities Guarantee
Trustee; provided that, nothing contained in this Section 3.2(a)(vi)
shall be taken to relieve the Preferred Securities Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Preferred
Securities Guarantee.
(vii) The Preferred Securities Guarantee Trustee shall not be
bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Preferred Securities 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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(viii) The Preferred Securities Guarantee Trustee may execute
any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians or
attorneys, and the Preferred Securities Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Securities Guarantee
Trustee or its agents hereunder shall bind the Holders, and the
signature of the Preferred Securities Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such action.
No third party shall be required to inquire as to the authority of the
Preferred Securities Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Preferred
Securities Guarantee, both of which shall be conclusively evidenced by
the Preferred Securities Guarantee Trustee's or its agent's taking
such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Securities Guarantee Trustee shall
deem it desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder, the
Preferred Securities Guarantee Trustee (i) may request instructions
from the Holders of a Majority in liquidation amount of the Preferred
Securities, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Preferred Securities Guarantee Trustee shall not be
liable for any action taken, suffered, or omitted to be taken by it in
good faith, without negligence, and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Preferred Securities Guarantee.
(b) No provision of this Preferred Securities Guarantee
shall be deemed to impose any duty or obligation on the Preferred
Securities Guarantee Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Preferred
Securities Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to
exercise any such right, power, duty or obligation. No permissive
power or authority available to the Preferred Securities Guarantee
Trustee shall be construed to be a duty.
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SECTION 3.3. Not Responsible for Recitals or Issuance of Preferred
Securities Guarantee
The recitals contained in this Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Preferred Securities
Guarantee Trustee does not assume any responsibility for their correctness.
The Preferred Securities Guarantee Trustee makes no representation as to the
validity or sufficiency of this Preferred Securities Guarantee.
ARTICLE IV
Preferred SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Preferred Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Securities
Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 25 million U.S. dollars ($25,000,000),
and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Preferred Securities Guarantee
Trustee shall cease to be eligible to so act under Section 4.1(a), the
Preferred Securities Guarantee Trustee shall immediately resign in the manner
and with the effect set out in Section 4.2(c).
(c) If the Preferred Securities Guarantee Trustee has or
shall acquire any "conflicting interest" within the meaning of Section 310(b)
of the Trust Indenture Act, the Preferred Securities Guarantee Trustee and
Guarantor shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
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SECTION 4.2 Appointment, Removal and Resignation of Preferred Securities
Guarantee Trustee
(a) Subject to Section 4.2(b), the Preferred Securities
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
(b) The Preferred Securities Guarantee Trustee shall not
be removed in accordance with Section 4.2(a) until a Successor Preferred
Securities Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Preferred
Securities Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Securities Guarantee Trustee shall hold
office until a Successor Preferred Securities Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Securities
Guarantee Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Preferred Securities
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Preferred Securities Guarantee Trustee has been
appointed and has accepted such appointment by instrument in writing executed
by such Successor Preferred Securities Guarantee Trustee and delivered to the
Guarantor and the resigning Preferred Securities Guarantee Trustee.
(d) If no Successor Preferred Securities Guarantee
Trustee shall have been appointed and accepted appointment as provided in this
Section 4.2 within 60 days after delivery of an instrument of removal or
resignation, the Preferred Securities Guarantee Trustee resigning or being
removed may petition any court of competent jurisdiction for appointment of a
Successor Preferred Securities Guarantee Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper, appoint a
Successor Preferred Securities Guarantee Trustee.
(e) No Preferred Securities Guarantee Trustee shall be
liable for the acts or omissions to act of any Successor Preferred Securities
Guarantee Trustee.
(f) Upon termination of this Preferred Securities
Guarantee or removal or resignation of the Preferred Securities Guarantee
Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Preferred
Securities Guarantee Trustee all amounts due to the Preferred Securities
Guarantee Trustee accrued to the date of such termination, removal or
resignation.
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ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Preferred Securities Guarantee shall in no way be affected
or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer
of all or any portion of the Distributions, Redemption Price, Liquidation
Distribution 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 (other
than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the extension
of any interest payment period on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action
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on the part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of
the Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Preferred Securities
Guarantee Trustee in respect of this Preferred Securities Guarantee or
exercising any trust or power conferred upon the Preferred Securities Guarantee
Trustee under this Preferred Securities Guarantee.
(b) If the Preferred Securities Guarantee Trustee fails
to enforce such Preferred Securities Guarantee, any Holder may institute a
legal proceeding directly against the Guarantor to enforce the Preferred
Securities Guarantee Trustee's rights under this Preferred Securities
Guarantee, without first instituting a legal proceeding against the Issuer, the
Preferred Securities Guarantee Trustee or any other person or entity. The
Guarantor waives any right or remedy to require that any action be brought
first against the Issuer or any other person or entity before proceeding
directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
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This Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders against the Issuer in respect of any amounts paid to such Holders
by the Guarantor under this Preferred Securities Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by mandatory provi-
sions of law) be entitled to enforce or exercise any right that it may acquire
by way of subrogation or any indemnity, reimbursement or other agreement, in
all cases as a result of payment under this Preferred Securities Guarantee, if,
at the time of any such payment, any amounts are due and unpaid under this
Preferred Securities Guarantee. If any amount shall be paid to the Guarantor
in violation of the preceding sentence, the Guarantor agrees to hold such
amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the 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 Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (h), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, the
Guarantor shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Guarantor's capital stock (which includes common and preferred stock) or
(other than (a) dividends or distributions in shares of, or options, warrants,
rights to subscribe for or purchase shares of, common stock of the Guarantor,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) as a result of a reclassification of one class or series of the Guarantor's
capital stock solely into another class or series of the Guarantor's capital
stock, (d) the purchase of fractional interests in shares of the Guarantor's
capital stock resulting from such a classification pursuant to the conversion
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or exchange provisions of such capital stock or any security convertible into
or exchangeable for shares of the Guarantor's capital stock, and (e) purchases
of common stock related to the issuance of common stock or rights under any of
the Guarantor's benefit plans for its directors, officers or employees or any
of the Guarantor's dividend reinvestment plans), (ii) make any payment of
principal of, or premium, if any, or interest on, or repay, repurchase or
redeem any debt securities of the Guarantor (including any Other Debentures)
that rank pari passu with or junior in right of payment to the Debentures or
(iii) make any guarantee payments with respect to any guarantee (other than
payments under the Preferred Securities Guarantee or the Common Guarantee) by
the Guarantor of the debt securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the Debentures (, if at such time (i) there shall have
occurred any event of which the Guarantor has actual knowledge that (a) is, or
with the giving of notice or the lapse of time, or both, would be an Indenture
Event of Default and (b) in respect of which the Guarantor shall not have taken
reasonable steps to cure, (ii) if such Debentures are held by the Property
Trustee, the Guarantor shall be in default with respect to its payment of any
obligations under this Preferred Securities Guarantee or (iii) the Guarantor
shall have given notice of its election of the exercise of its right to extend
the interest payment period pursuant to Section 16.01 of the Indenture and any
such extension shall be continuing.
SECTION 6.2 Ranking
This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to Senior Indebtedness (as defined in the Indenture), to
the same extent and in the same manner that the Debentures are subordinated to
Senior Indebtedness pursuant to the Indenture, (ii) pari passu with the Deben-
tures, the Other Debentures, the Common Securities Guarantee, any Other Common
Securities Guarantee and any Other Guarantee, and (iii) senior to the
Guarantor's capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate (i) upon
full payment of the Redemption Price (as defined in the Declaration) of all
Preferred Securities or (ii) upon liquidation of the Issuer, the full payment
of the amounts payable in accordance with the Declaration or the distribution
of the Debentures to the Holders and the holders of the Common Securities.
Notwithstanding
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the foregoing, this Preferred Securities Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
must restore payment of any sums paid under the Preferred Securities or under
this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, expense, liability, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Preferred Securities Guarantee and in a manner that such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Preferred Securities Guarantee or
by law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of
this Preferred Securities Guarantee.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Series A
Preferred Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the benefit of
the Holders then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no consent of Holders
will be required), this Preferred Securities Guarantee may only be amended with
the prior approval of the Holders of a Majority in liquidation amount of the
Preferred Securities (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined). The provisions of
the Declaration with respect to consents to amendments thereof (whether at a
meeting or otherwise) shall apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative
Trustee at the Issuer's mailing address set forth below (or such other address
as the Issuer may give notice of to the Holders and the Preferred Securities
Guarantee Trustee):
Sterling Bancshares Capital Trust I
15000 Northwest Freeway, Suite 200
Houston, Texas 77040
Attention: Michael A. Roy
Administrative Trustee
Telecopy: (713) 849-5498
(b) If given to the Preferred Securities Guarantee Trustee, at the
Preferred Securities Guarantee Trustee's mailing address set forth below (or
such other address as the Preferred Securities Guarantee Trustee may give
notice of to the Holders and the Issuer):
Bankers Trust Company
Four Albany Street
New York, New York 10006
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Attention: Corporate Trustee
Administration Department
Telecopy: (212) 250-6622
(c) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders and the Preferred Securities Guarantee Trustee):
Sterling Bancshares, Inc.
15000 Northwest Freeway, Suite 200
Houston, Texas 77040
Attention: George Martinez
President and CEO
Telecopy: (713) 849-5498
(d) If given to any Holder, at the address set forth on
the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit
of the Holders and, subject to Section 3.1(a), is not separately transferable
from the Preferred Securities.
SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF. EACH OF THE
GUARANTOR AND THE TRUSTEE HEREBY IRREVOCABLY: (A) SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE CITY OF
NEW YORK IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING BY ANY HOLDER, OR
ITS SUCCESSORS RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED
HEREBY; (B) WAIVES ANY DEFENSE OF LACK OF PERSONAL JURISDICTION; AND (C) AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN ANY SUCH COURT. EACH OF THE GUARANTOR AND THE TRUSTEE
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT
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IN AN INCONVENIENT FORUM. THIS SECTION 9.5 SHALL NOT PRECLUDE ANY SUIT, ACTION
OR PROCEEDING BY THE GUARANTOR OR THE TRUSTEE AGAINST ANY HOLDER OR ITS
SUCCESSORS RELATED TO THIS AGREEMENT IN ANY OTHER COURT OF COMPETENT
JURISDICTION.
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THIS PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.
STERLING BANCSHARES, INC., as Guarantor
By:
----------------------------------------------
Name:
Title:
BANKERS TRUST COMPANY, as
Preferred Securities Guarantee Trustee
By:
----------------------------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 4.8
RESTATED AND AMENDED
ARTICLES OF INCORPORATION
OF
STERLING BANCSHARES, INC.
Sterling Bancshares, Inc. (the "Corporation"), pursuant to the
provisions of Article 4.07 of the Texas Business Corporation Act, hereby adopts
these Restated and Amended Articles of Incorporation which accurately copy the
Articles of Incorporation of the Corporation that are in effect to date, as
previously amended and as further amended by such Restated and Amended Articles
of Incorporation as hereinafter set forth. The original Articles of
Incorporation of the Corporation were originally filed with the Secretary of
State of the State of Texas on September 23, 1980.
These Restated and Amended Articles of Incorporation and the
amendment made hereby have been duly adopted in accordance with the applicable
provisions of Article 4.07 of the Texas Business Corporation Act, and the
Restated and Amended Articles of Incorporation, and such amendment were adopted
by the shareholders of the outstanding Shares of Common Stock of the
Corporation at a shareholders meeting held on April 21, 1997.
ARTICLE ONE
The name of the Corporation is Sterling Bancshares, Inc.
ARTICLE TWO
Paragraph 1 of Article 4 of the Articles of Incorporation is hereby
amended to read in its entirety as follows:
The total number of shares of all classes of stock which the
Corporation shall be authorized to issue is 31,000,000 shares, divided into the
following: (i) 1,000,000 shares of Cumulative Preferred Stock, of the par
value of $1.00 per share (Preferred Stock); and (ii) 30,000,000 shares of
Common Stock, of the par value of $1.00 per share (Common Stock).
<PAGE> 2
ARTICLE THREE
The amendment made by the restated articles of incorporation has been
effected in conformity with the provisions of the Texas Business Corporation
Act and such restated articles of incorporation and the amendment made by the
restated articles of incorporation was duly adopted by the shareholders of the
corporation on the 21st day of April, 1997.
ARTICLE FOUR
The number of shares outstanding was 12,001,400 shares of Common Stock
and 88,380 shares of Preferred Stock; the number of shares entitled to vote on
the restated articles of incorporation as so amended was 12,001,400 shares of
Common Stock; the number of shares voted for such restated articles as so
amended was 9,320,696 of Common Stock; the number of shares voted against such
restated articles as so amended was 47,148 of Common Stock; and the number of
shares abstaining from voting on such restated articles as so amended was
46,401 of Common Stock.
ARTICLE FIVE
The articles of incorporation and all amendments and supplements
thereto are hereby superseded by the following restated articles of
incorporation which accurately copy the entire text thereof and the amendment
set forth above:
ARTICLE 1.
The name of the corporation is Sterling Bancshares, Inc.
ARTICLE 2.
The period of duration of the corporation is perpetual.
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ARTICLE 3.
The purpose for which the Corporation is organized is to engage in any
or all lawful acts, activities or businesses for which a corporation may be
organized under the Texas Business Corporation Act.
ARTICLE 4.
The total number of shares of all classes of stock which the
Corporation shall be authorized to issue is 31,000,000 shares, divided into the
following: (i) 1,000,000 shares of Cumulative Preferred Stock, of the par
value of $1.00 per share (Preferred Stock); and (ii) 30,000,000 shares of
Common Stock, of the par value of $1.00 per share (Common Stock).
A description of the respective classes of stock and a statement of
the designations, preferences, limitations and relative rights of said
respective classes of stock are as follows:
4.1. Preferred Stock.
Section 4.1.1. Issuance in Series. The Preferred Stock may
be divided into and issued in one or more series. The Board of Directors is
hereby vested with authority from time to time to establish and designate such
series, and within the limitations prescribed by law or set forth herein, to
fix and determine the relative rights and preferences of the shares of any
series so established, but all shares of the Preferred Stock shall be identical
except as to the following relative rights and preferences, as to which there
may be variations between different series: (a) the rate of dividend; (b) the
price at and the terms and conditions on which shares may be redeemed,
including, to the extent permitted by law, the manner in which shares are to be
chosen for redemption if less than all the shares of a series are to be
redeemed; (c) the amount payable upon shares in event of involuntary
liquidation; (d) the amount payable upon shares in the event
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of voluntary liquidation; (e) sinking fund provisions for the redemption or
purchase of shares; (f) the terms and conditions on which shares may be
converted, if the shares of any series are issued with the privilege of
conversion; and (g) voting rights. The Board of Directors shall exercise such
authority by the adoption of a resolution or resolutions as prescribed by law.
The term "fixed for such series" and similar terms as used in this Article 4
shall mean stated and expressed in this Article 4 or in a resolution or
resolutions adopted by the Board of Directors establishing and designating the
series of Preferred Stock referred to herein.
Section 4.1.2. Dividends. The holders of the Preferred
Stock of each such series shall be entitled to receive, when and as declared by
the Board of Directors, out of any funds legally available therefor, cumulative
preferential dividends in cash, at the rate per annum fixed for such series,
and no more. Dividends on shares of the Preferred Stock of each series shall
accrue from the date of the initial issue of shares of such series, or from
such other date as may be fixed by the Board of Directors, shall be cumulative,
and shall be payable quarterly on the last days of March, June, September and
December in each year to shareholders of record on the fifteenth day of the
calendar month in which such dividends are payable with the first dividend on
the Preferred Stock of any series being payable on the respective dividend date
which follows the first full calendar quarter after the initial issue of shares
of such series. Each share of Preferred Stock shall rank on a parity with each
other share of Preferred Stock, irrespective of series, with respect to
preferential dividends at the respective rates fixed for such series, and no
dividend shall be declared or paid or set apart for payment for the Preferred
Stock of any series unless at the same time a dividend in like proportion to
the accrued and unpaid dividends upon the Preferred Stock of each other series
shall be declared or paid or set apart for payment, as the
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case may be, on Preferred Stock of each other series then outstanding. Accrued
and unpaid dividends on the Preferred Stock shall not bear interest.
Section 4.1.3. Dividend Restrictions on Junior Stock. So
long as any shares of Preferred Stock are outstanding, the Corporation shall
not pay or declare any cash dividends whatsoever on the Common Stock or any
other class of stock ranking junior to the Preferred Stock unless (a) all
dividends on the Preferred Stock of all series for all past quarterly dividend
periods shall have been paid, or declared and a sum sufficient for the payment
thereof set apart, and (b) there shall exist no default in respect of any
sinking fund or purchase fund for the redemption or purchase of shares of
Preferred Stock of any series or such default shall have been waived by the
holders of at least a majority of the then issued and outstanding shares of
Preferred Stock of such series by a vote at a meeting called for such purpose
or by written waiver with or without a meeting.
Section 4.1.4. Redemption. The Corporation at the option of
the Board of Directors may redeem the Preferred Stock of any series which by
its terms is redeemable, at the time or times and on the terms and conditions
fixed for such series, upon notice duly given as hereinafter provided, by
paying therefor in cash the sum fixed for such series, together, in each case,
with an amount equal to accrued and unpaid dividends thereon. The term
"accrued and unpaid dividends" as used herein with respect to Preferred Stock
of any series shall mean dividends on all outstanding shares of Preferred Stock
of such series at the rate fixed for such series, from the date or dates from
which such dividends accrued to the date as of which accrued and unpaid
dividends are being determined, less the aggregate amount of all dividends
theretofore declared and paid or set apart for payment upon such outstanding
Preferred Stock.
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At least 20 and not more than 50 days' previous notice of any such
redemption of Preferred Stock shall be mailed, addressed to the holders of
record of the shares to be redeemed at their respective addresses as the same
shall appear on the books of the Corporation.
In case of the redemption of only part of the Preferred Stock of any
series at the time outstanding, at the option of the Board of Directors such
redemption shall be made pro rata or the shares of such series to be redeemed
shall be chosen by lot in such manner as may be prescribed by resolution of the
Board of Directors or the shares of such series to be redeemed shall be chosen
in such other manner as may have been fixed for such series.
The Corporation may, on or prior to the date fixed for redemption of
any shares of Preferred Stock, deposit with any bank or trust company in the
State of Texas, or any bank or trust company in the United States duly
appointed and acting as transfer agent for the Corporation, as a trust fund, a
sum sufficient to redeem such shares called for redemption, with irrevocable
instructions and authority to such bank or trust company to give or complete
the notice of redemption thereof and to pay, on or after the date fixed for
such redemption, to the respective holders of such shares, as evidenced by a
list of holders of such shares certified by the Corporation by its president or
vice president or by its secretary or an assistant secretary, the redemptive
price upon the surrender of their respective share certificates. Thereafter,
from and after the date fixed for redemption, such shares shall be deemed to be
redeemed and dividends thereon shall cease to accrue after such date fixed for
redemption. Such deposit shall be deemed to constitute full payment of such
shares to their holders. Thereafter, such shares shall no longer be deemed to
be outstanding, and the holders thereof shall cease to be shareholders with
respect to such shares, and shall have no rights with respect thereto except
the right to receive from the
-6-
<PAGE> 7
bank or trust company payment of the redemptive price of such shares without
interest, upon the surrender of their respective certificates therefor, and any
right to convert such shares which may exist. In case the holders of such
shares shall not, within six (6) years after such deposit, claim the amount
deposited for redemption thereof, such bank or trust company shall upon demand
pay over to the Corporation the balance of such amount so deposited to be held
in trust and such bank or trust company shall thereupon be relieved of all
responsibility to the holders thereof.
If as of the date fixed for redemption of the Preferred Stock called
for redemption, the amount deposited for the redemption thereof exceeds the
aggregate redemption price of all such shares being redeemed, any such excess
shall be paid back to the Corporation.
If and so long as there shall exist any default in the payment of
dividends on any series of Preferred Stock or any default in respect of any
sinking fund or purchase fund for the redemption or purchase of shares of
Preferred Stock of any series, the Corporation shall not (other than by the use
of unapplied funds, if any, paid into or set aside for a sinking fund or
purchase fund prior to such default) (a) redeem any shares of the Preferred
Stock unless all the then outstanding shares of Preferred Stock are redeemed,
or (b) purchase, retire or otherwise acquire for a consideration any shares of
the Preferred Stock except pro rata pursuant to offers of sale made by holders
of the Preferred Stock in response to an invitation for tenders given
simultaneously by the Corporation by mail to the holders of record of all
shares of the Preferred Stock then outstanding.
Section 4.1.5. Liquidation or Dissolution. In the event of
any liquidation, dissolution or winding up of the affairs of the Corporation,
then, before any distribution or payment shall be made to the holders of the
Common Stock or any other class of stock of the Corporation ranking junior to
the Preferred Stock in respect of dividends or distribution of assets upon
-7-
<PAGE> 8
liquidation, the holders of the Preferred Stock of the respective series shall
be entitled to be paid in full, in the event of a voluntary or involuntary
liquidation, dissolution or winding up, the respective amounts fixed for such
series, plus in each case a sum equal to accrued and unpaid dividends thereon
to the date of payment thereof. After such payment shall have been made in
full to the holders of the Preferred Stock, the remaining assets and funds of
the Corporation shall be distributed among the holders of the stock of the
Corporation ranking junior to the Preferred Stock in respect of dividends or
distribution of assets upon liquidation according to their respective rights.
In the event that the assets of the Corporation available for distribution to
holders of Preferred Stock shall not be sufficient to make the payment herein
required to be made in full, such assets shall be distributed to the holders of
the respective shares of Preferred Stock pro rata in proportion to the amounts
payable upon such share thereof. Neither the merger or consolidation of the
Corporation into or with another corporation nor the merger or consolidation of
any other corporation into or with the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
this Section 4.1.5., but the sale, lease or conveyance of all or substantially
all of its assets shall be deemed to be a liquidation, dissolution or winding
up of the Corporation within the meaning of this Section 4.1.5.
Section 4.1.6. Status of Shares Redeemed or Retired.
Preferred Stock redeemed or otherwise retired by the Corporation shall, upon
the filing of such statement as may be required by law, assume the status of
authorized but unissued Preferred Stock and may thereafter be reissued in the
same manner as other authorized but unissued Preferred Stock.
Section 4.1.7. Amendments. Subject to such requirements as
may be prescribed by law or as may be expressly set forth in the foregoing
provisions of this Section 4.1. or in any
-8-
<PAGE> 9
resolution establishing and designating a series of shares of Preferred Stock,
any of the foregoing terms and provisions of this Section 4.1. may be altered,
amended or repealed or the application thereof suspended or waived in any
particular case and changes in any of the designations, preferences,
limitations and relative rights of the Preferred Stock may be made with the
affirmative vote, at a meeting called for the purpose, or the written consent
with or without a meeting, of the holders of at least two-thirds of the then
issued and outstanding shares of Preferred Stock; provided that neither the
rate of dividend nor the amount payable upon the redemption or in the event of
voluntary or involuntary liquidation on any share of Preferred Stock be reduced
without the consent of the holders thereof.
Section 4.2. Common Stock.
Section 4.2.1. Dividends. Subject to the prior and superior
rights of the Preferred Stock, and on the conditions set forth in Section 4.1.
of this Article 4 or in any resolution of the Board of Directors providing for
the issuance of any series of Preferred Stock, and not otherwise, such
dividends (payable in cash, stock or otherwise) as may be determined by the
Board of Directors may be declared and paid on the Common Stock from time to
time out of any funds legally available therefor.
Section 4.2.2. Liquidation or Dissolution. After payment
shall have been made in full to the holders of the Preferred Stock in the event
of any liquidation, dissolution or winding up of the affairs of the
Corporation, the remaining assets and funds of the Corporation shall be
distributed pro rata among the holders of the Common Stock according to their
respective shares.
-9-
<PAGE> 10
Section 4.3. Provisions Applicable to All Classes of Stock.
Section 4.3.1. Pre-emptive Rights. No holder of shares of
any class of the capital stock of the Corporation or any other person shall be
entitled to any pre-emptive rights whatsoever.
Section 4.3.2. Voting Rights. Subject to the voting rights
expressly conferred herein, by law and by the Board of Directors in
establishing and fixing the relative rights and preferences of the shares of
any series of Preferred Stock, the holders of the Common Stock shall
exclusively possess full voting power for the election of directors and for all
other purposes. Except as otherwise provided herein, by law, or by the Board
of Directors in establishing and fixing the relative rights and preferences of
the shares of any series of Preferred Stock, in any case where the holders of
Preferred Stock possess voting rights, the Common Stock and Preferred Stock
together shall vote as one class.
Section 4.3.3. Noncumulative Voting. Cumulative voting shall
not be permitted.
ARTICLE 5.
The Corporation will not commence business until it has received for
the issuance of its shares consideration of the value of at least $1,000.00,
consisting of money, labor done or property actually received.
ARTICLE 6.
Without necessity for action by its shareholders, the Corporation may
purchase, directly or indirectly, its own shares to the extent of the aggregate
of unrestricted capital surplus available therefor and unrestricted reduction
surplus available therefor.
-10-
<PAGE> 11
ARTICLE 7.
No contract or other transaction between the Corporation and one or
more of its directors, officers or securityholders or between the Corporation
and another corporation, partnership, joint venture, trust or other enterprise
of which one or more of the Corporation's directors, officers or
securityholders are members, officers, securityholders, directors or employees
or in which they are otherwise interested, directly or indirectly, shall be
invalid solely because of such relationship, or solely because such director,
officer or securityholder is present at or participates in the meeting of the
Board of Directors or committee thereof which authorizes the contract or other
transaction, or solely because his or their votes are counted for such purpose,
if: (a) the material facts as to his relationship or interest and as to the
contract or other transaction are known or disclosed to the Board of Directors
or committee thereof, and such board or committee in good faith authorizes the
contract or other transaction by the affirmative votes of a majority of the
disinterested directors even though the disinterested directors be less than a
quorum; or (b) the material facts as to his relationship or interest and as to
the contract or other transaction are known or disclosed to the shareholders
entitled to vote thereon, and the contract or other transaction is specifically
approved in good faith by vote of the shareholders; or (c) the contract or
other transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified by the Board of Directors, a committee
thereof, or the shareholders.
ARTICLE 8.
Section 8.1. The Corporation, by action of its Board of
Directors, may indemnify any director or officer of the Corporation, and any
person who may have served at the request of the Corporation as a director or
officer of another corporation in which it owns shares or of which it is
-11-
<PAGE> 12
a creditor, against any costs and expenses, including counsel fees, actually
and necessarily incurred (or reasonably expected to be incurred) in connection
with the defense of any civil, criminal, administrative or other claim, action,
suit or proceeding (whether by or in the right of the Corporation or otherwise)
in which he may become involved or with which he may be threatened, by reason
of his being or having been such a director or officer, and against any
payments in settlement of any such claim, action, suit or proceeding or in
satisfaction of any related judgment, fine or penalty, provided that the Board
of Directors shall, in the exercise of its business judgment, determine that
such indemnification is in the best interests of the Corporation.
Section 8.2. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contenders
or its equivalent, shall not, of itself, create any presumptions that the
person to be indemnified did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and in respect of any criminal action or proceeding, did not
reasonably believe that his conduct was lawful.
Section 8.3. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
of Directors in the specific case on receipt of an undertaking by or on behalf
of the director or officer to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation.
Section 8.4. The foregoing right of indemnification shall not be
deemed exclusive of any other rights to which any director, officer or other
person may be entitled under any other bylaw, agreement, vote of shareholders
or disinterested directors, as a matter of law or otherwise both as to action
in his official capacity and as to action in another capacity while holding
such office and
-12-
<PAGE> 13
shall continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person. No person shall be entitled to indemnification pursuant to this
Article 8 in relation to any matter as to which indemnification shall not be
permitted by law.
ARTICLE 9.
In performing his duties, a director of the Corporation shall be
entitled to rely on information, opinions, reports or statements, including
financial statements and other financial data, in each case prepared or
presented by: (a) one or more officers or employees of the Corporation whom the
director reasonably believes to be reliable and competent in the matters
presented, (b) counsel, public accountants or other persons as to matters which
the director reasonably believes to be within such person's professional or
expert competence, or (c) a committee of the Board of Directors upon which he
does not serve, duly designated in accordance with a provision of the by-laws,
as to matters within its designated authority, which committee the director
deems to merit confidence, but he shall not be considered to be acting in good
faith if he has knowledge concerning the matter in question that would cause
such reliance to be unwarranted. A person who so performs his duties shall
have no liability to the Corporation (whether asserted directly or
derivatively) by reason of being or having been a director of the Corporation.
ARTICLE 10.
The address of the registered office of the Corporation is 15000
Northwest Freeway, Houston, Texas 77040, the name of the registered agent of
the Corporation at such address is George Martinez.
-13-
<PAGE> 14
ARTICLE 11.
The Board of Directors consists of fifteen (15) members who shall
serve as directors until their respective successors shall have been elected
and qualified, and whose names and addresses are as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
C. P. Bryan, Jr. 15000 Northwest Freeway
Houston, Texas 77040
John H. Buck 15000 Northwest Freeway
Houston, Texas 77040
James M. Clepper 15000 Northwest Freeway
Houston, Texas 77040
Walter P. Gibbs 15000 Northwest Freeway
Houston, Texas 77040
Mark T. Giles 15000 Northwest Freeway
Houston, Texas 77040
Bruce J. Harper 15000 Northwest Freeway
Houston, Texas 77040
Glenn H. Johnson 15000 Northwest Freeway
Houston, Texas 77040
James J. Kearney 15000 Northwest Freeway
Houston, Texas 77040
C. Frank Kurtin 15000 Northwest Freeway
Houston, Texas 77040
George Martinez 15000 Northwest Freeway
Houston, Texas 77040
Russell I. Orr 15000 Northwest Freeway
Houston, Texas 77040
Christian A. Rasch 15000 Northwest Freeway
Houston, Texas 77040
Steven F. Retzloff 15000 Northwest Freeway
Houston, Texas 77040
Raimundo Riojas 15000 Northwest Freeway
Houston, Texas 77040
</TABLE>
-14-
<PAGE> 15
<TABLE>
<S> <C>
Cuba Wadlington, Jr. 15000 Northwest Freeway
Houston, Texas 77040
</TABLE>
IN WITNESS WHEREOF, the undersigned has executed these
Restated and Amended Articles of Incorporation this 22nd day of May, 1997.
Sterling Bancshares, Inc.
By: /s/ George Martinez
---------------------------
George Martinez, Chairman
-15-
<PAGE> 1
Exhibit 5.1
May 27, 1997
Board of Directors
Sterling Bancshares, Inc.
15000 Northwest Freeway
Houston, Texas 77040
Sterling Bancshares Capital Trust I
c/o Sterling Bancshares, Inc.
15000 Northwest Freeway
Houston, Texas 77040
Ladies and Gentlemen:
We have acted as counsel to Sterling Bancshares, Inc., a Texas
corporation (the "Company"), and Sterling Bancshares Capital Trust I, a
Delaware statutory business trust (the "Trust"), in connection with the
creation of the Trust and the preparation of a Registration Statement on Form
S-3 (Registration No. 333-27185) filed by the Company and the Trust with the
Securities and Exchange Commission (the "SEC")(such Registration Statement, as
amended, the "Registration Statement") for the purpose of registering under the
Securities Act of 1933, as amended, Trust Preferred Securities (the "Preferred
Securities") of the Trust, Junior Subordinated Deferrable Interest Debentures
(the "Subordinated Debentures") to be issued by the Company, and the guarantee
of the Company pursuant to the Preferred Securities Guarantee Agreement (the
"Guarantee").
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement, as amended to the date hereof, including the form of
Prospectus included therein and the documents incorporated by reference
therein; (ii) the Certificate of Trust of the Trust (the "Certificate of Trust")
filed with the Secretary of State of the State of Delaware on April 4, 1997;
(iii) the First Amended and Restated Trust Agreement of the Trust dated as of
May 14, 1997; (iv) the form of the Second Amended and Restated Trust Agreement
of the Trust; (v) the form of the Preferred Securities; (vi) the form of the
Guarantee; (vii) the form of the Subordinated Debentures; and (viii) the form
of the Indenture (the "Indenture") between the Company and Bankers Trust
Company, as trustee, in each case in the form filed as an exhibit to the
Registration Statement. We have also examined originals or copies, certified,
or otherwise identified to our satisfaction, of such other documents,
certificates, and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
<PAGE> 2
Sterling Bancshares, Inc.
Sterling Bancshares Capital Trust I
May 27, 1997
Page 2
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In conducting our examination of
documents executed by parties other than the Company or the Trust, we have
assumed that such parties had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and that, except as set forth in paragraphs (4) and
(5) below, such documents constitute valid and binding obligations of such
parties. In addition, we have assumed that the Second Amended and Restated
Trust Agreement, the Preferred Securities, the Guarantee, the Subordinated
Debentures and the Indenture, will be executed and delivered by the parties
thereto, and when executed, will be executed in substantially the form reviewed
by us and that the terms of the Subordinated Debentures when established in
conformity with the Indenture will not violate any applicable law. In addition
we have assumed the receipt by each person to whom a Preferred Security is to be
issued by the Trust (collectively, the "Preferred Security Holders") of a
certificate for such Preferred Security or of a global certificate by the
Depository Trust Company, acting as agent, and the payment for the Preferred
Security so acquired, in accordance with the Trust Agreement and the
Registration Statement, and that the Preferred Securities are issued and sold to
the Preferred Security Holders in accordance with the Trust Agreement and the
Registration Statement. As to any facts material to the opinions expressed
herein which were not independently established or verified, we have relied upon
oral or written statements and representations of officers, trustees and other
representatives of the Company, the Trust and others.
Based upon and subject to the foregoing and to other
qualifications and limitations 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 Delaware Business Trust Act, 12 Del. C.
Section 3801, et seq. (the "Delaware Business Trust Act").
2. The Preferred Securities, when issued and paid for as
contemplated in the Second Amended and Restated Trust Agreement and the
Registration Statement, will represent valid and, subject to the qualifications
set forth in paragraph 3 below, fully paid and non-assessable undivided
preferred beneficial interests in assets of the Trust.
3. In accordance with the Delaware Business Trust Act, 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 Delaware General
Corporation
<PAGE> 3
Sterling Bancshares, Inc.
Sterling Bancshares Capital Trust I
May 27, 1997
Page 3
Law. We note that the Preferred Security Holders may be obligated
to make payments as set forth in the Trust Agreement.
4. The Subordinated Debentures, when authenticated and issued in
accordance with the Indenture and delivered and paid for as contemplated by the
Registration Statement, will be valid and binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable against the Company in
accordance with the terms, except to the extent that enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity).
5. The Guarantee will be a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except to
the extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditors rights generally, and (ii)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
The opinions set forth above are limited in all respects to the federal
laws of the United States of America, the Delaware Business Trust Act, the
Delaware General Corporation Law and the laws of the States of Texas and New
York.
We hereby consent to the reference to us under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving this consent, we do not thereby admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or under the rules and regulations of the Securities and
Exchange Commission relating thereto.
Very truly yours,
ANDREWS & KURTH L.L.P.
<PAGE> 1
EXHIBIT 8
May 27, 1997
Board of Directors
Sterling Bancshares, Inc.
15000 Northwest Freeway
Houston, Texas 77040
Sterling Bancshares Capital Trust I
c/o Sterling Bancshares, Inc.
15000 Northwest Freeway
Houston, Texas 77040
Ladies and Gentlemen:
We have acted as counsel to Sterling Bancshares, Inc., a Texas
corporation (the "Company"), and Sterling Bancshares Capital Trust I, a Delaware
statutory business trust (the "Trust"), in connection with the Registration
Statement on Form S-3 (Registration No. 333-27185) filed by the Company and the
Trust with the Securities and Exchange Commission (such Registration Statement,
as amended, the "Registration Statement") for the purpose of registering under
the Securities Act of 1933, as amended, Trust Preferred Securities of the Trust,
Junior Subordinated Deferrable Interest Debentures to be issued by the Company,
and the guarantee of the Company pursuant to the Preferred Securities Guarantee
Agreement.
We have reviewed the information contained in the Registration
Statement under the caption "Certain Federal Income Tax Consequences." It is
our opinion that such information is correct to the extent that it constitutes
matters of law or legal conclusions and that, based upon the considerations
stated under such caption the Trust will be classified for the United States
federal income tax purposes as a grantor trust and not as an association
taxable as a corporation.
Very truly yours,
Andrews & Kurth L.L.P.
2320/1117
<PAGE> 1
EXHIBIT 12
STERLING BANCSHARES, INC.
Calculation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION> Three months
ended
March 31, YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993 1992
--------------------------------------------------------
( In thousands, except ratios)
<S> <C> <C> <C> <C> <C> <C>
Pretax income 3,738 15,403 13,013 10,351 7,837 7,053
Adjustments:
Earnings from unconsolidated subsidiary -- (316) -- -- -- --
Fixed charges - including interest on deposits
One-third of net rental expense 62 152 137 144 182 114
Amortization of debt expense -- -- -- -- --
Interest expense, including deposits 4,653 16,727 14,557 11,140 7,301 8,699
--------------------------------------------------------
Adjusted earnings 8,453 31,966 27,707 21,635 15,320 15,866
Fixed charges - including interest on deposits 4,715 16,879 14,694 11,284 7,483 8,813
Ratio of earnings to combined fixed charges -
including interest on deposits 1.79 1.89 1.89 1.92 2.05 1.80
Pretax income 3,738 15,403 13,013 10,351 7,837 7,053
Adjustments:
Earnings from unconsolidated subsidiary -- (316) -- -- -- --
Fixed charges - excluding interest on deposits
One-third of net rental expense 62 152 137 144 182 114
Amortization of debt expense -- -- -- -- --
Interest expense other than deposits 154 703 1,949 1,062 369 435
--------------------------------------------------------
Adjusted earnings 3,954 15,942 15,099 11,557 8,388 7,602
Fixed charges - excluding interest on deposits 216 855 2,086 1,206 551 549
Ratio of earnings to combined fixed charges -
excluding interest on deposits 18.28 18.65 7.24 9.58 15.22 13.85
--------------------------------------------------------
1997 1996 1995 1994 1993 1992
--------------------------------------------------------
Ratio of earnings to combined fixed charges - 1.79X 1.89X 1.89X 1.92X 2.05X 1.80X
including interest on deposits
Ratio of earnings to combined fixed charges - 18.28X 18.65X 7.24X 9.58X 15.22X 13.85X
excluding interest on deposits
</TABLE>
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement of Sterling Bancshares, Inc. on Form S-3 of our report
dated March 7, 1997 (except for note X as to which the date is March 18, 1997),
appearing in the Annual Report on Form 10-K of Sterling Bancshares, Inc. for the
year ended December 31, 1996, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
May 27, 1997
<PAGE> 1
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) ------
--------------
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 executive offices) (Zip Code)
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)
--------------
STERLING BANCSHARES, INC. STERLING BANCSHARES CAPITAL TRUST I
(Exact name of Registrant as (Exact name of Registrant as
specified in its charter) Specified in its charter)
<TABLE>
<S> <C> <C> <C>
TEXAS 74-2175590 DELAWARE 76-0536778
(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.)
</TABLE>
15000 NORTHWEST FREEWAY c/o STERLING BANCSHARES, INC.
HOUSTON, TEXAS 77040 15000 NORTHWEST FREEWAY
(Address, including zip code HOUSTON, TEXAS 77040
of principal executive offices) (Address, including zip code of
principal executive offices)
Trust Preferred Securities of Sterling Bancshares Capital Trust I
Junior Subordinated Debentures of Sterling Bancshares, Inc.
Guarantee of Sterling Bancshares, Inc. with respect to
Trust Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE> 2
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, and Certificate of Amendment of the
Organization Certificate of Bankers Trust Company dated
March 20, 1996, 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 February 18, 1997, Incorporated herein by reference
to Exhibit 4 filed with Form T-1 Statement, Registration
No. 333-24509-01.
-2-
<PAGE> 3
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 - A copy of the latest report of condition of Bankers
Trust Company dated as of December 31, 1996.
EXHIBIT 8 - Not Applicable.
EXHIBIT 9 - Not Applicable.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized 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 16th day of May, 1997.
BANKERS TRUST COMPANY
By: /s/ KEVIN Weeks
Kevin Weeks
Assistant Treasurer
-4-
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 12/31/96 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. 00623
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS DECEMBER 31, 1996
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
<TABLE>
<CAPTION>
C400
-------------------------
RCFD BIL MIL THOU
---------- ------------
(Dollar Amounts in Thousands)
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)................................. 0081 1,545,000 1.a.
b. Interest bearing balances(2).......................................................... 0071 2,494,000 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 4,368,000 2.b.
3. Federal funds sold and securities purchased under agreements to resell in domestic offices
of the bank and of its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds sold......... .......................................................... 0276 3,651,000 3.a.
b. Securities purchased under agreements to resell ...................................... 0277 3,230,000 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C)... RCFD 2122 27,239,000 4.a.
b. LESS: Allowance for loan and lease losses....................... RCFD 3123 917,000 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 28,889,000 4.d.
5. Assets held in trading accounts............................................................ 3545 38,272,000 5.
6. Premises and fixed assets (including capitalized leases)................................... 2145 914,000 6.
7. Other real estate owned (from Schedule RC-M)............................................... 2150 213,000 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule
RC-M)...................................................................................... 2130 184,000 8.
9. Customers' liability to this bank on acceptances outstanding............................... 2155 597,000 9.
10. Intangible assets (from Schedule RC-M)..................................................... 2143 17,000 10.
11. Other assets (from Schedule RC-F).......................................................... 2160 6,056,000 11.
12. Total assets (sum of items 1 through 11)................................................... 2170 90,430,000 12.
</TABLE>
- ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE> 6
<TABLE>
<S> <C> <C> <C>
BANKERS TRUST COMPANY Call Date: 12/31/96 ST-BK: 36-4840 FFIEC 031
130 LIBERTY STREET Vendor ID: D CERT: 00623 Page RC-2
NEW YORK, NY 10006 12
FDIC CERTIFICATE NO: 00623
</TABLE>
Schedule RC -- Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES
Deposits:
13. a. In domestic offices (sum of totals of columns A and C from Schedule
RC-E, Part I) RCON 2200 11,985,000 13.a
(1) Noninterest-bearing(1)...................... RCON 6631 2,734,000 13.a.(1)
(2) Interest-bearing............................ RCON 6636 6,657,000 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule
RC-E part II) RCFN 2200 21,619,000 13.b
(1) Noninterest-bearing......................... RCFN 6631 654,000 13.b.(1)
(2) Interest-bearing............................ RCFN 6636 22,731,000 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase in
domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased...................................................... RCFD 0278 6,560,000 14.a
b. Securities sold under agreements to repurchase............................... RCFD 0279 120,000 14.b
15. a. Demand notes issued to the U.S. Treasury..................................... RCON 2840 0 15.a
b. Trading liabilities.......................................................... RCFD 3548 19,172,000 15.b
16. Other borrowed money:
a. With a remaining maturity of one year or less............................... RCFD 2332 15,909,000 16.a
b. With original maturity of more than one year................................. RCFD 2333 3,097,000 16.b
17. Mortgage indebtedness and obligations under capitalized leases................. RCFD 2910 31,000 17.
18. Bank's liability on acceptances executed and outstanding....................... RCFD 2920 597,000 18.
19. Subordinated notes and debentures.............................................. RCFD 3200 1,229,000 19.
20. Other liabilities (from Schedule RC-G)......................................... RCFD 2930 5,235,000 20.
21. Total liabilities (sum of items 13 through 20)................................. RCFD 2948 85,554,000 21.
22. Limited-life preferred stock and related surplus............................... RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................................. RCFD 3838 600,000 23.
24. Common stock................................................................... RCFD 3230 1,001,000 24.
25. Surplus (exclude all surplus related to preferred stock)....................... RCFD 3839 540,000 25.
26. a. Undivided profits and capital reserves...................................... RCFD 3632 3,131,000 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities...... RCFD 8434 (14,000) 26.b
27. Cumulative foreign currency translation adjustments............................ (382,000) 27.
28. Total equity capital (sum of items 23 through 27).............................. RCFD 3210 4,876,000 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of
items 21, 22 and 28)........................................................... RCFD 3300 90,430,000 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 Number
describes the most comprehensive level of auditing work performed for the bank ------
by independent external auditors as of any date during 1995...................... RCFD 6724 N/A M.1
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which submits a report on the consolidated holding company (but
not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a
certified public accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering
authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
</TABLE>
- ---------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
<PAGE> 7
State of New York,
BANKING DEPARTMENT
I, PETER M. PHILBIN, Deputy Superintendent of Bank 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 March 20, 1996, providing for an
increase in authorized capital stock from $1,351,666,670 consisting of
85,166,667 shares with a par value of $10 each designated as Common Stock and
500 shares with a par value of $1,000,000 each designated as Series Preferred
Stock to $1,501,666,670 consisting of 100,166,667 shares with a par value of
$10 each designated as Common Stock and 500 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 21st day of March in the Year of our Lord one thousand nine hundred
and ninety-six.
Peter M. Philbin
------------------------------
Deputy Superintendent of Banks
<PAGE> 8
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, Three Hundred Fifty One Million, Six Hundred
Sixty-Six thousand, Six Hundred Seventy Dollars ($1,351,666,670),
divided into Eighty-Five Million, One Hundred Sixty-Six Thousand, Six
Hundred Sixty-Seven (85,166,667) shares with a par value of $10 each
designated as Common Stock and 500 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 One Billion, Five Hundred One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,501,666,670), 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 500 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
<PAGE> 9
6. 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
20th day of March, 1996.
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 20th day
of March, 1996.
Sandra L. West
- ---------------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York Counterpart filed in the
No. 31-4942101 Office of the Superintendent of
Qualified in New York County Banks, State of New York,
Commission Expires September 19, 1996 This 21st day of March, 1996
